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AN INVESTIGATIVE STUDY OF INFLUENTIAL FACTORS ON THE EFFECT OF A
BUSINESS TRAINING ON A MICRO BUSINESS WITHIN VARIOUS
MICROFINANCE PROGRAMS IN MALAWI
Lisa Doedel (5893410)
Thesis submitted for the degree of BSc Economics & Business of the University of Amsterdam
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Lisa Doedel
AN INVESTIGATIVE STUDY OF INFLUENTIAL FACTORS ON THE EFFECT OF A
BUSINESS TRAINING ON A MICRO BUSINESS WITHIN VARIOUS
MICROFINANCE PROGRAMS IN MALAWI
Abstract
In order to increase or decrease the influence of certain factors, factors like illiteracy and unsupportive husbands, on the effect of the business training of two microfinance organizations, namely Tiwale and CARE, this thesis investigated what factors actually causes a business training to influence the success of a micro business. Because existing literature mainly focusses on whether or not a training influences the micro business but not on what actually causes the training to be of influence a grounded theory approach was adopted. Observations and in depth interviews were used as the main source of data. Factors like friendships, illiteracy and certain elements of the curriculum were identified as influential factors. This thesis proposes several recommendations in order to improve the business training programs of Tiwale and CARE among which adding a competitive element or classes on basic accounting skills and a need-finding assignment to the business training curriculum. But recommendations on enhancing the effect of the business training by interactive teaching and the use of visual aid and group discussions were also given. With these recommendations Tiwale and CARE, both active in Malawi, and microfinance institutions with similar characteristics, are be able to increase or decrease the influence of certain influential factors and consequently increase the effect of their business training programs on the success of the micro businesses of their beneficiaries. In order to increase the generalizability of this study, more research has to be done on the subject of influential factors on the influence of a business training on the success of a business training. However, by providing Tiwale and CARE with valuable recommendations, the practical value of this study is high.
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AcknowledgementsI would like to thank Tiwale, and Tiwale’s director Ellen Chilemba in particular, for introducing me to the Malawian culture (from interesting local cuisine to typical Malawian customs and the art of hitch hiking) and for letting me observe and participate in Tiwale’s business training program.
Moreover, I would like to thank CARE Malawi, especially CAREs program manager Mr Kumwenda, for arranging my village visits and for providing me with valuable information on the Village Savings and Loan Associations method.
Being able to work on a self-chosen topic with a supervisor who made discussions fun and interesting contributed to the fact that my thesis writing experience was an enjoyable one. I would therefore like to thank Mr Gruijters for providing me with valuable feedback and guidance while carrying out my research.
But most of all I would like to thank all the women who participated in this study and who took the time to answer my questions by telling me all about their micro businesses. In addition to providing me with valuable information, being able to see how successful micro businesses were started made my visit to Malawi an amazing one.
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ForewordYears ago, I read an article in the daily newspaper about microfinance in Africa. The fact that loans as little as twenty five dollars could help women escape poverty and give them the tools to become economically independent immediately caught my attention.
When working for SINAM, a Non-Government Organization (NGO) in Tamil Nadu, India, I was asked to observe the various women empowerment programs in order to improve the overall quality of the programs. When visiting Self Help Groups (SHGs) I noticed that the women were all very enthusiastic and eager to learn but simply did not have the knowledge or tools to really put their microfinance loans to good use. In order to improve this situation I developed a simple business training.
When I visited some of the women a few months after the training all of the women were very happy with their new jobs and told me that the training had given them more confidence and knowledge to successfully start and run their micro businesses. One of the women I visited was Shahee, a mom of three and the leader of her SHG. Shahee spend her loan on candle making supplies with the plan to sell them to stores in her neighbourhood. After a couple of weeks she figured that she might as well sell cleaning supplies to the stores she already sold her candles to. When this took off she expanded her business even more by selling air refreshers and washing powder. She told me that the training inspired her to save some of her profit in order to expand her business even more in the future and that she was planning a Diwali (i.e. an Indian holiday) discount special.
The same business training was also implemented in the microfinance program of YMicro Batticaloa in Sri Lanka. Women would put the skills they learned in the training to good use and showed strategic vision and entrepreneurship by planning promotional activities and expending the activities of the micro business.
Getting to know all these wonderful women who started small businesses, anything from raising cattle to waving baskets and running a small store, and seeing how a simple business training could influence the success of a micro business inspired me to write my thesis on the business training programs within microfinance programs.
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List of Contents Abstract ii Foreword iii List of Contents iv Abbreviations viii Introduction 1 Literature Review 2 1.1 Microfinance 3 1.1.1 Defining Microfinance 3 1.1.2 Defining Poverty 41.1.3 How Microfinance Works 4
1.1.4 Characteristics of a Successful Micro Business 5
1.2 Entrepreneurship 5
1.2.1 Defining Entrepreneurship 5
1.2.2 Teaching Entrepreneurship 5
1.2.2.1 Advocates of the Survival Skill theory 6
1.2.2.2 Advocates of Teaching Entrepreneurship 6
1.3.1 The Influence of Entrepreneurial Characteristics on a Business 7
1.3 Business Training 8
1.4.1 Defining Business Training 8
1.4.2 Business Training Curriculum 8
1.4.3 Business Training Pedagogy 9
1.4.4 The Influence of a Business Training 9
1.4.4.1The Influence of a Business Training on the MFI 9 1.4.4.2 The Influence of a Business Training on the Micro Business 10 1.4.4.3 The Influence of a Business Training on the Beneficiary 10
1.5 Culture 10
1.5.1 Defining Culture 11
1.5.1.1 Religion 11
1.5.1.2 Language 11
1.5.1.3 Education 11
1.5.1.3.1 The Influence of Education and Illiteracy 12
1.5.1.4 Gender Based Constraints 12
1.5.1.4.1 The Influence of Gender Based Constraints 13
1.6 Conclusion 14
2. DESIRED KNOWLEDGE PRODUCT 15
2.1. Potential Influential Factors to be Further Investigated in an Empirical Study 15
2.1.1 Length of a Business Training 15
2.1.2 Cultural Aspects 15
2.1.3 Education and Literacy 16
2.1.4 Entrepreneurial Characteristics 16
2.1.5 Additional Factors to be Investigated 16
2.2. The Need for Empirical Research 16
2.3. Research Question 17
3. METHODOLOGY 18
3.1 Goal of the Study 18
3.2 Research Method 18
3.1.1 Defining Theory 18
