2. Current Development Status Natural Factors 1: Location & Geography Location: Eastern Africa boarding the Indian Ocean between Somalia and Tanzania Climate: from tropical along the coast to arid toward interior Arable Land: 8% (USA 18%, CH 10%) Natural Hazards: reoccurring droughts, flooding during heavy rain falls
7. Obstacles to DevelopmentInternal Factors 1 Unemployment of 40% -> higher crime rate, more instability, stress etc -> -> poverty trap Corruption in government (144th of 159 countries) -> less funding from government, reduced donor support, less income distribution among the people (rich get richer poorer get poorer), less tourism, less aid, slower infrastructure development -> -> poor government trap Political and economic hangover from violence during 2008 elections -> resentments
9. Obstacles to DevelopmentExternal Factors 1 Unstable neighbors (e.g. Sudan, Somalia, Ethiopia -> refugees, possibly spreading tribal conflicts and reduced trade Global food crisis Global financial turmoil
10. Resources and Potential Internal Advantage 1 Relatively high literacy (85%) Regional hub for trade and finance in East Africa Industries: -small scale consumer goods (soap etc) -agricultural products (tea, coffee, etc) -tourism
11. Formal ProposalBackground information for Micro-credit scheme 1 7.5 million Kenyans live in slums 1.5 million (60%) of Nairobi’s population live in slums(little/no access to water, electricity, basic services, infrastructure etc.) -child mortality: 15% die before 5 years old (6% for Kenya as a whole)
12. Formal ProposalBackground information for Micro-credit scheme 2 Aaron Wegmann/Pamoja Trust (NGO): -redevelopment of slums (Kibera vs. Kambi Moto) -Kambi Moto (burnt earth), 1/10 finalist project for World Habitat 2009(UNO): 270 homes of lava stones, $3,200/house, 20% own capital Challenge: building of infrastructure, shop creation, public transport etc. in redeveloped former slums
13. Formal ProposalProject Goal To help develop an environment for investment and sustainable growth by a micro-credit scheme for people building the infrastructure in redeveloped former slums
14. Formal ProposalProject Details World Bank would give loan of $5,000,000 to local microfinance institutes (e.g. Equity Bank) who then would give micro-credits for people building the infrastructure in redeveloped former slums in Kenya (preferably redeveloped “Aaron style” not “Kibera style”) -> average loan balance/borrower: $280.6 -> $5,000,000/$280.6= 17,819 people
15. Formal ProposalExample of similar successful projects1 Julie Amunga lives in the slums of Mathare Amunga and her friends received a loan from the Jamii Bora Trust. She now runs a successful business selling vegetables and fresh fruit in the local market Her children can now go to school
16. Formal ProposalExample of similar successful projects2 Anna LeoniMuschi lives in a small town close from Mt. Kilimanjaro Before she received money she had to beg to provide for her family and her daughter Relatives gave her money to sell fruits but not enough to survive Anna received credits from the Akiba Commercial Bank, partner of responAbility Now she built a shop at the foot of Mt. Kilimanjaro selling meat and is able to keep a loyal clientele
18. Formal Proposal Financial Analysis of Project 1: Expenses & Expected Rates of Return 20%/day interest to informal money lender responAbility: 34% interest/year to MFI -expenses: 19% -provision: 2% -refinancing: 7% -profit for MFI: 5%
19. Formal Proposal Financial Analysis of Project 2Repayment Schedule Proposal: payment of 7%/year interest to the World Bank on the capital of $5,000,000 for 3 years Repayment of capital or renegotiation of interest rate for a new period to be determined