Leveraging informal lending mechanisms to facilitate technology transfer and microenterprise in developing countries

• Entrepreneurs must overcome four barriers to achieve success in developing countries.
• Using social capital and trust can be a means to overcoming the barriers.
• Three models of utilizing existing social structures to overcome barriers are presented, compared and summarized.

This article discusses how Rotating Savings and Credit Associations (ROSCAs or merry-go-rounds) can concurrently overcome four challenges faced by small enterprises in developing communities: access to financial capital, technology transfer, vertical and lateral knowledge transfer, and reliable market linkages. Based on primary data from Kenya, three models of partnership between ROSCAs and diverse external organizations are presented and compared against each other. These approaches are designed to help ROSCA groups engage in small enterprises, while creating business opportunities for agricultural technology manufacturers and the formal banking industry. The ultimate purpose of such collaborations is to improve rural livelihoods, strengthen food value chains, and foster food security.