making a difference in africa
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Making a Difference in Africa. The Townships Project From Microlending in South Africa to Systemic Poverty Eradication: The Next 12 Years by Martha Deacon, B.A. ( Hons ), J.D. Founder and CEO. Making a Difference in Africa. The Townships Project - PowerPoint PPT PresentationTRANSCRIPT
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Making a Difference in Africa
The Townships ProjectFrom Microlending in South Africa to
Systemic Poverty Eradication: The Next 12 Years
by Martha Deacon, B.A. (Hons), J.D.Founder and CEO
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Making a Difference in Africa
The Townships Project
• started supporting microlending in South Africa in 1998
• currently supports Tetla Financial Solutions (around Cape Town) and Phakamani Foundation (around White River), two of South Africa’s best run microlenders
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Making a Difference in Africa
Microlending entails • making tiny loans (starting at $100) • to the very poorest (living on $2 a day)• mostly women (98% of our clients)• in groups of 5 (each member guarantees
loans of others)• to start or expand a small business
(consumer loans make poverty worse)
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Making a Difference in Africa
Microfinance refers to the whole suite of financial services for the poorest, including
• loans• savings • insurance• mortgages• money transfers
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Making a Difference in Africa
• MicroFinance Institutions (MFIs) are those institutions that provide microfinance services
• The Townships Project has steadily improved its knowledge, connections and effectiveness over the past nearly 13 years…
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Making a Difference in Africa
1999 - 2004 = 6 years 2005 - 2009 = 5 years 2010 = 1 year 2011 = 8 months0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1,034
9,710
7,195
16,905
Number of Loans Disbursed 1999 - Aug 2011 by MFIs We Support
We’re now supporting twice as many loans each month as we did in all of the first 6 years
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Making a Difference in Africa
1999 - 2004 = 6 years 2005 - 2009 = 5 years 2010 = 1 year 2011 = 8 monthsR 0
R 5,000,000
R 10,000,000
R 15,000,000
R 20,000,000
R 25,000,000
R 686,300
R 12,059,850
R 10,368,300
R 22,428,150
Value of Loans Disbursed 1999 - Aug 2011 (8 Rand = $1 CDN)
The monthly value of loans supported is about $300,000 amongst 5,000 clients
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Making a Difference in Africa
1999 - 2004 = 6 years 2005 - 2009 = 5 years 2010 = 1 year 2011 = 8 months0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
5,170
48,550
35,975
84,525
Lives Changed Assuming 5 Lives per Loan
Total Lives changed in 12 years 8 months = 174,220About the size of Saskatoon, Regina or St. John’s Nfld.
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Making a Difference in Africa
1999 - 2004 = 6 years 2005 - 2009 = 5 years 2010 = 1 year 2011 = 8 months$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$194,084
$992,710
$228,173
$101,115
Total Spent in 12 Years and 8 Months ~ $1.5 Million
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Making a Difference in Africa
1999 - 2004 = 6 years 2005 - 2009 = 5 years 2010 = 1 year 2011 = 8 months$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00 $37.54
$20.45
$6.34
$1.20
Cost Per Life Changed
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Making a Difference in Africa
• We’ve built a solid foundation and in 2011 we launched a game-changing approach to eradicating systemic poverty…
• By applying the world’s most successful business system – franchising – to the world’s most intractable problem – poverty
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Making a Difference in Africa
• MicroFranchising applies the principles of franchising - branding, systematization, and replication - to tiny businesses ….
• Objective: Eradicate systemic poverty
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Making a Difference in Africa
• We found a partner - University of Cape Town’s Graduate School of Business, the premier business school on the continent
• We found a major sponsor - Standard Bank, the largest bank on the continent
• And we created something amazing…
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Making a Difference in Africa
MicroFranchising Launch:Trade Show and Workshops
by Martha Deacon, B.A.(Hons), J.D.Founder and CEO
The Townships Project
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Making a Difference in Africa
Report from South Africa
31 August – 2 September 2011
O.R. Tambo Recreation CentreKhayelitsha, Cape Town
South Africa
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Making a Difference in Africa
• MicroFranchising Launch was designed to address the four limiting factors in microlending
• All microlenders face the same challenges… and they prevent microloans alone from eradicating systemic poverty…
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Making a Difference in Africa
The Unicycle
Limits to Microlending:
1) “whack-a-mole” jealousy from lack of community support: “who do you think you are?!”
2) Most borrowers are not entrepreneurs: they just want a job
3) Lack of business innovation, skills and systems result in “selling rotten tomatoes to each other”
4) Business expansion requires more $$$ than microloans can provide
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Making a Difference in Africa
The Unicycle
Getting from the Unicycle of Microlendingto
Four Wheel Drive Mobile and a massive job creation engine at the base of the economic pyramid by using existing tools…
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Making a Difference in Africa
The Bicycle
By adding a 2nd wheel…
Asset-BasedCommunity Development (“ABCD”)
To give direction and overcome “whack-a-mole” syndrome
By turning victims into activists… asking the question: “What do we have?” instead of “What do you need?”
