Final Thoughts...

August 26, 2009

In this my last post, I think it would be nice both for me and anyone reading the blog to look back over the whole summer and look at some big-picture things that I learned and observations that I am coming away with. In order to keep this post to a manageable length, I’ll break it down into three sections and briefly highlight a few points for each. Pictured above are (l-r) Judi, Re, Rowland, and I (my Kenyan family).

1) VEF’s program and the challenges faced by rural entrepreneurs
It is clear that VEF is providing a unique service to a population in rural Kenya that has serious trouble accessing business capital through avenues such as formal banks or microfinance institutions. The true catalysts that help the groups succeed, as far as I can tell, were the business mentors. The BMs’ aptitude in training people with low levels of education in a clear and encouraging manner makes a huge impact on the beneficiaries and makes them feel that they can succeed in business even if they’ve never engaged in formal business before. For the beneficiaries who already have small businesses, the training can make a huge difference in teaching them how to keep good records and work with a group to maximize the power that five people have when they work "pamoja" (together).

The other shining stars, of course, are the beneficiaries. I can’t count the number of times that I visited a group of old mamas who proceeded to describe to me their stunningly profitable and complex business operations, and the ways in which their group worked together to spin off new businesses and boost current ones. As Rowland constantly reminded me, people who live from hand to mouth have to be incredibly creative to ensure that there is food on the table every day. When you combine five people possessing that creativity and intuitive knowledge of the ways to scrape together an income, provide training, and then a small start up grant the results can be mind-blowing.

There are certainly many hurdles along the way for these businesses. Illness, other family members in need, and natural phenomena such as one bad rainy season can debilitate a business if it is not firmly established. Furthermore, there is always the conflict between short-term needs and long-term interests that every beneficiary and group deals with. To be frank, I met with a number of groups who admitted that they had spent some of the grant money on food or basic needs instead of their business. You can imagine the temptation that a beneficiary who hasn’t had a good meal in a week feels to just skim a little money off the grant for basic needs. The fact that the vast majority of business groups invest the entire grant in their business, however, is a testament both to the training, the work of the BM, and the group members’ determination to take advantage of the opportunity to switch their focus from just looking for the next meal to thinking about saving for a child’s education or a stable food supply further down the road.

2) On life in the village
I will start by saying that I do not want to romanticize life in Shijiko, the village where I lived. Many, many people there are living in serious poverty and they will face a particularly hard struggle this year because of poor rains leading to a poor harvest. It is common to see families with 6 or 7 young children running around, few if any of whom will probably be able to go to school past 7th grade. Abuse of chang’aa, the local equivalent of moonshine, is prevalent, and diseases such as AIDS and malaria are also present.

That being said, there were many things that I loved about living in the village and that caused me to think about some of oddities of our way of life in the United States. First of all, there is much more human interaction on a daily basis. The fact that no one has a car means that you’re likely to see and talk with many people walking on the paths, or exchange greetings with someone working in their garden or in the fields. Also, I loved the fact that no one was ever “too busy” to talk with someone else. If a friend stopped by your house or you saw them on the road, there was always time to exchange greetings and have a short conversation. Secondly, people are much more tolerant of strangers. If I walked up to a random person’s door in the US and asked if I could speak with them inside their home, the answer would probably be “no.” In Eregi, however, literally every beneficiary whom I spoke with warmly welcomed me into his or her house and usually offered me tea, too. Also, there is a communal expectation that each person will share whatever he or she has in the way of food when someone is in need. When you receive a gift or are invited into someone’s house for tea, the expectation is that you will reciprocate by inviting your hosts to your house sometime in the future.

The other aspect of life in the village that I really enjoyed was the community events I attended such as weddings and funerals. Because everybody knows everybody else, there is always a strong turnout. The lure of free food, of course, is another major factor in drawing big crowds to those events. And I cannot forget to mention the dancing and singing aspects of weddings and funerals, too. The Eregi Catholic Church choir was absolutely phenomenal.

Finally, as an American who was used to 24/7 access to internet and cable television, I must admit that I thoroughly enjoyed unplugging for a few months. I think I managed to read 12 books in the span of 2+ months – a total I would certainly not have reached were I spending the summer in the United States.

3) On Kenya’s future
As a student of African Politics, I was keenly interested in getting a sense of Kenya’s development on a large scale and understanding how the government is playing a role in that process.

