Microfinance for small entrepreneurs

A group of Harvard students is teaming up with the United Nations and leading an effort to identify promising small entrepreneurs in developing countries to highlight the United Nations’ coming International Year of Microcredit.

The multinational effort consists of contests in eight developing nations. The project is led by a group of four Harvard Business School (HBS) students, supported by a global team of more than 40 microfinance and development experts, young professionals, and graduate students from Harvard and other universities around the globe.

Called “The Global Microentrepreneurship Awards,” the contests will identify successful small businesses in Afghanistan, Cambodia, the Dominican Republic, Indonesia, Mexico, Mozambique, Pakistan, and Rwanda. The countries represent a range of developing nations in population and economic status, from Rwanda with 8 million people, many of whom earn less than a dollar a day, to Mexico, with more than 100 million people, most of whom earn much more.

Several of the countries are recovering from wars that have ravaged their economies in recent decades.

Local microfinance institutions will nominate businesses for the awards on the basis of community impact, innovation, and personal excellence, among other categories. The business owners will make presentations on their businesses at a national awards event, which will include an awards ceremony as well as training sessions in various aspects of running a small business.

Winners will be invited to ring the opening bells in stock exchanges in their host country or a neighboring country, coinciding with a global stock exchange initiative to mark the launch of the Year of Microcredit on Nov. 18.

Michael Kerlin, one of four leaders of the launch team and a student at both Harvard Business School and the John F. Kennedy School of Government, said the students felt it was important that the small business people themselves received attention during the Year of Microcredit, as they’re the ones whose efforts have the potential to stimulate their home communities.

“We want to highlight the entrepreneurs so that financial institutions see [small business] as an area to invest,” said Kerlin.

The students have already begun fundraising to help finance the contests, hosting a successful benefit in New York City. They’ve also established country teams for each nation that will reach out to microfinance institutions in the eight nations. They’ve begun recruiting judges and sponsors for the contests as well.

The host country outreach is important, Kerlin said, because the effort should be supported in those nations and not be merely a U.S.-centered effort.

The International Year of Microcredit runs from Nov. 18, 2004, to Nov. 18, 2005, and seeks to promote small businesses and the institutions that provide them with financing. By putting the spotlight on this sector of developing nations’ economies, organizers hope to inspire entrepreneurs and attract more credit to help stimulate the economies of their home communities. The launch team also hopes to spur governments to create more supportive legislation to encourage small businesses and microfinance, and to inspire large financial organizations to consider small businesses as potentially profitable clients.