micro & small enterprises

A “micro-entrepreneur” refers to an economically active poor running a micro or small business. Whether registered or informal, his self-sustained professional activities are the sole income generation for himself and his peers, family and dependants. Whether destitute, extremely poor or non-poor but highly vulnerable, his exclusion from mainstream financial services puts him into economics of emergency and survival, incapable of generating savings, accessing credit lines or investing in his future.

There are 4 billion people who live with less than $ 4 a day, about 2.7 billion with less than $ 2 and 1.1 billion with less than $ 1 a day. There are at least 500 million economically active poor or micro-entrepreneurs worldwide, the vast majority of which lack access to capital to sustain and grow their professional activities. The average financing need worldwide is of $ 500 per microentrepreneur, suggesting a potential market demand of 250 billion dollar.

Microfinance services bring three essential features to a micro-enterprise and its owners: security, growth and empowerment. Economically active poor evolve in cash flows of survival and economics of emergency; they cannot afford to save, and the slightest shock on their revenues, whether due to exogenous factors (hurricanes, earthquakes, strikes, social strife, etc.) or endogenous factors (sickness, weddings, funerals, migration, etc.), might ruin their cash flow and sustainability. If existent, their often only alternative is to finance themselves with local loan sharks, charging up to 10% a day, as is the case in some place in Bolivia or the Philippines. On the contrary, access to adequate financial services works as a security buffer for them, offering liquidity in times of trouble. Similarly, access to capital allows them to invest in the future, buy fixed assets or hire new staff. In the end, contact with their micro-banker works to integrate them back into cycles of opportunities and increase their self-esteem, independence and social networking.

Stabilized and sustainable business cycles in turn increase the microentrepreneurs’ household disposable income. This affects their family consumption and life patterns, allowing them an array of choice from more education for their children, to better nutrition or housing facilities, access to health services, etc. Multiplied at the scale of a neighborhood or city, these hundreds of new opportunities stimulate social capital and community development.