Microenterprise is based on the principle that poor people in developing countries have less access to economic growth. They are unable to fully participate in their country’s growing economy. This problem affects substantially more women than men. Women have a harder time obtaining credit, and often lack a safe place to keep their savings, making it more difficult for them to lift themselves from poverty.
These poor people in the developing world do not have the same access to entrepreneurial opportunities as those in the developed world. Microenterprise works to even out that playing field. USAID, along with many other non-profits and NGOs work with developing communities to provide them with access to financial services to help them grow small businesses or farms.
The programs often seek to improve the quality and affordability of financial services for people in developing countries, extend access to excluded populations such as women, the disabled, and those living in remote and rural areas, and to assist these people selling their products by linking them with buyers and suppliers of goods and services, hence, growing their market.
Micro-enterprising and micro-financing programs give growing populations access to technology and services that they did not have before. This has the ability to lead to improved products that bigger businesses are looking to purchase.
USAID programs, for example, are capable of improving the lives of the poor to help them recover from natural disasters, protect their families from unforeseen crises such as illnesses and droughts, provide steady home food and family purchases, and help to lift them out of poverty.
USAID tries to broaden their micro-financing offering to cover health, education, and energy programs. They have found that combining this approach with other services improves household income. USAID also tries to expand financial services through mobile phone banking technology to those receiving microenterprise funding. This helps reduce the cost of banking transactions and can increase savings as well.
In summary, microenterprise helps poor populations and growing economies spread economic growth throughout the entirety of the population as well as providing them with the means to lift themselves and their families out of poverty for good.
– Caitlin Zusy