Technology – the key to increasing the productivity of microenterprises
It is widely accepted that microenterprises are an important source of goods and services, income, and employment in developing countries, particularly for low-income groups. This is illustrated by the growth in recent years of the numbers of programmes which target credit particularly at the enterprises of low-income people. This article discusses the importance of technologies to the survival, growth, and expansion of those all-important production and processing microenterprises, and argues that credit alone is insufficient to generate the productivity increases needed for long-term economic growth and poverty alleviation. The article analyses how external assistance can support technology innovation and dissemination, and examines the role of technological assistance in microenterprise programmes and ways in which development agencies can provide this assistance.
Combining credit and technical assistance – alpaca fibre production and processing in Bolivia
Bolivian herders face many constraints in producing alpaca fibre, including grazing land degradation, a lack of access to veterinary services, and the low-value genetic stock of animals. This article describes how a collaboration between an international NGO and a local herders' association increased productivity and incomes by establishing a more sustainable loan fund for herders that was complemented by supplying improved animals, technical assistance, and other inputs. Another important innovation was the creation of a commercial company in Bolivia for processing and export marketing of the alpaca fibre, which was previously sold to Peruvian companies through intermediaries. The new company is owned by the producers' association and the herders themselves. The article outlines the issues that have arisen in aiming for sustainable provision of the various services. While herders paid the full cost of improved animals and veterinary products, including transport, there was resistance to charging herders directly for extension services. Nevertheless, some of the extension costs are being recouped through interest from project loans and the herder associations' share of the profits of processing and marketing the fibre.
Loan-tracking systems for NGO microcredit programmes
Loan-tracking systems may provide much more information than the current status of the loans. This article describes information that can be gathered on loan application forms to monitor the economic impact of the loan on business owners and their families. Programmes can track changes by comparing applications for initial and repeat loans. The systems reviewed typically monitored changes in the client enterprises and reported key changes separately for men and women, but gave little information on their socio-economic characteristics. The study suggests that loan-tracking systems can often be implemented at a relatively low cost, and even simple systems can generate useful information for guiding programmes.