3.1.2 Grounded Theory Approach 19
3.1.2.1. The Grounded Theory Approach Process 19
3.2 Case Definition 19
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3.2.1.1 Tiwale 20
3.2.1.2 CARE Malawi 20
3.2.2 Business Training Programs 21
3.2.2.1 Business Training Tiwale 21
3.2.2.2 Business Training CARE Malawi 21
3.3 Data Collection 22 3.4 Interviews 22 3.4.1 Selection Criteria 23 3.4.2 Sample Size 23 3.4.3 Interviewees 23 3.4.3.1 Tiwale Interviewees 23 3.4.3.2 CARE Interviewees 24 3.5 Measurements 24
3.5.1 Separating Business and Personal Money 24
3.5.2 Maintaining Sales Records 24
3.5.3 Profit 25
3.5.4 Reinvesting Profit 25
3.5.5 Entrepreneurial, Strategic and Innovative Thinking 25
3.6 Data Analysis 25
4. FINDINGS 27
4.1 Direct Positively Influential Factors 27
4.1.1 Support Village Chief 27
4.1.2 Business Training Curriculum 27
4.1.3 Entrepreneurial Characteristics 28
4.1.4 Personal Business Advice and Weekly Meetings 29
4.1.5 Business Group Format 29
4.1.6 Competitive Element 30
4.2 Indirect Positively Influential Factors 30
4.2.1 Passion and Persistence 30
4.2.2. Low or Nonexistent Interest Rates 31
4.2.3 Length of the Business Training 31
4.2.4 Friendships and Fun Exercises 31
4.2.5 Interactive teaching Methods 32
4.3 Direct Negatively Influential Factors 32
4.3.1 Illiteracy and No Visual Aid 32
4.4 Indirect Negatively Influential Factors 32
4.4.1 Childcare 32
4.4.2 Unsupportive Husbands 33
4.4.3 Male Beneficiaries 33
5. RECOMMENDATIONS 34
5.1 Gain Support of Village Chief 34
5.2 Adapt Business Training Curriculum 34
5.3 Provide Personal Business Advice and Organize Weekly Meetings 34
5.4 Adopt a Business Group Format 35
5.4 Adopt a Business Group Format 35
5.5 Include a Competitive Element 35
5.6 Consider the Daily Responsibilities of the Beneficiary 35
5.7 Set Low or Non-Existent Interest Rates 35
5.8 Adopt Interactive Teaching Methods 36
6. DISCUSSION AND CONCLUSION 37
6.1 Relevance of the Study 37
6.1.1 Practical Relevance 37
6.1.2 Theoretical Relevance 38
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6.2.1. Validity 38
6.2.2 Generalizability 38
6.2.3 Reliability 39
6.3 Recommendations for Future Research 39
6.4 Conclusion 40
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AbbreviationsFAO Food and Agriculture Organization FFH Freedom From Hunger
MFI Micro Finance Institution NVP New Venture Performance SHG Self Help Groups
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IntroductionIt all started in 1976 when Muhammad Yunus loaned 27 dollars to forty-two people in a small village in Bangladesh (Yunus, 2007). Not only did the power shift from money lenders to entrepreneurs, women started to unite in groups (Yunus, 2007). These groups of women, the so called Self Help Groups (SHGs), not only created support amongst its members but also created a new way of banking; the Grameen Bank was born (Yunus, 2007). The potential of Microfinance was so appealing it spread fast. Microfinance programs were started on 5 continents and in over 105 countries (Lapenu and Zeller, 2001). Lützenkirchen and Weistroffer (2012) suspect that around one billion lives have been influenced by Microfinance loans in emerging markets and developing countries through the socio-economic ties of the borrowers and their families.
Microfinance decreases material poverty, increases financial services to the poor but also reduces the so called non-material poverty, which includes social and psychological effects that prevent people from living up to their potential (United Nations, 2000). Lapenu and Zeller (2001) found that most of the Micro Finance Institutions (MFIs) can be found in Asia and Africa. When guided well, the material benefits of a Microfinance loan can extend beyond the household of the beneficiary and into the community (United Nations, 2000). This is why it is of the utmost importance that beneficiaries get the support they need in order to succeed. One widely used tool is to teach entrepreneurial skills in the form of a business training (Klinger and Schündeln, 2011).
A significant amount of research has been done on the effects of a business training on institutions (e.g. increased payback rates and increased loan amounts). However, less research has been done on the effect of a business training on the micro business and the beneficiary. Two prominent studies on this topic were conducted by Karlan and Valdivia (2006) and Field, Jayachandran and Pande (2010) . Karlan and Valdivia (2010) found that a one- or two year business training led to improved business knowledge, practices and revenue. The exact factors that influenced the improved business knowledge, practices and revenue reported by Karlan and Valdivia (2010) have not yet been explored. Field et al (2010) explored the effects of a three day business training and found that Hindu women who attended the training increased their loan amounts and business income. However, Muslim women that took part in the training did not benefit from the training (Field et al, 2010). In addition to the reasoning behind the improved business knowledge, practices and revenues as reported by Karlan and Valdivia (2010), the underlying reasons of the different outcomes between Hindu and Muslim women have not yet been discovered. Since a business training has the potential to positively influence the micro business, and the beneficiary and their community, the factors that influence the effect of a business training on the micro business are certainly worth exploring into more detail.
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Since the two prominent studies on this subject, that the effect of a business training on a micro business, took place in Peru and Bangladesh, a totally different setting was chosen as the setting of this study. The setting in which this study took place was that of Lilongwe, Malawi within the two microfinance programs of Tiwale and CARE. Tiwale and CARE are two crucially different organizations, both in size, experience and the type of business training they provide their beneficiaries with. The overall goal of this study is to improve the business training program of Tiwale and CARE, and similar programs of other organizations with comparable settings, by providing Tiwale and CARE with recommendations based on the research on influential factors on the effect of a business training on the success of the micro business. By doing so, Tiwale and CARE are be able to increase or decrease the influence of certain influential factors on the effect of a business training on the micro business.One of the findings of this study was that illiteracy is a big problem in both business training programs. Illiterate beneficiaries often did not benefit from the training as much as their literate counterparts. The use of visual aid and more interactive teaching methods can be used in order to decrease the influence of the illiteracy factor after which the effect of a business training on the micro business will increase. Another practical implementation of this study is the finding that a need-finding process helps beneficiaries to successfully identify the needs within their communities. By adding a need-finding process to the business training curriculum beneficiaries have the tools to identify the needs within the community and start a business that has a higher chance of succeeding, simply because they offer the right product or service. More recommendations, based on various influential factors like the support of a village chief friendships, are discussed in the recommendation chapter of this thesis.
