Leveraging informal lending mechanisms to facilitate technology transfer and microenterprise in developing countries Kory Hansen a, b, * , Jin Ju Kim a, b , Stephen Suffian a, c , Khanjan Mehta a a Humanitarian Engineering and Social Entrepreneurship (HESE) Program, The Pennsylvania State University, Pennsylvania b School of International Affairs, The Pennsylvania State University, Pennsylvania c Sustainable Engineering Program, Villanova University, Pennsylvania article info Article history: Received 30 March 2014 Received in revised form 3 December 2014 Accepted 5 December 2014 Available online xxxx Keywords: Social capital Informal lending Technology transfer ROSCA Micro enterprise abstract This article discusses how Rotating Savings and Credit Associations (ROSCAs or merry-go- rounds) can concurrently overcome four challenges faced by small enterprises in devel- oping 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 tech- nology 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. © 2014 Elsevier Ltd. All rights reserved. 1. Introduction Reflecting similar challenges in many developing countries, the unemployment rate for Kenya in 2012 was estimated at 40%, which was five-times the global average at the time [19]. In an attempt to alleviate chronic unem- ployment and foster economic growth, several govern- mental and non-profit organizations have emerged to enable and empower micro-enterprises. Their efforts have offered Kenyan small and medium enterprises increased access to capital and professional business management advice [9,20]. Micro-enterprises now constitute a signifi- cant part of the national economy, accounting for an esti- mated 18% of GDP and the employment of 3.2 million people [16]. Access to financial capital is one of the biggest challenges facing entrepreneurs striving to start their businesses. Despite the increased interest in providing enterprises with access to capital, the formal banking sector in Kenya is deficient in this role. Although the formal banking industry in Kenya is the most developed in Sub- Saharan Africa, as of 2009 70% of adult Kenyans report not having a bank account [18]. Cultural customs, physical distance, unattainable minimum deposits, high adminis- trative costs, recurring fees, and complicated banking processes stymie efforts at expanding financial services to the unbanked. The formal banking sector, including traditional banks and savings and credit cooperatives (SACCOs), meet the * Corresponding author. School of International Affairs, The Pennsyl- vania State University, Pennsylvania. E-mail addresses: kory.hansen1@gmail.com (K. Hansen), kjjisvip11@ gmail.com (J.J. Kim), stephen.suffian@gmail.com (S. Suffian), khanjan@ engr.psu.edu (K. Mehta). Contents lists available at ScienceDirect Technology in Society journal homepage: www.elsevier.com/locate/techsoc http://dx.doi.org/10.1016/j.techsoc.2014.12.001 0160-791X/© 2014 Elsevier Ltd. All rights reserved. Technology in Society xxx (2014) 1e11 Please cite this article in press as: Hansen K, et al., Leveraging informal lending mechanisms to facilitate technology transfer and microenterprise in developing countries, Technology in Society (2014), http://dx.doi.org/10.1016/j.techsoc.2014.12.001