This project will help: 170 caregivers and 340 children from three centres in Kombolcha, Ethiopia
Estimated completion date: September 2020
Many of the people in Kombolcha in north-central Ethiopia struggle daily to survive. Most adults work as petty traders or day labourers. The average income for these caregivers is far below the poverty line at US$0.07 per day per person. Among these 170 households, 91 are female-headed. Ethiopia is experiencing its second severe drought in less than two years, resulting in many people losing their livestock and crops, and causing a food price hike across the country. Many parents find themselves unable to supply even the basic needs of their families—providing only one basic meal per day for their children. Most children are malnourished.
A government program provides food assistance to the community. However, this has done little to sustainably prevent the problem. While giving food aid to people in poverty addresses their immediate needs, it does not offer a long-term solution to poverty itself. The people in Kombolcha desperately need sustainable solutions so they can rise out of poverty and provide for their families. Long-term income-generating activities, coupled with business training and financial support through self-help savings groups, have been shown to address the livelihood needs of families living in poverty.
You can give 170 caregivers of the most vulnerable families in Kombolcha vocational and business skills training so they can start small businesses. Caregivers will also join self-help savings groups, a key component in the sustainability of the project, which will offer valuable emotional, spiritual and financial support. Members will be provided with microloans to expand their existing small businesses or to start new ones. Caregivers will gain skills in specific trades including: sheep rearing, diary cow rearing, petty trading and tailoring. They will also learn the importance of setting aside savings so they can invest further into their businesses. With sound businesses and more long-term security, caregivers can diversify their income sources and increase their household income to lift their families out of poverty.
Give a gift so parents can provide for their families for years to come.
Small business training and microloans
Provide caregivers in Ethiopia with sustainable income-generation options
Summary: This initiative will give 170 caregivers of highly vulnerable children the skills and financial means to start and grow sustainable businesses. By establishing self-help savings groups implemented through the church, caregivers will get the business, emotional and spiritual support they need, as well as gaining access to microloans in order to establish their businesses and flourish in the long-term. They’ll learn skills specific to sheep rearing, dairy cow rearing, petty trading, tailoring or the livestock trade, as well as entrepreneurial skills. Equipping both fathers and mothers with income-generating skills will help diversify and increase household income so that parents can meet the needs of their families and lift them out of poverty.Child development centres impacted: ET0148, ET0437 and ET0537 The problem: For most of the people in Kombolcha, Ethiopia, every day is a struggle to survive. The little money adults earn from selling goods at the market or working as day labourers is not enough to sustain their families. The average income stands at only US$0.07 per day—well below national poverty line of US$0.60 per day, and far below the international poverty line of US$1.90 per day. About 80 per cent of the families can provide nutritious food such as vegetables only once per month, and only 45 per cent can afford food items such as meat or eggs once per month. Malnutrition is a common problem among children in Kombolcha. Parents of Compassion-registered children in the area have been identified as highly vulnerable and are unable to provide even the most basic necessities. Reports show that many of these parents are only able to provide one basic meal per day for their children. Long-term drought that has swept Ethiopia and East Africa has only worsened the problem, heightening food shortages. Food inflation has also worsened the living conditions of struggling families in Kombolcha. Food prices peaked at 79 per cent inflation in 2008 and 50 per cent in 2011. In 2017, food inflation rates increased by 16 per cent, while the inflation rate for non-food items increased by nearly 8 per cent. Families of Compassion-assisted children in Kombolcha, already struggling due to low income and low food supply, simply can’t afford to buy food. Extremely low income coupled with high costs of food in Kombolcha caught the attention of the Ethiopian government. However, long-term dependency on external aid is neither wise nor sustainable. It removes the agency from the receiver and can cause people to develop dependency mindsets that keep them from seeking ways to improve their situation. The long-term drought in Ethiopia only further emphasizes the need for long-term, sustainable solutions. What is provided through this gift:
- Start-up money/microloans to start businesses
- Business education, such as training on saving and financial management, developing business plans and basic accounting
- Experience-sharing events
- Regular audits by church partner accountants and other qualified individuals
- Self-help savings groups
- Skills training for 170 caregivers in a vocation
Self-help savings groupsCaregivers will be part of a self-governed savings cooperative called a self-help group. These groups will encourage businesses to contribute savings, which can then be used by member businesses as microloans for needed equipment or other items to grow their businesses. In total, 19 self-help groups will be formed through this initiative. Self-help savings groups will also be formally linked to financial institutions and will receive materials needed to be self-sufficient: attendance registers, meeting proceedings books, cash books, saving and loan ledgers, bank ledgers, savings group bank passbooks and individual passbooks.
According to the Small Business Administration, about 30 per cent of businesses fail during their first two years and only about one-third survive 10 years or more. Establishing a sustainable business takes more than just capital. You also need a solid business plan, financial skills and vocational skills. A strong support and accountability system also increases a business’ chance of survival. Entrepreneurs who struggle in one or all of these areas often see their businesses fail.