This thesis starts by exploring the existing literature on the subject of microfinance, entrepreneurship, business training and the Malawian culture. The following chapter, the desired knowledge product, will then identify concepts to be further investigated and identify the need for empirical research. The thesis then continues by elucidating the methodology of this study. After which the findings will be discussed. The thesis then contributes to the improvement of the business training programs of Tiwale and CARE with a chapter on recommendations. This thesis ends with a discussion and conclusion in which quality of this study are discussed and suggestions for future research are given.
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1. LITERATURE REVIEWIn order to provide Tiwale and CARE with recommendations on adjustments and improvements on their business training programs, the existing literature on relevant topics will be explored in this chapter after which a desired knowledge product will be developed in the next chapter. This chapter first introduces the subject of microfinance and the way in which the micro finance model works in order gain a general understanding of the field of microfinance. The section on microfinance then continues by looking into what can be defined as a successful micro business. This chapter then continues by investigating the existing literature on entrepreneurship and whether or not it is a skill that can be taught and what influence entrepreneurial characteristics may have on a business. The next section will then discuss the curriculum and pedagogy of a business training and the influence of a business training on the MFI, micro business and beneficiary. This section ends by discussing various cultural concepts of which their influence on a business training will be investigated. By exploring what makes a business a successful business and by looking in to existing literature on influential factors on the effect of a business training we work towards a knowledge product that will provide Tiwale and CARE with enough information to improve and adjust their business training programs for the better.
1.1 Microfinance
This section first forms a definition of microfinance and then explains the workings of the microfinance model in order to gain a general understanding of the concept of microfinance. This section then outlays the findings on what makes a micro business a successful one. The criticism on the microfinance method and ways to improve the microfinance system are beyond the scope of this thesis and therefore not discussed in this literature review.
1.1.1 Defining Microfinance
Otero (1999) defines microfinance as “the provision of financial services to low-income poor and very poor self-employed people”. Ledgerwood and White (2006) add to this definition by addressing the fact that savings and credit, often without collateral, are not the only financial services offered by microfinance organizations. Insurance and payment services are also part of most microfinance programs (Ledgerwood and White, 2006). By combining these descriptions of microfinance the definition of microfinance used throughout this thesis is that microfinance provides financial information and financial services, like savings, loans and insurance to the poor in urban and rural areas who are otherwise unable to obtain such services from formal financial organizations.
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1.1.2 Defining PovertyPoverty can be described as “the pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life” (M. Ravillion, S. Chen and S. Prem, 2008). In addition to the definition of poverty, we define extreme poverty, often called the poorest of the poor as “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services” (M. Ravillion, et al, 2008). Especially the last sentence of the definition of extreme poverty by M. Ravillion, et al (2008), “It depends not only on income but also on access to services”, is a crucial one. Microfinance not only provides the poor with financial services, microfinances also provides the poor with information on financial services that will help them improve their chances of escaping poverty.
1.1.3 How Microfinance Works
Typically microfinance businesses range from hearing cattle to small convenient stores and agricultural ventures (Yunus, 2007). The type of business mostly depends on the level of education or the surroundings of the beneficiary (Lapenu and Zeller, 2001). Beneficiaries living in a busy city are not as likely to grow tomatoes whereas beneficiaries living in rural areas are not as likely to sell airtime as their counterparts living in a busy town or city. Depending on the type of microfinance project women are educated on relevant topics, for example agricultural topics, or free to start a business of their choice (Lapenu and Zeller, 2001).
The microfinance model is generally very simple and mostly consists of SHGs applying for a group loan. The Grameen Bank was the first organization to unite women into groups and to hand out group loans (Yunus, 2007). SHGs are generally formed by 10-15 women who meet on a weekly basis to discuss business-, health- and childcare related issues (International Labour Organization, 2006). The most common form of a microfinance loan is that of a group loan (Yunus, 2007). In the case of a group loan all the women of the SHG are responsible for the repayments of the group loan and often share a savings account which they can use to take out extra loans when necessary (International Labour Organization, 2006).
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1.1.4 Characteristics of a Successful Micro BusinessAn important reason to look into the characteristics of a successful micro business is because this study looks into factors that might be of influence on the success of the micro business. And without defining what entails a successful micro business, no such research can be performed. Karlan and Valdivia (2010) pointed out certain activities to identify whether or not a micro business is a successful micro business or has the potential to become a successful microfinance business. The identified activities are the separation of business and personal money, maintaining sales records, reinvesting of profit and entrepreneurial-, strategic and innovative thinking (Karlan and Valdivia, 2010). These activities are also supported by Klinger and Schündeln (2011), who add to the concepts identified by Karlan and Valdivia (2010) that a successful micro business also provides the beneficiary with income in the form of profit.
1.2 Entrepreneurship
This sections starts by defining entrepreneurship based on the existing literature on the subject. This section then continues to investigate the different opinions on teaching entrepreneurship in which the two main opinions, that of the survival skill theory and the advocates of teaching entrepreneurial skills, will be considered. Finally, this section looks into the influence of entrepreneurial characteristics on a business.
1.2.1 Defining Entrepreneurship
The term entrepreneurship is a widely used term in business and has a different meaning to many people. Some people use the term entrepreneurship as a term for innovation, creativity, risk taking, leadership or in a social context (Gartner, 1989). Others use the term for start-up businesses or new production methods (Martin and Oberg, 2007). Martin and Osberg (2007) define an entrepreneur as someone who is attracted to a suboptimal equilibrium and as someone who sees opportunities to provide a new product, service, process or solution to this suboptimal equilibrium. According to Martin and Osberg (2007) the reason that an entrepreneur sees this opportunity comes from a set of characteristics like inspiration, creativity, direct action, courage and fortitude. Baum and Locke (2003) add passion, strategic vision and extraversion to this list. This chapter later discussed the influence of these entrepreneurial characteristics on the success of a business.
