The pisces studies : assisting the smallest economic activities of the urban poor

This report - based largely on the lengthy case histories from Africa, Latin America, the Philippines, and India which comprise the bulk of the document - summarizes the results of the initial research phase of A.I.D."s PISCES project, detailing the level and impact of current assistance programs which target small businesses. The study found that loans of $12-300 were effective in assisting significant numbers of small businesses, most of them run by women, enter the business sector and increase profits, and in stimulating community improvement efforts. Types of assistance corresponded to the needs of the three levels of beneficiaries. Subsistence-level businesses were helped, mainly through community-based efforts, to earn income, while small entrepreneurs were helped in forming small groups to collectively guarantee loans and share business advice without the help of large staffs. Established businesses were expanded through innovative commercial bank programs. Only the latter two types, however, can be reached by simple, low-cost programs. Successful projects were found to be those which reflected the plans and desires of beneficiaries and the levels of skills and knowledge in the community; used staff who related to the poor and could generate a grass-roots response; promoted the program directly in the community rather than through a central office; used reputation among community residents as the main criterion for client selection; and kept loans small, short-term (3-6 months), and low-interest and encouraged adequate loan payback according to the client"s cash flow. Evidence was also found for the benefits of providing job skills training to the youth of the very poor, market assistance, and (although this showed mixed results) bookkeeping and management training. Donors can encourage these experimental efforts by enabling small and large PVO"s, large corporations, national development foundations, and goverment agencies to set or expand PISCES-type efforts. Included is a synthesis of the study"s major findings by the A.I.D. Project Director.