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Making a Difference in Africa
Asset-Based Community Development helps communities to understand
The Leaky Bucket
The Leaky Bucket provides a simple way for communities to understand their assets and their income: what they have, what’s coming in and what’s leaking out …
Developed in ‘90s in Chicago with Michelle Obama’s keen involvement
The Townships Project recommends the first money invested in any community be used to introduce ABCD …
Getting communities to think about how they can use what they have to get what they want…
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Making a Difference in Africa
The Three-Wheeler
Now add a 3rd Wheel:
Corporate Social Investment/Enterprise Development
Once a community is motivated, it is ready to seek additional investment…
BBBEE laws in South Africa today require about $1 billion annually spent on enterprise development…In an ABCD community, all eyes will be on this money
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Making a Difference in Africa
Four- WheelDrive
And finally the 4th Wheel:
MicroFranchising and other commercial solutions
Answers the lack of skills and diversity; brings the potential to systematize, replicate and brand a tiny business
For 40 years franchising has created as many as 9 out of 10 successful businesses (versus as low as 1 out of 10 for stand-alones)
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Making a Difference in Africa
Mobile
And now Mobile Technology Since 1998, virtually all South Africans (and about 80% of all Africans) have gained access to Mobile Telephones allowing access to:• Market information• Banking services
• Money transfer• Repayments• Savings
• Inventory restocking• Systems control • Accounting• Training
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Making a Difference in Africa
Jealousy – and “whack-a-mole” syndrome Corporate Social Investment funding pays for ABCD to motivate community
People just want a job; they lack of diversity of businesses and lack of skills
Franchises allows franchisees to effectively “purchase a job” showing them exactly how to run a variety of businesses; mobile telephones increase business efficiency dramatically
No capital available to purchase micro-franchises
Microloans can be used
Lack of sufficient funds to develop franchise by franchisor and lack of social/partnership resources
Enterprise Development funds are plentiful and sadly not well spent: ABCD and mirofranchising change that and can create a massive job engine at the base of the pyramid
Four Wheel Drive Mobile drives out systemic poverty…
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Making a Difference in Africa
Four Wheel Drive Mobile meets MicroFranchising Launch!
plus
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Making a Difference in Africa
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MicroFranchising Launch:Trade Show and Workshops
Intentionally Creating a MicroFranchising Industry
31 August – 2 September 2011 in Khayelitsha, Cape Town, South Africa
• Government policy makers met townships entrepreneurs met corporate entrepreneurs met franchisors met community activists met social workers met charities…
• To create and support new microfranchising businesses to build a massive job creation engine at the base of the economic pyramid…
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MicroFranchising Launch
On left: Tumelo Chipfupa, Deputy Director-General, Enterprise Development, Department of Trade and Industry
On right:
Sadi Luka, Chief Director of Community Development, Department of Social Development
First Plenary Session:
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MicroFranchising Launch
Tumelo Chipfupa came for 2 hours, stayed for 2 days. DTI wants The Townships Project’s MicroFranchising Launches in all 10 provinces – WHY?
• Since 1995, South Africa’s economy has grown from $500 billion to $2.7 trillion; taxpayers have increased from 1.8 million to more than 10 million; taxes from $113 billion to $664 billion (The Mail and Guardian, 27 Aug 2011) yet 20 million are still living on $2/day, under and unemployed, at the base of the economic pyramid
• 70% of enterprises with 5 – 50 employees, and 30% of those with 100+, started as micro-enterprises; all face the same challenges: formalization, credit, bank accounts… can be addressed by microfranchising
• MicroFranchising needs to be jump-started: even Vodacom didn’t recognize the fabulous market it has enjoyed in South African townships in the past 10 years
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MicroFranchising Launch
Sadi Luka from the Department of Social Development was elated to share the platform with the Department of Trade and Industry… WHY?
• Typically the Department of Social Development just hands out the monthly grant cheques: they’ve gone from 2.9 million to 13.9 million since 1995 representing a massive monthly income in all townships, which must be used to create new business if the 20 million on $2/day are ever to escape poverty…
• DSD also works with motivating communities through ABCD activities; these activities flow naturally into Department of Trade and Industry activities, aided by private/public partnerships…
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MicroFranchising Launch
THREE CASE STUDIESFrom MicroFranchising Launch:
Trade Show and Workshops
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MicroFranchising Launch
• Example: Keys Communications
• Challenge: Securing exclusive sites on home walls owned by grannies who resell them several times to competitors
• Solution: Find the “chief” granny through local church; deal with her to build community
understanding and loyalty, thereby increasing competitive uniqueness – ACHIEVED in 2 hour workshop
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MicroFranchising Launch
• Example: Crime Scene Clean-Up
• Challenge: Cost of franchise R 136,000 ($20,000) vs. township entrepreneur ability to pay about R 10,000 ($1,500)
• Solution: Downsize without losing any branding, systematization or replication functions – ACHIEVED in 2 hour workshop
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MicroFranchising Launch
• Example: Honda Scooters
• Challenge: Maximizing the townships market even with
100% financing strategy; Honda thought its market was commuters to the city
• Solution: Focus on micro-businesses lacking transit options rather than on city commuters; micro-businesses have credit rating with local microlenders – ACHIEVED in 2 hour workshop
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MicroFranchising Launch
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MicroFranchising Launch
1st element:
PlenarySessions
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MicroFranchising Launch
2nd element:
Workshops
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MicroFranchising Launch
3rd element:
Trade Show
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At the first everMicroFranchising Launch…
• 15 businesses were workshopped to become or expand as microfranchises by a cross-section of townships people, community workers, entrepreneurs, students, charities and government policy makers
• Everyone saw the power of small: microfranchising is now starting to be integrated into the mainstream at a public and private level
• Intentionally creating microfranchises can be a game changer in eradicating systemic poverty
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Making a Difference in Africa
Thank you!
www.thetownshipsproject.orgCharitable Organization No. 86418 8420 RR0001