• Micro Loans-Macro Impact

    Hussein Samatar

    Hussein Samatar ’00 M.B.A., executive director and founder of the African Development Center in Minneapolis, is a blessing to those who have very little. The mission of the center is to start and sustain successful businesses, build assets and promote community reinvestment among African immigrants and refugees living in Minnesota.

    Four days after completing his undergraduate degree in economics, Samatar was forced to flee his homeland of Somalia when a civil war erupted. He fled to Kenya and then sought refuge in Minnesota. And he was not alone.

    The Twin Cities is home to the largest Somali population in the United States. The 2000 census reported that 13 percent of Minnesota’s foreign-born residents were from Africa – including immigrants and refugees from Somalia, Liberia, Sudan, Nigeria and Ethiopia. This is a higher percentage than any other state in the country.

    “This is a place we could be a part of,” Samatar said of Minnesota. “Each person comes to do his best and to improve upon the previous generation.”

    Getting out of Somalia and starting a new life in Minnesota has given Samatar the courage to build the African Development Center from an idea to a source of inspiration to those around him. Samatar left a successful career at Wells Fargo to create the center. While many would find it difficult to leave a stable job to pursue an unknown, the choice was simple for Samatar. “I could take that leap of faith because one day we had everything, and the next day we had nothing. Whatever we have in life is not ours.”

    Many individuals in the African refugee and immigrant population have similar stories of survival. Through Samatar’s work at the center – and several other local boards and committees – he is able to help many in his community do more than simply survive; they can thrive in their new home.

    Samatar believes that personal financial literacy is the foundation upon which African immigrants can build success. He notes that in large part African communities are cash-based societies, so the African Development Center offers those who are new to the United States a basic education in credit, debt, budgeting and other personal finance essentials. The center also offers home ownership workshops and, for aspiring entrepreneurs, courses in business plan development.

    The education is working. Even in the midst of the current volatile housing and mortgage markets, not one of the more than 350 families trained since December 2004 has come back to the center with problems tied to the subprime lending crisis.

    Some of the center’s clients are aspiring entrepreneurs who need guidance in navigating the U.S. business process. Samatar finds that while many of these entrepreneurs can talk in detail about their business concepts, they don’t always have their ideas written down. The center offers a six-session course to help these individuals craft a business plan. Upon completion of a business plan, the center helps to connect the entrepreneurs with professional service providers. Many of these professional services are offered on a pro bono basis.

    While education is the foundation of the African Development Center, its financing activities have received the most praise in the Twin Cities media. The center offers two distinct financing opportunities – Islamic loans and micro loans.

    Islamic law prohibits usury, or the collection and payment of interest for a loan – a mainstay of most U.S. banking products. For these individuals, the center offers an Islamic alternative loan that doesn’t violate Islamic banking laws. The differences between Islamic and traditional financing are a small but critical component of the success of many Muslim immigrants.

    The African Development Center also is using the Nobel prize-winning concept of micro-finance to create opportunities in Minneapolis. Since 2005, the center has leveraged more than $6 million in business loans through private financial institutions, government programs, other community development nonprofits and its own micro-loan fund. The fund is now approaching $2 million. These loans of $25,000 or less help entrepreneurs finance a range of new business ventures.

    One beneficiary of a micro loan was Mapps Coffee & Tea on Riverside Avenue in Minneapolis. They received a loan through the African Development Center and were recently recognized as the Best Coffeehouse of 2007 by City Pages.

    The owners of Tam Tams restaurant and Afrik grocery store also were clients of the center and were honored by the Minneapolis City Council in 2007 for their entrepreneurship and community service.

    Tam Tams is owned by Stephen Kaggwa. While living in Uganda, Kaggwa dreamed of opening his own business. This dream brought him to Minnesota, where he felt he would have opportunities to do big things in his life. These opportunities did not come easily, as he had to adjust to new people, a new culture, new financial systems and a lack of start-up capital.

    Tam Tams is a prime example of financing and education working together to build a successful company. Through the center, Kaggwa was able to sharpen his business plan and secure a loan. “It is important to acknowledge the great work done by the entire team at ADC, and how timely their services are to the African community,” Kaggwa said.

    Kaggwa said that the success of his restaurant “has made me grow as a person, taken me out of my comfort zone and helped me to build a network of friends and colleagues across all personal and professional lines. I salute the entire team at ADC with both my hands and say thank you a million!”

    The African Development Center is recognized internationally as a successful model. Samatar was recently invited to Sweden, where many displaced Somalis emigrated following the outbreak of civil war. Minnesota’s strong Scandinavian heritage made a comparison between the two areas ideal. Samatar said that the Swedish officials he met with were impressed with the success of the African Development Center and plan to use some of the center’s best practices to improve opportunities for their own Somali population.

    When Samatar is asked about his most successful client story, he suggests without hesitation that every client who achieves his or her goals is a success. “To come to a new country from a refugee camp with nothing, to find shelter, to find a job, to provide for your family, to learn a new language, and then to start a company or buy a home – I think that is success.”

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