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MICROSTART Education Programmes

Micro-Investment Series for Micro-Businesses

Microinvesting can be defined as the supply of funds to low‐income populations excluded from the mainstream financial system – these are typically engaged in self‐employment, and often operate in the informal economy. Microinvesting has a common “double bottom‐line mission” which gives equal weight to the developmental goal of bringing the poor into the mainstream economy and building socially inclusive financial sectors, but also to sustain and generate a positive financial return.

Micro loans are characterised by their small amounts, short maturities, regular and frequent repayments, relatively high margins and they are typically for working capital purposes. They have been characterised by their high repayment rates to date, with the working poor proving to be remarkably creditworthy.

Established since the 1970s from South Asia and Latin America, the success of microfinance has led to increased attention from socially responsible/ethical investors and capital markets investors. Its success has hinged on its business model, good asset quality, which typically compares favourably with the asset quality indicators of mainstream banks; reasonably stable financial performance indicators and some evidence of resilience to broader external macroeconomic shocks. Investors have also been drawn to the sector by the role microfinance plays in the development of a country’s financial systems and economy, and on its ability to bring the poor into the mainstream economy.

However, the sector’s track record is short and its success could increasingly expose it to greater risks. In particular, strong growth and increased need for external funding has put pressure on the internal control systems, and place new demands on quality of management and corporate governance structures, which microinvestors struggle to meet.

We are pleased to announce that as part of our mission to empower enterprises in the ecosystem, our Centre will play an enabler or facilitator to assist microbusinesses become more integrated into the mainstream business sector, and ensuring poverty reduction and improve employment (and/or wealth improvement) in the long term. This is achieved through the provision of human and financial capital, under a robust platform of people, technology, processes and infrastructure.

To read more about Micro-Investment Series for Micro Businesses please click here to download the brochure.

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