Guest Author - Isabelle A. Harman

I was skimming through my latest edition of Inc. and ran across a short article about microlending - a financing service offered by institutions to those who have been classified as poor. The purpose is to help individuals start a business. A mere hundred dollar credit later and a rub on a magic urn and you are now a microentrepreneur! Surely there had to be more to this. It couldn’t be that easy, could it?

Relax, it isn’t that easy. I found a wealth of information regarding the movement to help people around the globe move from poverty to a life of dignity, pride, and a renewed appreciation for self. The residual rewards are shared by all.

Microenterprise Defined

The United States Agency for International Development (USAID) defines a microenterprise as “a firm of ten or fewer employees (including unpaid family workers) that is owned and operated by someone who is poor”. Others have identified its origin as an informal, homegrown business. A skill, sewing for example, that an individual has used for years can be developed into a small profitable business. Evidence of its effectiveness has been documented through studies and personal stories.

The disproportionately high levels of poverty found in many developing countries became the catalyst needed to create a formal process to help citizens of these states develop a means to earn an income. Traditional lending institutions have not been readily accessible to many of these people (particularly women). This fact brought forth microlending endeavors through non-profit and non-governmental organizations. Guy Vincent notes in his article Sustainable Microentrepreneurship that “during the 1980’s and 1990’s, particularly in Asia, Africa, and Latin America, thousands of microfinance NGOs (Non-Government Organisations) were established to provide microloans, using individual and group lending methodologies”. Individuals who have taken advantage of these lending practices have successfully developed small businesses. They are now able to do something as seemingly simple as sending their children to school and being able to eat more than one meal a day.

Of particular interest, women comprise a significant percentage of these entrepreneurs. In 2002, as reported by USAID, of 3.7 million microentrepreneurs who benefited from USAID’s annual funding, two-thirds were women.

Opportunities for All

Each government has its own criteria to qualify for microenterprise loans. Statistics have shown that when these loans are granted, the proportion of individuals who repay in full, with interest, is significantly higher than that of repaid conventional business loans. The practice of microlending has greatly benefited women throughout the world.

In many cases, repaying a loan of a hundred dollars is nothing to dismiss. Citizens of some countries find that kind of money while cleaning their cars. The reality is that in less developed countries a hundred dollars is considered a small fortune to their poor populace.

The establishment of microenterprise opportunities brings hope to many who are willing to develop their current skills and take the time to learn new ones. It seems that with this in place there aren’t many reasons for a person not to succeed. Or are there?