Who are Micro-Entrepreneurs?

December 6, 2016

People who visit low income communities are often struck by the sheer number of entrepreneurs. After all, it inspired Muhammed Yunus to start the Grameen Bank and all the support for microfinance. According to MIT economists Banerjee and Duflo only 12% of people are self-employed in OECD countries. In poorer countries roughly 70% of people have someone in their household who is self-employed. They report that the poor are entrepreneurial because they have limited opportunity for formal employment and that "these small businesses will probably not pave the way for a massive exit from poverty".

While I served as a Peace Corps volunteer in The Gambia (a small country in West Africa), I also noticed a plethora of enterprising people and businesses. My host mother sold bean sandwiches and my host father traded groundnuts. My host brothers weeded neighborhood's farms for small amount of money. In my village of 700 people, we had two tailors, one used-clothes seller, two beekeepers, three bakers, four shop-owners and many more people who sold essential goods like tea, sugar, and cigarettes from home.

These everyday entrepreneurs do not engage in business to make lots of money per se. If they can make enough to continue, that in and of itself serves the purpose. Any cash in hand is subject to emergency spending / lending. But if your cash is in the form of goods, it's locked in. That is why after the harvest season, people buy goats to raise and bags of rice and gallons of oil to sell.

My host mom sold bean sandwiches every morning and evening. Her business had little profit, even less so when she had to buy the beans instead of growing her own. But with that little profit, she could sometimes make lunch taste better (more oil, meat, fish), buy snacks for kids, and contribute to weddings, baby showers, and funerals without having to ask anyone. The rest went into sustaining her business everyday: buying the ingredients, paying back the shopkeeper for bread, occasionally giving small bits to her children and other favorite kids etc.

I agree with Banerjee and Duflo. People in my village did business to sustain their livelihood, not to escape poverty in any significant way. For a few business-minded people, however, they have the desire to grow and are committed to working hard. They simply lack capital. (I wrote more about that here)

That's where Vayando comes in. Vayando allows exceptional micro-entrepreneurs to earn more, increase disposable income, and even expand. It gives them the opportunity to dream.

Daniella is a Vayando intern and a Returned Peace Corps Volunteer (The Gambia 13-15). She is interested in social entrepreneurship and poverty alleviation.