Empowerment Loan Repayments
In the last week’s nugget (Thinking Entrepreneurship, Growth and Profitability), a lot of effort was dedicated to try and put things clear as to who entrepreneurs are and what entrepreneurship is, while stressing the underlining distinguishing features of entrepreneurs and mere business persons. It was underscored that growth and profitability of any enterprise requires innovation, creativity, basic management skills, passion, risk taking, modelling, marketing, financing and planning, among others, as being among the fundamentals of entrepreneurship and innovation.
In this nugget, attention has been drawn to what matters most in venture start-ups with a question: Money or idea? This question will help us in unlocking some of the teething issues noted in empowerment loan defaults as also observed by politicians and policy makers. There is absolute clarity that following the unprecedented increase in Constituency Development Fund (CDF) and Citizens Economic Empowerment Commission (CEEC) financing for empowerment loans to citizens, a lot of people have found readily available financing to begin some business ventures to leverage livelihood and contribute to socio- economic development of the nation. This, notwithstanding, anecdotal evidence suggests that loan defaults by citizens who borrow these funds is quite on surge which potentially bleaks the sustainability of such noble initiatives and reduces the potentiality of many individuals benefiting from such life-transforming programmes. We must get to the root of the problem for us to sustainably solve and resolve the phenomena.
I am inclined to deduce that a lot of individuals who opt to access these empowerment funds are not necessarily entrepreneurs but may simply be looking for something to survive on. I will provide candid justifications for this assertion.
In the School of Entrepreneurship and Innovation, what reigns paramount at the very initial stage of the venture is not money or capital but a brilliant idea or innovation for a venture. An idea here means identification of an opportunity to produce a product or provide a service which the market needs. There is a difference between a need and a want. What is needed is something that someone cannot do without while for “wants” people can do without. There is simply a certain proportion of people who would like to have a pizza, perhaps weekly, or monthly while the rest can do without it. On the other hand, no one can do without the basic necessities of life like food, shelter, clothing, water, basic education, health etc.
Therefore, coming up with a competitive business idea must be the pre-requisite of a successful entrepreneurial venture. If one has a competitive business idea, money or capital can follow the idea from any source such as grants, philanthropists or investment partners. A competitive idea which is well structured and can be translated into a viable business venture attracts money or capital and most of the times these are ventures which are sustainable and even develop into empires. By way of exemplification, Aliko Dangote, in starting his entrepreneurial empire, first spotted an opportunity and obtained financing from a relative which he was able to repay within three (3) months. This is an example of the fact that competitive business idea cannot fail to thrive and repay the borrowed amounts, holding everything constant. The mere fact that most enterprises in Zambia shut down before celebrating their first anniversary is a cause for concern about the nature of these ventures and the ideas behind these innovations. There are some cases where people obtain these empowerment funds through some co-operatives and simply share them without investing in anything which can sustain the repayment and revolution of the funds. All such are indicators that the business ideas which people have in these groupings are not properly nurtured, incubated and hatched. This nexus needs resolution.
Moreover, a great idea can create a unique value proposition which sets a venture apart from competitors. A unique proposition also entails business modelling which a critical element in the success of a venture. Uniqueness of a product or service is very crucial in market penetration and enhancing customer loyalty. A business idea can be said to be a gap in product or service provision in the sector or industry which one identifies and hopes to bridge by making those products or services available the right quality and quantity as required by the identified market in what is called “demand.” This resonates with entrepreneurship and innovation.
It is also worth pointing that there is a process which is necessary in venture idea generation meant to ensure a well nurtured and thought out business venture. Creativity: – This is a process of creating a novel or useful idea. The creative idea process progresses through five stages: – Preparation: – This is the background, experience, knowledge the entrepreneur brings to the opportunity recognition process.
Incubation : – This is the stage during which the person considers an idea or thinks about the problem i.e. critical analysis.
Insight : – This is the flash of recognition when the solution to the problem is seen or idea born.
Also called the “eureka experience”. This is an opportunity recognition stage in business context.
Evaluation : – This is subjecting the idea to scrutiny & analysis of viability and sustainability. Elaboration: – Here the creative idea is put in a final form i.e. transformed into something valuable e.g. service, product or business concept. This is the point at which a business plan is conceptualized and written.
It is critical to point out that the foregoing process of coming up with a bankable business is not an easy one. There is need for investment in time to discern the feasibility and viability of such a venture. It cannot be surprising that a lot of individuals who obtain empowerment funds may simply be copying and pasting other people’s ideas. A Chinese saying goes, “to start a business is easy but to keep it running is difficult.”
