Rural Entrepreneur Access Project (REAP)
How REAP Works
BOMA’s Rural Entrepreneur Access Project (REAP) is an innovative micro-enterprise program that gives ultra-poor women in Northern Kenya the tools they need to graduate from extreme poverty and adapt to a changing climate. REAP helps pastoral women to start small businesses in their communities, so they can earn a sustainable income, pay for food and medical care, send their children to school, survive drought and accumulate savings for long-term family stability. The REAP program:
- Empowers ultra-poor women who are not served by traditional microfinance
- Helps families adapt to climate change through diversified income and committed savings
REAP is a two-year poverty graduation program that provides a cash grant (seed capital to launch a business), sustained training in business skills and savings, and hands-on local mentoring by BOMA Village Mentors to business groups of three women. When the businesses are established and generating profits, typically at six months, Mentors work with REAP groups to form BOMA savings associations and work with each savings group for one year. Our program targets the poorest of the poor: When we begin working with them, 99 percent of BOMA entrepreneurs live on less than $2.50 per day (the poverty line), while 88 percent live on less than $1.25 per day (the extreme poverty line).
REAP helps women to build a pathway out of extreme poverty by addressing three elements that contribute to the cycle of aid dependency in the arid lands of Africa: low incomes, inconsistent cash flows and inadequate financial services for the rural poor. Profits from each REAP business provide a diversified income, while BOMA savings associations help women to manage cash flow (for daily needs), plan for future expenses (such as school fees and medical care), and respond to shocks (such as drought or family emergencies).
Does REAP work? Yes. According to our 2012 Impact Evaluation, 99 percent of REAP businesses are still in operation after one year and 97 percent after three years—a full year after the two-year program graduation mark. Women consistently report that the top benefits of a BOMA business are the ability to buy food for their families, pay for school fees and medical care, and establish a financial safety net through savings, so the family is better-equipped to handle emergencies and survive shocks.
BOMA’S SEVEN STEPS TO POVERTY GRADUATION
Step 1 (Pre-intervention): BOMA meets with community leaders to discuss collaboration. Mentors consult with BOMA Location Committee to identify participants. Mentors qualify participants with Grameen Progress Out of Poverty Index (PPI), ensuring that 75% are below the extreme poverty line ($1.25 per day) and 100% are below the poverty line ($2.50 per day). Mentor collects baseline data with BOMA’s Standard of Living Index (SOLI).
Step 2 (Mentoring): Mentors assemble business groups and help them write a business plan (including projected start-up costs, budget, and a savings plan). Mentoring continues for two years, including instruction, help with record-keeping, mediation and advice. Mentors visit each business and savings group monthly.
Step 3 (Jump Grant): Each group receives a seed-capital Jump Grant in the KES equivalent of $100 (£62.50). Grants are disbursed in a public setting with all participants and community leaders. Grants are tracked by a strict system of receipts (for grant-distribution security information, see below).
Step 4 (Business Skills Training): Participants receive a skills training class led by their Mentor at the time of the Jump Grant that discusses supply and demand, profit and pricing, record keeping, marketing and savings. Participants are given a record book. Village elders, community leaders and district officials attend, encouraging success.
Step 5 (Progress Report and 2nd Grant with Savings Training): Following completion of a Progress Report by their Mentor at approximately three months, each group receives a final Progress Grant of $50 (£31.25) at six months. The second phase of funding is conditional upon continued business operation, ensuring that the first grant is used for the business. Mentors introduce the savings program and deliver micro-savings training (record-keeping, planning for future expenses, assessing loan requests).
Step 6 (Formation of BOMA Savings Associations): Mentors assemble savings groups (three to eight REAP groups). Members meet monthly to deposit or withdraw savings, using a shares-based method. Mentors work with each group for one year and deliver nine skills training modules that include borrowing and lending, planning for long-term expenses (including a section emphasizing the education of all children), loan applications, assessing credit-worthiness, investing, and sustaining the business and savings group.
Step 7 (Access to Credit): REAP businesses and individuals make regular contributions to the savings pool, which is then used as a source of credit, with established guidelines and lending rules, for business expansion and individual interest-bearing loans. Participants have access to credit at the one-year mark and continue to be mentored for another year.
GRADUATION CRITERIA: Using baseline data collected at intake, individuals are also surveyed at the one-year, two-year (graduation) and three-year marks. The degree to which individuals have progressed out of poverty is judged against ten criteria in five categories: food security, household asset ownership, sustainable livelihoods, resilience and behavioral changes. Women are said to have graduated if they have achieved appropriate thresholds within six of the criteria. An individual who has graduated from REAP therefore is reliably food secure, has more productive and household assets, multiple viable sources of income, and is able to successfully respond to shock, collectively reflecting a transition out of extreme poverty. Data for the ten indicators was first collected for businesses started in January 2011. When surveyed at program enrollment (baseline), no individuals had met the criteria. At one year, 92% had graduated.