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What is a Microenterprise?

%img src="" /% REDUCING POVERTY

Microenterprises contribute significantly to economic growth, social stability and equity. The sector is one of the most important vehicles through which low-income people can escape poverty. With limited skills and education to compete for formal sector jobs, these men and women find economic opportunities in microenterprise as business owners and employees.

In Chile. for example, a Banco del Desarrollo evaluation found that 88 percent of the bank's microenterprise clients, who represent the poorest groups, improved their standard of living after receiving a loan.


Women-owned businesses make up one of the fastest growing segments of microenterprise. In Latin America and the Caribbean, women own and operate 30-60 percent of such companies. ne work women do outside the home is usually in addition to the care they provide for their families, which limits their business opportunities. Moreover, they often face even greater obstacles than their male counterpane in getting

credit from formal sources.

Increased income in the hands of women is invested in health, education and housing for their families. As microentrepreneurs, women not only make a huge contribution to national income, but they also create reliable social safety nets for their families and communities.


Official policies often make business difficult for microentrepreneurs. Improved business regulations, tax regimes, licensing requirements, financial sector reform and bank supervision will promote better conditions for microenterprise development.

Less than five percent of Latin American rnicroentrepreneurs have access to formal financial services. Deposit services are rarely geared to these businesspeople, especially in rural areas. The small loans microentrepreneurs usually need generally are less attractive to traditional formal financial institutions because of their high transaction costs.

Microentrepreneurs also lack access to services such as marketing, training in basic business skills, and technology transfer. Source: The IDB and Microenterprise - Promoting Growth with Equity Hari Srinivas -

Category: Payday loans

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