December 16, 2007 5:00 pm

How to make a little go a long way

The concept of microfinance – small loans to the entrepreneurial poor – is not a new one on US business school campuses. Indeed, as they expand their globally minded curricula, many business schools have devoted more time and money, and sometimes even entire courses, to the subject.

Other schools have gone a step further: the UCLA Anderson School of Management in California helps young female entrepreneurs in Kenya transform their poverty-stricken lives by starting homegrown businesses.

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It all started this year when Judy Olian, the dean of Anderson, was at the Fortune Magazine/State Department International Women Leaders conference. There she met Pauline Mwangi, who trains emerging entrepreneurs in Nairobi. Ms Mwangi was creating a pilot programme, “Young Women in Enterprise”, for Technoserve, the non-profit international development organisation. The aim of the programme, funded in part by the Nike Foundation, was to equip young women from low-income areas of Nairobi with business and life skills to start small businesses.

Prof Olian happened to be assigned as Ms Mwangi’s mentor at the conference – a fortuitous pairing. “It was an interesting and easy fit for us,” she says. The Anderson school has a long history of working with students on microfinance-oriented projects, according to Prof Olian.

“Her work struck a particular chord with me, because it was about helping young women. Many of the young women she works with live in the slums of Nairobi. They have no running water, no sewerage and no electricity. They have some basic education, but they subsist on less than $1 (£0.49) (€0.68) a day. The issue is: how do you lift them out of the cycle of poverty?

“Her work is about educating girls on how to do business, how to keep records, and how to sustain a successful enterprise,” she says.

“We are talking about tiny, tiny businesses, but they could change the lives of these women.”

Ms Mwangi spent a week at Anderson attending classes and seminars on best business practices and skills related to organisation and management. She also met professors who specialise in micro­finance and worked with students who were interested in entrepreneurship in the developing world. “Learning how they think about microfinance and the developing world helped me think about how I could expand my programme back in Kenya,” Ms Mwangi says.

“The most important lesson for me, though, was the realisation that Judy, my mentor, and the other women I met were so much like me. They face the kind of challenges I face. I saw that they do their best with the opportunities they get and that they stayed focused on their goals, not giving up. And I thought, ‘I can do that’. ”

Her time at Anderson also helped hone her ideas for the pilot programme in Nairobi, she says. In particular, it gave her the confidence and motivation to try new approaches.

“The dean’s office is a very busy environment and so many activities were going on,” she says. “As I fitted into the culture of the office, I realised I could do much more than I thought I was capable of. I am now more likely to try new things and take on more challenging issues readily than I would have done before.”

The programme she created involved 260 young women, ranging from 15 to 24 years old. Most of the women had no business training, nearly half had left secondary school early, and more than a quarter had children.

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Each woman was given 100 hours of training in entrepreneurship and life skills through business clubs and schools. In addition, they received mentoring from leading women entrepreneurs and coaching from business school student associations.

At the end of the programme, the women participated in a business plan competition. Many of the businesses “supply a need in the area that the girls live”, says Ms Mwangi. “They want to open a little shop to sell paraffin, or start a knitting business making sweaters for babies.

“These girls are starting out very small, but their dreams are bigger. Many of them wrote business plans for larger enterprises – such as a dry-cleaning business, a soap-making business, daycare for small children, or a catering business. I am trying to help the girls become more creative, more imaginative.”

The women presented their ideas to a panel of judges, which comprised local business people, business school faculty members and representatives from microfinance institutions. Of 260 women who completed the traineeship, 40 were awarded a small amount of seed money – funded through donations of individuals and companies in Kenya – to start their businesses.

One young woman, for instance, won $429 in prize money to start a business that enhances secondhand garments with hand-sewn embroidery. Another won $355 to open a small grocery store for university students. “The joy I see on their faces when they win. They are so proud of what they’ve achieved,” says Ms Mwangi. “I feel that I am bringing hope to these girls.”

Transformative

Her connection to Anderson continues today. At the moment, Ms Mwangi is working with a group of five Anderson MBA candidates on a special consulting project, looking into whether Technoserve ought to embark on programming in Kenya in the hospitality industry. The students are doing research and will spend a week in the country at the beginning of next year.

“Microfinance is becoming a big part of the conversation on campus,” says David Weisz, a member of Ms Mwangi’s team. “It appeals to business students because it’s about leveraging economic principles to do good in the world. The beauty is in its simplicity.”

Prof Olian is encouraged that her students have shown an interest in microfinance in the developing world. “This is a generation of MBA students – the Millennials – that didn’t grow up in an era of harsh need. They are post-Depression, post-Vietnam, and yet they are very concerned about doing good.”

The professor has spent time with Ms Mwangi in Nairobi, observing the progress of the pilot programme. She is heartened that her former mentee has been able to put the knowledge she gained at Anderson to good use. But Prof Olian hastens to add that students and faculty have learned as much from Ms Mwangi as she did from them.

“This is a two-way street,” she says. “It was a humbling and transformative experience to see how people can in a small way make a huge difference.”

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