The Microenterprise. It is a popular anti-poverty strategy common in the field of international development for decades that puts the responsibility of poverty alleviation in the hands of the poor by encouraging such individuals to use their own skill set to create income-generating activities.
Specifically in Kenya, as jobs become less common in the public or private sector, sources of income become less formalized and individuals take up the spirit of entrepreneurism to support themselves and their families.
While conducting research in Kenya, I was often asked what the job opportunities were like in the United States by the very Kenyan informal economy workers whom I was trying to learn from. It seemed that these individuals were just as curious as I was regarding employment trends around the world.
To my surprise, there are continually expanding entrepreneurial policies that have coincided with the democratization of capital within for-profit and non-profit lenders to promote the development of microenterprises in the United States. [1]
Within the last decade, the microenterprise has been a solution of the American government to tackle the economic uncertainty of the Great Recession. As unemployment statistics remain high (as of April 2012 8.1%), the microenterprise is servicing as one avenue of job creation in the United States. [2]
For example, Nicole Gates, a Grameen America borrower, is just one individual who decided to turn to her own culinary skills to start a business after being laid off from her full time job. [3] During the recent economic decline, individuals such as Nicole are often left with no choice but to focus on the development of a microenterprise for survival. I also witnessed such a trend in Kenya, where formal sector jobs are not sufficiently providing job opportunities for the population, even those with college degrees.
In the United States, Congress and President Obama seem to recognize the need for supporting microenterprises. In the last year, three major pieces of legislation passed with bi-partisan support. The Jumpstart Our Business Startups (JOBS Act) [4], the Entrepreneur Access to Capital Act [5], and the Access to Capital for Job Creators Act [6] are all meant to make it easier for small business owners and start-ups to flourish.
These pieces of legislation compliment the previous efforts of the Microenterprise for Self-Reliance Act and its later amendment titled the Microenterprise Results and Accountability Act, which made it possible for increased funding from private and non-profit lenders through microfinance programs. [7]
Entrepreneurs now have access to small amounts of capital, as low as $1,000, through a microfinance industry that has moved full circle around the globe, now returning to where it originated as large American communities are now facing similar economic hardships as their global neighbors in the developing world. [8]
Microfinance lenders in the United States now include a vast number of organizations and private companies. The most popular include Accion U.S.A [9], Sam’s Club (Walmart owned and operated), Opportunity Fund [10] and most recently Grameen America (created from the success of The Grameen Bank lead by Muhammad Yunus, the Nobel Prize recipient for his innovation in "pro-poor credit delivery") [11].
As the decade long trend to support the development of microenterprise continues, the government of the United States should learn from the use of the microenterprise as a method to expand economic opportunities for the poor in other countries.
For example, during the early 19th century in England, welfare provisions were replaced by the informal economy that was meant to be an endless opportunity for the poor to support themselves. [12] Also, during the 1980s and 1990s, Hernando De Soto, made the use of microenterprises hugely popular in international development policies throughout Latin America to allow the poor to become the economic heroes in their own lives through entrepreneurism. [13]
Unfortunately, the past has proven that such pushes for microenterprise based policies often do not provide sufficient long-term economic development or poverty alleviation through the push for self-employment [14] because it breaks down organized labor [15] and collective activities used to challenge social structures of income and racial inequality. [16]
If the American government wishes to decrease economic insecurities of its citizens, especially the effects of the Great Recession, such historical legacies need to be understood. Only then can the government fully understand the potential of entrepreneurial activities for job creation and learn what resources are needed to make the microenterprise a poverty prevention and poverty alleviating option for citizens of the United States.
[1] Roy, Ananya. Poverty Capital: Microfinance and the Making of Development. New York: Routledge, 2010.
[2] Department of Labor Statistics
“Labor Force Statistics from the Current Population Survey.” Accessed May 29,
2012. http://www.bls.gov/cps/
[3] Bernhard, Kent. “Small Loans, Big
Dreams.” Portfolio.com Accessed May 29, 2012. http://upstart.bizjournals.com/companies/startups/2012/04/16/grameen-america-part-of-domestic-microfinance-trend.html?page=all
[4]Read more about this act: http://beta.congress.gov/bill/112th/house-bill/3606
[5] Read more about this act: http://beta.congress.gov/bill/112th/house-bill/2930
[6] Read more about this act: http://beta.congress.gov/bill/112th/senate-bill/1831
[7] Roy, Ananya. Poverty Capital: Microfinance and the Making
of Development. New York: Routledge, 2010.
[8] Bernhard, Kent. “Small Loans, Big
Dreams.” Portfolio.com Accessed May 29, 2012.
http://upstart.bizjournals.com/companies/startups/2012/04/16/grameen-america-part-of-domestic-microfinance-trend.html?page=all
[12] Bateman, Milford. Why Doesn't Microfinance
Work?: The Destructive Rise of Local Neoliberalism. London: Zed Books,
2010.
[13] De Soto, Hernando. The Other
Path: The Invisible Revolution in the Third World. New York: Harper &
Row, 1989.
[14] Specifically in Latin America during the
1980s and 1990s, the expansion of the informal economies of developing
countries resulted in an increase in poverty and inequality (although other
factors are partially to blame).
(Please
refer to Bateman, Milford. Why Doesn't
Microfinance Work?: The Destructive Rise of Local Neoliberalism. London:
Zed Books, 2010.)
[15] Harvey, David. A Brief History
of Neoliberalism. Oxford: Oxford University Press, 2005.
[16] Bateman, Milford. Why Doesn't
Microfinance Work?: The Destructive Rise of Local Neoliberalism. London:
Zed Books, 2010.
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