FAQs

Frequently Asked Questions (FAQs):

What is a microenterprise?

A microenterprise is a business that:

• Employs between 1-10 people, including the owner
• Requires little capital to start-up

How important are microenterprises?

• They account for as much as half of all employment
• Microenterprise represents the heart of the region’s economic engine that remains undercounted and under-recognized
• Microenterprise allows low income people access to the mainstream economy
• Microenterprises contribute significantly to economic growth, social stability and equity

How are microenterprises financed?

Microfinance institutions (MFIs), Savings and Credit Cooperative Societies (SACCOS), and other depository institutions are the largest lenders of debt capital to microenterprises.

What is microfinance?

Microfinance is the provision of both financial and non-financial services to poor and low-income clients.

Who are microfinance clients?

Microfinance clients generally do not have access to the formal financial institutions. They are poor and low-income people who are usually self-employed. They are street venders, carpenters, artisans, subsistence farmers, and service providers.

How do regulations affect microenterprises?

Most microenterprises in East Africa operate in the informal economy, mainly beyond the purview of laws and regulations. A vast majority of microenterprises choose to remain informal because the costs and procedural burden of joining the formal economic outweigh the benefits of staying in the informal economy.

What is the role of women in microenterprise?

In addition to making up the fastest growing segment of microenterprises, women make a huge contribution to the national income and create reliable social safety nets for their families and communities.