Case study

Microentreprise Development: Not By Credit Alone

How can the projects of Asian Development Bank been more effective?

This study explores micro-enterprise development, and how the Asian Development Bank (ADB) can improve the effectiveness of its support to this emerging segment of the financial services industry.

The paper:

  • Reviews thematic issues and draws on country studies of seven developing member countries (Bangladesh, India, Indonesia, Mongolia, Nepal, Philippines, and Viet Nam);
  • Synthesizes many of the key findings and also examines the impact and effectiveness of support that was provided to the microenterprise sector by ADB through loans and technical assistance that were approved between 1988 and 1992.

In detail, the paper:

  • Investigates the role of microenterprises in the house-hold economy and their contributions to development in terms of reducing poverty, empowering women, generating employment, and general contributions to the development of the private sector;
  • Provides a picture of the diversity of micro-level enterprises;
  • Gives an overview of the financial services that are needed by the poor and the issues which these needs imply for institutions seeking to provide the services;
  • Presents a number of suggestions for funding agencies such as ADB;
  • Discusses the major features of the policy and institutional environment in a number of Asian countries.

The study also highlights the importance of nonfinancial services in efforts to help develop microenterprises and provides a framework for donors for the further development of policy and operations to support microenterprise development.