Savings and credit cooperatives for sustainable financing of new businesses
Africa remains a “youthful” continent, given that 65 percent of the total population is below the age of 35 years. According to the Africa Union statistics, over 10 million young Africans enter into the labor market each year. The potential for young people to transform their communities and nation is huge. Youth must therefore play a key role in building a peaceful and prosperous continent.
However, unemployment and lack of educational opportunities means that many are living in poverty, involved in armed conflict, and subject to exclusion.
One of AFSC’s strategic initiatives is to promote alternatives for youth affected by structural violence, inequality, and injustice.
AFSC is therefore organizationally committed to youth development through the restorations of livelihoods, building leadership skills and nonviolent approaches to solving problems.
AFSC convened a meeting of 18 young people for learning and exchange from Oct. 8-11, 2013, in Kenya. The women and men participants came from Burundi, Somalia, and Zimbabwe, representing civil society, the private sector, and governments.
The focus of the event was on youth innovations and savings credit cooperatives. We noted that they were enthusiastic to learn, share, and make friends from and with each other. AFSC program staff members from the same countries attended the seminar and were part of the learning experiences.
This seminar happened in the aftermath of the Westgate Mall siege and hostage crisis in Nairobi, which claimed over 70 lives and left many people injured. Despite this reality, the young people, especially from Somalia, were able to travel to Kenya and learn about financing business ideas, starting new business, and strengthening entrepreneurship.
AFSC’s Africa Regional Director, Dereje Wordofa, opened the event. In his keynote speech he encouraged young people to become forces for positive change and reminded them that they have huge energies and possess reservoirs of creativity for personal and social transformation. He also underlined the fact that if young women and men acquire life-skills combined with leadership know-how, they can direct their efforts to transforming the ugly conditions of violence, inequality, and poverty into peace and inclusive prosperity. He urged them to contribute toward to the wellbeing of their communities.
During the four-day event, participants held discussions around savings and credit cooperatives and youth entrepreneurship—with special emphasis on how such cooperatives contribute to sustainable growth of new businesses. Key benefits include the possibilities of getting loans at cheaper interest rates to finance entrepreneurial ideas and education, attending to other family needs, and growing businesses.
Participants visited five cooperatives and youth initiatives in Nairobi and the environs. At The Youth Enterprise Development Fund, the young people were able to appreciate how a public-funded youth initiative is promoting entrepreneurship, youth employment, and access to cheaper loans, and is benefiting young people across the whole country.
The participants got firsthand information on experiences of how savings and credit cooperatives were organized, and how they grew from small groups and from local areas in Kenya to become national in outlook during the last 40 years. They learned that in the early stages of developing cooperatives in Kenya, communities struggled to understand the meaning and the importance.
The five cooperatives that the participants visited had gone through processes of rebranding, had embraced the use of information technology, had adapted good management practices including financial management, and had diversified their products to meet members’ demands and needs.
Eventually, participants saw how cooperatives have played a large part in the development of Kenya’s economy and are sustainable, since they incorporate a strong component of community participation around savings. This realization provided some very rich lessons to emulate in Burundi, Somalia, and Zimbabwe.
Participants committed themselves to advancing the creation and efficient management of cooperatives and to promoting youth employment.
Some youth from Zimbabwe committed to return and start poultry farming.
The Somali participants noted that they didn’t know about cooperatives, but now were resolved to initiate some. They observed that they will have to use structures that do not charge interest on loans, a practice that is prohibited in Sharia (Islamic law, practice, and tradition).
Participants noted that it will not be easy to apply the lessons learned in their contexts, citing numerous hurdles related to national policy, conflict, and capacity.
But they took away with them the “ants” metaphor: In their activities, ants never quit. For instance, if they are heading somewhere and you try to stop them, they’ll look for another way. Ants think of winter all summer; they gather their food during summer and can’t be so naïve as to think summer will last forever.
Finally, the participants vowed to stay positive all times and indicated to do all that they can to succeed.
The participants believed that active youth engagement and leadership in income generating activities are essential for community development. They share a similar view that youth have the energies and potential to be innovative, productive, and identify peaceful solutions to problems.
A full report of this convening will be available by early December 2013.