Micro Lending for a Macro Future
Kenya- MasterCard and Unilever have teamed up to create Jaza Duka ("fill up your stores") in Kenya. Their new partnership will help micro entrepreneurs grow their businesses with micro-lending. MasterCard and Unilever analyse the store by how much inventory it has bought over time with Unilever. This allows for a micro credit and if it gets approved by the KCB Bank Kenya, the store is qualified for an interest free credit line. The entrepreneurs will also get tips on how to run their business smoothly. Such as marketing tools and techniques, finances, supply and demand planning.
Personally, I believe this is a great start for micro entrepreneurs. It's already hard enough to start and maintain a business. 80% of new businesses fail within the first 18 months. Having store owners in Kenya can help out its economy. Something I didn't understand fully, is what happens if the store owner doesn't pay back the credit they owe? What would the penalties look like for that? Not many companies would take a risk such as this one.
The article also stated that in time, the store owners could even apply for business loans. The store owners' assets and liabilities will grow. If they know how to make a balance sheet, then they should know how their business is doing. If the store is doing well, then they'll see a net worth rather than a loss. MasterCard and Unilever can diversify their loans so there is a fallout, it won't hurt them as much.
Pymnts. “Micro-Lending Has Macro Results For Kenyan SMBs.” PYMNTS.com, What's Next Media, 6 May 2018, www.pymnts.com/news/international/2018/mastercard-unilever-microlending-kenyan-smbs-partnership/.
Personally, I believe this is a great start for micro entrepreneurs. It's already hard enough to start and maintain a business. 80% of new businesses fail within the first 18 months. Having store owners in Kenya can help out its economy. Something I didn't understand fully, is what happens if the store owner doesn't pay back the credit they owe? What would the penalties look like for that? Not many companies would take a risk such as this one.
The article also stated that in time, the store owners could even apply for business loans. The store owners' assets and liabilities will grow. If they know how to make a balance sheet, then they should know how their business is doing. If the store is doing well, then they'll see a net worth rather than a loss. MasterCard and Unilever can diversify their loans so there is a fallout, it won't hurt them as much.
Pymnts. “Micro-Lending Has Macro Results For Kenyan SMBs.” PYMNTS.com, What's Next Media, 6 May 2018, www.pymnts.com/news/international/2018/mastercard-unilever-microlending-kenyan-smbs-partnership/.
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