1.2.2 Teaching Entrepreneurship
Ever since the start of microfinance there have been different opinions on whether or not entrepreneurship is a skill that can be taught (Karlan and Valdivia, 2010). There are roughly two
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opinions on whether or not entrepreneurial skill is a skill that can be taught or improved. Some believe that the poor have something called a survival skill and do not need basic business training. Where others believe that the entrepreneurial skill can be improved or taught by giving beneficiaries the opportunity to obtain certain skills in the form of a business training.1.2.2.1 Advocates of the Survival Skill theory
Yunus (2007), the founder of the Grameen Bank, firmly believes in something he calls the survival skill principle. “I firmly believe that all human beings have an innate skill. I call it the survival skill. The fact that the poor are alive is clear proof of their ability. They do not need us to teach them how to survive; they already know. So rather than waste our time teaching them new skills, we try to make maximum use of their existing skills. Giving the poor access to credit allows them to immediately put into practice the skills they already know.” (Yunus, 2007). However, the Grameen Bank does acknowledge that beneficiaries who take part in a microfinance program that offers training on relevant topics are generally more successful than beneficiaries without any training, information or access to land (Grameen Bank, 2013).
1.2.2.2 Advocates of Teaching Entrepreneurship
As a reaction to the survival skills principle by Yunus (2007), Karlan and Valdivia (2010) assessed whether or not micro entrepreneurs were indeed maximizing their profits without any training. No evidence could be found that a business training increased profit or revenue for already existing micro businesses (Karlan and Valdivia, 2010). However, a positive effect on enterprise revenues for start-up micro businesses, e.g. businesses that were started by beneficiaries after they attended a business training program, was found for business owners who attended a training in which skills such as profit calculation and strategic planning were discussed (Karlan and Valdivia, 2010). Klinger and Schündeln (2011) support the findings of Karlan and Valdivia (2010) and investigated whether or not training and business development programs in developing countries could improve entrepreneurial skills and enhance entrepreneurial activities by focusing on the creation and expansion of the business on a micro level. Klinger and Schündeln (2011) found significant evidence that participants of a business training were more 4% to 9% more likely to start a micro business after attending a training. A beneficiary who attended a business training was found to be 25% to 56% more likely to expand their micro business later on (Klinger and Schündeln, 2011). These findings are also supported by the study of Boum and Locke (2003) who found that self-efficacy, which positively influences the NVP, can be trained and gained through experience. Klinger and Schündeln (2011) also note that a competitive factor might have influenced the entrepreneurs by giving them more confidence about their abilities as an entrepreneur. Klinger and Schündeln (2011) state that not all parts of the business training program were equally successful.
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Unfortunately, the study by Klinger and Schündeln (2011) does not investigate which parts of the business training program did not contribute to the increased percentages of people who started and later on expended a businesses, neither does the research by Karlan and Valdivia (2010).1.3.1 The Influence of Entrepreneurial Characteristics on a Business
An extensive amount of research has been done on entrepreneurial traits, skill and motivation in relation to the success of a business and a lot of the authors agree that a lot more research on the subject is still to be done. Early research mainly focused on finding general characteristics and motives that would define successful entrepreneurs (Brockhaus, 1980). Sandberg (1986) shows that New Venture Performance (NVP) is not a direct result of such characteristics and motives. Sandberg’s (1986) NVP model [NVP = f(E,IS,S)] explains the relationship between the NVP and Entrepreneurial characteristics (E), Industry Structure (IS) and Strategy (S). In other words, the relationship between entrepreneurial characteristics and the success or growth of the business does not stand alone but is a result of more than one factor.
Research on entrepreneurial characteristics and the influence on a NVP that took Sandberg’s (1986) NVP model into account and therefore the various relationships between the NVP and entrepreneurial characteristics, industry structure and strategy is that of Baum and Locke (2003). Baum and Locke (2003) found that vision was positively correlated with venture or business growth. The term vision is not limited to goal setting but includes growth aspirations or imagery and can be best described as strategic vision (Baum and Locke, 2003). Also, strategic vision and goal setting skills were found to be skills that can be trained (Baum and Locke, 2003). In addition to venture growth, profitability, survival and innovation of the business were indicated factors to be further investigated in relation to vision (Baum and Locke, 2003).
Interestingly enough passion and persistence had no direct effect on the businesses performance (Baum and Locke, 2003). The weak results found between passion and persistence in other studies, among which that of Gartner (1989), might be caused by the fact that passion and persistence are more likely to indirectly effect the business than to directly affect the business (Baum and Locke, 2003). In other words, passion for business does not directly influence business growth and success but probably does make it a whole lot more fun.
Self-efficacy, which can also be described as the fact that the entrepreneur believes that he or she has the skills to succeed, has been shown to be best developed by training and previous entrepreneurial experience (Baum and Locke, 2003). The good news, is that besides the fact that self-efficacy can be trained, is that self-efficacy also has a positive effect on NVP (Baum and Locke, 2003).
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Baum and Locke (2003) also found that extraversion, energy and ambition were positively related to firm growth. Extravert and energetic entrepreneurs are often social entrepreneurs who easily get in touch with other parties which in turn is helpful for the expansion of the network and contacts of the entrepreneur, something that is indirectly related to the firms growth rate (Baum and Locke, 2003).1.4 Business Training
Now that the topic of entrepreneurship and the various pieces of evidence on the improvements of entrepreneurship by training have been discussed, this section builds upon this knowledge by discussing the relevant literature on the subject of business training programs. After defining business training, the curriculum and pedagogy of the business training programs studied by Karlan and Valdivia (2010) and Klinger and Schündeln (2011) will be discussed. This section, just like the previous section on entrepreneurship, then investigates the influence of a business training on the micro business. In addition to the influence of a business training on the micro business, the influence of a business training on the MFI and beneficiary are also discussed in this section.
1.4.1 Defining Business Training
In this thesis a business training is defined as a period of time, from a couple of hours till a few years, wherein beneficiaries come together to gain a better understanding of certain business concepts in order to improve their business skills and in turn start a successful micro business. These concepts range from basic business and accounting skills to a need-finding process and group dynamics. The details of the business training programs observed in this study will be discussed into more detail in methodology chapter of this thesis.
