This year Solar Sister’s local customer service team in Tanzania conducted 86 interviews with Solar Sister alumni — entrepreneurs who were once active but now no longer run clean energy businesses.The goal of the survey was to better understand why some entrepreneurs scale up their businesses and others do not.
Over two thirds of entrepreneurs in Tanzania remain active over time in their businesses. But what about that final third? — Abby Mackey
Behaviours
The data shows a variety of reasons that cause women to leave the program, many of which are rooted in systemic inequality and poverty. See the results summarized in the table below. Entrepreneurs reported poor health, time limitations and behaviours rooted in cultural beliefs as key challenges. Cultural reasons largely refer to female entrepreneurs reporting that their husbands no longer permitted them to run the business. Health issues included pregnancy, chronic health problems and temporary sickness. These results underscore the importance of Solar Sister’s focus on providing women in last mile communities access to economic opportunities that build individual agency and create household safety nets and resiliency in the form of savings.
Competition and capital
Entrepreneurs commonly reported competition and capital as major challenges to maintaining their businesses. Competition was mainly from low quality and faulty products flooding local markets, which underscores the importance of building a strong brand and consumer awareness in last mile communities. Solar Sister is continuing to scale up our marketing efforts through radio campaigns, new marketing materials for individual entrepreneur businesses and strategic partnerships with institutions like International Finance Corporation’s Lighting Global.
Gladys Ndalo, pictured below, is a Solar Sister entrepreneur in Tanzania. She is 56 years old, a farmer, mother of seven children and six grandchildren. She is pictured with a new poster developed in partnership with Khangarue Media to increase the visibility of Solar Sister businesses in communities.
The capital issue
The most commonly reported reason that women leave the program is due to capital. This answer actually opens the door to an interesting question. When an entrepreneur begins a business, she makes an initial inventory down payment, but after that first investment of capital, she turns over her inventory month after month. New capital should not be a major challenge as ideally an entrepreneur should maintain capital by reinvesting the proceeds from sales. In this case, new capital would be needed only when the entrepreneur wants to scale up to a new level. However, data reveals that this continues to remain a challenge likely due to capital originally coming from a loan (that then cannot be turned over and has to be repaid within a short time period) or entrepreneurs not preserving their initial investment. And in fact, our data shows that entrepreneurs in our program who begin their businesses with a loan have lower sales and tend to drop out sooner.
External pressures
Examining why entrepreneurs drop out is essential to improving our impact. This research leads us to explore more deeply the pressures that lead to entrepreneurs pulling capital out of the business, and to create systems and tools that will help them reinvest more easily. Providing loans is not the silver bullet because we we know that investing personal capital is a critical factor of an entrepreneur’s successful sustainable businesses. Therefore, lowering the bar of entry – but not removing it – for low-income women might be the best way to support them to grow long term businesses. Solar Sister’s partnership with Women for Women International proved this to be a successful approach.
Solar Sister knows that 100% retention is not possible in the program. This is a unique business opportunity that not every woman will succeed in given the many systemic challenges that women face in last mile communities in Tanzania. Wherever possible though, Solar Sister is working to identify and tackle barriers to entrepreneurial success and to open the door of economic opportunity to more and more women.
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Last Mile Learning is a monthly blog series by Grants and Impact Manager, Abby Mackey. This series shares our experiences, data and learning from our work with women-run renewable energy businesses in Nigeria, Tanzania and Uganda.