What ‘entrepreneurship’ means for the poor

More than half of all the workers in low- and middle-income countries are self-employed, running corner shops, market stalls and smallholder farms that are vital sources of goods and services for their local communities and important drivers of household income. In nine out of ten cases, these small businesses have fewer than five employees, often just the owner, with family members helping out when needed.

Economists refer to these ubiquitous small businesses as “micro-enterprises” and their owners as “micro-entrepreneurs”.

For many people, however, the term “entrepreneur” conjures up an image of someone with the drive to start an innovative business that exploits a gap in the market. Entrepreneurship is seen as a calling and starting a business as a chosen opportunity.

This narrative rarely applies to under-resourced communities, where the majority of micro-entrepreneurs take the plunge to start running a business out of necessity, material duress and a lack of viable income alternatives. Most are driven by “push” rather than “pull” motives. Given the choice, many would probably prefer salaried employment.

(RE)DEFINING SUCCESS FOR MICRO-ENTREPRENEURS

In the words of the Nobel Prize-winning economists Abhijit Banerjee and Esther Duflo: “The many businesses of the poor are less a testimony to their entrepreneurial spirit than a symptom of the dramatic failure of the economies in which they live to provide them with something better”.

While job creation policies remain the remit of governments, a growing number of non-profits seek to encourage and support micro-entrepreneurship both to increase the owners’ household revenues and assets, and to provide services to their communities.

Cassandre Pignon, Head of Programmes at Cartier Philanthropy, explains: “We all love a clear success story. When we talk with our partner organisations about micro-entrepreneurs, there’s a tendency to pick the outliers – those who have grown most dramatically over the years. But it’s worth taking the time to redefine success. We’re looking at individuals with limited formal education, financial literacy, access to technology and financial resources. So success could be making enough profit to keep children in school or afford urgent medical care. It could be a change in the family’s consumption habits, such as more food on the table, or the ability to fix a leaking roof, or the recruitment of an employee – maybe a neighbour – to run another stall at the market.”

Today, Cartier Philanthropy’s portfolio includes several partner organisations that help “necessity micro-entrepreneurs” in extremely poor contexts to become engines of prosperity for themselves, their families and communities.

Some of these organisations use evidence-based “graduation” models which include the creation of commercial activities to boost livelihoods among those living in extreme poverty. Some take a social entrepreneurship approach, facilitating the creation of micro-businesses that provide essential services such as clean water, safe sanitation or childcare to underserved communities. Some assist farming families, focusing specifically on supporting and enhancing farm entrepreneurship and agribusiness management.

“These necessity micro-entrepreneurs play a vital role in keeping vulnerable communities afloat. Which is why we think it’s so important to find and fund approaches that have proven effective in helping them build the skills and resources they need to increase their incomes and gain greater stability,” says Cassandre.

MICRO-ENTERPRISES AS A ROUTE OUT OF EXTREME POVERTY

Organisations such as BRAC run programmes built on the assumption that extreme poverty is mostly the result of limited access to resources (information, training, financial capital and market access) and social and environmental vulnerabilities. The simultaneous provision of productive assets, cash transfers, enterprise development assistance, skills coaching, healthcare and education has been proven to help individuals and families create sustainable micro-businesses (often several in parallel) that pave the way for greater self-sufficiency, autonomy and opportunities.

BRAC, the pioneer and largest implementer of this approach, runs graduation programmes worldwide, having developed adaptations in 14 countries to address a range of different contexts and unique concerns. Cartier Philanthropy has been funding BRAC’s disability-inclusive graduation model in the Manyoni and Chamwino districts of Central Tanzania since 2022. In this pilot, BRAC aims to help 900 individuals and their families – an estimated 3,600 people, including 15% with disabilities and 70% women – to “graduate” out of extreme poverty by 2025.

