Access to finance for micro- and informal economy enterprises, is an important stepping stone to securing livelihoods and economic growth, but needs improved regulation and consumer protection, explored through this study.
Since the Grameen Bank began making tiny loans to village savings groups in 1983, microfinance has emerged as a key tool of development policy, based on the assumption that widening access to finan-cial services, including credit, savings, insurance and money transfer, will trigger growth of micro-enterprises.
From its origins as a grass-roots movement to provide credit to the neediest, microfinance is now a major supplier of financial services to millions of people in the emerging world. Yet major concerns remain about its access, reach and regulation; its operation in urban areas, and impact on poverty reduction and indebtedness. Meanwhile, in the absence of access to secure finance, many microenterprises resort to informal, unregulated and often exploitative sources of credit.
The underlying assumption of the research is that microenterprises play a crucial role in many urban economies of the global south and should be seen as central to policy development for inclusive economic growth. The project focuses on microenterprises in economic sectors with growth potential, including trade, manufacturing, construction and tourism, with a focus on secondary towns, which have been less studied than major cities but play a key role in absorbing population growth and accommodating economic transformation.
Drawing on comparative studies of Rwanda, Tanzania, Kenya, Ethiopia and India, the research explores the potential of consumer protection to increase the reach and quality of financial services available to the poor, and to facilitate innovation and growth in microenterprise.
DFID-ESRC Growth Research Programme, Project ES/J009369/1 (2013-2016).
- Professor Malcolm Harper, Emeritus Professor of Enterprise Development, Cranfield School of Management, UK