Running a business enterprise should not be seen as an event but a long-life undertaking with utmost dedication and commitment. It also implies putting in place necessary structures as the business
grows to ensure its sustainability. I should, however, stress that it is not advisable to borrow money in order to start a business or a venture unless the demand and/or market for such product or service is absolutely guaranteed though such guarantee cannot be guaranteed as well since the future is always uncertain. Borrowing funds is more ideal for an already existing enterprise which requires recapitalization for increased growth, profitability and expansion. This is because such a venture already has a predictable market, revenue flows and there could be a demonstration that it holds great potential for growth given the prevailing product / service demand from a predictable and available clientele base. This is a nexus which requires resolution in these empowerment funds where pre-requisite borrowing assessments may not be tenable due to the social nature of funds.
In this regard, therefore, there is need to build capacity in individuals who wish to obtain these financial empowerments to ensure that they live to the aspirations of the nation. Capacity building may be around business planning, business idea scrutiny, basic financial literacy (capital, profit, loss), product /service marketing, modelling, basic management skills of an enterprise, close monitoring and evaluation of the venture’s performance on set timeliness, benchmarking, advisory services of available venture opportunities in specific jurisdictions / regions and where certain business ideas cannot work, among others.
In conclusion, while both money and an idea are essential for launching a competitive venture, an idea is more important. A great idea can create a unique value proposition, drive innovation, and attract talent and funding. Money is still necessary for execution and scaling up, but it’s secondary to having a solid and candid idea. A well-researched and innovative idea can increase your chances of success and attract the funding and resources you need to grow your enterprise, even at nil cost of capital.
There is need to weigh more on scrutinizing the business ideas of persons wishing to obtain such funds in order to minimize chances of defaults but sustain the brilliant intentions to benefit many more citizens in these funds. Capacity building is of paramount import.
The author is a Scholar, Entrepreneurship & Innovation Expert, Strategic Business Management Consultant, and Development Expert. He is a Senior University Lecturer researcher, mentor and coach of master’s and PhD students, consultant in public policy formulation, business and strategic planning, strategic human resource planning, and a trainer (capacity-builder) in entrepreneurship, business development and management. He possesses a Bachelor of Business Administration (BBA), Master of Business Administration (MBA), Doctorate in Business Administration (DBA), Master’s in Development Studies (MDS), and Bachelor’s Degree in Development Studies (BDS) with over 15 years of entrepreneurial work experience in venture start-ups and academic adjuncts engagements in later years at the University of Zambia. For comments or inquiries, send to chrinehapompwe7@gmail.com
Money or Idea? Tracing Bottlenecks to Citizens’
Empowerment Loan Repayments
In the last week’s nugget (Thinking Entrepreneurship, Growth and Profitability), a lot of effort was dedicated to try and put things clear as to who entrepreneurs are and what entrepreneurship is, while stressing the underlining distinguishing features of entrepreneurs and mere business persons. It was underscored that growth and profitability of any enterprise requires innovation, creativity, basic management skills, passion, risk taking, modelling, marketing, financing and planning, among others, as being among the fundamentals of entrepreneurship and innovation.
In this nugget, attention has been drawn to what matters most in venture start-ups with a question: Money or idea? This question will help us in unlocking some of the teething issues noted in empowerment loan defaults as also observed by politicians and policy makers. There is absolute clarity that following the unprecedented increase in Constituency Development Fund (CDF) and Citizens Economic Empowerment Commission (CEEC) financing for empowerment loans to citizens, a lot of people have found readily available financing to begin some business ventures to leverage livelihood and contribute to socio- economic development of the nation. This, notwithstanding, anecdotal evidence suggests that loan defaults by citizens who borrow these funds is quite on surge which potentially bleaks the sustainability of such noble initiatives and reduces the potentiality of many individuals benefiting from such life-transforming programmes. We must get to the root of the problem for us to sustainably solve and resolve the phenomena.
I am inclined to deduce that a lot of individuals who opt to access these empowerment funds are not necessarily entrepreneurs but may simply be looking for something to survive on. I will provide candid justifications for this assertion.
In the School of Entrepreneurship and Innovation, what reigns paramount at the very initial stage of the venture is not money or capital but a brilliant idea or innovation for a venture. An idea here means identification of an opportunity to produce a product or provide a service which the market needs. There is a difference between a need and a want. What is needed is something that someone cannot do without while for “wants” people can do without. There is simply a certain proportion of people who would like to have a pizza, perhaps weekly, or monthly while the rest can do without it. On the other hand, no one can do without the basic necessities of life like food, shelter, clothing, water, basic education, health etc.
