Ethiopia
Small business training and microloans in Ethiopia
Empowering caregivers in Ethiopia with sustainable income-generation options
Education & Training
The Need
Ethiopia is suffering from its second severe drought in less than two years, killing livestock and crops and hiking food prices so vulnerable families can no longer afford the basic necessities. With an average income of US$0.07 per day—far below the international poverty line of US$1.90 per day—parents in Kombolcha, Ethiopia, are desperate to feed their children. Their unreliable day labour jobs don’t pay enough to overcome poverty or allow their children to thrive.
Extremely low income coupled with exceedingly low food supply and increasing food costs has become a fearsome threat. Most children in the region are malnourished but their parents can barely afford to provide one simple meal each day, much less fresh vegetables or eggs.
While the Ethiopian government has taken notice of the dire situation in Kombolcha, the resulting food aid is not a long-term remedy. Food distribution is certainly helpful in emergency situations, but a sustainable solution is required to avoid dependency. Families can thrive only when parents gain the skills, confidence and tools they need to break the vicious cycle of poverty and change their children’s lives and futures.
Marketable income-generating skills, business training and savings groups have proven effective with 182 other Compassion church partners in Ethiopia, by helping parents meet their families’ daily needs and gain financial security for the future.
Our hope with this intervention was to give parents living in extreme poverty the vocational and entrepreneurial skills to launch their own small businesses, along with peer support and financial accountability through self-help savings groups. By equipping them with sustainable income-generation options, caregivers could gain the freedom to earn a reliable household income to support their children’s holistic development, while climbing out of poverty toward a brighter future together.
Our Response
To empower mothers and fathers to launch successful small businesses, the local government microenterprise office trained the caregivers in business skills such as how to choose viable business ventures, calculate savings and credit, manage documents and conduct meetings. Next, caregivers gained experience in high-demand trades, such as tailoring, sheep and dairy cow rearing, and market and livestock trading.
Compassion Ethiopia’s Livelihood Specialist trained centre staff from the three frontline church partners to support the caregivers emotionally, spiritually and financially as they ventured into the business world. The church partners organized the 169 caregivers into 15 self-help savings groups to help foster a sense of community among the entrepreneurs as they share experiences and learn together, hold one another accountable and encourage wise saving and investing.
Each group opened their own shared bank account at a local bank and keep detailed records of their meetings and transactions in saving passbooks and ledgers. The church partners provided working capital to the caregivers through microloans distributed in the savings groups, giving parents the impetus to turn their business plans into a reality. Accountants and other qualified personnel perform regular audits and monitor the self-help groups.
Since nearly one in three businesses fail in the first two years, these savings groups have been a foundational component of the intervention. In addition to start-up capital, establishing a sustainable business requires a solid business plan, financial skills, vocational skills and a strong accountability and support system.
Community, accountability and shared experiences have bonded the caregivers in new relationships, in which they encourage and spur one another on in family and work life. Together, they have developed a culture of saving, resulting in excellent economic growth, both individually and as a group. Mothers and fathers are thrilled to be earning a good profit to cover housing costs, repay loans and purchase food for their families.
Your Gift Provides...
• Vocational skills training for 169 caregivers in one of five areas:
o Sheep rearing: plays a significant role in social and cultural functions, including food security, gender equity, weed control and income generation
o Dairy cow rearing: an efficient system that can produce highly nutritious milk, which can be used to make cheese and yogurt
o Market/petty trading: purchasing crops or produce from farmers at low prices and upselling to consumers
o Tailoring and embroidery: a lucrative career because of the high demand and minimal equipment required
o Livestock trade: purchasing livestock when the price is low and reselling when market value is higher in other regions or during peak holiday times
• Business education, including financial and savings management, basic accounting and developing business plans
• Microloans to start small businesses
• Experience-sharing events for caregivers
• Self-help savings groups
• Regular audits by church partner accountants and other qualified professionals
ReportA message from a caregiver
Before the intervention, I used to work as a daily labourer and make injera flatbread for my neighbours. With my meagre income, I faced big financial constraints and struggled to cover basic needs like clothes and sending my children to school. I had a big challenge to even feed my children each day.
Since the intervention, I took out a loan to start selling charcoal. I saw an improvement in my business, but I was not completely satisfied. I took out an additional loan and ventured into the business of making and selling injera. With this business, I finally became successful and started earning a considerable income. From this process, I have learned that working hard is crucial to overcoming socio-economic problems and improving one’s living conditions.
I am happy that I can send my children to school and fulfill their basic needs. With the income I earn from this business, I am also able to send my eldest daughter to college. I regularly contribute money to the group account. I purchased seven egg-laying chickens at home. I started my small injera-making business in my home, but I thank God that now I have the capacity to make 100 injera per day to distribute to my customers.
For the future, I have a dream to venture into running a small restaurant. I love doing business. Though I have a chronic disease, I see a bright future ahead of me. When I am engaged in my business, I forget my pain and health complications. I do not want to stop going because of my current success. I have many dreams and hopes.
Thank you so much! It is donors like you who made a way for me to come to such a successful stage. I am totally released from being dependent on other people. I am a free woman who is self-employed and can support my family! May God bless you!
ReportThank you for your generosity
Your investment has lit a fire in the hearts of 169 caregivers who have finally been given the chance to use their God-given skills to engage in relevant business training, work hard in a marketable trade and provide for their children’s needs. Thanks to your gift, families in Kombolcha, Ethiopia, now have hope for the future—and enough food on their table today.
Caregivers have been willing and happy to set aside savings each week to contribute to the common bank account—carefully recorded by the parents and monitored by staff, committee members and accountants—which is used as a matching fund for working capital. The partner churches have reported that many of the caregivers have tripled their household income.
No longer are these families dependent on outside aid. The self-help savings groups have been pivotal in fostering strong work ethic, community solidarity and mindset changes like taking ownership for both successes and failures. Instead of just receiving seed money for business start-ups, these strong women and men have been empowered with the lifelong skills and habits required to persevere, think creatively and plan for the future.
Mohamed is a father of five who eagerly participated in the income-generation skills training before starting his own small business. Yonatan, his eight-year-old son and a registered Compassion beneficiary, has watched his father work hard to launch a successful business selling sugarcane, which has allowed him to pay for his children’s school fees. “I am very happy with the skills training,” says Mohamed, “because I acquired basic skills for the business I am running, like money management and the importance of regular saving.” Well done, Mohamed! You are leading your children by example.
Thanks to your generosity, not only has these caregivers’ financial situation been transformed, but their outlook on life has changed as they experience the autonomy and satisfaction of running a business and preparing for the future, including saving for their children’s university education. Their motivation shines through their hard work and determination as they joyfully and tenaciously take the steps to break free from the cycle of poverty—for good.
ReportA message from a centre director
Before the intervention, the caregivers’ living situations were not good. These mothers had the desire to run their own businesses, but with no sufficient capital to venture out, they were dependent on their husbands’ incomes.
Since the intervention, mothers took out loans from the self-help groups to launch their own businesses. They are happy to be earning an income to buy bread for their children. They are well on their way to becoming self-sufficient through various income-generating activities.
This intervention has totally changed the local government’s view of the local churches and the centre because now they can see the sustainable ways in which we are equipping families to rise out of poverty. The local government has encouraged us to do even more income-generating activities to release more families from socio-economic hardship. This intervention has also enabled us to resolve the challenge of getting our license renewed every three years. Now we can carry on with our core program without these challenges.
Most parents say they have forgotten how miserable family life used to be before. Now they are thriving with their increased income, self-employment and ability to meet the basic needs of their children. Thank you for what you have done to help these caregivers and their children.