Village Enterprise

Village Enterprise

Founded	1987 (1987)
Focus	Economic development
Location	San Carlos, California, United States
Area served	Africa
Method	Graduation Approach
Key people	Dianne Calvi (CEO) Debbie Hall (Chair of the Board of Directors) Brian Lehnen (Co-founder) Joan Hestenes (Co-founder)
Employees	100+
Slogan	Creating Sustainable Businesses. Transforming Lives.
Mission	To end extreme poverty in rural Africa through entrepreneurship and innovation
Website	www.villageenterprise.org

Overview

Village Enterprise (formerly known as Village Enterprise Fund) is a 501 (c) (3) non-profit organization that equips rural Africans living in extreme poverty with the resources to create sustainable businesses.

A pioneer in the micro-enterprise sector, Village Enterprise has started 33,000 businesses, trained over 136,000 business owners and impacted the lives of over 700,000 women, men and children^[1] as of August 2015.

Village Enterprise plays a unique role in the poverty reduction and microenterprise development fields, targeting people living below the extreme poverty level of $1.90 a day or less (as newly redefined by the World Bank^[2]), especially women and youth, who are historically underserved by other NGOs.^[3]

History

Village Enterprise was co-founded in 1987 by Brian Lehnen and Joan Hestenes to show how “entrepreneurship can help the very poor create businesses and experience the dignity of long-lasting jobs.”^[4] For the first several years, Village Enterprise remained a small, volunteer-run organization that was operated from their home.^[5]

In 2005, Jessica Jackley co-founded Kiva, the world's first peer-to-peer online microlending platform, after working as an intern with Village Enterprise in East Africa.^[6]

In 2008, Village Enterprise trained the BOMA Project on its microenterprise model.^[7]

In 2010, Dianne Calvi, Village Enterprise’s first outside CEO was hired. The name changed from Village Enterprise Fund to Village Enterprise.

In 2011, the new Village Enterprise model was launched. The new model included rigorous targeting methodology, a one-year training program, and a savings program in addition to a cash grant and mentoring.

Village Enterprise is currently headquartered in San Carlos, California, with regional offices in Kitale, Kenya; Soroti, Uganda; and Hoima, Uganda, and just over 100 employees.^[8] Over 95% of Village Enterprise’s staff are East African, including its in-country leadership, a model that was recognized in the Spring 2013, 10th Anniversary edition of the Stanford Social Innovation Review.^[9] Village Enterprise also employs local mentors for their businesses, who live in the communities they serve.^[10]

Program

In 2011, 41% of those living on less than $1.25 per day reside in sub-Saharan Africa and it is forecasted to increase to 81% by 2030. Village Enterprise works in remote, rural areas of East Africa where as of 2008, over 60% of the population live below this extreme poverty line.^[11]

Village Enterprise’s graduation program consists of a set of sequenced interventions recognized by CGAP (the Consultative Group to Assist the Poor) as “key components to put very poor people on a sustainable pathway out of extreme poverty.” According to Nicholas Kristof of the New York Times, “the graduation program gives very poor families a significant boost that continues after the program ends.”^[12] Common elements of graduation programs include business training and ongoing business mentoring, start up grants/asset transfer, and a business savings program. Other entities that follow a graduation model also provide limited consumption support, though Village Enterprise does not.

The Village Enterprise microenterprise model targets individuals who live under $1.90 a day using Grameen Foundation’s Progress Out of Poverty Index (PPI)^[13] combined with a village-based Participatory Wealth Ranking.^[14]

The Village Enterprise model includes a year-long program that includes 14 modules of financial literacy and business training, a start up grant of $150, mentoring, and savings group formation and support.^[15] Village Enterprise gives grants rather than loans, as people living in areas that Village Enterprise serves typically don’t have access to banks, or, aren’t ready to take on a loan. Recent research has shown that microloans have not shown to be successful in leading the ultra-poor out of extreme poverty.^[16]

Typical businesses include farming, livestock, tailoring, and small retail businesses.^[17] Each business has three business owners, to diversify risk and pool skill sets,^[18] and supports an average of 20 people based on the size of families in the area.^[19] Approximately 80% of Village Enterprise business owners are women.^[20]

As an exit strategy, Village Enterprise forms Business Savings Groups (BSGs) of 10 businesses each. BSGs are a self-generating, self-managing form of microfinance that pools savings and loans to members. BSGs provide members ongoing protection against financial shocks and access to growth capital. Over seven million people across Sub-Saharan Africa currently participate in savings groups.^[21]

Areas of Work and Impact

Conservation

Village Enterprise’s conservation program^[22] was pioneered in 2007 around the Budongo Forest, one of Western Uganda’s critical chimpanzee habitats in partnership with the Jane Goodall Institute. Since then, Village Enterprise has extended to a wide band of protected areas and corridors. As of September 2015, the program is being implemented in southwest Budongo Forest villages and into the Hoima District community forests in Uganda. In 2012, Village Enterprise introduced the model in Kenyan villages surrounding the Kakamega Forest in partnership with Kenya Wildlife Services.

