Florence, a teenager from northern Rwanda, understands what it means to struggle and to persevere. When her parents could no longer afford her school fees, she was forced to drop out of secondary school, leaving her future uncertain.
Living in a rural community with few economic opportunities only deepened her hopelessness. But everything changed when she was introduced to Village Enterprise’s poverty graduation program, which offered her a second chance to pursue her dreams through entrepreneurship.
At 18, Florence joined the program and launched a mobile bakery with two other women, traveling by bicycle and selling baked goods in local markets. With guidance from a business mentor and startup cash from Village Enterprise, their venture flourished. Using her business profits, Florence re-enrolled in school, paying her own tuition and even buying a new school uniform. “I am proud of myself knowing that the future is in my own hands,” she says.
Florence’s story is just one of many examples of how our poverty graduation model is changing lives across rural Africa. This approach is not a temporary fix; it’s a solution for building long-term, sustainable businesses that thrive well beyond the program.
Instead of relying on short-term aid that eventually runs out, we focus on personal agency and restoring dignity. By providing participants with the tools and knowledge needed to escape poverty permanently, they can confidently navigate all that life throws at them, and focus on building livelihoods and futures they’re proud of.
In the following sections, we explore the core elements of our poverty graduation model and its far-reaching impact on communities throughout rural Africa.
What is Village Enterprise’s poverty graduation model?
The Village Enterprise poverty graduation model is a sustainable approach to alleviating extreme poverty in rural Africa through entrepreneurship. Adapted from BRAC’s Targeting the Ultra-Poor poverty graduation program developed in 2002, our model equips vulnerable women, refugees, and youth with the training, resources, and mentorship they need to launch climate-smart businesses and savings groups.
Equipped with reliable incomes and savings, our entrepreneurs are able to “graduate” out of extreme poverty through their own hard work, creative ingenuity, and determination.
Our model includes several components such as business training, startup cash, savings groups, and mentorship. These elements not only help participants on their journeys as first-time business owners, but also cultivate resilience against challenges like climate change, global inflation, conflict, and other unexpected shocks.
Ultimately, the model ensures that participants are not just surviving but thriving, breaking the cycle of poverty and building a brighter, more resilient future for themselves and their families.
How does the poverty graduation model work?
The Village Enterprise poverty graduation model takes individuals step-by-step through building and growing successful businesses. Here’s how we make it happen:
1. Identifying the right participants
We work closely with local communities to identify households living below the extreme poverty line of $2.15 per day. Beyond income, we also consider factors such as the lack of prior business training or the inability to meet basic family needs. This ensures that we direct resources to those who need them most.
2. Business savings groups (BSGs)
Starting a business is important, but financial and social support is equally essential. Throughout the program, participants join business savings groups (BSGs) made up of 30 entrepreneurs each. These groups create a social and financial safety net, allowing members to pool savings, provide loans to one another, and build collective financial responsibility.
Through our BSGs, we also introduced a new type of savings program called Savings With A Purpose (SWAP), helping participants save for specific assets of their choice and further supporting their journey toward financial independence.
3. Training
Next comes intensive, hands-on business and financial literacy training. Our curriculum includes lessons on sustainability, goal setting, family support, and leadership skills, ensuring that businesses can thrive in the long term.
We teach the women, refugees, and youth we serve to think like entrepreneurs, looking for untapped business opportunities and how to use their unique strengths and skills to operate and grow their businesses.
4. Seed capital
After training, participants form groups of three to launch a business of their choice. We provide business grants—also known as startup cash, seed capital, or cash transfers—through mobile transfers. Participants receive half of the grant immediately after training, with the remaining amount disbursed six months later, following a progress review by a business mentor. Grants vary in size depending on external factors such as location, but they are all at least USD 180.
Research shows that combining cash transfers with hands-on business training leads to a significant increase in household income that persists for years.
5. Ongoing mentorship
Throughout the program, participants receive training and coaching from a local business mentor who is from their community. Village Enterprise’s business mentors offer personalized support, checking in regularly and providing hands-on coaching in areas like business logistics and group management.
