Christmas for Entrepreneurs Around the World

In Kishasa they sing through the night. In Mexico City, the streets and houses are adorned with bright red flowers that brings luck year round. In Russia, where snow is practically guaranteed, they swap presents at New Year and don’t celebrate Christmas until a week later. So how (indeed if at all) do lendwithcare entrepreneurs celebrate Christmas and how does it affect their businesses? We asked our MFIs exactly this. 

In Benin, Christmas is very popular and is celebrated in all homes, whether Christian or not. It is very much a family occasion. Houses are cleaned and decorated with trees & garlands, presents are exchanged and special meals are prepared from yam and beans to fish or mutton. Father Christmas arrives with presents for the young children and many of our entrepreneuers will visit those in need or alone at this time of year: orphans, prisoners and the elderly.

But the festive season is far from quiet for entrepreneurs. As our ACFB, our chosen MFI in Benin told us: “The celebration time at Christmas is the period par excellence for business in Benin. Trading is intense, especially on the markets selling toys, gastronomy, clothes, shoes, garlands, and ornaments for example. Each stall owner manages to keep on their shelves the products in higher demand by customers both regular and new. The main routes in the towns and countryside are transformed into temporary markets. Usually during this period the majority of ACFB’s clients are rushing to get loans.”

The entrepreneurs funded through lendwithcare live in the south of Benin near the coast, where there are two rainy seasons and two dry seasons; from December to February the air is hot and dry as the dust of the harmattan wind blows across West Africa.

Next door in Togo, weather, business and celebrations are similar. Special dishes are served with drinks such as whisky, coca-cola and a local beer made from millet. Our MFI partners WAGES told us that: “Christmas is one of the most important holidays in the country. Christmas is an opportunity for our communities to do special things such as give beautiful gifts to families and parents like chickens, sheep, cloth, wine, drink cans and bags of rice. This is the time of great reunion and we took the opportunity to reconcile quarrelling members. Best wishes are formulated in those days.”

Depending on their business, it can be the busiest time of year for some entrepreneurs; those that work in bars and restaurants or as tailors, hairdressers and taxi dressers are barely able to celebrate at all. 

As Cambodia is mostly Buddhist, Christmas is not celebrated by most. However, businesses may grow to meet demand from those who do. Across the South China Sea in the Philippines, the opposite is true for 90% of the population belong to the Christian faith, of which the vast majority are Catholic. Here, they lay a claim to the world’s longest Christmas celebrations, as carol singers visit houses as early as September. Religious devotion is central to their celebrations and is perhaps typified by Simbang Gabi – a mass attended for nine consecutive days; a tradition which if completed is believed to result in the wish of the believer being granted. Despite the recent floods in the Philippines (which did not affect the area of the country where our partner MFI is based), the Christmas spirit is kept alive, as SEED Finance told us: “This season of the year is truly an important occasion for all Christians in the Philippines. As long as God’s spirit and guidance is present in everyone’s heart, the Filipino Christmas will always be the happiest no matter what challenges come ahead.”

Closer to home in Bosnia and Herzegovina, Christmas is celebrated by some and not by others; there are a roughly equal number of Muslims to Christians. Many Christians fast but prepare cakes and dishes in time for Christmas celebrations. Christians and Muslims alike visits friends, family and collegeues. Our MFI partner Zene za Zene told us that as Muslims they celebrate two ‘Bajrams’: the two major Muslim festivals that mark the end of Ramadan and pilgrimage to Mecca. They told us that for Christians and Muslims alike:  'For all holidays in Bosnia and Herzegovina peoples are more close and friendly to each other.'

All of our partner MFIs and indeed everybody at lendwithcare would like to express their thanks to lenders in the UK and their wishes of good health, prosperity and happiness to all those who lend their money so generously. Good will and a very Merry Christmas to all!

By Emma Howard, assistant at lendwithcare.org

Microcredit and Job Creation

© CARE/ Emilie Bailey

When the aim is to create jobs then what is more effective, lending to the very smallest businesses, often referred to as microenterprises, or lending to slightly larger businesses commonly called Small and Medium Enterprises (SMEs). This was the question addressed by an interesting workshop that I attended recently on the relationship between microcredit and job creation at the Microcredit Summit in Valladolid, Spain. I am not sure that we reached any sort of agreement, apart from the obvious that both are important.

Traditionally, microfinance institutions (MFIs) have provided quite small short-term loans, often lasting no more than 3-4 months, to microenterprises to use as working capital. These businesses tend to be family owned and operated ventures. If these businesses are successful and grow, it usually means that the microentrepreneurs work longer hours. If they actually reach the stage when they require extra labour they tend to employ other members of the same household, often spouses, elder children or even other members of the extended family. It has been argued that little employment is created outside the immediate family and that many micro-businesses tend to remain micro.

In the context of low-income countries, SMEs are broadly defined as businesses with between 5 and 50 employees and typically require much larger, longer-term loans. They are often described as occupying a void called ‘the missing middle’ in terms of accessing finance; that is they are considered as being too large for the MFIs and too small for the banks. Nevertheless, it has been suggested that creating jobs is actually better achieved by focusing on SMEs, particularly those in labour-intensive industries, and even that such enterprises contribute more to the goal of poverty reduction. This occurs, it is argued, because SMEs often employ low-skilled workers; that is those that are among the poorest segments of the population and who are usually too risk averse even to begin their own microenterprises let alone qualify for micro-loans.

In fact, which of the two approaches is most effective in terms of creating employment is largely an empirical question. Lendwithcare’s MFI partners have recognised the potential of SMEs and while they still concentrate on providing finance to microenterprises, they have extended lending to include SMEs. In the Philippines, for example, approximately 10% of our partner SEEDFINANCE’s portfolio is targeted at SMEs. The employment creating potential of SMEs is demonstrated by Christina Reyes who has a business producing woven products made from the stalks and leaves of water hyacinths. Christina employs 25 workers from her local community in San Miguel in Central Luzon - all of whom are single parents and who would have struggled to receive a loan and establish their own businesses.

           

Undoubtedly, SMEs do possess considerable potential to create employment and while different organisational lending skills are required for lending to larger businesses, perhaps more MFIs should complement the provision of microfinance with lending to SMEs as well. However, aside from the obvious concern with the quality, not simply the quantity of jobs, we should also recognise that SMEs vary considerably between different economic sectors in terms of the types of workers they employ. For example, a forthcoming investigation on SMEs supported by the BRAC Bank in Bangladesh reveals that SME employees were far more educated and skilled and came from households considerably less poor on average than microcredit borrowers. Furthermore, SME employees tended to be men while microcredit borrowers were largely women. We cannot assume, therefore, that lending to SMEs will always create opportunities for the poorest.

By Ajaz Ahmed Khan, microfinance adviser at lendwithcare.org