Updated Apr 13, 2021

Creating Sustainable Businesses. Transforming Lives. Village Enterprise Graduation Model

https://villageenterprise.org/what-we-do/

Alex Strzempko

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Village Enterprise works to end extreme poverty in rural Africa through entrepreneurship and innovation.

With over 30 years of experience serving as a pioneer in the quest to end extreme poverty in rural Africa, Village Enterprise’s community-based, participatory program reflects a bottom-up approach to microenterprise development. Our poverty Graduation year-long program is designed for rural Africans who live on less than $1.90 per day, the World Bank’s definition of extreme poverty, and equips ...
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With over 30 years of experience serving as a pioneer in the quest to end extreme poverty in rural Africa, Village Enterprise’s community-based, participatory program reflects a bottom-up approach to microenterprise development. Our poverty Graduation year-long program is designed for rural Africans who live on less than $1.90 per day, the World Bank’s definition of extreme poverty, and equips them with the resources to start a small, sustainable business and savings groups. As per our recently completed large-scale, independent, three-year Randomized Controlled Trial (RCT) with Innovations for Poverty Action, we have solid evidence that our Graduation program is a cost-effective, scalable, and sustainable solution to increase the income and savings of people living in extreme poverty. Village Enterprise provides participants a path to sustainable and profitable business enterprises by combining highly effective targeting with a group-based business creation program featuring cash initial grants, financial literacy training, ongoing mentoring, and the formation of savings groups. Village Enterprise uses the human-centered design methodology to adapt our program to different contexts and demographics, for example working with youth and refugees. An early adopter of new technologies, Village Enterprise has incorporated mobile technology to monitor, evaluate, and deliver elements of our program, including our adaptive management system (that recently won a dashboard contest at the 2019 Monitoring Evaluation Research and Learning Tech Conference last September) our mobile cash disbursement and our digital training tools. Key to our success is the sequencing of the following program components: 1. Targeting: Targeting districts and villages with high rates of poverty, we conduct a participatory wealth ranking exercise, where local leaders are invited to a focus group to define categories of relative wealth for their village and then rank households in the village according to those categories. Of the poorest households identified, we use the Poverty Probability Index, a country-specific poverty measurement tool, to select only those with a 95% likelihood of falling under the poverty line. This multi-step targeting process results in a participant population that has no current employment (apart from subsistence farming and/or daily labor) and no history of running a business. 2. Training: Our business mentors deliver three-four months of business skills and financial literacy training designed for participants who have little formal education and assist them in building sustainable small enterprises of three entrepreneurs each. Integrated resource sustainability training ensures that new business activities promote environmental best practices and the family support module inviting the whole household ensures program participants, mostly women are supported while participating in our program. The interactive training materials use an approachable, visual, and concise format and focuses on learning by doing and interacting. Some goal-setting tools enable to standardize content for each mentoring visit and make sure every business owner receives proper training. Our business mentors can now access the training curriculum and review video recording of modules digitally on their tablets. 3. Savings groups: At the beginning of the training, we form Business Savings Groups (BSGs) of approximately 10 businesses (30 entrepreneurs) each. BSGs are a self-generating, self-managed form of microfinance that allows members to pool savings and access loans. BSGs provide members with ongoing protection against financial shocks and access to growth capital. Our Business Savings Groups serve as a safety net and a support group, as well as our exit strategy. 4. Seed funding: Village Enterprise provides an initial cash grant as seed capital to start the business after the business group develops a business plan with the help of their business mentor. A second cash transfer is provided six months later upon the successful completion of the program as assessed by the business mentor. 5. Mentoring: Business mentors guide each new group in selecting an enterprise that is best positioned to flourish, taking into account the team’s skillset, local market conditions, risk factors, and profitability. Equipped with mobile training and mentoring tools, business mentors provide important ongoing coaching and mentoring throughout the program to ensure that all participants have the skills and knowledge to run a business, save for the future, resolve group conflicts, develop confidence and agency, and successfully graduate out of extreme poverty.
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Stage 5: Scaling

The Village Enterprise Graduation Model is now at the scaling phase. We currently operate in several regions across both Kenya and Uganda, with expansion to Rwanda ongoing, and carried out technical assistance partnerships in Mozambique and the DRC.

Focus Areas:

Entrepreneurship, Economic Empowerment and Climate Change and Resilience

Entrepreneurship, Economic Empowerment and Climate Change and ResilienceSEE LESS

Implemented In:

Tanzania, Uganda and Kenya

Tanzania, Uganda and KenyaSEE LESS

3
Countries Implemented In
185,000
Customers
200
Employees
$10,000,000
Funds Raised to Date

Problem

According to the World Bank, 767 million people in the world are categorized as extremely poor. This means that they live on less than $1.90 a day. The number of extreme poor in Sub-Saharan Africa stands at a staggering 389 million people, which is more than the number of extremely poor people in all other world regions combined. When people are extremely poor, they survive at a subsistence level and are put at risk when any external shock, such as an illness or necessary household repair, occurs. Because they are reactive to external forces, they cannot save money, plan for the future, or realize their full potential and become healthy and productive members of their communities.

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Solution

Our one-year Graduation approach equips the rural poor with the knowledge, tools, and confidence to start sustainable businesses and savings groups, paving a path out of extreme poverty. A community-led, group-based approach, the Village Enterprise Graduation Program incorporates five core elements: targeting of the extreme poor using a participatory approach; establishing business savings groups; a structured training program delivered by talented, local business mentors; a seed capital grant to start a group business; and ongoing mentoring. By equipping extremely poor people with the resources to create successful and sustainable businesses, our participants permanently break the cycle of poverty for themselves and their families. Our impact measurements include increased income, savings, and productive assets, which contribute to better nutrition, greater access to education for children, higher-quality housing, individual empowerment, and a sense of hope for the future.

Target Beneficiaries

We target people living in rural areas in Sub-Saharan Africa who make under $1.90/day. As the global burden of extreme poverty falls disproportionately on female-headed households, approximately 75% of our program participants are women. Our typical program participant is in their 30s, although we work with clients of various ages. We have experience tailoring our approach to youth, refugees, and in conservation areas, and we expect that we will expand and adapt our program to additional specific contexts in the future.

Milestone

Date Unknown
New Country Implemented In
Kenya
Date Unknown
New Country Implemented In
Uganda
Date Unknown
New Country Implemented In
Tanzania

Supporting Materials

VE-2020AR-Web-orientation-null.pdf