In much of the developing world where there is no access to capital, entrepreneurs are left idle, unable to access markets and create sustainable incomes to support themselves and their families. Willing and capable individuals, with the drive and motivation to build enterprises, can only do so if allowed the opportunity to access credit to invest in ideas. A large portion of the poor is thus sidelined from the market.
The Africa Aid Approach
Africa Aid addresses this market failure by making that essential investment in the poor. We combine market access with skills training so that the investments we make do not just improve the business itself, but also the recipients' ability to grow and maintain a successful enterprise. Africa Aid partnered with two Ghanaian nonprofit organizations in 2007, Friends of Women Foundation and the Daasgift Quality Foundation, to distribute small business loans to poverty-stricken entrepreneurs who otherwise would not have access to credit. Women and men are working to grow seamstress and art-making businesses. Loans are subsequently paid back with interest to ensure future entrepreneurs' ability to access capital to invest in their own businesses.
In the name of our model of strengthening foreign-assistance programs by working alongside American universities, Africa Aid partnered with the University of California, San Diego to assist in the design of the SEAM initiative. Students within a graduate course on microfinance contributed to the design of the microfinance project design, and traveled to Ghana with Africa Aid to assist with the program implemented. SEAM marks the first program fully designed and translated from classrooms to African communities through an Africa Aid university partnership.
Working alongside Friends of Women and Daasgift, the SEAM program has deployed more than $7,000 in loan capital to 40 women in Ghana, who have used the money for a variety of enterprises, including a bakery, a sewing and textile business, and a business that makes bottles and distributes liquid soap.
The income generated from these enterprises has offered the recipients the opportunity to not only afford basic necessities like food and water, but also to send their children to school, creating a ripple-effect that extends to the next generation of Ghanaians.
The first cycle of loans was repaid in just six months and Africa Aid is in discussions with our implementation partners to negotiate a second loan cycle in 2009.