For the immigrant and refugee community it is often the lack of access to finance that blocks successful entrepreneurship, but microfinance could be the answer!
Abdul (who asked for his real identity and origins not to be revealed) is from the Afghan border with Pakistan and now lives with his family in Belgium. He is in his mid 40s with an older sister and a younger brother who live nearby. Although they have been granted asylum, their legal position in Belgium is unclear but they are determined to establish themselves: “I was a doctor in Kabul and my brother was a teacher … we managed to get out with our families but we’re not allowed to work in our professions so we started a business washing cars.” It’s a fairly typical story in the refugee community and they are fortunate that the local authority has granted them permission.
Their business is situated in an old garage unit in a prosperous residential area near Brussels, and they provide a highly efficient hand-washed car valeting service seven days a week from around 7.30am to 21.00 each day. When they started the business in 2013, it was just Abdul and his brother, while his sister did the bookkeeping and handled the relationship with the fiscal authorities. By March 2016, the business had grown to include two other refugee workers and they regularly valet up to 60 cars a day. The men are all paid the same and the hourly rate is not that great, but the business is thriving and growing.
When asked what the greatest difficulty had been in getting the business started, Abdul said, “We had no access to finance. The banks wouldn’t touch us because we had no credit rating, so we turned to local microfinance sources, people who lend small amounts of money for short periods of time with low interest rates. We raised just enough to buy the equipment we needed and to pay for rent, lighting and water.”
After a year of subsistence level earnings, they had paid back their microloans and were able to raise new ones that allowed them to have heating and some much needed additional equipment. Again, long hours and low wages have allowed the business to grow and they have a regular and loyal clientele who pay €20 per valeting. Abdul has plans for further improvements, but he still does not have access to bank finance and so, as each microloan is paid off, he takes out a new and larger loan. “We are building a reputation as being reliable borrowers and our microfinance lenders support us. The great thing is that microfinance is very informal and built on trust … maybe we’ll never have to go to a bank!”
Last November, HRH The Grand Duchess of Luxembourg, speaking at the SME Assembly, expressed her continuing support for microfinance initiatives. Although her direct experience was with microloans for women entrepreneurs in India, microfinancing in general is becoming well established in a wide range of countries with various organisations acting as a meeting point between micro-lenders and those in need of finance.
More information on microfinance is available from:
Kiva, an American microfinance meeting point