Balloon Ventures

The Problem

Poor quality informal jobs

In Uganda, 80%+ of women and youth work in the informal sector. This work is insecure, low wage and often unsafe.

We know from our own research that in Mbale, under 5% of employees have formal contracts, the average entry-level wage for full-time employment is Ugx.240,000 well below the living wage, and many employees haven’t been paid for 3-6 months.

SGBs are the solution but they get stuck

Small and Growing Businesses (SGBs) are informal businesses operating in traditional brick and mortar industries with tremendous potential to drive good job creation. Research demonstrates that good jobs are created as small firms formalise and grow into SMEs. Unfortunately, most SGBs in Uganda get stuck, creating the ‘missing middle’.

But why? 

Typically, finance is seen as the major barrier to growth. This is partly true. SGBs in our database all listed finance as a major challenge. The investment they need, €10,000-20,000, is too large for microfinance and too risky for banks.

However, evidence also shows poor management is equally important. The World Management Survey, compiled with 11,000 firms across 34 countries, shows that adopting better management leads to productivity growth of 30%+. We see this every day. Irregular financial management, poor planning, and unmotivated staff inhibit growth.

The Solution

Coupling Investment with Consultancy 

Balloon Ventures unlocks the potential of small businesses in brick and mortar industries by offering loans of €10,000-€20,000 combined with efficient tech-enabled business support that embeds good management practices over the long term. This drives growth, behaviour change and creates good jobs. Through this approach, we unlock the potential of businesses employing 5-15 people to grow, become SMEs, and create good jobs.

A Financially Sustainable Model

Businesses pay interest on the loan which covers the cost of financing and the consulting support. Although simple, this commercial approach is unique, leveraging technology and local knowledge to deliver practical support and investment at low cost. It is working, with €239,548 invested in 17 new businesses in the last 12 months creating 61% financial sustainability in the last quarter. Our goal is to reach 100% financial sustainability which then unlocks huge potential for this model to scale across other markets where the need to unlock the potential of small businesses is similarly massive.

Additionality

CFYE Support

With the support of CFYE, we will scale our work across Eastern Uganda, and open source our approach to catalyse a new market supporting SGBs.  By September 2023, we will create 351 new jobs and improve/sustain 632 jobs (total 983). 95% of these jobs (933) will be for youth. At least 50% will be for women. All jobs will be: contracted, safe, pay living wage, and offer training and development.