Kenya has had it’s fair share of problems recently, with the post-election violence being the most visible of those but also including rampant corruption and general government ineptitude. The country’s most crucial need, something that will begin to solve many of these problems, is simply the creation of jobs, jobs, and more jobs. So long as millions of Kenyans are out of work or living hand-to-mouth, elections will continue to be determined by which candidate hands out the most money to convince people to vote for him. The availability of stable jobs will lead people to vote based on the issues rather than just on money, and it will also lead them to demand results from their government (something which is not a primary concern for your average subsistence famer right now). Furthermore, people with a stable job and a family are much less likely to take up arms after elections, nor will they be likely to support anyone who advocates such actions.

Secondly, the government needs to focus on building strong institutions (which means reforming almost every single one that is currently in existence). The police force is comically inept and corrupt, the justice system is broken, and there is very little oversight to ensure that funds for government projects are spent responsibly. If institutions can be strengthened so that they are more immune to political interference from the party in power at any given time, government efficiency and transparency will improve. Ordinary Kenyans will begin to see an impact in their lives as electricity becomes available for rural homes, roads are paved, the education system is strengthened, and the police begin to work for the citizens as opposed to looking out just for their own good.

I had an absolutely fantastic time this summer in western Kenya, and I would encourage anyone interested in VEF’s work or in Kenya in general to make a visit to the area. It is very hard to get a sense of the reality on the ground unless you actually go there in person, meet the people, and experience the rhythms of daily life. I hope my posts have conveyed some of that reality to anyone reading them, and if you want any more insight feel free to email me at mkremer21@gmail.com. Thanks for reading!

NOTE: There are also 2 new posts right below this one.

My last day in Kenya

August 24, 2009

After returning to Nairobi from western Kenya, I had one day to spend in the city before heading back home. I stayed with family friends in the city, and I was treated to an opportunity to experience another aspect of Kenya’s rich tribal diversity. My family friends were Kikuyus, hailing from the central region of Kenya. As such, they treated me to some delicious traditional Kikuyu dishes such as “Githeri” (beans, corn, vegetables, and potatoes mixed up into a delicious mash) and beef stew that was different from the Luhya way of preparing beef that I was used to. Of course there were some dishes I ate like chapati, cabbage, and sweet potatoes that I was quite familiar with. I also tried to learn some Kikuyu in the short time I was there – as opposed to Luhya which is characterized by the “kh” sound, Kikuyu is full of hard “th” sounds (as in “weather,” “this,” etc).

In addition to being introduced to Kikuyu culture, I also had time to see some of the work that VEF is doing in Nairobi’s slums. I traveled with Benard, the business mentor for Nairobi, to a slum called “Korogocho” (pictured above) on the outskirts of the city. Benard was a native of western Kenya (so I was able to speak Luhya with him), but he moved to Nairobi five or six years ago. He now works at an adoption center and orphanage called the Thomas Barnado House, where he works with children and families living both at the center and in the slums to get them off the streets and help them succeed in school.

Unfortunately I only had a few hours with Benard, so we went on somewhat of a whirlwind tour of some of the VEF businesses in Korogocho. The businesses that I saw, however, were both highly successful and very different from the businesses that I had been so used to working with in western Kenya. As Benard pointed out, working in an urban slum presents a whole host of issues that do not come up in the villages. For one, turnover and movement of group members is a huge issue. Most of the beneficiaries that Benard works with are young, and they are constantly moving around for a number of reasons including the constant search for stable housing and work. In the village, beneficiaries tend to be much more static (partly because there they tend to be older women as opposed to the younger men and women in Nairobi).

In spite of the rapid rate of turnover, the slum presents a whole host of profitable opportunities to businesses for a number of reasons. First, despite the fact that almost all the residents are quite poor, there is a lot of money circulating in the slums because of the population density and the fact that everyone has to find a salaried job in order to support themselves (subsistence farming is not an option there). Secondly, things are more expensive in the city, which, according to Benard, enables the businesses to realize higher profit margins. For example, a vegetable selling business in the village might buy an avocado for five shillings and sell it for seven, but in the city it could buy it for five and sell it for ten. Furthermore, if there were demand for 10 avocadoes in the village there would probably be demand for 20 in the city.

