Summary points from HR&S and PAY PAL meeting, 30 N0v 2021
By Evelyn FUNJIKA

Addressing the challenges of our entrepreneurs

What are the challenges faced?
1. Lack of entrepreneurial competency and lack of capital
Participate in village banking where a group of small business owners put money together which they can use to get loans and repay with interest. Works very well until someone takes out a big loan and they fail to repay leaving everyone else at a loss. Very difficult to follow up due to lack of formal agreements and difficulties with tracing the person. Most people may not know the procedure involved in getting their money back.
2. Difficult transition to online services
Closures due to the covid-19 pandemic with only essential services running forced people to turn to online services to sale their products. Increased job opportunity for online content creators. But this resulted in people selling or using other people’s content as their own (poor understanding of IP rights). Business owners who were technologically illiterate were not able to easily transition to online services. It also introduced the added cost of internet services.
3. Transport challenges
Selling products online require the seller to deliver the goods. The buyer and sellers need to develop trust. Use the pay-on-delivery model. The expenses with delivering the goods is borne by the seller. Sometimes after paying for the delivery, the buyer may decide the goods are not what they expected. If the buyer is too far, the cost of delivery is too high (can even be about 50 % of the price of the goods). Big companies have warehouses in different locations making it easier and cheaper to distribute their goods. Not an option that is available to SMEs. There is need to rethink how we look at logistics, warehousing/transportation so that the cost of deliveries and sending back packages can be reduced. Need to think of how we can overcome the
transport challenges.
4. Government policies
Government introduces polices which may disfavor SMEs. For example banning an online platform such as twitter will mean business owners who use twitter for their business will have to look for another platform to use, move their customers to the new platform or find new customers.
5. High interest rates
There are companies that give out loans but they have very high interest rates which make it very discouraging for small business owners.
6. Difficulties to transact across borders
Very difficult to make payments across borders due to high currency conversion rates.
Some countries may have ceilings for the credit cards so cannot make purchases beyond a particular amount.
Sometimes there is need to involve a middle man/ agent to facilitate the payment who may add extra charges and makes it more expensive to acquire the goods.
7. Aid dependence and insecurities
High poverty rates due to instability, conflicts and poor disease management. Donations have not brought development. Donors should target the local populations and not just the government. Supporting local populations can boast development.

Groups of SMEs

i) Local people with no/limited education
Examples are people in the rural areas who farm. These people may not need high income. They can pay back the loan but need coaching on management skills, entrepreneurship. Also need coaching on bank registration and other procedures.
ii) Graduates with ideas but no business experience
Need coaching on how to run a business, how to access loans that have low interest rates and can support their businesses.
Governments do have systems to support SMEs but these are not well implemented at local scale. May not provide support for start-ups.

Reflections and questions

1. Does Pay-pal work in Africa?
Pay-pal allows payment across Africa but many currencies are supported. Person-person payments have only just been introduced even in the USA.
It is difficult to come up with a global solution due to country restrictions so it is best to think of country based solutions.
2. HR&S raises money through Action10 to support the RISE centers.
Does it make sense for Action10 or HR&S Sweden to use Pay-Pal to transfer money to RISE centers in Africa?
It is possible to set up accounts for payments between HR&S Sweden and the RISE centers in Africa. It will be cheaper than using bank transfers. Payments within the country are also possible if the members/customers have Pay-pal accounts. Need to discuss further on how this can be achieved.
3. Can you transfer money outside the country using virtual cards beyond the country’s restriction for debit cards?
Need further consultation on this.