Microequity and Microfinance

Abstract

This paper examines the work of the Village Enterprise Fund, an US nongovernmental organization, in East Africa as a case study in "equity" based microfinance in low-income countries. Many small business established in high-income countries rely on some form of equity capital to fund the startup phase and much of the growth of the business. The success of startup grants and equity financing in high-income countries suggests that this method might also be applicable in low-income countries. Using the work of the Village Enterprise Fund as an example, the paper argues that startup grants and equity finance are useful and appropriate in addition to the more common loan-based approaches. Show more