Providing refugees & asylum seekers with

micro-capital for business start-ups – a case study

from Cape TownKathryn Hoeflich, Director, CTRCContributors: Phaladi Kotsie, Julien Verzier, & Lucy Doggett10 February 2014

Overview

• Introduction to the Self-Reliance Programme

• A Few Case Studies• Challenges & Lessons

“Learned”

Introduction – CTRC’s Self Reliance Programme

• CTRC: supportive services for emergency/social assistance, self-reliance & social cohesion• Funded primarily by United Nations High

Commissioner for Refugees• Self-Reliance Programme• South African Qualifications Authority assistance• (Formerly) Vocational Training Programme• Micro-business Grants• (New) Entrepreneurship & Business Skills Training• Various workshops, cooperatives, etc.

Introduction – Self Reliance Programme

• Types of businesses supported:• Sewing• Fish-Drying• Informal Trading (Hawking) – cigarettes, sweets, chips, etc.• Hair Salon (Saloon)• Driving • Upholstery, Tiling, Carpentry & other home-improvement• Small-plot farming• Refrigeration, Welding, Air-Con repair, etc.

• 2006 – 2013: 450 grants of total value R885,000 • Grant size: R500-5,000 (US$50 - 500) per person

• Source for data for cases: less than 50% could be contacted, excuses, false addresses – 25% contactable

Case #1: Archibald• Supported in 2008 to obtain driving

license through vocational training budget & then some seed funds through micro-grant R3,200 total investment by CTRC

• Employs 2+ South Africans (seasonal flux)• Runs 2 businesses – profit + passion• Owns his own tools & re-invests

• Major constraint: access to loans for business expansion

Case #2: Matilda• Elderly woman assisted in 2007 with R2,949 (2 domestic machines & material• Xenophobic attacks in 2008• left everything when she fled; shack & machines protected by

street committee

• Now: exports duvets to Namibia, large orders for local churches, focus on quality & customer service

• Employs 4+ employees (locals & Zimbabweans)• What sets her apart: community relations

Case #3: Fish-Drying Group• 5 women from DRC working together ad

hoc for 2 years; 2010: assist with R16,500 total for small fridge & fish-drying machine

• Constraints• Took over 1 year to get assistance from CTRC• Pooling of funds maximizes equipment, but

no group-dynamics assistance• Low capacity fridge, electricity cuts means

spoiled fish• Once-off assistance policy• Change of location, break-in & break-up

Case #4: Blind Weavers Group• 10 blind skilled weavers & their guides• Negotiation with Blind Institute for up-

skilling & high-quality material• 1 year+ of negotiations & offer to

provide free 1 month training + R50,000 for business start up + location + material, negotiations broke down • They make more money begging on

streets & trains

What is Success?• Defining ‘success’ as limited failure or

barely breaking even• Of contactable individuals, 76% still

running businesses• Of 76%, only 50% feel self-sufficient

• Focus on short-term survival vs. long-term growth is major constraint• Selling the capital goods when times get tough

Challenges & Lessons “Learned”• Non-alignment of skills• Plenty of skills (teachers, engineers, nurses, economists)

but they choose running a micro-business because formal economy is nearly impossible with Section 22 asylum seekers permit

• Little-to-no business or entrepreneurial skills• Selling chips on a block where everyone else has the same• “Soft-skills”, motivation, passion/interest set the truly

successful apart from those who struggle

• Community Relations• Violent Xenophobia, “Business Xenophobia”, general

violence, attitudinal xenophobia• Local language, local knowledge, social membership• Clustering or limiting to same nationality

Challenges & Lessons “Learned” - 2• Structural Challenges• Police harassment• Policy, by-laws, legislation & practice• Lending & micro-finance institutions

• Challenges with CTRC’s programme• Constrained:

• too little funding per person vs demand – makes each grant smaller

• No loans• No repeats

• Lengthy process with too many steps• No business training for beneficiaries (fixed in 2012/2013)• Not enough follow-up or monitoring• Over-coming hand-out mentality