Method

Microfinance initiatives support small businesses. Through training and small loans, Five Talents helps to establish and nurture small businesses. Training in business skills combines with loans for stock, equipment, raw materials, land, premises etc. ( to help establish grocers, hairdressers, bakers, brick-makers, shoe-repairers) This tackles poverty bottom up. Each business builds economic independence for the individual entrepreneur, their families and the families of those they employ. Employment and independence bring dignity. Five Talents creates jobs to fight poverty.

Microenterprise development is an efficient and effective method for fighting poverty and raising entrepreneurs in developing countries. By contrast, top-down grant programmes often lead to dependency. Micro-loans programmes maintain ownership and responsibility with the entrepreneur significantly enhancing the success rate. Since the loan capital is constantly revolving to other entrepreneurs, it is an extremely cost-effective method of micro-enterprise development.

How Does Five Talents Work?

In most cases we follow the 10-step procedure below:

1. Identify a Partner - Five Talents identifies, trains and funds a partner to run a micro-loans programme. This is normally with the help of the local anglican church in the country concerned.
2. Group Formation - Groups of entrepreneurs are invited for training. Groups are between 5-10 people. They can be all women, all men, or a mixture.
3. Training - The groups are trained by the local Five Talents staff in basic business skills: planning, marketing, book-keeping.
4. Savings - Groups open a bank account and start regular saving, to reach 30% of their requested loan amount. This is a sign of commitment and part-security for the loan
5. Business Planning - Clients draw up their individual business plans, and apply for a group loan.
6. Loan - Loans are deposited on the Group account, once all conditions have been met. In the first round, loans are a maximum of £40 per person.
7. Investment - Each entrepreneur uses his/her share of the loan to invest in his/her business. For example, buying a piece of equipment, machinery, or stock.
8. Monitoring - Five Talents local staff visit the clients for encouragement and supervision.
9. Repayment - Loans are repaid over 6 months with interest. The interest pays the local staff and office running costs. The Group is jointly responsible for repayments. Late payments can be met from the prior-savings.
10. Recycling - The loan, when paid back, is then loaned out to other groups. Groups can re-apply for subsequent (and bigger) loans as their businesses expand. Some groups are on their 8th or 9th loan cycle. Eventually the business has grown to provide sufficient collateral to qualify for individual loans from commercial banks.

We have produced a 9 minute video showing Five Talents at work in Uganda - business training, client interviews, some case studies and an overview of how Five Talents works with the active poor. Click here to view.