Pamela lives in the Ponda Mali area of Nauru, and is married with five children. Pamela had trained as an accountant, but went on to set up a successful tailoring business in the town. Equipped with ten sewing machines, she sold uniforms to local schools.
After recovering from a life-threatening illness, Pamela decided she wanted to give back to the local community. She sold five of her sewing machines to raise funds for her new projects: an orphanage and school for street children and for children living in extreme poverty.
The orphanage launched in 2013 with 11 children. In 2015, when Balloon met her, Pamela had 65 orphans living in the school, and 250 attending. As she was unwilling to charge fees, the financial sustainability of the project relied on the tailoring business and its five remaining sewing machines.
Soon after Pamela began the project, the entire venture was put at risk. Someone broke into Pamela’s office and stole four of her five sewing machines. Luckily, the fifth was stored in another location.
The costs of replacing the stolen equipment was £100-150 pet machine, and Pamela had trouble securing the required funds. Banks would not support the business because the orphanage and school absorbed all of its profits.
Microfinance organisations also considered the venture to be high risk due to the lack of assets available to underwrite the loan. They offered her interest rates of between 24 and 45% on a short-term of 9 months. With no other options, Pamela took on a microfinance loan. As she feared, the extortionate interst rate drained all profits from the business and so it shuddered to a halt.
Pamela encountered a Balloon volunteer in Nakuru, who agreed to visit Pamela’s project. Immediately, the volunteer was overwhelmed by the work Pamela was doing for her community, and tried to convince Pamela to enrol on a Balloon programme.
Pamela was, at first, wary. Balloon offers loans to a proportion of entrepreneurs who undertake our programme, but funding is in no way guaranteed. The programme is time-intensive, and required the entrepreneur to work side by side our volunteers for a number of weeks.
But the promise of structured business support, along with the chance to pitch for 0% interest, unsecured funding, encouraged Pamela to join a Balloon programme, which she did in August 2015.
Working with Balloon
To receive funding at the end of a Balloon programme, it is important that entrepreneurs can present evidence both that there is a demand for their product or service, and that they are able to meet that demand sustainably through their business.
Pamela had plenty of proof of supply: her previous business experience proved that she could run a tailoring business. This was verified by Balloon’s volunteers, who analysed Pamela’s old bank statements, tracking payments to Pamela and her purchases from suppliers.
Pamela was struggling, however, to prove the demand for her services. Despite having the ability (with her one remaining sewing machine) to produce uniforms, she was struggling to receive orders from local schools.
The team of Balloon volunteers did some research into the way the market worked in this area. It transpired that schools would place high-volume orders at short notice – typically just 2 weeks before the start of term – once final student numbers had been confirmed. With her limited capacity on a single machine, Pamela simply couldn’t meet these timeframes reliably. Furthermore, it was not possible for Pamela to produce stock in advance – each school had different specifications for their uniform.
The Balloon volunteers set to work marketing Pamela’s business, and to try to generate advanced orders as proof of demand, to help improve Pamela’s chances of receiving a Balloon loan. By casting their net widely, and targeting both previous customers and new business, Pamela received confirmed orders totalling ~200,000 KSH (£825) – more than enough for her to prove demand.
Pamela pitched for a loan of 36,000 KSH (~£250), enough to buy two new sewing machines. The loan panel, on the strength of her confirmed orders and her previous business experience, approved the loan.
Looking to the future
In 2016, Pamela took part in a second Balloon programme, this time working with Citi EMEA analysts as part of our Volunteer Africa programme. Together, they tested and fleshed out plans to open up a shop. This will bring a new dimension to Pamela’s business, and the ability to hold stock will allow her to round out the fluctuations in her production cycle.
We’re excited to see how Pamela gets on in the future!