The issue in the slums is start-up capital. A few examples of how the VEF grant helped start businesses or took them to the a higher level: we visited a firewood selling business that was able to buy and transport wood from the countryside and bring it into the city to sell instead of buying and selling within the slum as the members had previously done. Firewood is a very common cooking fuel in the slums, but, as you might expect, there are no trees. Having the capital to buy wood cheaply outside the city and transport it in to sell enabled that group to realize dramatically higher profits. We also visited a water selling business that had used the grant to buy a water tank to supply that highly demanded but scarce commodity to the citizens of Korogocho. There is no piped water in Korogocho, and the current drought has forced the government to begin serious water rationing for almost all the citizens. Since the grant, the group had bought another tank and set up a public toilet, and also, according to their leader, expanded to include a network of 35 water sellers throughout the slum! We also visited a food stand manned by two young boys cooking a soup whose main ingredient was cow’s head! A Kenyan delicacy that has yet to come to the US. Taste aside, however, the story of that business was particularly heartening because the group of five youth were previously unemployed before receiving the grant and starting the business. Youth unemployment is a huge problem in Kenya, and it was one of the catalysts behind the post-election violence in early 2008. Their business was doing quite well, although I strongly encouraged them to start keeping written records so that they would have a better idea of daily expenses, sales, and profits.

Overall, it was an amazing afternoon. For anyone who thinks that slums are just one big mass of grime and rampant poverty, I would highly advise him or her to visit Korogocho or Kibera with Benard to get a sense of the amazing things that are going on in those places. There was clearly a whole summer’s worth of work I could have done with Benard in Nairobi, but I had to settle for just that one afternoon and the promise that I would return to spend more time with him there. What a way to end an amazing summer! A concluding post to follow…

Wrapping up in western Kenya

August 23, 2009

Last Sunday marked the end of my time in Western Kenya. It was with great sadness that I bid farewell to the many friends I made over the course of the summer (including Bryan, pictured above, who was the evaluator I worked with on the profit-sharing study), and with particular sadness that I left Rowland, Judy, and the rest of the family whom I had spent 2+ months with. In my next post, I’ll write about some of the big-picture things that I learned from my experience this summer. Here, I’ll sum up the last week of the profit sharing study.

As I wrote last week, I had a great day in Bukura visiting Father Williams’ businesses and interviewing them for the profit-sharing study. That day in Bukura was the 3rd day of the study. As I became more familiar with the types of responses I was receiving to the questions, I was better able to ask them in a way that would yield accurate answers (in that I was no longer interviewing people who claimed that each business member was making 10 KSH per day ($0.13) and living on that money alone). I also talked with Rowland who helped give me an idea of what a normal vegetable selling business or a normal farming business should earn.

I had planned to do follow-up work in the study (i.e. making sure to interview at least two people from each business group separately), and that plan was made even more urgent by my realization that the data from the first two days of the study was definitely incomplete or inaccurate.

The second time around, the interviews took much longer because I decided that the best way to get a real picture of how the business was doing was to go back to the beginning. After discussing how the members used the grant, the tasks that each member was responsible for, how the business operates, and what constitutes normal revenue and expenses for a week of business (or, in some cases, I would ask them to describe their last week of work), I would finally get to the topic of how the business members share profits. Furthermore, I would request to see their record books to get a more accurate idea of the normal expenses and revenue. This roundabout approach to figure out the ways in which the members shared profits enabled me to get much more accurate data because I was able to ask particularly incisive questions if things didn’t seem to make sense. When all the numbers from the first series of questions matched up, getting an accurate answer for the important question of how profits were shared was a cinch.

Another great day in Bukura/Lufumbo

August 15, 2009

About a month ago, I wrote an entry about the day I spent visiting businesses started by the VEF business mentor named Father William Musando in a town called Bukura. I went back to Bukura today to interview businesses for the profit sharing study, and I was just as blown away by the success of the businesses there as I was the first time I went.

Last time, the main focus of my visit was to see whether or not the businesses I interviewed were still in operation or not. I found that the vast majority of them still were, and of that majority almost all of them were extremely successful. Today, in conducting the profit sharing study, I gained a new appreciation for just how successful these businesses are. Not only are they still in operation and not only are they doing well, but I found that almost every business had diversified and spun off one or more new businesses. I also found out how the group members use savings systems and diversification to aid each other and cushion the group in case of emergencies or unforeseen problems.

