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Microenterprise development provides aspiring entrepreneurs, particularly women and the poor, with greater, more reliable access to loans and business development services to start or expand their small businesses. Providing access to a small amount of capital -- just a few hundred dollars -- makes a huge difference in the lives of many poor people trying to start a business and earn some income.
As leading microcredit organization ACCION International explains, these “micro" loans can make the difference between mere survival and a decent life. With capital, people can grow their businesses and earn enough to afford basics like running water, better food and schooling for their children.
An example of a microenterprise client might be a woman's cooperative selling handicrafts. A loan could help buy materials that would make production easier or better planned. Or it might help set up a small street-vending food service so someone could provide for a family. It might also involve establishing a revolving-loan fund in a small village.
Who Works in Microenterprise Development
Individuals generally enter this field because they want to make a difference in the lives of less-fortunate people. This social consciousness is an important attribute to someone who may work in this field, but beyond that, many skills are needed to forge a career in microenterprise development.
The field is becoming more sophisticated, and the need for a strong financial and economic background is critical. Many microenterprise professionals have prior banking experience, particularly in the areas of lending and credit. Additionally, a minimum of two years' prior experience in a developing country -- usually through the Peace Corps or the like -- is generally required. A graduate degree in economics, business administration or international affairs is also important.
If you would like to enter the field but don't have the international experience, one option to consider is to start domestically. Encouraged by the success microenterprise models have had abroad, a new trend has developed to fund microenterprise projects in the US. For example, ACCION International opened a New York office with a domestic focus. Community development corporations (CDCs) around the country are also involved in microenterprise work.
A Typical Job
People involved in microenterprise development generally work for nonprofit organizations or multilateral agencies, like the World Bank. Job titles include microfinance specialist, loan officer or program officer.
Daily work involves meeting with prospective borrowers and entrepreneurs and assisting them with loan applications and technical assistance for their businesses. You might also conduct analyses of these businesses to assure viability as well as structure loan terms that work for each client. Many organizations also do evaluations, conducting follow-up visits to ensure funds were used for their intended purpose and payments can be made in a timely fashion. Often, organizations help individuals connect to similar small-business owners to form supportive networks.
Trends in the Field
"The overall trend or push by international donors is moving toward increasing the financial sustainability of microfinance organizations so that they cover more of their operating costs with the revenue they generate on loans and fees to their clients,” says Jeremy Black, a microenterprise professional. “USAID [the US Agency for International Development], for example, is a major proponent of this goal."
The increasing complexity of the field is also important to consider. "Major international microfinance and microenterprise development organizations are becoming increasingly sophisticated structures, some with holding companies combining for-profit and nonprofit entities," Black says. "A few are attracting equity investors. Some are becoming increasingly adept at conducting sector or subsector analyses in order to encourage microenterprise development in a sector with growth potential, or in order to encourage cluster development."
For More Information
- USAID Microenterprise: This is USAID’s initiative to support technical and financial assistance, research and training on best practices in microenterprise development and finance.
- InterAction: A nonprofit umbrella organization of non-governmental organizations (NGOs) involved in international development work.
- ACCION International: This is a well-known microcredit organization that operates in the US and Latin America. It has links to other organizations, publications to order and information about their projects.
- The Grameen Foundation: This nonprofit was inspired by Professor Muhammed Yunus' Grameen Bank, an independent bank for the poor that he started in 1976. The organization aims to spread the scope of microfinance throughout the world.
