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The Relationship Between Microfinance, Entrepreneurship And Sustainability In Reducing Poverty In Developing Nations

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Microfinance-African-Youths
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The African Youths Organization

Solution Description

The extent to which microfinance, entrepreneurship and sustainability are inter-related is dependent on the extent to which it addresses the economic development process for example. If we are looking for an action which will enable the poor to overcome their poverty, I would go for credit invested in an income generating enterprise as working capital or for productive assets leading to establishment of new enterprises or growth of an existing one, profit from the enterprise provides income and a general strengthening/A variety of financial institutions worldwide have found way to make lending to the poor sustainable and to build on the fact that even the poor are self employed repay their loans and seek savings opportunities. The challenge is to build capacity in the financial sector drawing on lessons from international best practices in micro enterprises and rural finance. However, ensuring environmental sustainability is equally important as sustaining micro enterprises financially. The Sustainable Financial Markets Facility (SFMF) recognizes the importance of promoting “environmentally and socially responsible lending and investment in emerging markets, thus stimulating sustainable markets and private sectors activity. The need to enhance other sustainable initiatives is also paramount thus the interrelated nature of microfinance entrepreneurship and sustainable development is evident, the extent to which microfinance, entrepreneurship and sustainability are interdependent in becoming increasingly recognized by experts in their respective fields of work assoc

How will it improve our quality of life?

The fundamental framework: The policy legal and regulatory framework that allows innovative financial institutions to develop and operate effectively. In institution building: Exposure to and training in best practices that banks and microfinance organization need to expand their outreach and develop sustainable operations, long with performance – based support for capacity building. Innovative Approaches: Leasing, lending and other products to increase access of small and medium size enterprises to financial services. Despite the apparent benefit of microfinance in reducing poverty, an inevitable controversy exists.

Triple Bottom Line Benefits

Entrepreneurship is the active process of recognizing an economic demand in an economy and supplying the factors of production (land, labour and capital) to satisfy the demand usually to generate a profit. High levels of poverty combined with slow economic growth in the formal sector have forced a large part of the developing world’s population into self-employment and informal activities. But this is not necessarily negative, micro enterprises contribute significantly to economic growth. Social stability and equity. The sector is one of the most important vehicles through which low-income people can escape poverty with limited skills and education to compete for formal sector jobs, these men and women find economic opportunities in micro-enterprises as business owners and employees. In most developing countries, micro-enterprises and small scale enterprises account for the majority of firms and large share of employment. In Ecuador, for example, forms with fewer than 50 employees accounted for 99 percent of firms and 55 percent of firms in 1980: in Bangladesh, enterprises with fewer than 100 workers accounted for 99 percent of enterprises and 58 percent of employment in 1986. Finally, it has been noted that small-medium enterprises constitute the most dynamic segment of many transition and developing economics. They are more innovative, faster growing and possibly more profitable as compared to larger sized enterprises. Hence, the role of entrepreneurship in reducing poverty in developing nation is promising. 

Issues, Barriers and Opportunities?

THE ROLE OF SUSTAINABILITY IN REDUCING POVERTY IN DEVELOPING COUNTRIES The concept of sustainability is difficult to define and its precise definition varies within different contexts. However regarding the development process, two primary aspects of sustainability emerge. Economic and environmental sustainability both tie in with the notion of sustainable micro-entrepreneurship, economic sustainability refers to a continual supply of finance to meet a person on community’s needs, usually in the for of secure and accessible loans from a microfinance institutions and environmental is the aim to preserve environmental resources for use by future generations providing financial services entails that they must be sustainable and that means charging interest rates that cover your costs. Microfinance institutions have convincingly demonstrated that they can become profitable and sustainable institutions while making major contributions to poverty reduction by increasing economic opportunities and employment. This affects them because the growing public awareness of corporate governance and of environmental and social issues is driving changes in consumers behaviour. Investment and policy or regulatory adjustments, all signs point to continued pressure on the private sector to demonstrate the economic growth and sustainability.

Microinsurance Reaches 3m in the Philippines, More Expansion Predicted in Microcredit as Commercial Banks Enter Microfinance

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Wednesday, April 4, 2012

MICROCAPITAL BRIEF

» Posted by  in Category: Asia,Microinsurance at 11:12 am

According to a report attributed to the Insurance Commission of the Philippines, a government body regulating the country’s insurance industry, the microinsurance program launched in 2010 has contributed to 3.1 million Filipinos having acquired insurance coverage. The basic unified microinsurance product for health, accident, house and livelihood doesn’t charge more than 5 percent of an individual’s earnings and can provide coverage between PHP 10,000 (USD 233) and PHP 200,000 (USD 4,460). The Asian Development Bank has provided USD 1 million in funding for the microinsurance program.

The Chairman of the Insurance Commission, Emmanual F Dooc, reportedly said the goal was to cover all households below the poverty level, which includes 27 percent of the population [1]. A recent addition to the program is the new product of property and livelihood coverage in case of disaster, a service that the government will be promoting through road shows within the country.

In a recent article in Positive, an online platform for investing in microfinance and small enterprises, several factors were cited as contributing to growth potential for the microfinance market in the Philippines. These include a strong regulatory framework and commercial establishments partaking in the microfinance arena, as opposed to only cooperatives and rural banks.

The Philippines was ranked as the second best market for microfinance business environment in a recent study based on 2010 data was conducted by the Economist Intelligence Unit of London that compared 55 countries. The Filipino National Credit Council Director, Joselito Almario, reportedly argued that the Philippines would have ranked first had it not been for a low ranking in the “investment climate” category.

By Amira Berrada, Research Associate

About the Insurance Commission of the Philippines: The Insurance Commission (IC) of the Philippines was created in 1949 and is mandated by law to regulate and supervise the country’s insurance industry. Its mission is to “protect the interest and welfare of the insuring public and to develop and strengthen the insurance industry.” Specifically, its objectives are to promote the growth and financial stability of insurance companies; to maintain a minimum standard of performance for insurance companies; to educate the public about insurance; to establish a sound insurance market; and to safeguard the rights and interests of the insured. IC’s vision is that by 2020, every Filipino will have the opportunity to be covered by insurance.

About the Asian Development Bank (ADB): Established in 1966 and headquartered in Manila, the Philippines, the Asian Development Bank (ADB) is a development finance institution that consists of sixty-seven members, of which forty-eight are located in the region. ADB has three strategic priorities: to foster inclusive growth, to facilitate regional integration and to ensure environmentally sustainable growth. To accomplish these objectives, ADB uses loans, technical assistance programs, grants, equity investments and guarantees to private companies in member countries. ADB reported a total capitalization of USD 64 billion as of December 31, 2010.