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Finding capital for a project can be challenging, and this is no exception for those starting social enterprises.
Young people worldwide face the greatest difficulty in finding funding. Much of this is because of a struggle to access formal banking services. In fact, young people are 44% less likely to save money through a traditional banking institution.
Luckily there are other ways for young changemakers to get funding. These funding methods often match the qualities of social entrepreneurs themselves — innovative, flexible, and wanting to make a change.
Mobile financial services have revolutionized the way money is saved and transferred in Sub-Saharan Africa.
But did you know many mobile money services also offer microloans?
Take M-Pesa, the most popular mobile money service in Kenya and Tanzania. A partnership with local banks has led to the creation of M-Pawa, a mobile bank account where users can save money, no matter the size of their deposit. Youth can then access small loans at any time.
It is a similar situation in Uganda, where telecom MTN Uganda and Commercial Bank of Africa recently announced a mobile money loan service called MoKash.
Want to share your social enterprise with the world? Applying for an award or grant can be a great way to do that.
This prize is exclusively for African social entrepreneurs between the age of 15 and 22. The Anzisha Prize looks for business ideas that respond to a social need, have the potential to create jobs, and can be scaled. Finalists are sent to South Africa for a week of entrepreneurship workshops and grand prize winners split a $75,000 USD prize.
This is an opportunity specifically for entrepreneurs with a social or environmentally-minded project. The competition is open to social entrepreneurs around the world and winners get a prize of $10,400 USD. Seif’s website offers helpful tips on how social entrepreneurs can win.
This is a seed capital fund for web and mobile startups in Sub-Saharan Africa. Prize amounts range between $25,000 USD to $500,000 USD and include mentorship within East Africa and with entrepreneurs in Silicon Valley. In the first three years, almost 60% of all applications came from Kenya alone!
Group saving takes community projects to the next level. Savings groups are a gathering of people who pool their money to help individual group members reach their savings goals. These groups are also a way to learn about financial planning and group decision making since they are led entirely at a community level.
Community members meet on a regular basis to add a certain amount of money to a group savings account. Throughout the year, members can take out loans to start a community project, make emergency repairs to their home, or scale their small business — whatever is approved by the group. That loan is then paid back with interest, growing the community savings fund even more. At the end of the year, the total amount of money that has been saved is divided evenly between members.
More than four million people in Africa are part of a savings group — should you be one of them?
In the end, banks are not the only option for funding your innovative idea, be it big or small. Do you use other savings methods? Share your financial solutions in the comments below!