1.4.2 Business Training Curriculum
FINCA, a large microfinance organization that is active since 1984 and operates in Latin America, Africa and Eurasia, focuses on general business skills and strategy training in their business training program (FINCA, 2013). The business training that FINCA uses is developed by a collaborative effort between Atinchik, Freedom From Hunger (FFH) and FINCA (Karlan and Valdivia, 2010). Atinchik is an organization that has a lot of experience in developing training materials on business management topics for microfinance programs (Karlan and Valdivia, 2010). FFH has years of experience providing financial training on microfinance products and business development. The business training curriculum was developed through extensive research which included individual surveys, group discussions and feedback of beneficiaries and employees of several MFIs (Karlan
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and Valdivia, 2010). A similar type of business training was also used in the study of Klinger and Schündeln (2011).The business training observed by both Karlan and Valdivia (2010) and Klinger and Schündeln (2011) existed of two modules. The first modules introduces beneficiaries to what a business is, how a micro business works and the ins and outs about the marketplace (Karlan and Valdivia, 2010). Beneficiaries were also trained on the topics of promotional strategies and commercial thinking (Karlan and Valdivia, 2010). The second module explained the importance of separating business and personal money, how to calculate profit and production costs and how to price a product (Karlan and Valdivia, 2010).
1.4.3 Business Training Pedagogy
The curriculum developed by FINCA, FFH and Atinchik focuses on general business skills and strategy training but does not include any individual problem-solving exercises (Karlan and Valdivia, 2010). However, the teaching method includes a discussion with the beneficiaries and short exercises are included (Karlan and Valdivia, 2010). Beneficiaries did exercises like identifying potential customers, competitors and the placement of the business in the market place (Karlan and Valdivia, 2010). Depending on the level of education of the beneficiaries homework may be part of the training (Karlan and Valdivia, 2010). When illiteracy was an issue the training relied heavily the use of visual aid (Karlan and Valdivia, 2010).
1.4.4 The Influence of a Business Training
In order to investigate the influence, as well as the influence of internal and external factors, of a business training the findings of the studies by Karlan and Valdivia (2010), Klinger and Schündeln (2011) and Field et al (2010) are explored in this section. This section is divided into three sections; the influence of a business training on the MFI, the influence of a business training on the micro business and the influence of a business training on the beneficiary.
1.4.4.1 The Influence of a Business Training on the MFI
Increased enterprise revenue of a newly found micro business has a positive impact on the MFI as beneficiary is able to repay their microfinance loan more easily or in a shorter period of time (Karlan and Valdivia, 2010). In addition to the increased enterprise revenues of a newly found business Field et al (2010) found that Hindu women who attended the training increased their loan amounts, which could mean that beneficiaries expand their micro business once they feel comfortable that that they can succeed. Karlan and Valdivia (2010) also argue that the training may improve the goodwill of the beneficiary towards the MFI, which might in turn lead to higher
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repayment rates. Karlan and Valdivia (2010) also found that client retention, which has a positive effect on the sustainability of the MFI, increased after beneficiaries attended the training. Beneficiaries were 4% to 5% less likely to drop out of the program (Karlan and Valdivia, 2010). Karlan and Valdivia (2010) reason that the length of the training program, namely one or two years, might have been one of the main reasons for beneficiaries to quit the program.
1.4.4.2 The Influence of a Business Training on the Micro Business
Karlan and Valdivia (2010) found that a basic business training increases engagement in activities that are being taught in the training. Beneficiaries were more likely to have engaged in activities like separating business and personal money, reinvesting profits into the business, maintaining sales records and strategic thinking about new business opportunities (Karlan and Valdivia, 2010). Beneficiaries were 4% more likely to have maintained sales records and about 5% more likely to have made changes or innovations to the micro business (Karlan and Valdivia, 2010). As previously indicated, Field et al (2010) found that Hindu women who attended the training increased their loan amount and business income. Increased business income suggests that Hindu women did indeed spend their loans on starting a business instead of other expenditures (Field et al, 2010).
1.4.4.3 The Influence of a Business Training on the Beneficiary
The influence of a business training does not stop at higher repayment rates and the engagement in activities like separating personal and business money or strategic thinking; a business training also impacts the beneficiary directly. As could be expected, and as discussed in the previous section, knowledge on business issues and subjects discussed in the training improve when attending a business training. But indirect effects like empowerment and inspiration have been reported as well. Field et al (2010) found that Hindu women felt more inspirational and shared their newfound knowledge with family and friends. Empowerment is a central concept in a lot of Business Training Programs.
1.5 Culture
This section discusses the cultural aspects that might be of influence when it comes to the effect of a business training on the success of a micro business. This section, starts by defining the concept of culture. This section then elaborates on the subjects of religion, language, education and gender based constraints. All of these concepts are discussed within the setting of this study, namely Malawi. The sections on education and gender based constraints also discuss the influence of these factors on the micro business and beneficiary. No influence on the effect of a business training on the micro business of the concepts of religion and language could be found in the existing
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literature. However, this section does discuss these concepts since they might be found to be related to other concepts or found to be of influence in the empirical research phase of this study.1.5.1 Defining Culture
Hofstede (1983) defines culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another”. Culture can be viewed on national, regional, ethnic, religious, gender, social class or even organizational level (Hofstede, 1983). Since cultural is such an extensive subject this thesis limits the discussion of culture to topics that might be of relevance to the question at hand in relation to the subject of culture, namely the influence of culture on the effect of a business training on the micro business. The topics discussed in section are therefore restricted to religion, language and gender differences in Malawi.
1.5.1.1 Religion
The British missionaries who arrived in Malawi in 1859 played an important part in the establishment of churches and therefore a rapid growth of western, in particular Christian, religion in Malawi (McCracken, 2012). Because of the influence of the Christian missionaries 68% of the population, almost 16 million people, nowadays identify as Christians, 25% as Muslim and 7% as other (Kohler, Watkins and Behrman, 2013). Not much research has been done on the influence of religious based aspects on either the MFI, the micro business or the beneficiary. No literature could be found on religion as an influential factor on the effect of a business training on the micro business.
1.5.1.2 Language
Five common languages, among which the two official languages English and Chichewa, are spoken in Malawi (Central Intelligence Agency, 2013). Chichewa, spoken around the Lilongwe area, is spoken by 57% of the population, English is spoken by approximately 20% of the population (Central Intelligence Agency, 2013). No literature could be found on language as an influential factor on the effect of a business training on the micro business or in relation to other possible influential factors.
