“Most of my professional life has been doing menial jobs at Lilongwe [capital of Malawi] and subsistence farming, and now chicken farming on my own farm. At my age, I can’t do most of the jobs I used to do anymore. I washed people’s clothes by hand or cleaned their homes for a low wage. I decided to start a business that can support me because I don’t have a state pension.
These are the words of Asale Sigele, owner and manager of a poultry farm in Malawi. Born into a large, polygamous and poor family, Asale recalled how she was married at a young age without any formal education. She has never had a regular gainful job and her husband is now deceased. She was 56 when she started poultry farming.
Malawi is one of the poorest countries in the world, with 70% of the population living on less than $ 1.90 a day. Decent jobs are scarce. The United Nations Economic Commission for Africa has said that women in Malawi are “overrepresented in the most unstable, lowest paid and least skilled farm and non-farm work,” associated with domestic and caring responsibilities. demanding children. It is estimated that 62% of small business owners in Malawi have only primary education or less; 9% have no formal education at all. Yet women are more likely to be self-employed in Malawi than men: to escape poverty, Malawian women start and run their own businesses.
I met Asale while working as a volunteer consultant for Grow Movement, a UK charity that provides transferable skills to entrepreneurs in Malawi, Rwanda and Uganda. Grow Movement connects entrepreneurs with a volunteer consultant who works with them for a period of at least six months. Consultants, who are recruited from all over the world, are either professionals or academics, with skills in areas such as marketing, finance, accounting and business development.
The accounting barrier
When I started my career as a consultant at Asale, she had been in business for five years and struggled to grow. When we first met, it became apparent that she did not have adequate records of her business start-up transactions. The only records she kept were a collection of bills for chicken feed, poultry medicine and treatment, and equipment. She had a book in which she wrote down the names of the people and traders who took her eggs on credit to pay them back later. Everything was written by hand.
Other women entrepreneurs from the Grow Movement program in Malawi also shared striking stories. Take Naomi Kuluwani, a 54-year-old woman who runs a grocery store and a pigsty selling pigs to local butchers. When asked if she keeps records of her business transactions, she replied:
“At first I didn’t want a teacher [volunteer consultant]: I knew the job, I had been to school. I thought my consultant could give me money, but she was clear that she was not going to give me money, she was going to give me skills to grow. I was just buying and selling. I wasn’t recording anything. I didn’t count anything.
The Grow Movement case studies are not unique. In a FinScope study of women entrepreneurs in Malawi, 65% of small business owners did not have financial records. In the study, a female entrepreneur explained how “access to finance is a challenge because banks require collateral, deposits or savings, adequate financial records, written business plans and a credit history. . They charge high interest rates and have short loan repayment periods. ”
Additionally, the study notes that most properties are owned by men, so women who use their husbands ‘name to demonstrate existing capital as collateral may also be affected by their husbands’ adverse credit history. which could force his wife to repay the debt. or be denied credit.
As a teacher and researcher in accounting, I have seen that financial record keeping is a major challenge in the entrepreneurial journey of women in Malawi. We have developed a tailored training and mentoring plan to help Asale meet these challenges. We started with basic accounting training, then moved on to the basics of preparing an income statement.
Due to Asale’s limited formal education, we have used lay language such as “left column” or “right column” to refer to the expense and income register. Asale would then keep track of the totals for each column on a weekly basis to estimate its weekly profit. These totals would be aggregated to determine the monthly profit from the poultry business. She would keep the records in her native language, Chichewa, which is widely spoken in Malawi.
Master the costs
Without a clear strategy for financing and controlling costs, even viable businesses will not survive regardless of their early start-up successes. Asale and I have identified three areas of interest for the growth of his business. First, the sale of eggs and “old hens” that had stopped laying. We mapped the town of Lilongwe to households, local grocery stores and a supermarket as key customers, and she identified five companies as the main competitors in her area. A particular pinch point was the egg hatchery and the sale of chicks, in which his neighborhood specialized. Asale had to place orders up to six weeks in advance if she intended to purchase new chicks. Acquiring an egg incubator would allow him to produce more chicks, which in turn would increase the egg hatchery – a potential avenue to expand his source of income.
