The SEEP Network Guidelines for Microenterprise Development in HIV & AIDS-Impacted

Communities: Supporting Economic Security and Health

Annex D: Group-Managed Businesses

Although group enterprises are a common response in HIV- & AIDS-impacted communities,
practical experience drives these SEEP Guidelines to advise caution and encourage programs to
explore the wider range of options presented here. There are advantages and disadvantages to
group enterprises.

Advantages of Group Enterprises

• Efficiency: Programs can reach a group of people with one technical visit or service.
• Leverage: Programs can be tacked on to existing groups that are already formed for social
purposes.
• Demand: Clients in social groups demand assistance with income generation.
• Economies of scale and market leverage: Groups enable poor people to accumulate
capital and invest in equipment or purchase and produce in bulk, and to link to market
with a single transaction.
• Access to higher volume, steadier, or higher-value markets: Often individual enterprises
are run by poor people selling to poor people in very low volume. Higher margins are
possible when selling to others with higher incomes or high-volume purchasers, such as
schools or traders.

Disadvantages and Risks of Group Enterprises

• Group enterprises can offer a way for households to get a higher return on investment, to
take a relatively safe risk with a small amount of capital and time, and to diversify
household income.
• Often, programs promote the same productive enterprises (pig rearing, for example) with
little regard for the market for the product.
• Groups are more difficult to manage than individual enterprises. They are easily co-opted
by individuals or a few leaders or can present an undue burden on very weak members.
• When health or social services organizations support group enterprises, it can be
challenging to provide the right technical, business management, group management, and
marketing advice – particularly if there is a wide range of group enterprises.
• A group enterprise is usually a secondary activity for members, so when crisis hits, it is a
lower priority which then affects other members.
• Group enterprises in which all members are living with HIV or AIDS or are heavily
impacted by HIV & AIDS may have lower success rates because everyone is struggling.
On the other hand, in groups with a mixed membership, there may be resentment against
people who are more affected and not able to contribute.

Recommendations

• Explore a range of options before determining that group enterprises be a core strategy.
 • Help groups choose the minimal function and simplest level of engagement first, building
up to more complex arrangements. For example, groups can send a representative to the
market or to a trade to negotiate on their behalf, but the trader can purchase individually
from each member on a specific day; or the group can send two representatives to
procure inputs for the group, but members can manufacture and market their goods
individually, etc.
• Access effective group management training materials that, at a minimum, ensure that
o leadership is fairly elected and rotated;
o more than one leader has control over the money;
o finances are reported transparently to all members regularly;
o individuals have the option to invest money and get a return without working,
returns are relative to the amount invested, and the amount invested is sometimes
fixed and sometimes flexible;
o people who put in time are appropriately compensated for that time or for their
output;
o there are consequences for non-payment or non-participation, and policies in
place in case of emergencies; and
o there are succession plans and policies in case of illness or death.
• Develop technical capacity in a few types of enterprises. Conduct business feasibility on
the group enterprises to ensure their viability. Develop standard business models, plans,
and manuals and instructions to help many groups efficiently. Ensure effective and
sufficient market linkages for inputs and products so as not to saturate the market with a
few enterprises.
• Concentrate on accessible, higher-value markets that present an added return for
individuals, but are not too risky.
• Use local traders and intermediaries. Do not use the group or an NGO to “go around the
market.” Create sustainable market linkages.