Similarly, Village Enterprise equips people living in extreme poverty in rural Africa (“first-time entrepreneurs”) with cash transfers, business and financial literacy training plus ongoing mentoring to create climate-smart, sustainable three-person micro-businesses and saving groups. The business areas supported include livestock rearing, farming, small retail shops and restaurants, tailoring and beekeeping. The small-scale vendors enrolled in the Village Enterprise programme make incremental steps over time, deciding whether to sell more of the same type of products, or to start selling some additional products, or maybe to add a street cart to sell in a new location, or even to invest in advertising to get more customers.

This group-based approach makes Village Enterprise’s model particularly cost-effective, with “our entrepreneurs generating $5.40 in income for every $1 invested in the programme”.

MICRO-BUSINESSES FOR CHILDCARE AND EARLY LEARNING

Early childhood care and education options are scarce in low-resource settings, hindering children’s development and adversely impacting parents’ ability to work.

Kidogo in Kenya and SmartStart in South Africa are both proving that it’s possible to improve access to affordable, quality childcare through a social franchising approach that supports individuals to operate as qualified, self-sufficient micro-entrepreneurs.

Kidogo identifies women (and sometimes men) who are running existing congested “baby care” centres. The organisation then trains them intensively in early childhood development and education, health and nutrition, and entrepreneurship. The caregivers who meet Kidogo’s quality standards at the end of the training become “Mamapreneurs” (and “Babapreneurs”) – franchisees with improved ability to run their childcare centres as profitable micro-businesses, consistently receiving an affordable fee from the parents.

SmartStart’s Early Learning Practitioners – typically unemployed or underemployed South African women – go through a similar recruitment and mentoring process, gaining critical early childhood development training along with the know-how to access government funding and support as micro-entrepreneurs. SmartStart’s 18,000 licenced Practitioners have reached 266,000 early learners in South Africa since 2015.

“At Kidogo, we believe that a market-based approach which enables childcare micro-enterprises to be profitable is the best way to ensure high quality for children,” says Co-Founder and CEO Sabrina Habib. “The term ‘Mamapreneur’ highlights the importance of these women seeing themselves as entrepreneurs. That’s critical due to the nature of their businesses, with childcare being a traditionally undervalued economic activity, perceived as a woman’s responsibility for which no compensation is due. Shifting this mindset is a critical part of Kidogo’s and SmartStart’s work”.

AGRI-ENTREPRENEURS FOR BETTER YIELDS

In most developing countries, smallholder farmers struggle to access agricultural resources like good quality seeds or fertilisers that could improve the productivity, yield and nutritional content of the food they produce. Products specifically conceived for their needs, such as farming technologies, insurance and training – and the credit to access them – are even harder to come by.

iDE in Zambia and myAgro in Senegal both focus on agri-entrepreneurs to provide an essential last-mile link, delivering high quality inputs reliably and at a fair price to family farmers in remote areas.

iDE recruits and trains local agri-entrepreneurs called Farm Business Advisors (FBAs) to provide smallholder farmers far from commercial areas with pivotal links to quality inputs, credit, markets and advice. The FBAs earn an income by selling seeds, fertilisers and agricultural technologies like hermetic storage bags on commission and by charging fees for the services they provide farmers. In Zambia, iDE reported that its best-established FBAs earned an average of USD 88-118 per month in 2023.

“Not only do the FBAs deliver needed supplies, they are also trusted advisors, providing farmers with valuable training and guidance to boost productivity and resilience”, says Sylvester Kalonge, iDE Zambia Country Director. “In 2024, we recruited and trained 156 new FBAs, nearly doubling the network, and we aim to add 600 FBAs over the next five years. Today 94% of our new recruits are women.”

MyAgro’s workforce is a network of trained, equipped, commission-remunerated, community-based “Village Entrepreneurs” who mobilise smallholder farmers and support them to purchase input packages that match their needs and constraints. In 2023, myAgro tested an innovative model in rural Senegal to address the lack of a profitable, reliable poultry distribution network. The model involves setting up a Mother Unit, run by a Village Entrepreneur, in which 500 one-day old chicks are nurtured for four weeks before being sold to farmers in surrounding villages. The Mother Units generate additional income for Village Entrepreneurs, estimated at $1,000/year per Unit.

