Micro-Enterprise Support: A Critical Review

This paper critically examines microenterprise development as a strategy to promote poverty reduction and social justice. It underlines the complexity and limitations of microcredit and microenterprise development.

The paper highlights the importance of addressing broader issues such as gender and class inequity, and policy issues. Study findings include:

• Some projects have defined microenterprise support too narrowly, overlooking crucial factors such as market linkages and supply of raw material;
• Expectations for microenterprise development as a vehicle for poverty reduction and social change have been overambitious, given the constraints that the poor face;
• Microenterprise projects often fall short of potential because of lack of donor/NGO skills and knowledge.

Studies confirm that few NGOs have appropriate managerial, business and technical skills. NGOs need to:

• Clarify goals, and assess the role of microenterprise support in achieving these goals;
• Improve effectiveness of their microenterprise support;
• Explore partnerships with specialized NGOs or develop their own capacity to provide effective support;
• Be self-critical and open to learning in the field of microenterprise support.