Australian Aid: Approaches to Microfinance and Enterprise Development

This paper describes the Australian Governments approach to microfinance and enterprise development. It discusses the role of governments in addressing inequality and creating enabling environment for growth.The paper elucidates that the approach the governments should follow must involve:

• Eliminating conflict;
• Maintaining macroeconomic stability;
• Providing key infrastructure;
• Creating attractive investment framework;
• Developing well functioning markets.

The paper highlights the support provided by Australia in Vietnam for the implementation of new enterprise law aimed at:

• Simplifying establishment procedures for businesses;
• Abolishing a range of sub licenses;
• Decreasing the involvement of the State in business management.

The paper then presents the activities initiated by Australia in Fiji for enabling the poor to participate in the economy by:

• Teaching enterprise skills to primary school children;
• Providing seed grants of US$500 for establishing and operating enterprises;
• Rendering support for research, planning and monitoring the enterprises.

Further, the paper identifies the activities undertaken by Australia to meet the needs of poor households, including supporting:

• Activity in China: to create opportunity for retrenched women workers;
• BRAC: in providing access to financial services for the poor in Bangladesh;
• CEP: in providing access to loans for urban migrants;
• Microfinance program in Sri Lanka.