1.5.1.3 Education
Primary education is not compulsory but the Malawian constitution does state that people are entitled to at least five years of primary education (United States Department of Labor, 2013). Free primary education for children was established in 1994 which greatly increased attendance rates,
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and even recently attendance rates went up from 58% in 1992 to 75% in 2007 (United States Department of Labor, 2013). However, not many children continue their education in secondary school which makes that they have basic reading and writing skills and can only do very basic calculations (World Bank, 2001). Because of the higher attendance rates and improved teaching methods and materials, literacy has increased among the youth (United States Department of Labor, 2013). The United States Department of Labor (2013) reports an increase of literacy of the youth group of 14% between 2000 and 2007, leading to a literacy rate of 82% in 2007. The average literacy rate for women in Malawi is 46,5% (United States Department of Labor, 2013).1.5.1.3.1 The Influence of Education and Illiteracy
Not much research has been done on the influence of the level of education and illiteracy on the success of a business training. It might be of importance to adapt the level of the business training according to the level of education of the beneficiary. However, Karlan and Valdivia (2010) contribute to the issue with two suggestions. Namely that of adjusting the training pedagogy of the training when illiteracy is a problem and that of adjusting the difficulty level of the training (Karlan and Valdivia, 2010). The business training observed by Karlan and Valdivia (2010) relied heavily on visual aid when a large part of the group of beneficiaries was illiterate. Also beneficiaries in groups with a high literacy rate were assigned homework assignments (Karlan and Valdivia, 2010).
1.5.1.4 Gender Based Constraints
Johnson (2000) proposes three general components of gender based constraints female beneficiaries face when starting or operating their micro business, namely the individual-, household and society component. The three gender based constraints from Johnson (2000) perfectly sum up the meaning of gender based constraints.
Johnson (2000) states that women face a variety of constraints when taking and repaying credit, starting and maintaining their business and in responding to incentives, these constraints can be labelled as the individual component of gender based constraints.
The household component can be described as social relations within the direct family, mostly the relationship between husband and wife (Johnson, 2000). However, the household also contains the relationship between the beneficiary and her sons, daughters and other relatives that influence what activities are acceptable for the beneficiary to undertake (Johnson, 2000). The third component of gender based constraints is the component of the wider community. The wider community component entails the perception and actions of society at large, in particular the male half, on the actions of the beneficiary (Johnson, 2000). One can think about stereotypes of appropriate roles for women within society, mobility constraints for women
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because of social norms or the fact that women are excluded from financial services (Johnson, 2000).On a more practical note, FAO (2011) reports that women in Malawi face more difficulties when transforming their labor into paid labor and continuously by translating their paid labor into higher incomes (FAO, 2011). The difficulties women in rural area’s face is mostly caused by a significant domestic work burden (FAO, 2011). Women, both in rural as in urban areas, spend more time on domestic activities than their male counterparts (FAO, 2011). Not surprisingly, FOA (2011) reports that women who spend a lot of their time on domestic activities find it difficult to engage in productive employment and to find productive employment and other income generating activities.
1.5.5.1 The Influence of Gender Based Constraints
When putting Johnson’s (2000) three gender based constraint components, namely the individual-, household- and society component, into context, an example of Field et al (2010) comes to mind. Field et al (2010) found that Muslim women that took part in the training did not benefit from the training at all, unlike the Hindu women who participated in the same business training program. Hindu women who attended the training increased their loan amount and business income, Muslim women did not change their loans nor did they increase their business income (Field et al, 2010). Field et al (2010) suspect that the different effects of the business training on Hindu and Muslim women are based on the higher social constraints Muslim women face in comparison to Hindu women. This example illustrates the gender based constraints women may face in countries were society, which may or may not have been caused by religious reasons, views certain roles, such as being a micro entrepreneur, unsuitable for women.
Another example of gender based constraints is that of the exclusion of women from farmer’s clubs in Malawi. Women, especially divorced or single house hold women, in Malawi are still excluded from certain organizations and clubs that can be of importance in the agricultural industry as well as in other industries (World Bank, 2001). Farmer’s clubs are clubs where one can apply for loans and buy fertilizer (World Bank, 2001). When women are excluded from such clubs this not only makes that women have less chances to apply for loans to expand their business, it also makes that it is very difficult to buy fertilizer which in turn leads to lower or of lower quality harvests (World Bank, 2001).
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1.6 ConclusionIn order to work towards providing Tiwale and CARE with recommendations on adjustments and improvements on their business training programs, the existing literature on microfinance, entrepreneurship, business training and culture, were introduced and discussed in this chapter.
After discussing the evidence on teaching entrepreneurial activities the influence of entrepreneurial characteristics on the success of a business were discussed. In conclusion, the existing literature suggests that strategic vision and self-efficacy are directly related to venture growth. Passion and persistence were found to not be of direct influence on the performance on the business. Extraversion on the other hand might be indirectly related to the growth rate of the business.
This chapter continued by exploring the concept of a business training into more detail. This section started off by looking into the curriculum and pedagogy of two prominent studies, that of Karlan and Valdivia (2010) and Klinger and Schündeln (2011), after which the influence of a business training on the MFI, the micro business and the beneficiary were discussed. In conclusion, a basic business training has the potential to increase revenues and to boost the partaking of a beneficiary in activities like separating business and personal money, reinvesting of profit into the business, maintaining sales records and strategic thinking. In addition to these findings, empowerment of beneficiaries was reported as well.
The last part of this chapter investigated the concept of culture, among which the topics of religion, education, language and gender-based constraints. It became clear that not much research has been done on the influence of culture within the business training concept. However, suggestions on using visual aid and homework assignments for groups with high literacy rates were found.
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2. DESIRED KNOWLEDGE PRODUCTWith the goal of this study, namely to provide Tiwale and CARE with recommendations on adjustments and improvements on their business training programs based on the study on influential factors on the effect of a business training on the micro business within their business training programs, in mind, a literature study has been executed. While performing literature research it became clear that some of the existing theories on influential factors on the effect of a business training on the micro business have to be investigated further in order to successfully provide Tiwale and CARE with valuable recommendations. This chapter therefore identifies the concepts to be further investigated and then addresses the need for empirical research. After which a research question, which will be used to develop a knowledge product and to formulate valuable recommendations to be used by Tiwale and CARE, will be formed.
2.1. Potential Influential Factors to be Further Investigated in an Empirical Study
Existing literature is mostly written on whether or not a business training influences the micro business. The existing literature often does not elaborate on the factors that actually cause a business training to be of influence, whether it is a positive or negative influence. Besides the lack of information on possible influential factors on a business training that influence the effect of a business training on the micro business, the relationships between the various concepts have not yet been explored in the existing literature. The topics discussed in this section were found in the existing literature and worth exploring into more detail as they may be of influence on the effect of a business training.
2.1.1 Length of a Business Training
Karlan and Valdivia (2010) based their findings on a business training programs that lasted for one or two years. Not all MFIs will be able to facilitate a business training of this length because of cost- and other constraints. Not to mention the burden such a lengthy business training puts on the beneficiary. Beneficiaries will have to go to the trouble of traveling to the location where the training is given while also having other responsibilities like taking care of their children, housework or other job responsibilities. We therefore identify the length of the business training as topic to be further investigated.
