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Microfinance Enterprise in the third world economy Research Proposal

            Microfinance has grown from a small program in the 1970s in Bangladesh to a worldwide movement today. Microfinance is basically the small loans that are granted to the third world poor. Such microloans are usually provided through non-profit, humanitarian organizations. These new mechanisms are often referred to as nongovernmental organizations (NGOs) whose focus is on empowering poor families.

            The movement to expand financial services for the poor as a grassroots development strategy is a relatively recent phenomenon. Microfinance, which emphasizes granting small loans to the poorest of the poor without requiring collateral, rests upon the notion that the most impoverished people in developing countries typically do not otherwise have access to traditional financial; services, but that they do possess modest survival skills that make them credit-worthy. Credit programs can offer the poor access to small amount of capital, and, in turn, they use these loans for self-employment projects, to generate income and eventually become self-reliant.

            Microfinance was introduced by an economist named Muhammad Yunus in Bangladesh in the 1970s. Before the introduction of microfinance, the worlds poorest people were virtually under-served by financial institutions. This is because poor people generally do not own property, making them unable to offer the necessary collateral needed to secure loans. Most have no credit record. Most lack education or a formal employment record. Many live in rural areas, beyond the reach of traditional banks. And many cannot read or write or sign their own names. Women are often further deterred in that some societies stipulate that only a man may se3rve as guarantor to a loan. Furthermore, most banks would not consider allowing loans small enough to be appropriate in those instances, for the simple reason that transaction costs would be prohibitive. In the absence of formal access to financial services, the poor traditionally had no choices outside of being exploited by local money lenders.

            The potential of using institutional credit and other financial services for poverty alleviation in Kenya is quite significant. About 18 million people, or 60 percent of the population are poor and mostly out of the scope of formal banking services. According to the Poverty Reduction Strategy Paper (PRSP) of 1999, a large number of Kenyans derive their livelihood from the (Micro and Small Enterprises) MSEs. Therefore, development of this sector represents an important means of creating employment, promoting growth, and reducing poverty in the long-term. In the past, microfinance institutions (MFIs) established using either an NGO or a savings and credit co-operative societies framework have been important sources of credit for a large number of low income households and MSEs in the rural and urban areas of Kenya. The Government of Kenya recognizes that greater access to, and sustainable flow of financial services, particularly credit, to the low-income households and MSEs is critical to poverty alleviation. Over 100 organizations, including about 50 NGCs, practice some form of microfinance business in Kenya. About 20 of the NGOs practice pure microfinancing, while the rest practice microfinancing, while the rest practice microfinancing alongside social welfare activities. The microfinance sector in Kenya has faced a number of constraints that need to be addressed to enable them to improve outreach and sustainability. The major impediment to the development of microfinance business in Kenya is lack of specific legislation and set of regulations to guide the operations in Kenya are registered under eight different Acts of Parliament namely:

·         The Non Governmental Organizations Co-ordination Act

·         The Building Societies Act

·         The Trustee Act

·         The Societies Act

·         The Co-operative Societies Act

·         The Companies Act

·         The Banking Act

·         The Kenya Post Office Savings Bank

Some of these forms or registrations do not address issues regarding ownership, governance, and accountability. They have also contributed to a large extent to the poor performance and eventual demise of many MFIs because of a lack or regulatory oversight.

 

Research Methodology

The planned methodology is secondary research. The researcher will make use of published materials such as books, magazines and newspapers to collect data and information regarding the topic. The researcher will also make use of the internet to obtain information about the company such as its background and other related information. For the research, the researcher will mainly rely on secondary data in obtaining the information. Due to inaccessibility of the subject or the case study, other research methods are not applicable. Secondary data are data that have been collected for some other purpose. Secondary data can provide a useful source from which to answer the research question(s). Punch (1998) mentions several advantages of using existing data. Expenditure on obtaining data can be significantly reduced and data analysis can begin immediately, so saving time. Also, the quality of some data may be superior to anything the researcher could have created alone (Thomas, 2004, p. 191). On the other hand, the chosen research method also has several disadvantages. Data that have been gathered by others for their own purposes can be difficult to interpret when they are taken out of their original context. It is also much more difficult to appreciate the weak points in data that have been obtained by others. The data may be only partially relevant to the current research question (Thomas, 2004, p. 191).

 


Comments

Anonymous said…
在莫非定律中有項笨蛋定律:「一個組織中的笨蛋,恆大於等於三分之二。」......................................................................
Anonymous said…
成熟,就是有能力適應生活中的模糊。.................................................................
Anonymous said…
當一個人內心能容納兩樣相互衝突的東西,這個人便開始變得有價值了。............................................................
Anonymous said…
偶爾上來逛逛,下次不知是否還有緣再進來,先祝您平安順利!!!............................................................
Anonymous said…
人生中最好的禮物就是屬於自己的一部份..................................................
Anonymous said…
寂寞又無聊 看到你的BLOG 加油喔!!............................................................
Anonymous said…
我們能互相給予的最佳禮物是「真心的關懷」。..................................................
Anonymous said…
拒絕冒險和成長的人,終將被生命的潮流陶汰。..................................................
Anonymous said…
永遠不要躊躇伸出你的手。也永遠不要躊躇接受別人伸出的手。.................................................................
Anonymous said…
愛,拆開來是心和受兩個字。用心去接受對方的一切,用心去愛對方的所有。......................................................................
敬周喜 said…
一個人的價值,應該看他貢獻了什麼,而不是他取得了什麼.................................................................
Anonymous said…
不要把生命看得太嚴肅,反正我們不會活著離開。............................................................
Anonymous said…
A truly happy person is one who can enjoy the scenery on a detour. ..................................................................
Anonymous said…
融會貫通的智慧,永遠不會被遺忘。..................................................
Anonymous said…
上班很累,摸個魚輕輕鬆鬆的逛部落..................................................................
淑洪娟 said…
困難的不在於新概念,而在於逃避舊有的概念。......................................................................

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