An innovative micro-credit project offering small business loans to some of the poorest communities in rural Ghana has been set up by a group of enterprising students at The University of Nottingham.
The groundbreaking new initiative is already helping hundreds of people in Ghana to capitalise on their business potential and expand their profit margin — giving them a stable financial income and enabling them to work themselves out of poverty.
Dubbed CEDIS — which is Ghana’s national currency — the scheme is the brainchild of Chris Skilton, a graduate of Nottingham University Business School. He visited Ghana back in 2008 as president of the University’s Students in Free Enterprise (SIFE) team, which was setting up a cooperative for beekeepers to ensure they got a fair price for their produce.
During his visit he talked to many local business people — but the story was always the same — while successful in their own right, they were being held back from further expansion by a lack of capital funding and limited access to financial support. He learned that loan interest rates in the country are prohibitively high — mainstream banks offer annual rates of around 35 per cent, while private finance companies’ rates can be anything up to an astronomical 50 per cent a year.
The CEDIS scheme encourages Ghanaian entrepreneurs to draw up a business plan and uses capital from charitable fundraising to offer them loans of just two per cent per month over a six month period. Since its launch in October last year it has already helped more than 250 individuals and currently boasts a 100 per cent repayment rate.
Chris Skilton said: “There are literally millions of Ghanaians without access to legitimate financial services. With the support of the University and the SIFE team we have already been able to reach out to several hundred entrepreneurs. In the coming years we hope to offer thousands of individuals the same opportunities to develop their businesses and support their families.”
Chris has enlisted the help of the current University of Nottingham SIFE team to get the scheme up-and-running. Their role has involved assisting in the development of a social impact assessment scale to determine where the loans are most needed and the creation of a fully computerised database for managing the scheme.
Members of the team recently visited Northern Ghana to see the impact that CEDIS is already having on the lives of people living in one of the poorest regions in the world, with high levels of unemployment, an infant mortality rate of up to 25 per cent and a life expectancy of just 45 years.
They got the chance to meet people like Amma Yahaya Nabila, who runs a rice processing business and has had a loan of 100 Ghana CEDIS (around £50) and has used the return on her investment to give her children an education.
Speaking about CEDIS, she said: “To be honest, it has helped me a lot and I cannot thank them enough for their help. I am thanking them a lot as now my children are able to go back to school, within these recent days. It is from this profit margin that I got the help to support them to go to school.”
Vice-President of The University of Nottingham SIFE team Aaron Salamon, who has recently completely the first year of an economics degree at the University, was on the trip.
He said: “Every single day we met a different set of entrepreneurs. They were all living in very poor communities but they worked hard and were successful business people in their own right.
“These are very proud people — they are not interested in taking handouts or charity, they simply want the means to help themselves and just require a little extra help to allow them to reach their full potential.”
The scheme has benefitted from a £17,500 grant from the University’s annual development fund — £7,500 covered the cost of the trip to Ghana, while the students will use the remaining £10,000 to develop business ventures in the UK and Ghana. These businesses will allow CEDIS to expand its capital base and become more sustainable over time.
CEDIS has also joined forces with the organisation DEKI which through its website www.deki.org.uk offers people the chance to directly fund loans to specific borrowers in the developing world.
Students in Free Enterprise (SIFE) is a global non-profit initiative and competition which encourages students to demonstrate their business acumen while creating economic opportunity for others. The University of Nottingham SIFE team has a long history of success, having lifted the UK title four years in a row from 2005 to 2008.
Chris Mahon, Director of the MBA in Entrepreneurship at the Nottingham University Business School and Faculty Advisor for SIFE Nottingham, said: “The CEDIS programme is a great example of what SIFE is all about. Our students have worked very hard to develop and grow this important initiative in Ghana, and they have used the skills they developed here at Nottingham to help other people transform their lives.”
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