Through this project, our church partners in Ethiopia will help caregivers to form self-help savings groups. The implementation of the local church will help ensure that people’s spiritual needs, as well as their financial and social needs, are addressed. These self-help savings groups will meet regularly to offer support to the small-business owners and encourage the members to contribute savings. These groups act as a social support, providing community solidarity, commitment to vision and accountability. Members can share experiences and learn from each other. They also help members to take ownership of their successes and failures, rather than developing a passivity that comes from a long-term dependence on outside aid. Self-help savings groups will foster the behavioural change needed to ensure business success instead of simply seed money for business start-ups. The role of local church partners in meeting the needs of vulnerable communities can be summarized by Compassion International’s Complementary Interventions Director, Herb Ehresman:
No one knows the needs of their community better than the local church. They understand what will and won’t work better than many others because they live there—they understand cultural and social needs as well as limitations. Long after the last NGO has shuttered their doors and left, the local church will still be ministering in that community. And poverty is much more than just lack of physical benefits or money—broken relationships, sin and deficient world-views are powerful chains of internal poverty that the Bride of Christ is uniquely positioned to address.Self-help savings and loan group initiatives have already been implemented by Compassion church partners in Africa and Ethiopia, and we are excited about the sustainable and holistic impact we are seeing. These initiatives have helped business start-ups not only survive in the short term but thrive in the long term. So far, Compassion has supported 25 business interventions with 182 church partners across Ethiopia alone. Skills training for 170 caregivers in one of the following five industries:
- Sheep rearing: In the central highlands of Ethiopia, sheep are raised mainly for meat; skin and wool are subsidiary products. Rearing sheep plays significant social and cultural functions including food security, gender equity, weed control and income generation. This activity will also be supported by local government.
- Dairy cow rearing: Small-scale dairy production is an almost universal component among the farming industry. Dairy production is an efficient system that converts large quantities of roughage (the most abundant feed staple in the tropics) to milk, a highly nutritious food. The dairy industry also occupies a special position among the other livestock farming industries due to its interrelated features of producing a heavy commodity on a daily basis. Milk is a very valuable but expensive raw material used to make a wide range of products, such as cheese and yoghurt, and thus is a high food commodity. Kombolcha is located in one of the highland areas of Ethiopia, which, according to the Food and Agriculture Organization for the United Nations, has potential for dairy development. Dairy farming is common among subsistence farmers in the highlands of central Ethiopia, who have small-scale, mixed crop-livestock farms. In this income-generating activity, caregivers will be taught about the industry and how to run a dairy farm. They will also be provided with microloans to purchase and feed cows. Local church partners will link the caregivers to the nearby market.
- Market/Petty trading: Most caregivers in Kombolcha have all been exposed to trading in one form or another. Some are already involved in this business as small-scale retailers. These caregivers will be able to use seed money or microloans to grow their exist¬ing businesses and thus increase their financial capacity. Loans will be given to caregivers according to priority and taking into consideration the items needed to run their businesses. The process of reviewing and approving the loans will be handled by the self-help savings groups themselves and by Compassion staff. The main type of business in petty trading will be purchasing cereals and other crops at low prices and selling them to consumers with a profit markup. Some caregivers have shown interest in making and selling injera, a type of flat bread that is a staple in Ethiopian cuisine. Making and selling injera is ideal because of its low initial capital, and it requires minimal effort, making it best for female caregivers who already have household responsibilities and who are looking to supplement their family income. These caregivers will be given microloans to purchase injera-making equipment (“mitad”), teff flour and fuel. As their businesses progress, the savings groups will consult with one another on ways to improve the way they do business, such as the use of electric stoves. Baltna—spices commonly eaten with injera—are also products for market trading that would prove lucrative. In this activity, caregivers would receive microloans to buy different ingredients, process them and sell them for profit. Other caregivers have shown interest in selling fruits and vegetables at market. Microloans will allow caregivers to purchase pepper, cabbage, carrots, tomatoes, potatoes etc. from rural farmers or wholesalers and then sell them for profit in the local market. Finally, some caregivers are currently involved in viable pet¬ty trade activities and would like to expand their businesses. Others would like to start businesses selling cloth, charcoal, butter, cheese, or fast-food items, or making and selling shoes and running mini-shops. Several caregivers are ready to take on microloans and run petty trade businesses.
- Tailoring: Tailoring and embroidery are common needs in the cities and towns of Ethiopia. Interested caregivers will learn tailoring and embroidery skills so they can start their own businesses. Tailoring is a lucrative income-generating activity for Kombolcha because of the min¬imal equipment required and because of the need for this service in the community. Caregivers will receive basic sewing and embroidery training. Microloans will help them purchase the sewing machines, thread, and fabric needed to start this type of business.
- Livestock trade: The livestock trade in Ethiopia involves buying livestock from various sources when their price is low and then selling them at other places where their market value is higher. An alternative is to care for the purchased live¬stock until the price increases (e.g., around holidays). Microloans and savings groups will allow caregivers to purchase livestock and cover other expenses, as well as covering business expansion costs. Church partners will collaborate with local government, micro-enterprises and institutions to access free training, where available, and expert support to train and empower beneficiaries.
- Local contribution: $5,913.49
- Monitoring: Group discussions, regular meetings and social activities will enable caregivers to address their social needs and to share experiences. Compassion staff and local church partners will intervene with the self-help groups should conflict arise. Accountants from local church partners and other qualified Compassion staff will conduct regular audits for each self-help group. Surveys, records and regular monitoring data will be completed/collected at intervals ranging from twice in four years to every six months and will be used to measure the success of these long-term interventions. Indicators of success include measures such as average income, percentage of malnourished children under the age of five, number of children who get at least three meals per day, number of households whose income increased by at least 50 per cent, number of caregivers provided with microloans, number of caregivers who received training and number of self-help groups able to run their own saving and credit schemes without close support from the local church partners.
- Handling of funds: Local church partners, with support from Compassion Partner Facilitators, will distribute funds, including initial microloans to self-help groups.
- Follow-up: Continuous follow-up, technical support and experience-sharing events will equip the savings groups and enable them to be self-organized and self-running. The savings groups will disburse microloans to their members, giving them ongoing financial access (through financial savings and repaid loans) for proposed or new businesses that might emerge in the future.