The document discusses different types of economic activities and enterprises that can generate income, ranging from individuals selling goods on sidewalks to large corporations employing 51+ people. It also describes informal savings schemes commonly used in developing areas, such as ROSCAs and ASCAs. These involve groups of people saving together and taking turns receiving payouts. The document advises that NGOs and missionaries considering microfinance programs should research existing community savings schemes and decide whether to promote, provide, or partner with these schemes. It identifies some ways that microenterprise development can be incorrectly implemented, such as through unsuitable loans or subsidized credit.

1. David Bussau and Russell Mask
Chapter 3
Reviewed by Abigail East
Christian Microenterprise

2. Income Generation
 1.I15th percentile i.e. selling merchandise on
sidewalks)High quality
 MED work at this level results in: less: vulnerability,
minimal: employment opportunities. High
 impact=sustaining jobs, low impact: creating jobs
 2.micro-enterprise(1-10 employees) MED=more:
Income, employment
 3.small-enterprise(11-50) MED=more: Income,
employment
 4.medium-scale enterprise(51 or more)
 5.large-scale enterprise
 Continuum of Economic Activities (Figure 1)

3. Savings Schemes
 · Take place among people who know each other
 · Relatively small amounts of money
 · Multiple
functions(credit+trade+commerce=insurance
against risk)
 INFORMAL FINANCE SCHEMES(3 important
elements)

4. Poor People Save
 Important note: poor people save and have been
doing so in the 2/3 world for centuries, relying on
informal mechanisms to save.
 Informal Finance- all financial transactions, loans
and deposits, occurring outside the regulation of
a central monetary or financial market authority.

5. ROSCA
Size/Purpose: 15-30, up to 60. Fixed amount /week
lottery
 Use: consumer goods, investment etc
 Getting Started with OneNote Page 2 Use:
consumer goods, investment etc
 Longevity: time bound
 Attraction: simple and transparent

6. ASCA
 ASCA’s
 Methodology: not time bound or fixed amount
 Ex. Credit Union, Burial society
 Longevity: as members see fit
 Functions: insurance services
 Challenges: transparent if time bound. savings
accountability is a problem with larger amounts
 Interest: on loans, balancing out inflation
 Excess cash managed by loaning to other credit
unions

7. Promote, Provide or Partner?
 NGOS and missionaries considering microfinance and/or MED need to
research current community schemes and extent of assistance to
community
 1. Promoter: help poor set up program/self managed scheme
 2. Provider: sell service to the poor
 3. Partner: existing provider
3 OUTSIDER OPTIONS
 1. TIME HORIZON
 2. SUSTAINABILITY
 3. DIRECT SERIVCES
 4. GOALS FOR OUTREACH
 5. LINKAGES
 6. MACROECON AND POLITICAL CONDITIONS

8. Incorrect MED
 Inappropriate loans: burying people in debt ie student loans
 Subsidized credit: not real market environment
 Low repayment rates: reduces confidence, increases cost
 Local government programs: often misappropriated or
misused
 Unfair preference: i.e. believers/cliques
 How to INCORRECTLY implement MED
 1. Est. $ after all production costs are subtracted
 2. Est. and quantify “senior claims” i.e. food, fuel
 3. Assess likely problems during loan i.e. weather