Growing Small Businesses through Literacy and Communiuty Action
Microfinance loan recipients need more than just start-up money. They need basic math, reading, and writing skills to keep records and grow their businesses. Threatening health, sanitation, crime, and environmental conditions can undermine an otherwise viable microbusiness effort. A microfinance program that includes problem-solving literacy and action initiatives can help participants overcome these obstacles and become self-reliant. That is the concept behind ProLiteracy's Literacy and Self-Reliance Initiative.
How it Works:
Local leaders form grassroots organizations that serve residents of poor neighborhoods and villages. Members agree to take part in a community action plan with literacy as a primary or secondary component.
The group determines the community need, develops an action plan, and approaches ProLiteracy for support.
ProLiteracy provides funding, training, and technical assistance and links the new partner with other similar partner projects within the ProLiteracy network.
Local partners provide facilities and leadership, as well as volunteer and donated resources.
ProLiteracy trains local partners to use the Literacy for Social Change model, which integrates math and native-language reading and writing lessons, critical thinking, and cultural expression in community development plans.
ProLiteracy’s partners organize savings or solidarity groups, provide vocational skills training, and supply seed money or loans to begin small businesses.
In some communities, 15 to 40 people receiving training and support form small savings groups, credit unions, and individual and/or cooperative businesses. Each week, members contribute small amounts to savings accounts which earn 1 percent to 4 percent interest. Accumulated savings generate capital, the source of $30 to $500 loans that are made to individual group members who have had their business plans accepted by the membership. The individuals repay the loans with interest over three to 12 months.
In some cases, individuals receive seed money as a one-time grant that doesn’t have to be repaid.
Measuring Program Success
The success of these programs is measured by a number of factors including: the number of participating members; number of loans extended and payback rates (generally 95 percent or higher); number and longevity of individual and group micro-enterprises formed; expansion and growth plans for credit and business operations; and the descriptions of achievements and lessons learned offered by leaders and participants.