To ensure mentorship is as effective as possible, our enumerators use regular surveys to collect real-time data on how each business is doing. This allows mentors to personalize their guidance and provide tailored support.
6. Access to markets and financial services
Access to large markets and financial services—such as banks—is often limited in rural areas. We address this by training entrepreneurs to navigate local markets and work with market systems experts who help connect them with buyers and sellers. Whenever possible, we also link entrepreneurs with financial institutions and government programs, providing them the opportunity to scale their businesses.
7. Graduation and long-term impact
At the end of the program, each community holds a graduation ceremony to celebrate the entrepreneurs, their hard work, and their progress toward graduating out of poverty. BSGs also distribute the savings each entrepreneur has accumulated throughout the program.
By the time they graduate, participants have the skills, confidence, and resources to run their businesses on their own, paving the way for long-term financial security. While the program officially ends at graduation, its impact on the lives of entrepreneurs, their families, and their communities will be felt for generations.
Going beyond financial success: Tackling the root causes of extreme poverty
To truly eradicate extreme poverty in rural Africa, we need to take on the root causes. This includes gender discrimination, the impacts of climate change and environmental degradation, displacement, hunger and malnutrition, and lack of access to digital technology.
Women’s empowerment
Over 83% of our program participants are women, and we empower them to become decision-makers and leaders in their communities.
Take Sharon from Agago, Uganda. She now chairs her business savings group, encouraging other women to embrace leadership roles. “Because of how much I have grown through Village Enterprise, I am inspiring other women to step into leadership positions at any level,” she says. Sharon’s success has allowed her to purchase household assets and support her family, breaking social barriers and motivating others in her community.
Supporting refugees
In partnership with Mercy Corps, we created DREAMS (Delivering Resilient Enterprises and Market Systems) to support refugees. This model merges Village Enterprise’s poverty graduation program with Mercy Corps’ market systems development expertise, equipping refugees with the skills and resources needed to run sustainable businesses and rise out of poverty.
This collaboration supports refugees in building self-reliance and also strengthens the economic fabric of the communities they join. Learn more about our efforts with DREAMS here.
Climate resilience
We help communities mitigate the effects of climate change by teaching them how to adapt to unpredictable weather patterns. Entrepreneurs like Wilson use these skills to keep their businesses strong despite shifting conditions. This improves their livelihoods while promoting environmental sustainability.
Conservation
Our model encourages participants to start businesses that protect local ecosystems and avoid harmful practices like illegal lumbering or poaching. By promoting eco-friendly initiatives, entrepreneurs contribute to conservation efforts, helping restore protected environments and safeguard endangered species. This dual focus on economic success and environmental stewardship enables communities to thrive while preserving their natural resources.
Digital innovations
We leverage technology to enhance our participants’ entrepreneurial journeys through tools like the DreamSave app, a digital savings ledger designed by DreamStart Labs. This tool helps entrepreneurs track savings, build credit, and maintain accurate business records.
In West Pokot County, Kenya, the Tapoyen business savings group has replaced traditional paper ledgers with DreamSave, cutting their meeting times from two hours to just 45 minutes. Grace Chemtai, the group’s chairwoman, shares, “Attendance has improved since we started using DreamSave, and our savings have increased.” Groups using the app have seen an average 50% rise in savings and an 85% increase in attendance.
As Meshack Mbinda, our Senior Director of Technology Solutions, says, “Technology helps us reach more people and have a greater impact in our fight against extreme poverty.”
Tackling child malnutrition
Our program also addresses acute child malnutrition by implementing interventions that promote healthier lives. By helping families escape poverty, we ensure children receive the nutrition they need to thrive.
Through initiatives like the USAID-funded Nawiri Project, we have adapted our poverty graduation model to include nutrition-sensitive components, such as cash transfers for food and health education.
What makes the Village Enterprise model unique?