This brought us to the second area of intervention: securing working capital financing. Asale had an outstanding loan that she was having trouble repaying. The main reason was that she had bought 1,300 chicks with the loan, but 400 had died within weeks. This had reduced her profit margin and lengthened her loan repayment period, and she could no longer use her existing chicken as collateral for a new loan. We had to identify alternative financing.
We agreed that she should approach the vendors who were selling egg incubators – poultry hatching equipment – and acquire one through hire-purchase agreements. A solar-powered or kerosene-powered incubator was ideal, given frequent power outages in Malawi. The hire-purchase agreement was more expensive than a secured loan, so we agreed to approach a microfinance bank for funding using the incubator as collateral. She did not go to a commercial bank because it would cost more.
Asale has participated in a “merry-go-round,” an informal banking system where individuals take turns meeting to lend each other money. Unfortunately, the merry-go-round lacked the capacity to pay for the incubator.
Third, Asale had lost over 30% of her brood due to a suspected infection. She clearly needed insurance coverage. We found out that the microfinance bank that provided the egg incubator loan also offered insurance to small and medium-sized businesses. It would also minimize losses if her chicks died due to infections or environmental factors. So she got an insurance policy for the chicks that hatch from her incubator and another for any newly acquired chickens that are part of her laying flock.
Fourth, the control of business expenses. Asale had relied on memory to identify the various costs incurred in the poultry trade: chicken feed and medicine, kerosene to keep young chicks warm at night, and occasional labor when egg production was high. Chicken feed was the biggest expense.
We tried two ideas. First, visit the stores and compare the different prices with the yield of eggs they produced. We reduced the price she paid for food by 5,000 Malawian kwacha ($ 6.15) per kilogram. Although animal feed may not seem expensive, for a small business in Malawi it is the difference between making a profit and operating at a loss. Asale knew from experience that changes in nutrition can lead to decreased egg production, so we agreed to purchase smaller amounts of the new foods so that we could study their effect, mixing them with the previous foods to create. the nutrition mix that would maximize egg production.
Second, a basic 50/50 blend of poultry and corn concentrate that gives chicken almost the same benefits as standard feeds, but at a lower cost. This was considered because she had enough space to plant more corn to feed the chickens on a 5.6 hectare farm that she inherited from her late husband. Taking the two measures together, we agreed on the 50/50 mix as it reduced the operating costs of feeding the chickens by around 40%.
The path to follow
Asale and I worked together by combining her local knowledge with my expertise to overcome some of the key challenges she faced and improve the efficiency and profitability of her fledgling business. Her local knowledge of field issues and my skills as an accountant and sales trainer enabled us to identify solutions.
A survey of small businesses in Malawi reports several programs aimed at facilitating access to finance and basic business skills, such as the Growth Accelerator Market Testing Program, the Private Sector Development Program and the Jobs for Youth project. Despite this, access to finance remains the number one challenge facing women entrepreneurs in Malawi. Essential financial literacy and numeracy skills are also not widely available enough to enable women entrepreneurs to use available funds effectively.
Asale’s success means that she can serve as a role model for other women. The Malawi National Association of Women in Business should consider launching nationwide mentoring, pairing women micro-entrepreneurs with experienced owners or managers of established businesses. A local support network has proven useful, especially for women of Asale’s age who no longer have time to enroll in formal education.
The government of Malawi, through the Small and Medium Enterprises Development Institute or the Development of Malawian Entrepreneurs Trust, should appoint SME support agents to partner with field agents who work for organizations such as the Grow Movement. The provision of near-personalized support by SME Support Officers can help keep the mentoring time limited that I was providing as a volunteer mentor.
Without these local interventions, programs supported by the international community will continue to attract skepticism and we will continue to see struggling women grow their businesses to the same extent as men.