Starting a business for the vulnerable may not deliver self-reliance

(As published in the Observer: https://observer.ug/viewpoint/71351-starting-a-business-for-the-vulnerable-may-not-deliver-self-reliance)

A friend recently told me his organisation is phasing out the giving of food to the vulnerable mothers living with HIV that they currently support because they realised handouts are not a sustainable intervention. 

The organisation has now embarked on training the mothers how to make petroleum jelly and soap so that when the handouts stop coming, the mothers can start selling the petroleum jelly and soap to earn an income to meet their needs.

This path of skilling beneficiaries and offering them capital to start their own businesses is one trod by a number of NGOs in Uganda because many see it as a more sustainable way to economically empower the vulnerable. But can this intervention deliver economic self-reliance for the vulnerable?

A number of studies of businesses in Uganda and world over report that most businesses never make it to their second birthday with one study placing the percentage of businesses that die within the first 18 months at 80%.

Obviously, without the capital to start and a product to sell, those failed businesses would never have appeared among the statistics of started businesses because those two are a must-have before any business can start.

The reasons, therefore, for the death of 80% of the businesses are not lack of capital or lack of a product to sell but rather the lack of other things needed to make a business work.

Good self-management skills, having a good team, keeping a positive attitude in all circumstances, marketing skills, negotiation skills, good time management, bookkeeping knowledge, resilience and good instincts are some of the other critical things and skills a business owner must possess to set up and run a profitable business.

In addition to having all the above skills and traits, the chances of a business becoming successful are much higher if the business is started out of the entrepreneur's self-initiative because building and running a business is an uphill task that relies heavily on the entrepreneur's self-confidence.

Unfortunately, even this is something most business owners created from NGOs' skilling initiatives will lack because starting a business (as a substitute to receiving handouts) is often the only available option that every beneficiary must embrace, willy-nilly.

All the realities mentioned above that characterize businesses born out of skilling initiatives by NGOs leave the businesses highly susceptible to premature death.

This means, using my friend's organisation as an example, that within 18 months from the time, they stop giving those vulnerable HIV positive mothers food handouts, 80% of them and their families will be in a worse state than they are now—with no food handouts and no business (a source of income).

Therefore, although hand-to-mouth handouts are indeed not sustainable, it is imperative that NGOs carefully examine their proposed alternative interventions to food handouts to ensure that those alternatives can deliver the economic empowerment they desire to achieve.