Support for Microenterprise as Asset-Building: Concepts, Good Practices, and Measurement

Publication Date: 1 Apr 2004
Published by: Microfinance.com
Document Type: Paper

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What is the role of asset-building in the development of microenterprises?

This paper proposes that building assets - human, financial, or social - plays a fundamental role in the development of microenterprises, which are very small businesses owned by people of modest means.

The paper argues that:

• Savings services and networks of social capital are as important as training and loans;
  
• Most new ventures depend more on savings than on loans;
  
• Social networks are key business assets that poor people often lack;
  
• The outputs of microenterprise-support programs and self-employment can also be seen (and measured) in terms of asset building.

The paper describes:

• Concepts and good practices in micro-enterprise support programs as seen through the lens of asset-building;
  
• The benefits of micro-enterprise development in terms of assets;
  
• An asset-based framework for measuring progress and performance.

The paper offers the following conclusions:

• The ‘asset-development’ paradigm highlights the usefulness of savings services for financial capital and networks for social capital.
  
• With these tools, microenterprise programs have better chances of finding something that works in their context with their target group.
  
• There are established good practices that programs can build on.
  
• Good self-employment programs are also good wage employment programs.
  
• Even if their micro-enterprises fail, micro-entrepreneurs will have enjoyed some of the non-financial benefits of microenterprise ownership, and will have built assets that will serve them in whatever they do next.