Is Credit Enough? Entrepreneurial training through MFIs in Pakistan: A case study

Authors

  • Paras Abro Corresponding Author, Ph.D, Scholar, Mehran University Institute of Science Technology and Development, MUET Jamshoro. Author
  • Dr. Arabella Bhutto Mehran University Institute of Science, Technology and Development, MUET Jamshoro Pakistan. Author
  • Dr. Adnan Pitafi Mehran University Institute of Science, Technology and Development, MUET Jamshoro Pakistan. Author

Keywords:

Micro financing, micro financial institutions, trainings to entrepreneurs, entrepreneurial development, analytical hierarchical process

Abstract

The academic and development policies mostly discuss credit constraints faced by micro-entrepreneurs and presume entrepreneurs would be managing their business optimally. However, credit alone is not an answer to the needs of an entrepreneur. There is a need for understanding how to utilize the funds properly to have a successful venture. Microfinance providers are working in coordination with other non-financial services to cater to these needs for the entrepreneurs for entrepreneurship development and societal up lifting. Pakistan in the case has a sound microfinance structure but the outreach seems to be much lower than other peer nations in the world. The present study aims to explore the microfinance industry in Pakistan and their credit plus approach targeting enterprise development in particular. The study follows a qualitative approach which induces the possibilities of providing training to the clients, particularly entrepreneurs. Three main financial institutions of Pakistan are taken as a sample for the understanding of MFIs and their perception towards entrepreneurs through interviews as the main tool. The results revealed that no Microfinance bank provide any sort of formalized pieces of training to the entrepreneurs or MESE loan clients, although they wish or intend to do so. However, non-banking Microfinance institutions despite smaller loans and short span provide extensive training to their borrowers. The study has main policy recommendations that may be adopted by the MFIS or Central bank of the country to support the inception stage of entrepreneurial development in Pakistan.

References

ADEMCOL (2001). Bundling Microfinance and Business Development Services (BDS):A Case Study from ADEMCOL in Colombia. Asociación para el Desarrollo Microempresarial Colombiano (ADEMCOL) and Women’s Opportunity Fund, Micro enterprises best practices, US Aid project.

Adner, R. 2012. The Wide Lens: A New Strategy for Innovation. New York: Penguin Books

Ahmad, R., Hussain, A., Umer, M. & Parveen, K., (2017). Efficiency of Microfinance providers in Pakistan: An Empirical Investigation. Review of Economics and Development Studies, 3(2) 147-158).

Al-Mamun, A., M. N. H. Mazumder, and C. A. Malarvizhi. 2014. “Measuring the Effect of Amanah Ikhtiar Malaysia’s Microcredit Programme on Economic Vulnerability among Hardcore Poor Households.” Progress in Development Studies

Asad, M., Haider, S. H., Akhtar, M. B., & Javaid, M. U. (2011). Human Resource Practices and Enterprise Performance in Small and Medium Enterprises of Pakistan. First International Conference on Contemporary Issues of Business (pp. 1-18). Lahore: Comsats

Bembenutty, H., White, M. C., & Vélez, M. R. (2016). Developing self-regulation of learning and teaching skills among teacher candidates self-regulated learning and development in teacher preparation training. In H. Bembenutty, M. C. White, & M. Vélez, Developing Self-regulation of Learning and Teaching Skills Among Teacher Candidates (pp. 9-28). Springer Netherlands.

Digital Entrepreneurial Ecosystem Pakistan, ATKearney, 2017, retrieved at https://www.mckinsey.com/~/media/mckinsey/featured%20insights/middle%20east%20and%20africa/pakistans%20start%20up%20landscape%20three%20ways%20to%20energize%20entrepreneurship/starting-up-unlocking-entrepreneurship-in-pakistan.ashx

EFFECT OF MICROFINANCE ON POVERTY REDUCTION: A CRITICAL SCRUTINY OF THEORETICAL LITERATURE Nyarondia Samson Mecha, Global Journal of Commerce and Management, Global Institute of Research and Education, 2017

Ekpe, I., Mat, N. B., & Razak, R. C. (2010). The Effect of Microfinance Factors on Women Entrepreneurs’ Performance in Nigeria: A Conceptual Framework. International Journal of Business and social science, 1(2), 255-263Microfinance in south aisa UK Aid, 2018

Entrepreneurial Ecosystem Report of Pakistan by SEED Ventures (Social Entrepreneurship and Equity Development) Pakistan, 2014