2.1.2 Cultural Aspects
The possibilities of minimalizing certain cultural aspects, cultural aspects that prevent a business training from living up to its potential, should be further investigated. Little is known on the
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influence of cultural factors like religion and gender based constraints. This makes that cultural factors are a topic to be further explored in this study.2.1.3 Education and Literacy
Little research has been done on the curriculum and pedagogy of the business training. This study will therefore further investigate what parts of the business training and teaching styles directly influence the success of the micro business. The relationships between various concepts, concepts like education, religion and gender based constraints, will be taken into account when exploring the topics of the curriculum and the pedagogy of a business training.
2.1.4 Entrepreneurial Characteristics
More research has to be done on the influence of entrepreneurial characteristics on the NVP and in the case of this study on the effect of the business training on the success of the micro business. This study will investigate whether strategic vision indeed has a positive effect on the NVP and if passion and persistence have, as Baum and Locke (2003) say, no direct effect on the NVP. The ability to improve self-efficacy by training and the influence of characteristics such as extraversion, energy and ambition on success of a business will also be further investigated.
2.1.5 Additional Factors to be Investigated
In addition to the factors that have been identified in the existing literature, it is of great importance to carry out more research on influential factors that impact the influence of a business training on the micro business within the setting of Tiwale and CARE. For example, it would be very interesting to investigate whether self-efficacy, which was identified in the literature as a skill that can be obtained through training, is enhanced by a competitive element. Or if a business training with interactive elements has a greater effect on the success of the business than a business training that does not incorporate visual aid or interactive assignments. In addition to doing more research on influential factors, it would be very interesting to also look into the relationships between influential factors, for example the relationship between a lack of support from a husband and the strategic vision of the beneficiary or the possible relationship between illiteracy and self-efficacy
2.2. The Need for Empirical Research
As the goal of this study is to provide Tiwale and CARE with recommendations on adjustments and improvements on their business training programs, the factors previously identified, as well as
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factors yet to be identified within the setting of the business training programs of Tiwale and CARE, should be further investigated in order to establish their influence on the effect of a business training on the micro business. This study therefore continues by conducting empirical research on influential factors, and the relationships between these factors, on the effect of a business training on the micro business within the setting of the two cases of Tiwale and CARE.2.3. Research Question
In order to successfully provide Tiwale and CARE with recommendations on improvements and adjustments of their business training programs, the development of a knowledge product is of great importance. In order to develop a knowledge product, a research question was formulated; What factors are of influence and how are they of influence on the effect of a business training on the success of the micro business within the setting of the two business training programs of Tiwale and CARE? With the findings, or in other words the knowledge product of this study, recommendations can be given to both Tiwale and CARE on possible improvements and adjustments of their business training programs.
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3. METHODLOGYThis chapter discusses the goal of this study into more detail. After which the case definition is discussed. This section explores the setting of this study and provides more information on the selected MFIs and their business training programs. This chapter then continues by explaining the data collection methods after which more information will be given on the interviews. Finally, the measurements and data analysis of this study are discussed.
3.1 Goal of the Study
This thesis aims to provide Tiwale and CARE with valuable information, and suggestions on improvements and adjustments, on factors that influence the effect of a business training on the micro business within the setting of their own business training programs. This will lead to more efficient and effective business training programs which will in turn help beneficiaries and their micro businesses to become more successful. We do so by providing Tiwale and CARE with recommendations that are based on newly developed theories on factors that influence the effect of a business training on the micro business within the setting of the business programs of Tiwale and CARE. In addition to providing Tiwale and CARE with information on influential factors, the newly developed theories could also be used by MFIs with similar situational factors when adjusting or developing their business training programs. More on the generalizability of this study is discussed in the final chapter, that of the discussion and conclusion of this thesis.
3.2 Research Method
In order to provide Tiwale and CARE with recommendations a grounded theory approach is adopted in order to formulate theories on influential factors on the effect of a business training on the micro business within the setting of the business training programs of the two MFIs. This section first forms a definition of theory after which the research methods is discussed into more detail.
3.1.1 Defining Theory
“A theory is a statement of relations among concepts within a set of boundary assumptions and constraints” (Bacharach, 1989). When developing a theory it is important to keep the boundaries of the newly developed theory in mind. Not only explicit restrictions, like the setting in which the study is conducted, also implicit values influence the development of a theory (Bacharach, 1989).
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3.1.2 Grounded Theory ApproachIn order to develop theories on the influential factors of the success of a business training on the micro business, within the setting of the two selected cases, this study adopts a qualitative data collection method and a grounded theory approach. The grounded theory approach can be defined as “the discovery of theory from data systematically obtained from social research” (Glaser and Strauss, 1967). The grounded theory approach is a perfect approach when exploring integral social relationships and group behaviour when little research on the situational factors has been done (Crooks, 2001). Since little research has been done on factors that influence the effect of a business training on the micro business, the grounded theory approach suits the needs of this study perfectly.
3.1.2.1. The Grounded Theory Approach Process
The grounded theory approach can be described as a flexible process in which the first step is that of the collection of data (Charmaz, 1995). The researcher becomes theoretically sensitive by exploring the existing literature which will in turn help the researcher to distinguish important factors identified by the participants of the study (Charmaz, 1995). However, it is important that the researcher begins the research with as few predetermined ideas as possible (Charmaz, 1995). This is not to say that existing literature and prior knowledge and experiences of the researcher cannot be used when developing categories (Charmaz, 1995). However, attention should be paid that the categories are not forced to fit the existing literature and prior knowledge of the researcher (Charmaz, 1995). The second step of the grounded theory research process is that of outlining key points and findings that are marked with codes which are then categorised into concepts (Charmaz, 1995). After which these concepts are used to form categories which are the start of the development of a new theory on the topic that is being researched (Charmaz, 1995). More information on the grounded theory approach and the exact tools used in relation to this study will be discussed throughout this chapter.
3.2 Case Definition
This section discusses the two selected cases, namely Tiwale and CARE. After which more information on the two MFIs and their business training programs will be provided.
