GVEP’s micro entrepreneur development programme (DEEP) works with hundreds of tiny businesses delivering clean energy products and services in East Africa. Three years into the programme we are building up enough data on these businesses to be able to generate some interesting analysis. One thing we observe is that the Pareto principle applies to these micro-businesses just as it does in other markets – a small number of businesses out of the total account for the majority of the sales.
Take for example briquette makers in Uganda. Many of the ‘businesses’ we work with fabricate a small quantity of briquettes, by hand, as one of several income generating activities the family engages in. Monthly revenues for most are small – around $20 – but provide a handy extra source of cash for the family budget. For many entrepreneurs that’s enough. They have neither the resources nor the ambition to focus on briquettes as a serious business venture. Only a few show this appetite - turning over more than $100 a month. They are the ones who invest in merchandising production, improving quality, looking for new customers, and professionalise packaging and branding of the product.
Abhijit Banerjee and Esther Duflo in their book Poor Economics (Public Affairs, 2011) explore this phenomenon in a chapter entitled ‘Reluctant Entrepreneurs.’ Fifty percent of poor families in less developed countries engage in some kind of non-agricultural business activity. But these business are very small and generally remain so. The individuals running micro businesses are not ‘entrepreneurs’ in the sense we use that term in the US or Europe. Petty commerce is part of a survival strategy where risk is diversified by having several income streams within a family group. Many of these businesses – such as small stores – are in saturated markets where room for growth is limited.
In the DEEP programme we recognise the reality that many people who join the programme are happy with their small scale operations. We cannot turn them into something they do not want to become. Our attention focuses mainly on the enterprising few who really do want to make a business out of briquettes. These are the people we try to link with loan providers and equipment suppliers. Some of the most enterprising are relatively recent recruits to the programme – people who saw others making briquettes, realised the potential, and decided to take this up themselves. In contrast some of the businesses which joined at the start of the programme have hardly grown at all.
Alessandra GVEP International
simongvep73
David Disch
peterjamesgeorge
jasmienbronckaers
Hamish F
lauraclough
Any projects in Peru? we’d like to know how to interact with you for solar & eolic projects, and if South America is an area of interst for you in a near future.
Yes we have various projects in Peru, including a solar one in Piura: http://www.gvepinternational.org/en/business/news/close-yet-so-far-away-grid and a pico-hydro one in various locations: http://www.gvepinternational.org/en/business/news/more-water-under-wheels
No heolic ones I’m afraid.
The individuals running micro businesses are not ‘entrepreneurs’ in the sense we use that term in the US or Europe.
Indeed, that’s the point. There are a lot of people in developing countries running their own micro-businesses because they have no choice. But that doesn’t make them ‘entrepreneurs’ in the sense we use the term in the US or Europe.
At least they’re trying to make a better life for themselves. Hopefully they make it.
Yes they work hard and there is a lot that can be done to support them. In order to provide effective support though we need to be clear what kind of businesses we are dealing with.
It would be nice to see British inventors supported who are finding new sources of energy, like one I visited in Wells, Somerset, last spring. His name is Bobby Amarasingam and he has developed a gravity motor, spending all of his money to develop it but is in need of more help. See Peswicki to learn more. I went over from Canada specially to meet him and encourage him
Microentrepreneurs despite of their small profits are the backbone of the economy of a third world country.
Thumbs up to these guys!
I know how difficult it is to run a business in a third world country. After all, I am an entrepreneur from the Philippines.