One (Tentative) Step for Microcredit
Love him or hate him, Rudy Giuliani (in his autobiography, Leadership) advises against announcing new projects until they have been successfully implemented and results have been proven. As mayor of New York City, his practice was to underpromise and overdeliver, increasing the electorate's pleasure with his results.
For the sake of chronicling our journey of thought and activity, I'm going to break Mr. Giuliani's rules of leadership. I'm going to tell you what we're planning on doing. Your part of the bargain is to not hold it against me if this plan doesn't work out exactly as described.
In an earlier lamentation, I expressed some frustration about the limitations of the microcredit industry in Mozambique. Specifically, I worried about the helpfulness of an industry that charges the world's poorest entrepreneurs interest rates on their loans of 6% per month, and that makes credit accessible only to those with an existing business. New entrepreneurs, no matter how well thought-out a business plan they have crafted, need not apply.
Our team recently visited a small chicken farm that has spawned the development of a strategy for tackling one of these two limitations: allowing budding entrepreneurs without business experience to access existing microcredit channels.
Our vision is to facilitate the creation of "out-grower co-operatives," leveraging the expertise of a successful entrepreneur to assist budding new entrepreneurs to start their own businesses -- in this case, chicken farms.
Think of it as franchised chicken farming.
We will match groups of people interested in starting a new business (the franchisees) with an existing, successful chicken farmer (the franchisor) to start a new farm. The successful entrepreneur will benefit by sharing in any profits of the out-grower co-operative; the new entrepreneurs will benefit by having access to the expertise of the successful entrepreneur, which will help them to establish and maintain successful farms and, importantly, allow them to obtain start-up capital based on the creditworthiness of the successful entrepreneur.
A side (but not insignificant) benefit is that it will bring more meat into protein-starved diets.
The out-grower co-operative strategy is based on another noteworthy leadership principle written about by leadership academicians and practitioners alike: build good ideas around great people.
We are proposing to create chicken farms not because chicken farms alone will pull Mozambique from the mire, but because the "key people" we have identified for the pilot phase are successful chicken farmers. Had they been coconut growers, or garment makers, or fishermen, the model would be the same: built around the expertise of the key people identified.
Once the new chicken farmers have several cycles of business experience under their figurative belts, they may choose to continue operating the chicken farming co-operative, or may choose to leverage their newly-established business experience to start an enterprise of their own choosing and design.
We are hoping to be able to test the model this fall, but still have many details to work out. We also have a lot of people to convince on the merits of the model before we can implement it -- not least of which is the micro-credit community.
And, of course, the next challenge will be to find a way of reducing the cost of credit in a manner that will out-last my tenure in Mozambique.
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