Gem report 2012, GEM 2012 GLOBAL REPORT, retrieved on 16 july 2017 from https://www.gemconsortium.org/report/gem-2012-global-report

Goldmark, L., 1999. The financial viability of business development services. Small enterprise development, 10 (2), 4-16

GPFI and IFC, “Strengthening Access to Finance for Women-Owned SMEs in Developing Countries”, 2011 Gutierrez-Nieto, B., Serrano-Cinca, C., & Molinero

Guerin, I., G. Venkatasubramaniam, and C. Churchill. 2005. “Bonded Labour, Social Capital and Microfinance: Lessons from Two Case Studies.” The Indian Journal of Labour Economics 48 (3): 521536

Halder, S. R., 2003. BRAC's business development services - Do they pay. Small enterprise development, 14 (2), 26-35

Humphreys, A., 2008. Understanding Collaboration and Collective Production: New Insights on Consumer Co-Production. Advances in consumer research, 35, 63- 66 YBI 2011

Karlan, D., & Valdivia, M. (2011). Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions. Review of Economics and Statistics,93(2), 510-527. doi: Doi 10.1162/Rest_a_00074

Kent, D., and M. Dacin. 2013. “Bankers at the Gate: Microfinance and the High Cost of Borrowed Logics.” Journal of Business Venturing Webb et al. 2010

Khan, ‘How one mechanic is keeping his hands dirty during the lockdown The Express Tribuen, 16 (04) (2020), p. 2020

Khavul, S., H. Chavez, and G. Bruton. 2013. “When Institutional Change Outruns the Change Agent: The Contested Terrain of Entrepreneurial Microfinance for those in Poverty.” Journal of Business Venturing.

Lanao-Flores, I. & Serres, P. (2009) ‘Microfinance and non-financial services: An impossible marriage?’ Private Sector Development, 3(3), 1-6

MohsinShafi and JunrongLiuWenjuRen, 2020, ’ Impact of COVID-19 pandemic on micro, small, and medium-sized Enterprises operating in Pakistan, Research in Globalization, Volume 2, December 2020, 100018

Mondal,W.I. , “Microcredit and Micro entrepreneurship: An Extension of Schupeter’s Five-Factor Model”, University of Redlands,pp.1-7

Newman et al. (2017), Microfinance and entrepreneurship: An introduction International Small Business Journal: Researching Entrepreneurship 2017, Vol. 35(7) 787 –792 © The Author(s) 2017 Reprints and permissions

Pakistan Micro finance network, 2019, ‘PMN Review 2019’

Patton, D. and Marlow, S., 2002. The determinants of management training within smaller firms in the UK. What role does strategy play? Journal of small business and enterprise development, 9(3), 260-270

Peters, C., Bodkin, C. D. and Fitzgerald, S., 2012. Toward an understanding of meaning creation via the collective co-production process. Journal of consumer behaviour, 11 (2), 124-135;

Politis, D. and Landström, H. 2002. Informal investors as entrepreneurs: The development of an entrepreneurial career. Venture Capital, 4(2): 78–101.

Reed, L. R. 2011. State of the Microcredit Summit Campaign Report 2011. Washington, DC: Microcredit Summit Campaign,

Susan Henry, 2006, ‘Good Practice in Business Development Services: How Do We Enhance Entrepreneurial Skills in MFI Clients? http://www.ruralfinanceandinvestment.org/sites/default/files/Good_Practice_in_Business_Development_Services_pdf.pdf

Syed Hussain Haider , Muzaffar Asad and Mina Fatima, ‘MICROFINANCE AND PERFORMANCE OF MICRO AND SMALL ENTERPRISES; DOES TRAINING HAS AN IMPACT’ International Journal of Small Business and Entrepreneurship Research Vol.6, No.4, pp.40-49, July 2018

Valk, W. V. D., 2007. Buyer-seller interaction patterns during ongoing service exchange. Thesis (PhD). Erasmus University Rotterdam

Yin, R. K., 2009. Case-study research: Design and methods 4th edition ed. London: Sage.

Downloads

Published

2021-06-30

How to Cite

Is Credit Enough? Entrepreneurial training through MFIs in Pakistan: A case study. (2021). International Research Journal of Management and Social Sciences, 2(1), 1-16. http://irjmss.com/index.php/irjmss/article/view/154

Similar Articles

1-10 of 122

You may also start an advanced similarity search for this article.