Born, Trained or Excluded Microentrepreneur

University essay from Högskolan i Borås/Akademin för textil, teknik och ekonomi; Högskolan i Borås/Akademin för textil, teknik och ekonomi

Abstract: Purpose– The assumption that microcredit alone can contribute to worldwide povertyalleviation is debated, the opponents voicing the need of non-credit services in addition togive the poor access to capital. Social intermediation services are argued to be essential inmaking a difference in a time where the impact of microfinance itself has been reappraised inseveral studies. Simultaneously, the shift to commercialization of the industry due to pressureto accomplish self–sustainability is inescapable; concerns over its benefits for the poor ispronounced. Some are suggesting positive effects, others argue there being negative effectsdue to the change in focus. The purpose of this study is to generate knowledge about theinfluence MFIs have in enabling individuals to be microentrepreneurs in Sri Lanka.Design/methodology/approach– This will be accomplished through investigating theconditions and terminology used by MFIs in relation to entrepreneurship and theirrequirements of training. The findings may be used as guidance to other MFIs andstakeholders, both nationally and globally, who wish to engage in this field. The study relieson qualitative methodology where multiple case studies were analyzed and the findings basedon primary data conducted from nine semi-structured interviews. The cases have beenselected according to theoretical sampling.Findings– Based on the findings and theories applied, it can be stated that the ambition of theMFIs in Sri Lanka is to contribute to the microentrepreneurs development. This isaccomplished by giving them microcredit, training and motivation to start a sustainablebusiness and thus rise out of poverty. The findings suggest that the MFIs have an importantrole, but that the responsibility following as a result of their influence is compromised. Theconclusion is that the MFIs do not acknowledge everyone to be entrepreneurs, and are lackingin providing the most optimal training and supply of microfinance services for theirmicroentrepreneurs to succeed. This is limiting the microentrepreneurs progress and excludesan unknown part of potential microentrepreneurs.Originality/value– The findings of this study can help us to understand how MFIs in SriLanka enable or restrict the microentrepreneur because of their expectations and otherconsequences due to the market of microfinance and the fundamental assumptions whichmicrofinance is based on. Our contribution provides context on what conditions andlimitations MFIs create for microentrepreneurs in rising out of poverty with the assistance ofmicrofinance. The findings may be used as guidance to other MFIs and stakeholders, bothnationally and globally, who wish to engage in this field.

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