Therefore, coming up with a competitive business idea must be the pre-requisite of a successful entrepreneurial venture. If one has a competitive business idea, money or capital can follow the idea from any source such as grants, philanthropists or investment partners. A competitive idea which is well structured and can be translated into a viable business venture attracts money or capital and most of the times these are ventures which are sustainable and even develop into empires. By way of exemplification, Aliko Dangote, in starting his entrepreneurial empire, first spotted an opportunity and obtained financing from a relative which he was able to repay within three (3) months. This is an example of the fact that competitive business idea cannot fail to thrive and repay the borrowed amounts, holding everything constant. The mere fact that most enterprises in Zambia shut down before celebrating their first anniversary is a cause for concern about the nature of these ventures and the ideas behind these innovations. There are some cases where people obtain these empowerment funds through some co-operatives and simply share them without investing in anything which can sustain the repayment and revolution of the funds. All such are indicators that the business ideas which people have in these groupings are not properly nurtured, incubated and hatched. This nexus needs resolution.
Moreover, a great idea can create a unique value proposition which sets a venture apart from competitors. A unique proposition also entails business modelling which a critical element in the success of a venture. Uniqueness of a product or service is very crucial in market penetration and enhancing customer loyalty. A business idea can be said to be a gap in product or service provision in the sector or industry which one identifies and hopes to bridge by making those products or services available the right quality and quantity as required by the identified market in what is called “demand.” This resonates with entrepreneurship and innovation.
It is also worth pointing that there is a process which is necessary in venture idea generation meant to ensure a well nurtured and thought out business venture. Creativity: – This is a process of creating a novel or useful idea. The creative idea process progresses through five stages: – Preparation: – This is the background, experience, knowledge the entrepreneur brings to the opportunity recognition process.
Incubation : – This is the stage during which the person considers an idea or thinks about the problem i.e. critical analysis.
Insight : – This is the flash of recognition when the solution to the problem is seen or idea born.
Also called the “eureka experience”. This is an opportunity recognition stage in business context.
Evaluation : – This is subjecting the idea to scrutiny & analysis of viability and sustainability. Elaboration: – Here the creative idea is put in a final form i.e. transformed into something valuable e.g. service, product or business concept. This is the point at which a business plan is conceptualized and written.
It is critical to point out that the foregoing process of coming up with a bankable business is not an easy one. There is need for investment in time to discern the feasibility and viability of such a venture. It cannot be surprising that a lot of individuals who obtain empowerment funds may simply be copying and pasting other people’s ideas. A Chinese saying goes, “to start a business is easy but to keep it running is difficult.”
Running a business enterprise should not be seen as an event but a long-life undertaking with utmost dedication and commitment. It also implies putting in place necessary structures as the business
grows to ensure its sustainability. I should, however, stress that it is not advisable to borrow money in order to start a business or a venture unless the demand and/or market for such product or service is absolutely guaranteed though such guarantee cannot be guaranteed as well since the future is always uncertain. Borrowing funds is more ideal for an already existing enterprise which requires recapitalization for increased growth, profitability and expansion. This is because such a venture already has a predictable market, revenue flows and there could be a demonstration that it holds great potential for growth given the prevailing product / service demand from a predictable and available clientele base. This is a nexus which requires resolution in these empowerment funds where pre-requisite borrowing assessments may not be tenable due to the social nature of funds.
In this regard, therefore, there is need to build capacity in individuals who wish to obtain these financial empowerments to ensure that they live to the aspirations of the nation. Capacity building may be around business planning, business idea scrutiny, basic financial literacy (capital, profit, loss), product /service marketing, modelling, basic management skills of an enterprise, close monitoring and evaluation of the venture’s performance on set timeliness, benchmarking, advisory services of available venture opportunities in specific jurisdictions / regions and where certain business ideas cannot work, among others.
In conclusion, while both money and an idea are essential for launching a competitive venture, an idea is more important. A great idea can create a unique value proposition, drive innovation, and attract talent and funding. Money is still necessary for execution and scaling up, but it’s secondary to having a solid and candid idea. A well-researched and innovative idea can increase your chances of success and attract the funding and resources you need to grow your enterprise, even at nil cost of capital.
There is need to weigh more on scrutinizing the business ideas of persons wishing to obtain such funds in order to minimize chances of defaults but sustain the brilliant intentions to benefit many more citizens in these funds. Capacity building is of paramount import.
The author is a Scholar, Entrepreneurship & Innovation Expert, Strategic Business Management Consultant, and Development Expert. He is a Senior University Lecturer researcher, mentor and coach of master’s and PhD students, consultant in public policy formulation, business and strategic planning, strategic human resource planning, and a trainer (capacity-builder) in entrepreneurship, business development and management. He possesses a Bachelor of Business Administration (BBA), Master of Business Administration (MBA), Doctorate in Business Administration (DBA), Master’s in Development Studies (MDS), and Bachelor’s Degree in Development Studies (BDS) with over 15 years of entrepreneurial work experience in venture start-ups and academic adjuncts engagements in later years at the University of Zambia. For comments or inquiries, send to chrinehapompwe7@gmail.com
