url
8
Jun
2014

THE IMPORTANCE OF MONITORING AND ENTREPRENEURSHIP CONCEPT AS FUTURE DIRECTION OF MICROFINANCE: INTRODUCTION

THE IMPORTANCE OF MONITORING AND ENTREPRENEURSHIP CONCEPT AS FUTURE DIRECTION OF MICROFINANCE: INTRODUCTIONA good and reliable microfinance program should have the capacity to integrate both the concepts of entrepreneurship and microenterprise. This is particularly true because the concept of entrepreneurship pays a lot of attention on the requirements of training, experience, business training, creativity, competitiveness and the readiness and preparedness of entrepreneurs to undertake risk and support and capital financing. Microenterprise on the other hand provides the tools for entrepreneurs to possess and operate businesses for their living whilst promoting new products and changes in the industry. In fact, the International Labour Office (ILO) indicates that entrepreneurship is an important tool for individual development while Vandenberg maintains that microenterprise businesses can be a very important mechanism for the alleviation of poverty across the globe. By similar token, capital financing and support such as micro financing are required as a complement to link microenterprise and entrepreneurship so as to enable the micro entrepreneurs to operate using the entrepreneurial concepts. In his book, ‘The Fortune at the Bottom of the Pyramid’, Prahalad offered his recognition and confidence by indicating that the poor are creative entrepreneurs and are able to further develop themselves. Similarly, Li stressed that the government support programs such as capital support and subsidy are able to promote groups of entrepreneurs among the poor. Hence, microfinance program is an important input in creating entrepreneurial process which is highly required in rectifying the social issues and problems such as poverty and development of micro entrepreneurs.

Efforts to alleviate poverty through the use of entrepreneurial approach have been practiced in Malaysia since independence in 1957 along with the implementation of the New Economic Policy (NEP). This policy emphasized on the importance of industrial sector and the formation of the Bumiputera Commercial and Industrial Community (BCIC). In addition, the entrepreneurial approach is becoming even more important with the introduction of economy based on knowledge (K-economy) in achieving the objectives of National Vision Policy (NVP), 2001-2010. Based on the K-economy concept, human capital is the most important aspect being focused by the Malaysian Government. According to the ‘Census of Establishments and Enterprises 2005’ report conducted by Bank Negara Malaysia and SME 2008 report, it was found that the future economic growth strategy for Malaysia would highly depend on the contribution of Small and Medium-Sized Industries (SMEs) registered in the country, where 80 percent of the total SMEs are microenterprises. It was found that of the total establishments in the country, the small enterprises reported total establishments of 18.4 percent followed by medium enterprises of 2.2 percent. This proved that the entrepreneurs and microenterprises activities have contributed a larger impact on the development of the entire Malaysian economy. Furthermore, microenterprises have become an important and effective mechanism for assisting the poor community to get out of the vicious circle through the entrepreneurial process via micro financing program.

A good and reliable microfinance program should have the capacity to integrate both the concepts of entrepreneurship and microenterprise. This is particularly true because the concept of entrepreneurship pays a lot of attention on the requirements of training, experience, business training, creativity, competitiveness and the readiness and preparedness of entrepreneurs to undertake risk and support and capital financing. Microenterprise on the other hand provides the tools for entrepreneurs to possess and operate businesses for their living whilst promoting new products and changes in the industry. In fact, the International Labour Office (ILO) indicates that entrepreneurship is an important tool for individual development while Vandenberg maintains that microenterprise businesses can be a very important mechanism for the alleviation of poverty across

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Kevin J. Brandon

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