The Village Enterprise model stands out for several reasons:
Cost-effectiveness
Our poverty graduation model delivers an impressive return on investment. For every $1 donated, entrepreneurs generate $5.34 in lifetime income. This underscores the efficiency of empowering individuals to create their own economic opportunities rather than perpetuating a cycle of dependency on ongoing aid.
The emphasis on financial independence
Rather than offering temporary relief, our model promotes self-sufficiency and long-term growth. For example, after fleeing conflict in South Sudan and struggling to provide for her four children, Susan started a retail business through our program, enabling her to provide three healthy meals a day for her family and school fees for two of her children.
“I feel very confident and respected by my children and community. Thank you for helping a hopeless widow have hope again,” she shares.
A community-led approach for long-term independence
We customize our poverty graduation model to meet the specific needs of each community. For instance, in areas with high malnutrition, we include nutrition education, while in regions affected by climate change, we promote climate-smart businesses.
Consider Wilson, a farmer from Katabe Village, who improved his unsustainable farming practices through our training. Now, he has increased his profits and launched a beekeeping business, allowing him to pay for his children’s education and build a new home.
These success stories highlight how our community-led approach and emphasis on targeted interventions lead to lasting change and forge a path toward resilience and growth.
Proven impact: Real results backed by research
Our poverty graduation model has been proven effective at ending extreme poverty by rigorous research. In 2018, Innovations for Poverty Action (IPA) conducted a randomized controlled trial (RCT) involving over 6,378 households in Uganda, providing robust evidence of our program’s impact.
Participants in our program experienced significant improvements, with an average increase of 6.3% in monthly consumption and 5.8% growth in net assets compared to the control group. With a projected return on investment of 534% and full cost recovery within three to four years, our model demonstrates strong cost-effectiveness.
The model’s impact extends beyond Uganda, with positive results across six countries, showcasing its versatility and effectiveness in various contexts, demographics, and populations. This includes a recent evaluation of the Village Enterprise Development Impact Bond (DIB) in Kenya and Uganda further supporting its broader implementation.
Beyond the data, the impact of our work is evident in everyday life.
Take Grace from Uganda, who diversified her income through retail, farming, and goat rearing to provide nutritious meals for her nine children. Or Lotorupe in Kenya, who started a goat-selling business and expanded into groceries, ensuring her children receive consistent, nutritious meals. In Ethiopia, Halima turned her situation around by launching a honey business and trading goats to support her family’s healthcare.
To dive deeper into their inspiring stories, check out the full journeys of Lotorupe, Grace, and Halima.
Partnerships and collaborations: A collective effort
Ending extreme poverty is a complex challenge that goes beyond just economic issues. Conflict, displacement, inflation, and climate change all contribute to the cycle of poverty, affecting income, education, and health.
At Village Enterprise, we understand that we can’t tackle these multifaceted problems alone. That’s why we collaborate with various organizations, including government agencies, non-profits, and international bodies. Here are some of our partnerships:
The Starbucks Foundation
We help women in coffee, tea, and cocoa-growing communities start sustainable businesses, supporting the foundation’s mission to impact 1 million women and girls.
DREAMS program with Mercy Corps
Funded by the IKEA and Conrad N. Hilton Foundations, this program combines our poverty graduation model with Mercy Corps’ expertise to promote refugee self-reliance.
PARKS project
In partnership with the Ngogo Chimpanzee Project and funded by the Arcus Foundation, PARKS reduces poverty while protecting endangered species and habitats.
Wildlife Conservation Society (WCS)
Our decade-long partnership with WCS addresses poverty alleviation and wildlife preservation through a holistic approach.
Through these collaborative efforts, we foster collective action to effectively address the numerous drivers and effects of poverty.
Why this matters now
Poverty alleviation is more urgent than ever. As challenges like climate change, conflict, and economic instability escalate, Village Enterprise’s poverty graduation model provides an effective solution to break the cycle of poverty—for good.
Explore our Ways to Give to see how you can support our mission and contribute to a future where everyone has a chance to pursue their dreams.