CHF Programs Featured in “Entrepreneurship in Postconflict Zones”

CHF Programs Featured in CFR Paper on Entrepreneurship in Postconflict Zones

CHF Senior Technical Advisor in Development Finance, Richard Shumann, represented CHF on May 17 at the Council on Foreign Relations Panel on “Catalyzing Economic Growth – the Power of Entrepreneurship,” focused on lending to small and medium enterprises in post-conflict countries. CHF is well known for this, through LEDFC in Liberia and IMMDF in Iraq. Elizabeth Littlefield, President and CEO of OPIC, praised CHF’s work with LEDFC and IMMDF, and mentioned OPIC’s partnership with us in new loan guarantee funds in Egypt and Jordan.  
 

Shumann reported that a main challenge was finding bankable clients and experienced staff in post-conflict areas. Entrepreneurs have lost their businesses, or fled, and cannot launch new enterprises or present strong cases for borrowing funds. It is important to build the capacity of local staff, so we need to spend resources building up loan officers and middle managers. 
 

Other key lessons are to be clear, flexible and patient. The institution needs to have clear, consistent objectives, with an institutional form that gives it credibility and limits regulatory burdens. SME lenders must be flexible, adapting to changing markets and the evolution of various sectors, but also adjusting to constantly shifting security situations. Finally, it can take a long time to build a strong portfolio – mainly because there are few qualified clients at the start, and we need to navigate and understand the local context.
 

Elizabeth Littlefield mentioned six main mistakes in lending to SMEs:

It’s not just about the money – SMEs need support services and better business infrastructure.

People expect far too much of the government

Don’t assume you can stick with the plan

Don’t assume everyone is an entrepreneur – many people prefer to have a job

Expatriate vs. local staff balance. Lots of expatriates have the knowledge but lack the local context; locals, even those from the returning diaspora may have baggage from the conflict or can be subjected to inappropriate pressures from clients or government officials.

Go one step at a time, and try not to have too many objectives. For instance, don’t tell organizations to lend to women, rather give them incentives; the new Egypt Loan Guarantee Fund will provide higher percentages of guarantees to women owned businesses.
The Council on Foreign Relations paper, by Gayle Tzemach Lemmon, features CHF’s Liberian Enterprise Development Finance Company (LEDFC) and the Goldman Sachs 10,000 Women Certificate Program for Women Entrepreneurs project in Liberia as examples of programs successfully working with entrepreneurs and SMEs in postconflict environments. Both programs are implemented by CHF International.
You can download he full paper here.