Village Enterprise also includes a resources and sustainability curriculum to all our areas of operations. By supplementing business training with conservation training, the organization is helping local people protect their natural resources and giving them the means to make a living without exploiting these resources.

Youth

Over 75% of Africa’s population is younger than 35.^[23] Youth are particularly affected by unemployment. Village Enterprise created a youth-focused program that harnesses this issue by adapting to the needs and desires of striving rural youth entrepreneurs.

This program is carried out by local business mentors, who themselves are young educated leaders in their communities, and who motivate and mentor rural youth entrepreneurs to reach their full potential. This program was inspired by the results of a Youth Study^[24] conducted in Spring 2014 in partnership with FHI 360 and USAID to identify retention, training, and business selection strategies for our program. It was a November 2015 finalist of a USAID Collaborative, Learning and Adaptation Case Competition.^[25]

Women businesses

In 2014, over 80% of business owners were women. According to the UN World Food Program findings, women and girls are most affected by neglect in rural, poverty stricken areas. 7 out of 10 of the world’s hungry are women and girls. In East Africa, women are more likely to be illiterate, perform unpaid work and eat less in lean times than men. Studies show that women will invest 90% of their income back into their families compared to the 35% men invest.^[26]

Women prioritize things like health care, nutritious food and education. Increasing the bargaining power of women has the potential to create a virtuous cycle as female spending supports the development of human capital, which in turn fuels current and future economic growth. In addition, our newly successful women entrepreneurs strengthen social justice in the communities where they live.

Village Enterprise participated in a Boston Consulting Group study^[27] on empowering women entrepreneurs in 2014. The report looked specifically at the importance of social capital and networks for the success of these women entrepreneurs.

Financial Inclusion

Often the poor remain or slide back into poverty due to financial setbacks from a medical illness or funeral of a loved one. Savings Groups are increasingly recognized as a valuable vehicle for helping the “unbanked” transcend extreme poverty and are highlighted in Jeffrey Ashe’s book, In Their Own Hands, as a “catalytic innovation that bypasses subsidies, dependency, and high costs while effectively increasing food security, building assets, and empowering the community.” Village Enterprise's Business Savings Groups (BSG) provide a safe place to save, take out business loans, and access interest-free financing for family emergencies, thus acting as both insurance against catastrophes and as banks as a source of capital for business expansion.

Village Enterprise became an early adopter in the “savings revolution” by adding this component to their model in 2012. Across Kenya and Uganda, each BSG saved an average of $455 last year in 2014.^[28] In 2014, they participated in a MasterCard Foundation research study of practices and possibilities in savings^[29] and provided extensive data on the needs and preferences of 139 of their savings group members in Uganda.

People living in extreme poverty face unique circumstances that can make it difficult for them to connect to trade opportunities. In rural areas, inadequate roads, limited information, and scarce power sources pose daily challenges that affect access to local markets. Village Enterprise’s Innovation Incubator is running studies and pilots to determine the most sustainable and viable means of linking rural entrepreneurs to stronger markets through rigorous market analysis and mapping.

In 2013, Village Enterprise launched its Smarter Market Analysis and Risk Assessment Tool (SMART),^[30] which determines the profitability, risk, sustainability, demand, and price fluctuation of different crops at the local market level. The tool has been recognized by the Rockefeller Foundation's 100 Next Century Innovators (among 1,000+ applicants) and featured in NextBillion.net.^[31]

Results

Internal monitoring data show that 75% of the businesses that Village Enterprise starts are still in operation after four years.^[32]

Village Enterprise’s RCT

Village Enterprise is currently undergoing a Randomized control trial (RCT) in 6,600 households across a diversity of settings in rural Uganda with Innovations for Poverty Action (IPA). This RCT will provide new knowledge to contribute to the graduation program ecosystem, particularly questions on the marginal impact of individual components that Banerjee et. al. discuss in the Science Magazine article.^[33]

Village Enterprise uses TaroWorks^[34] to collect data via smartphones and then to analyze and report on the performances.

Funding

Village Enterprise is funded by individuals, foundations, corporations, and government and multilateral organizations, including USAID and FHI360.

External reviews

In 2010, Charity evaluator GiveWell rated Village Enterprise as one of their top charities.^[35]

In, 2012, 2013, and 2014 Village Enterprise received Charity Navigator’s 4-star rating.^[36]

In 2012, the Rockefeller Foundation recognized Village Enterprise as a Next Century Innovator for developing SMART (Smarter Market Analysis Risk Tool), a mobile agricultural tool that identifies risk/reward factors for small-scale farmers to consider when deciding which crop(s) to plant.^[37]

In 2015, Village Enterprise’s grants-based ultra poor program was recognized by Innovations for Poverty Action (IPA)^[38] and featured in the New York Times.^[39]

2010-2015 Village Enterprise received Guidestar’s highest, gold rating for five consecutive years.^[40]

2015 Village Enterprise received Great Nonprofit’s “top rated nonprofit” award.^[41]

References

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