url
2
Jul
2014

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

THE IMPORTANCE OF MONITORING AND ENTREPRENEURSHIP CONCEPT AS FUTURE DIRECTION OF MICROFINANCE: RECOMMENDATIONSIt is also envisaged that entrepreneurial training based on Islamic concept embedded with Islamic entrepreneurial approach is able to create respondents’ awareness towards the importance of the allocation of micro funds through the distribution of zakat for the purpose of operating microenterprises. The awareness among the program recipients would enhance their responsibility towards the usage of micro funds in the best possible way, hence increasing their self-reliance and striving forward to alleviate poverty. If program members can increase their income level and move out of poverty, they would be able to indirectly repay back the zakat funds later in their life as they soon become active contributors of zakat. Furthermore, continuous monitoring enables the adoption of social contracts among program members in the wider context as relationship between the principal (MFI) and agents (program members) can be enhanced for the purpose of economic development for the entire Muslim ummah.

Empirical evidences showed that the total income of members prior to joining the program seemed to be the most important factor that contributes to the effectiveness of the microcredit program in creating and increasing business profits. The findings of the current study are also consistent with those of Morduch (2008 and 1998), Coleman, Imran Matin and Hulme and CGAP which stated that microcredit programs are very effective for the vulnerable poor and low income groups but are not effective for the hard-core poor as the current findings proved it among the program members of YBK.

Findings of this study also pointed out that the screening procedures and choice of program members and should be refined especially for the LZS and YBK programs. This should be done for the simple reason that the hardcore poor groups are in need of direct support from the government and other nongovernmental organizations in the form of non-productive supports such as housing, education, food and jobs which can sustain their life. Job opportunity is more important to the hardcore poor than business enterprise due to their low educational level and lack of skills. Based on other studies, Coleman and Nichter and Goldmark, most microenterprises failed due to the inability of the implementation of the microenterprise development program to create favorable job opportunities and identify potential members to undertake microenterprise businesses such as the level of knowledge, skills and resources owned by the members. Findings from the current study showed that asnaf entrepreneurial development program among the poor groups organized by LZS should be revised and updated as it was more appropriate for the asnaf fisabilillah compared to the poor asnaf. In addition, stringent screening of potential program members should be adhered to by the LZS program management officers (Wan Sabri Wan Hussin, 2009) and similarly for the YBK program, in order to ensure that the poor members are really appropriate for the program and that only those that are prepared to take risk are selected.
The current study findings also imply that the program members should be exposed to basic entrepreneurial and business skills training even before they start their microenterprise businesses. Training exposure of this nature should also be organized as an on-going, continuous and sustainable activity in order to help those in the business activities. This is of critical importance due to the low educational level in addition to lack of business knowledge among the program members, especially those of the YBK program compared to the other programs. In reality, all program members, especially those under the YBK, are basically not ready or unable to undertake any business activities.

It is also envisaged that entrepreneurial training based on Islamic concept embedded with Islamic entrepreneurial approach is able to create respondents’ awareness towards the importance of the allocation of micro funds through the distribution of zakat for the purpose of operating microenterprises. The awareness among the program recipients would enhance their responsibility towards the usage of micro funds in the best possible way, hence increasing their self-reliance and striving forward to alleviate poverty. If program members can increase their income level and move out of poverty, they would be able to indirectly repay back the zakat funds later in their life as they soon become active contributors of zakat. Furthermore, continuous monitoring enables the adoption of social contracts among program

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Kevin J. Brandon

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