One of the best examples of this complexity was the “Jerusalem Group.” The group members received the grant in 2005, and all five initially worked together selling clothes. Over time, however, they saved profits from the clothing business and, one by one, opened up businesses that each member took over individually. So now, in addition to the clothing business, the members are running a bookshop, a vegetable stand in the market, a clothing shop separate from the group’s shop, and two household goods kiosks. The members spend the majority of their time at their individual businesses, but they also take turns running the group’s clothing business. The members keep their individual profits, but every month they each bring 275 shillings to pool as a group (1,375 KSH total). 1,000 of that pool goes toward increasing the stock of the clothing business, and 375 is given to a different member each month on a rotating basis (called a merry-go-round system). Finally, every five months the group takes a percentage of the accumulated profits from the group clothing business and splits it among the five members.

As you might imagine, that interview took awhile to get through because the system was so intricate! Many of Father William’s other groups had similar systems. In addition to keeping each member occupied full-time, this diversification is an excellent way for a group to survive the types of seasonal fluctuations that many businesses in the area face. If one of the businesses is in a down season (say, for example, that the maize harvest just happened and the price of maize is low), the group will still have revenue coming in from a number of streams, and in that way it will be able to absorb the lack of money coming in from maize.

I think that, in addition to Father William’s excellent mentoring skills, the VEF grants, and the business training, there is just something in the water in Bukura and Lufumbo that enables these entrepreneurs to turn fledgling businesses into mature, thriving enterprises. Each business that we visited had an inspiring story to tell about its success and the way the members worked together. Hearing those stories never gets old.

Looking for needles in a haystack - and finding a few

August 15, 2009

I spent Wednesday working on the profit-sharing study in Chavakali Market. Chavakali is the closest town to where I am living in Eregi, and on Wednesdays there is quite a large crowd present for market day. Even so, it is still a pretty small place – if you want access to the internet or a bank you will have to go about 20 minutes down the road to either Mbale or Kakamega.

VEF business mentor Margaret Embalabala has helped to start a number of businesses in Chavakali, so I went there with a long list of businesses hoping to find at least a few to interview. I was also interested in comparing businesses working in Chavakali to the businesses I had interviewed earlier, all of which were in the villages and operating on a relatively small scale.

What I didn’t realize was that looking for businesses in a town is much different than looking for them in a village. In the village, if you bring a list of group members to someone that person will usually know at least one or two of those people. Thus, we were able to find businesses in the longevity study with relative ease (because we were working exclusively in the villages). In Chavakali, however, it was a different ballgame. Amidst the hustle and bustle of market day, we were only able to find two businesses. What brightened up the day, however, was the fact that both of these businesses were doing very well.

One of the businesses, Upendo (love in Swahili) Auto Garage, was an excellent example of how a VEF grant given to a business that is already in operation can make a huge difference. Bernard, the head mechanic and owner of the shop, had already been running the shop before the grant, but it was on a very small-scale. When he learned of VEF’s proram, he grouped together with four other men who had auto repair skills, applied for the grant, underwent training, and ultimately received the $100 grant. Those other four group members are still working at the shop, and Bernard pays them based on the work that they do (they get 20% of the cost of the work they do, and the other 80% goes toward paying for the operational expenses for the shop). Bernard himself doesn’t take a portion of the profits. Instead, he reinvests them in the business. He gets money for his daily needs from money paid to him by two apprentices he has hired, and also from a towing service that he runs on the side. So overall, the $100 from VEF provided new employment opportunities for six people (including the two apprentices) and enabled Bernard to expand his business, too. It’s amazing how much a small amount of money can do around here.

Profit Sharing Study

August 5, 2009

I have been working on a new task for the past week and a half: designing and implementing a study of how VEF beneficiaries share profits from their business. To collect the data, I have again enlisted the evaluators from the longevity study to visit businesses included in the study.

A quick reminder on how VEF businesses are set up: before receiving the $150 grant, five people must form themselves into a group and come up with a business idea and plan. The group then attends business trainings together, and after completing all the preparation they receive the grant and begin (or, in some cases, continue) their business.

The goal of this study is to determine how many of those five actually end up benefitting directly as a result of their involvement in the business. We also want to get some data on the different ways in which businesses share profits among the members and pool profits for group investments. On a broader scale, the study is attempting to gauge the true impact of VEF’s grant. If you know the number of households that benefit (in this case, if a husband and wife were in the same group they would count as just one beneficiary) you can extrapolate that to assume that all the dependents in the household benefit as well.

