Chapter 14: Microfinance–Microenterprise Relationship: The Malaysian Growth Experience
Sow Hup Chan INTRODUCTION Millions of microenterprise activities take place in many corners of the world, including the bustling emerging nation of Malaysia. In recent publications, the topic of microfinance has been discussed and debated. This chapter examines the microfinance and microenterprise relationship in a rural community in Malaysia. Governments and non-government organizations have used microfinance as a tool to alleviate poverty and empower the poor. Microfinance provides a cost-effective and sustainable development model by increasing the income of the poorest, and enabling them to improve their quality of life and resist oppression through collective action (Yunus, 1994, 1995). Microfinance also has the capacity to increase self-employment productivity in the informal sector. It can service markets where banks cannot. Academic studies have raised numerous questions about microfinance as a means for poverty alleviation (Goetz and Sen Gupta, 1996; Hulme and Mosley, 1996; Copestake, 2002). For instance, in examining whether or not poor borrowers have access to microfinance in vulnerable remote areas, Chan and Abdul Ghani (forthcoming) found that microfinance programs can reach the poorest of the poor in remote villages, and microfinance initiatives help develop communities. Specifically, the availability of small loans encouraged the development of: (1) rural enterprise; (2) skills and confidence in rural women; and (3) the social standing of rural women in their rural community (Chan and Abdul Ghani, forthcoming). While this suggests an important role of microfinance institutions in meeting the Millennium Development Goals, it also indicates that the microfinance industry has the capability to reach...
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