Escaping Extreme Poverty - Kenya 2021
Creating resilience: Enabling people in need to become economically independent
“I am not depending on the government or NGOs anymore. I depend on myself.” Walter Irungi is proud to have become a successful small business owner after having joined the Basic Entrepreneur Training (BET), facilitated by the Hilti Foundation and led by the aid organization Hand in Hand International. With this program, more than 16’000 women and men in Kenya & Tanzania have been enabled to escape extreme poverty through creation of micro-businesses and to better survive shocks such as COVID-19 lockdowns.
Walter Irungi during a session on credit module with his self-help group at Kambuku village in Muranga County, Kenya.
Despite certain progress through joined efforts, the Sustainable Development Goal (SDG1), to eradicate extreme poverty, will not be achieved by end of 2030. The World Bank’s prediction shows, that due to the COVID-19 pandemic, 600 million people will still be living in extreme poverty by end of this decade – almost 90 percent of them in Sub-Saharan Africa. Therefore, the Hilti Foundation will keep on investing in enabling people to become economically independent by earning sustainable income. That leads to better living conditions creates resilience to any crisis or shock.
Helping for self-help
As a day jobber and subsidence farmer, Walter’s income used to be volatile and his economic situation quite vulnerable. That has changed completely, since he joined the Hilti Foundation’s basic program (BET) in 2018. The program’s overarching goal is, to enable members of so-called self-help groups within 9-12 months to start a micro-business and generate sustainable income by selling products to third parties.
Respecting core values such as teamwork, responsibility, reliability and honesty, the group experiences how to support each other and to discuss potential business opportunities.
At the age of 13 Walter dropped of school and – like many beneficiaries – never learned to read and write or do the math properly. That’s why the program’s training methods are rather interactive: Pictures, flip charts, posters, and role-playing are the appropriate tools for teaching simple entrepreneurial skills and accounting literacy. Besides marketing related topics – like what a product is, what a market looks like and how to define a price – the curriculum includes technical training, necessary to successfully breeding livestock or growing vegetables.
Walter’s self-help group learned, how to start and manage table banking. This group-based funding system works completely off-bank and is very common in developing countries. Each member contributes with weekly or monthly savings to create a fund. Once a reasonable amount is achieved, everybody can request a loan for business investments – being aware to pay it off with interests. “Because a loan is not a donation,” Walter grins.
Creating resilience
Living in extreme poverty is threatening, especially during pandemic lockdowns in countries without public support or welfare. “For this reason, our local project officers distributed hygiene kits with masks, soaps and disinfectant, and informed people about important health measures.” Dorothea Arndt, CEO of Hand in Hand International, further explained, that the beneficiaries were also trained on how to produce masks and disinfectants. For their own safety, but mainly to create a new source of income during lockdowns.
Werner Wallner, CEO of the Hilti Foundation, is convinced that creating resilience by following the principles of “sell, save and reinvest”, will help the people to survive any shock until the business can be restarted again: “That's exactly what happened to our beneficiaries: Even though the sales were down because the market was gone, they still owned a functioning micro-business and knew what to do.”
Resilience is an ongoing topic, since day-jobbers or subsidence farmers are extremely vulnerable to any kind of economic shock. That’s why the safe and solid business models are key for the program’s effectiveness. Even if those businesses also suffered from lockdowns, they have been able to easily be ramped back up by applying the very same mechanisms, they once have been created with.
As Walter says: “Now I only depend on myself and I know what to do: I have a company to run!" Asked for his plans, he replied: "I want to expand."
Definition of the extreme poverty line
The International Poverty Line is defined by USD 3.20 per day and the Extreme Poverty Line by USD 1.90 per day. That is needed to keep a person alive. With less amount of water and food, sustainable life is not possible.
Family spending in East Africa
Mastercard Survey 2020: Due to COVID-19, family spending in East Africa have been mainly reduced in the following areas: basic clothing by 66%, quality or quantity of food by 50%, education for children by 50% and health and medicine by 33%.