Enthusiasm for microcredit programs has increased during the
past decade. The attention these programs have drawn stems philosophically
from progress in cultivating self-sufficiency among those in abject
poverty, and practically from the viability and high loan repayment rates of
many microfinance institutions. The programs assume that lack of capital
is the main barrier to the economic progress of the poor. The lack of entrepreneur
business management experience and training, however, may create
a barrier equally powerful and limit the growth potential of
microenterprises. Microcredit programs could foster even greater economic
progress by ensuring that clients receive appropriate human capital development.
Without adequate training of microentrepreneurs, microloans may
allow the poor to move from abject poverty to subsistence income levels, but
limited skills leave the opportunity for substantial firm growth untapped.
The potential of these firms to employ others also remains unfulfilled. This
paper reviews relevant microcredit and microenterprise literature, and then
argues for increased microentrepreneur training based on the case of a
Manila microentrepreneur.