There are a number of challenges in implementing the study. First and foremost, talking about income and business profits is just as touchy a subject here in Kenya as it is in the United States. I have tried to minimize talk of “money” and “profits” in the survey as much as possible. Instead, much of the interview focuses on discussing the different tasks that each active member performs. In doing so, we are able to gauge how much each member contributes to the business; that contribution should have a correlation to the share of profits that that member receives. After getting that information, there are questions that address profits specifically. I have told the evaluators to phrase the questions in ways that will get the point across but are not be as direct as simply asking “what percentage of the profits do you get?” We are also interviewing at least two members of each group to ensure that we are getting reliable data.

Secondly, trying to gauge what constitutes a “household” poses a tough problem. Almost everyone who lives in each village is related to each other either by blood or by marriage, so simply asking whether a member has any family members in the group does not yield accurate data. Compounding the problem was that some group members live in the same compound but in different houses. To classify them as one unit would be misleading because they each provided for their own families separately. So the question I came up with was “how many group members eat food from the same kitchen?” If you share a kitchen with someone, the two of you share the burden of buying and preparing food that is prepared in that kitchen. Thus, the incomes that both people got from the business would go towards caring for the same dependents. Under the theory that each household has “x” number of dependents, it is possible to calculate the total number of people that benefit from the VEF program. So if there are two people in a group who share the same kitchen, they should only count as one household for purposes of multiplying the number of households in the group by the number of dependents in each.

I hope that complicated explanation made sense. I’ll be back out in the field tomorrow collecting more data.

Longevity Study: Meeting with the Business Mentors

August 1, 2009

Over the past week and a half, I met with four of the business mentors (BMs) who had businesses in the pilot longevity study that I had previously conducted. The BMs are a core part of VEF’s program: they live in areas that VEF works in, and they spread the word about VEF at the village level. They help people form groups, lead them through business training, and, if the group qualifies for the grant, provide advice and mentoring to the business as it is getting started.

As I described in earlier posts, I trained independent evaluators to collect the data firsthand on the 65 businesses included in the study. We managed to reach 59 in the week we spent out in the field. I wanted to speak with the BMs, however, to see if their knowledge of the businesses could shed any new light on the data that we had collected.

As you might imagine, it was a tough task for the BMs to remember how a random sampling of their businesses started between 2 to 4 years ago were doing. There were some cases where the BM had not visited the business in some time. This happened for a variety of reasons: in Father William’s case, for example, he had been transferred to a different parish and didn’t have many chances to go back to his old parish. The most common answer was that the BM simply did not have time to visit all of them. The BMs help start as many as 40 businesses each year, and so they have plenty of work to do in just keeping an eye on the businesses that are in their first year. This does not mean that they neglect the others. For one thing, the businesses that the BM helps to start are usually run by a group of people that the BM knows because, as I’ve quickly learned, in these villages everyone seems to know everyone. So the BM doesn’t have to make a point of going to inquire specifically about each business; he or she will most likely just see the beneficiaries on the road or in the market or at church. Also, because word travels so fast around here, the BM probably would be able to get a sense of how the business is doing without even visiting it!

So even though there were some cases where the BM said that he or she didn’t know how the business was doing, most of the time the BM was able to provide at least some insight into the current state of the business. More often than not, the BM’s answer matched what we found in the field. There were a few cases, however, where I learned new information about the business from the BM. For example, in cases where the business was no longer in operation the BMs were usually able to provide their opinion about why it failed (which sometimes differed from the explanation we heard in the field). Also, there were a few cases where the BM’s insight led us to follow up again with the business and ask more pointed questions that helped us to establish clearly whether or not the business was operating.

In the big picture, getting the BMs’ input into how the business was doing solidified my confidence in the data even more, and helped me to identify places where a follow-up interview with the business group was necessary. Gathering reliable data is very challenging out here. There are many variables (especially with groups of 5), and it is hard to reach some of the people and businesses you are trying to visit. I think that the survey data we gathered, however, is as strong as we can realistically hope for. In the end, we drew on the institutional knowledge in the villages (for help finding the beneficiaries), the firsthand description of how the business was doing given by the group members, and then finally the BM’s third person perspective on the business. I am optimistic that we can scale up this methodology to cover all the regions where VEF works in Kenya.