Sangu Delle Tedtalk was a delight one to watch – hits the nail on the head regarding micro finance and the perception that ‘fixated on romanticised idea that every poor person in African is an entrepreneur.”
The idea that microcredit helps with free trade thereby alleviate poverty in the rural areas and improve self-sufficiency is true, only that not every poor Africans has the discipline of a successful trader.
Take Nigeria for example, most people depended on trading for livelihood given limited options available, however most of these traders started out as a form of investment, which means that most run with the first idea that pops into the mind without proper research into what will be required to make any profit from such business.
There are several reasons why small businesses fail, one that is most obvious in Nigeria is misplaced priority of traders. Most traders in the market set up their businesses with the help of family/friends loan which more often than not people will default on.
My people never ran out of excuses as to why they default on loans – it ranges from children school fees, robbery, to Owambe of all kinds.
Banks do not give micro credit to market women because people are very hard to track down. Banks do give loans where tangible collateral is presented and the interest of 20% is agreed on – most Nigerian market traders are priced out of this.
A few years ago, a Lagos based private driver was asked by his boss what he would like to with his life as the boss has to return to his home country. The driver says he’d like to set up a business for himself as it might be hard for him to get another job given his age (54years old). The boss gave him three million naira ($15k) – no string attached.
This is a huge amount that is sufficient to set up something moderate. This driver has never done a day business in his life, he has always worked for people with an okay salary. When he got hold of the money, setting up any business was the last thing he did – the money was spent on building project, bigger than the money interest free cash he had.
Three years down the line, he called the ex boss only to give lots and lots of stories, the type no one in Nigeria would buy – that basically says money is all gone and no business so back in market looking for another driving job.
Mr Delle’s idea of ‘Pan-African titan’ is an excellent idea so is better access to finance to help existing business owners and others with brilliant business ideas set up a medium to large-scale factories that could give Africa much-needed boast and level playing field in world market.