Microfinance and street children: is microfinance an appropriate tool to address the street children issue ?

2.3.2. Supporting services: the need for vocational training

Our previous section outlined how should financial services for street children be designed and delivered in order to be effective and sustainable. At the same time, we remember that the programs outlined previously are doing more than just providing financial services to street children and point out the need to complement financial services with other supporting services. Indeed, even if motivated, willing and committed to start a successful business, street children may lack the appropriate skills to do that. Vocational training is therefore one solution to support street children in acquiring those skills. This concept generally refers to an educational activity oriented to provide necessary knowledge and skills for exercing a working activity.^83(*) This is a common education option in projects for street children and Kobayashi (2004) classifies vocational training in 4 categories. Three of them can be characterized as a direct supporting service to our microfinance framework, the fourth one being also important but is not directly a supporting service. However, all of them have the finality to offer street children with alternatives to harmful or illicit work.

a. Production-oriented training

This type of training it focuses on technical skills needed to produce goods and services and generally comprises trainings such as mechanics, electronics, electrical wiring, carpentry, welding or tailoring. However, Ennew (2000:133) warns about the risk of stereotypes that may be part of such schemes, where girls are being teached cooking and sewing, and boys mechanics. It needs therefore to be diversified and Kobayashi (2004) points out that the key is to design a vocational training that matches the demands of participants, the skill levels of participants and the demand of the market

b. Service-oriented training:

This training focuses on skills needed to provide specific services to other businesses and final consumers.

It includes mainly technical training which focuses on the way to serve the consumer (such as in the hotel business), and one major part of it concerns «retailing», such as grocery shops, or restaurants.

c. Entrepreneurship development training

Once being graduated from the previous training sessions, the child has two options: either work as an employee in a particular business (grocery shop, mechanical shop, etc), or start his/her own business. In the second option appears the notion of «entrepreneurship training».

Stevenson (1997)^84(*) reminds us about this concept and points out that it refers to «The process whereby individuals become aware of business ownership as an option or viable alternative, develop ideas for business, learn the process of becoming an entrepreneur and undertake the initiation and development of a business» .This means that, after being graduated from the previous vocational training sessions, the organisation should provide awareness about business opportunities for street children, and helps the ones who are interested and capable of starting their activity. In order to help them, they need to provide entrepreneurial skills which are aimed to develop personal, organizational and financial skills needed in order to start a business. The activities include: developing a business plan (one of our criteria in accessing credit), problem solving, communication skills, goal setting, time management, stress management, managing and reducing costs, stock control techniques, etc.

However, SKI argues how it is essential to have a constructivist approach by building upon the skills of the street children (which are already numerous, as pointed in our chapter 1) and by focus on a peer training approach. Finally, Kobayashi (2004) warns to inform the participants that what they learn in business development training is not a promise of reward, but essentially a way for self-improvement.

d. Management-oriented training

The business plan being done, the child will need to know how to manage its new business. Here comes the notion of management training, which seeks to accompany the child in the challenges he/she may face in the management of its business. SKI argues that this can be done through some group discussions hold every two weeks.

e. Supporting services and financial services: a microfinance plus framework

The three dimensions highlighted above are necessary in order to enhance the effectiveness of the microfinance intervention, especially the microcredit component of our model. However, this adds considerable costs to our previous minimalist model and, hence, may impact negatively the program sustainability. However, without those services, «effectiveness» will be poorly achieved.

Therefore, the challenge is to achieve a good balance between effectiveness and sustainability by reducing the costs of provision. In order to do so, two options exist:

ü Partnerships: to make a direct partnership with a specialized organisation providing vocational training, such as Underprivileged Children's Education program (UCEP) in Bangladesh.

ü Mentorship: to allocate (as does the children's development bank) an informal mentor to the child, who will provide him/her the entrepreneurship and management training. However, this solution may curtain effectiveness if the mentor is not entirely committed.

Finally, it has to be noted that two barriers must be settled in order to avoid an error in targeting

ü For production and service training: not all street children may need training; the less vulnerable ones may still have the possibility and the willing to integrate formal education system, and this has to be encouraged as it is a way to find a formal work in the future (although this concerns a particularly minority of children)

ü For entrepreneurship and management training: not all the children are entrepreneurs, some may only want and have the capacity to get employed; but the important point therefore is to provide them with saving services in order to maximize the returns from their jobs.

Our following page illustrates our new microfinance framework, which integrates the vocational training components.

FIG. 3.2.: A MICROFINANCE PLUS FRAMEWORK FOR STREET CHILDREN

STREET CHILDREN

PRODUCTION-ORIENTED TRAINING

SERVICE-ORIENTED TRAINING

CRITERIA FOR ACCESSING CREDIT ARE MET

CRITERIA FOR ACCESSING CREDIT ARE NOT MET

(i.e. too young, too vulnerable, or not willing to start a business)

· SIZE: SMALL BUT TAILORED

TERM: FLEXIBLE BUT DELIMITED

INTEREST RATE: LOW

CREDIT

ENTREPRENEURSHIP TRAINING

MANAGEMENT TRAINING

DELIVERED

GROUP-LENDING

PROGRESSIVE LENDING

FREQUENT REPAYMENT

LINKING THE GUARDIANS

JOB PLACEMENT

SAVINGS

SUCCESSFUL BUSINESS ACTIVITY

* ⁸³From www.ilo.org/public/english/region/ ampro/cinterfor/publ/tunion/casanova/pdf/what_is.pdf (the article offers an interesting view on the evolution of the concept across time )

* ⁸⁴ Quoted in Schoof and Haftendorn (2004)