By Scott Buchanan, Economist and Truro Anglican Church Member
It is a pleasure to be able to report on a successful microfinance outfit that helps the poorest of the poor. I heard a talk recently from Dale Stanton-Hoyle, CEO of the Five Talents organization. (He is as nice in person as he looks in his website bio photo).
This group was birthed at Truro Anglican Church, in Fairfax, Virginia. An Anglican bishop from Tanzania noted that he had many thousands of people under his care who were suffering so much from hunger and other concomitants of poverty that they had little inclination or energy to listen to elevating spiritual messages. As he put it, “An empty stomach has no ears.”
Inspired by Jesus’ parable of the talents, where servants were each entrusted with some large sum of money (expressed in “talents”) and were expected to multiply that money productively, a group was formed in 1998 to help people living in the most extreme poverty to build productive enterprises.
Their approach would be classified as part of microfinance, which nowadays is a well-known and well-regarded approach. The modern stream of microfinance has its roots In the Grameen Bank of Bangladesh, founded by microfinance pioneer Mohammed Yunus in the 1970s.
Five talents describes itself more specifically as:
A micro-enterprise development organization that helps the world’s most vulnerable families escape poverty. Partnering with local churches around the world, we train men and women, mostly women living in extreme poverty, to form savings groups, take out loans, and build their own businesses. It may seem surprising, but even those living in extreme poverty can save a little each week, start a tiny business, and fulfill their God-given potential.
In general, Five Talents does not give handouts. They support a limited number of full-time trainers, who in turn train local volunteer trainers, who do most of the actual organizing and leading. They found that when Western sources provided the initial seed capital, the money was not valued as much, and the loan payback rates were unsustainably low, around 60% or so.
So their model is to form a group of 20 or more people, and have them save their own money for at least six months. This develops tremendous accountability for borrowed funds. You are borrowing precious money from your group of friends and associates, and they all have a stake in helping your business succeed so you can repay it.
During those initial 6 to 12 months, the organization provides training: first, basic literacy (many are illiterate) and math skills which are essential for running a small business. Then, they provide training for more specific business planning and operation. This graphic depicts the process.
A typical loan might be $30-$150. This might be used to buy a goat to raise, or some beans to sell in the market. The local people can be creative in coming up with enterprises. The speaker told of a woman who was stuck in a refugee camp, who had been beaten up by life and was bitter and hopeless. All she could see were wretched poor people, and not much else. But the trainer persisted in asking her, “But what has God blessed you with?” The subsequent conversation went something like this: “Well there is this large river nearby. And...there are unemployed men in the camp who used to have skilled jobs. I could probably pay some of them to make me a dugout canoe, then I could ferry people across the river for a fee. And...there are all these ragged children running around underfoot… I could probably buy them some fishing gear and pay them to catch me fish in the river, that I could sell in the market.” So this insightful local person was able to identify two completely new business ideas that the trainer had not thought of.
Five principles for “How to Build a Successful Business Anywhere” are:
Start Small and Dream Big
Know Your Neighbors
Plan for Success
Manage Growth Wisely
Let Your Business be a Blessing
Some 80% of their participants are women. These women get a huge boost in self-confidence and community status, as well as income and food for their families.
Five Talents typically operates in concert with the local Anglican church in a country, which gives them some credibility and support and structure to start with. They are currently active in nine countries, mainly in central and eastern Africa along with Bolivia and Myanmar. They aim for countries with largest numbers of people living in extreme poverty. There is a wide range of development among so-called Third World countries. Many African countries already have a nascent middle class economy, so Five Talents directs its effort elsewhere.
According to their tracking, they have developed some 95,000 businesses so far, with a total of 1.4 million family members supported. They currently train about 10,000 people a year, and hope to increase that to 20,000 people. As with most development NGOs, the ultimate holy grail is to have your development project become independent and self-sustaining. Happily, Five Talents reports a great deal of success in getting groups to become self-funding after about one and a half years.
Scott Buchanan attends Truro Anglican Church and is a contributing writer to an economics blog.