“From darkness into light”: the mAcrocredit model

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“From darkness into light”: The mAcrocredit model

‘Business.’ What does that even mean? I’m not sure what it means to you. But for us, it’s our door – our gate – to a better life. Not for our individuals’ lives. I mean for the lives of our people. My community, my children and grandchildren. For my neighbors, my partners in life.

It’s a heavy door, I admit, but one that can only be opened if we work together. We need to learn how to respect ourselves again, how we can use our skills, our knowledge, to achieve things for ourselves.

Maybe – yes, we do need help from ‘mzungus’ (Swahili: foreigners), but it is our own hands that need to build our communities. We need to learn how to take care of ourselves again.

Interview with Village Company member, Babati, Tanzania (2014)
Laura Claus
Laura Claus, PhD student, Cambridge Judge Business School

This is reality

According to the 2014 UN Millennium Project report, more Africans live in a state of extreme poverty and hunger than ever before. In the sub-Saharan region, the number of people living on less than $1.25 a day has increased to over 415 million from 290 million in 1990. That is more than 40% of the sub-Saharan population, and that is significantly more than the population of the USA and UK combined.

589 million people living without electricity, 738 million who lack access to clean water, fewer than 20% of women who have access to education, and $1 trillion in ‘dead aid.’ This is just the short version of what rural villagers in sub-Saharan Africa call their “reality”.

Taking care of ourselves again

But these people have a dream. A dream to “take care of ourselves,” a dream of “a better life,” a dream of “hope.” Now, how can their dreams become reality? How can they break free from the spiral of poverty?

Village Inc. Africa, an initiative located in Tanzania suggests bridging a for-profit, capitalist approach and the pursuit of social benefits built on the pillars of dignity and business excellence. It is the Village Companies (VC), legally incorporated for-profit enterprises, which represent the core of the idea. Run by a group of local, community-elected villagers, the VCs choose to pursue different business activities such as pig farms, bull herds, beehives, or sunflower fields. The profits they then generate serve to renovate classrooms, build teachers’ houses, set up medical dispensaries, provide housing opportunities, and by hiring workers, contribute to lowering the rural unemployment rate as well as the urge of urbanisation.

Hence, VCs have ownership and are in control in the creation of financial and community benefits from their ongoing operations; in their words “by ourselves, for ourselves.”

m-A-crocredits – not microcredits

Initially, the VCs are supported by so called ‘macrocredits.’ Macrocredits are defined as “an investment made in Village Companies which develops a stream of revenue through the creation of new products and services that benefits the investors, employees and communities through the intentional distribution of profits.”2

Phonemically related to microcredits, the semantics of the two terms differ fundamentally. Designed as small loans that serve individual borrowers, microcredits help attain a certain (though debated) level of personal subsistence. However, arguably, microcredits have not been very efficient in developing businesses or communities.

Rather than micro-lending to individuals, macrocredits are offered to groups of entrepreneurs. Because macrocredits are tied to a commitment of an ‘intentional distribution of profits,’ which describes the recipients obligation to serve three different ends with the profits generated from macro-financed activities – reinvestment in their businesses, repayment of the macrocredit (at an interest rate of 12%), and the implementation of a community-chosen social need – macrocredits are a promise to create long-term shared value for collective groups.

Dream big, but start small

And that’s not all. Assisted by a local Village Company incubator and a global team of consultants, the model has the capability to scale – to reach communities far beyond the original context of rural Tanzania.

With the vision to foster a network of VC clusters throughout Africa, the existing VC communities “dream big, but [know they have to] start small.” And while they know that “it is our own hands that need to build our communities,” they are also aware that the ‘heavy door’ to push for change “can only be opened if we work together.” And with we, they mean you, me; hence – us.

From darkness into light

By the end of the century, almost half of the world’s children will be African2. And while we can wait for Africa’s journey into poverty to continue, maybe it’s time to stop – to “stop waiting, because waiting means stagnation, stagnation means things will never change.”

Maybe it’s time to consider us all as equals, to share our knowledge and expertise, as well as our encouragement and care. The macrocredit-model may not provide the solution to all issues but it’s a first step. It more than not is a promising new approach in creating scalable, shared value not just for individuals, but for groups of entrepreneurs and their communities. In the villagers’ words, the model has “helped villages move from darkness into light […] giving us a chance – if nothing, a chance – to succeed in getting ourselves back up.”


1 Village Inc. Afrifa’s website
2 Read “Africa’s population: Can it survive such speedy growth?”, The Economist, August 2014

All quotes are from villagers interviewed in Tanzania, 2014.

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