3.2.1 Selected MFIs
When selecting the microfinance projects of this study, attention was paid to the experience, size and type of organization. By selecting two crucially different organizations the findings of this study are slightly more generalizable as when the study would have been based on two similar
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organizations (Eisenhardt, 1989). The next section discusses the two different microfinance projects into more detail.3.2.1.1 Tiwale
The first case of this study is the microfinance project of Tiwale, a start-up MFI in Lilongwe. Tiwale was founded in 2012 by Ms Chilemba after obtaining a fund from the British Counsel. Tiwale is a community based organization and strives for economic development and women empowerment (personal communication Ms Chilemba, July 15th, 2013). Tiwale only operates during the summer period and employs 7 employees during this period (personal communication Ms Chilemba, July 15th, 2013). At the time of writing Tiwale just completed its second microfinance program in Nsilinza, a village just outside of Lilongwe. The loans were paid back on a weekly basis over a period of 9 weeks. All the groups successfully started businesses, most of them selling food items, and have all paid back their entire loan at the end of the 9 week period.
3.2.1.2 CARE Malawi
The second case of this study is that of CARE Malawi. CARE is an experienced humanitarian organization that is active in 84 countries and has reached over 83 million people through its 997 poverty-fighting and humanitarian aid projects.
CARE Malawi, part of the worldwide CARE network, works with the Village Savings and Loans Association (VSLA) model (VSLA, 2013). The VSLSA model allows beneficiaries to pool their savings through the Accumulated Savings and Credit Association (ASCA) model and allows its members to borrow from the common savings pool when wanted or needed at moderate interest rates (VSLA, 2013). The VLSAs have 15 to 30 members who all have an individual passbook to keep track of their savings, in the form of shares, and loans (CARE, 2013). Members obtain between one and five shares at each weekly meeting, which is based on their income of that week (VSLA, 2013). VSLA groups also allow male participants, where a lot of other microfinance projects do not (VSLA, 2013). The VSLA system claims to be the most successful microfinance system with the highest payback rates in the industry (VSLA, 2013). A crucial difference between the traditional microfinance- and VSLA system is that the VSLA system asks beneficiaries to create their own funding in a period of four weeks where the beneficiaries of the microfinance system rely on external funding. According to Mr Kumwenda the VSLA system is a very sustainable system that does not rely on external funds except for some, relatively small, operational costs (personal communication, July 19th 2013). Mr Kumwenda notes that another important difference is that the members of the VSLA decide on the interest rates themselves and appoint their own leaders (personal communication, July 19th 2013).
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3.2.2 Business Training ProgramsNow that the organizations have been discussed into more detail this section provides the reader with more information on the curriculum, teaching styles, organization and other relevant information on the business training programs of both Tiwale and CARE.
3.2.2.1 Business Training Tiwale
Tiwale organizes a week-long business training program that discusses issues ranging from empowerment to bookkeeping and the importance of separating business and personal money, while also organizing fun activities in between the classes. The training was given in groups of approximately 10. Tiwale’s beneficiaries, in groups of 3, wrote a business plan at the end of the week and discussed this plan with the facilitators. During the last class the groups were able to ask the teachers for advise on their business plans and discuss other concerns they might have had. After which the facilitators graded the business plans in order to determine which beneficiaries were be eligible for the loan of MK20.000 (approximately €40).
3.2.2.2 Business Training CARE Malawi
Mr Kumwenda explains that CARE trains village agents, responsible for the implementation of the VSLA system in certain areas, on a subjects ranging from the structure and rules of meetings to buying and selling shares and banking (personal communication, July 19th 2013). The village agents are trained according to the Field Operations Manual (Village Savings and Loans Associations Program Guide, 2013). After the village agents received training, the VSLA groups were formed.
Beneficiaries of the groups received training on topics such as group dynamics, saving, lending and debt management. Mr Kumwenda adds to this by explaining that CARE has recently added two training modules to this curriculum recently to improve the overall quality of the business training program, namely a training on financial education and a training on business management (personal communication Mr Kumwenda, July 19th 2013). However, the participating groups of this study had not yet received the training on financial education and business management (personal communication Mr Kumwenda, July 19th 2013). The training was given by a teacher trained by CARE who spoke about the topics of group dynamics, saving, lending and debt management for a period of three hours. No visual aid, writing exercises or group discussions and assignments were used in the training observed. Mr Kumwenda explains that writing exercises are not used as a teaching method because of the low literacy rate in most of the VSLA groups (personal communication Mr Kumwenda, July 19th 2013). Mr Kumwenda was unable to explain the lack of visual aid and group discussions (personal communication Mr Kumwenda, July 19th 2013).
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3.3 Data CollectionThe data collection took place in the summer of 2013, from mid-July to mid-September. Eisenhardt (1989) and Charmaz (1995) recommend using multiple data sources like in-depth interviews, observations, written documents and project reports. In depth interviews served as the main source of data collection, a method often used when working with a grounded theory approach (Charmaz, 1995). In addition to the interviews, observations and written documents, like repayment schedules and program guidelines, served as additional information. The questions of the interviews were time and process based. Patton (2002) points out that questions in the post, present and future tense can be combined with questions regarding certain concepts. The structure of the interview was therefore based on the development of the business, starting with the first contact with the organization. Structuring the interview based on the process of the business allowed for investigation of the influence of a business training on the various stages of the business. Because of the relative simple business activities, and the ease of setting up a business of the sort, it was possible to interview several beneficiaries in various stages of the development of the business. c In addition to asking questions about the process of the micro business the beneficiary was asked to elaborate on certain topics when there was reason to do so based on observations or answers given by the beneficiary. Because of the language barrier this method allowed for more freedom in conversing with the beneficiary as when a more structured approach would have been chosen. Not to mention the topics that beneficiaries brought up that would not have been discussed in a more structured interview. However, because of the language and translational barrier this research ended up being more deductive then intended. Beneficiaries would often answer questions with very basic answers which forced the interviewer to ask more specific questions than planned. v In order for the beneficiary to feel comfortable and for the interviewer to have enough time to observe the situation, the interviews lasted about one hour. The interviews took place before or after the weekly meetings or when the repayments were collected. But a couple of visits were also paid to the place where the activities of the business took place, by doing so the interviewer was able to ask questions relating to the business based on observations during the interview. Beneficiaries were comfortable in an environment familiar to them and did not have to go through the trouble of traveling to a certain location which would have prevented them from doing their everyday activities. All the interviews have been recorded to prevent the loss of data.
3.4 Interviews
This section outlines the selection criteria of the beneficiaries that were interviewed, the number of beneficiaries that were interviewed and provides the reader with more information on the participating beneficiaries of this study.