“In 2023,” myAgro reports, “we successfully launched and trained 18 Mother Units which served more than 3,200 farmers in the course of the year, delivering over 16,000 chicks with a mortality rate of just 0.8% (an incredible improvement on the 5% industry standard). In 2024, we aim to establish additional Units, strengthening the poultry value chain to the benefit of chick suppliers, Village Entrepreneurs and smallholder farmers”.

WATER AND SANITATION MICRO-BUSINESSES

In too many parts of the world, clean drinking water and safe sanitation remain unavailable or unaffordable for the poorest, who are often excluded from city-wide infrastructure. Some micro-businesses offer sustainable off-grid solutions to serve these needs.

1001fontaines helps villagers to become micro-entrepreneurs in underserved areas of Cambodia where untreated water sources are a health hazard, training them to set up and manage small local solar water purification plants called “water kiosks”. From these, they deliver purified water in reusable 20-litre jugs directly to people’s homes at a price set to provide a sustainable balance between affordability and profitability.

Support from 1001fontaines comes in the form of ongoing coaching, technical assistance and routine maintenance, all provided through its local entity, Teuk Saat 1001.

“We are convinced that empowering one individual from each community to become an entrepreneur is a fantastic way to ensure the sustainability of our actions” says Amandine Chaussinand, Managing Director of Teuk Saat 1001. “Thanks to the initial training and ongoing coaching we provide, the entrepreneurs make a decent living and have incentives to maintain service quality over time. They earn an average of $340 per month compared with a $200 minimum wage for industrial workers. At the same time, consumers are happy to pay for this safe drinking water because they value the professionalism of the entrepreneurs and trust the water quality.”

A core part of Fresh Life’s work in Nairobi, Kenya, and Lusaka, Zambia, is the construction of dry, container-based sanitation facilities that are designed for residential compounds, schools and busy markets. Municipalities and urban dwellers, particularly those living in unsewered, crowded informal settlements, invest in these products as a high-quality sanitation option. More than 6,000 local micro-entrepreneurs – known as Fresh Life Operators – provide every day 204,000 residents with access to hygienic sanitation while earning a stable income.

“Fresh Life’s entrepreneurship model offers two operator pathways: residential and commercial,” says Anthony Mulinge - Fresh Life Managing Director. “Residential Operators provide toilets as rental units within informal settlements, whereas Commercial Operators run pay-per-use toilets in public spaces or marketplaces. This dual approach empowers local residents by building inclusive economies that enhance their financial stability while also providing safe sanitation.”

NO MAGIC BULLET

There are large numbers of micro-entrepreneurs in the poorest areas of the world. Successful approaches to overcoming the biggest obstacles they face – lack of skills, resources, information and finance – show us that their small businesses can help improve household prospects, and in some cases even gain local customers access to essential goods and services.

But it would be a mistake to herald micro-enterprises as a “magic bullet” against poverty or consider them the first step in an automatically progressive path to long-term prosperity when they are, for the most part, just a survival mechanism.

Moreover, there are contexts where hiring people under staff contracts is simply more effective than fostering entrepreneurship.

“The 1001fontaines model of self-sustaining water-kiosks, which works so well in Cambodia, couldn’t be replicated successfully in Madagascar, where over 80% of the population lives below the poverty line,” explains Samdoup Allier, Programme Officer at Cartier Philanthropy. “So a different approach was developed there that uses large water production facilities to supply a decentralised network of kiosks that sell drinking water in urban areas. Crucially, the water kiosk managers are salaried employees, not micro-entrepreneurs.”

As always, context and creative flexibility are key. But there can be no doubt that in many areas of the world, supporting individuals to become successful micro-entrepreneurs is not the last resort but the only resort, and can make a key difference to them, their families and communities.