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Understanding the microenterprise sector to design a tailor-made microfinance policy for Cape Verde

Author

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  • José Baptista
  • Joaquim Ramalho
  • J. Vidigal da Silva

Abstract

Two of the central challenges faced by Cape Verde at the present are the high level of unemployment and the increasing proportion of the population that lives below the poverty line. Microenterprise development can be an effective means of addressing both problems in a developing country like Cape Verde, where microenterprises account for about 50% of employment. In this paper we provide a detailed profile of micro firms? owners and investigate the relationship between their characteristics and the resort to outside seed capital. We find a cluster of factors - the microentrepreneur?s age, gender, level of education and reason for being self-employed - which influence significantly the probability of being in need for external startup capital. The policy implications of these findings for the design of a specific microfinance program for Cape Verde are discussed.
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Suggested Citation

  • José Baptista & Joaquim Ramalho & J. Vidigal da Silva, 2006. "Understanding the microenterprise sector to design a tailor-made microfinance policy for Cape Verde," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 5(3), pages 225-241, December.
    • Handle: RePEc:spr:portec:v:5:y:2006:i:3:p:225-241
    DOI: 10.1007/s10258-006-0004-7
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    1. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    2. Shaw, Judith, 2004. "Microenterprise Occupation and Poverty Reduction in Microfinance Programs: Evidence from Sri Lanka," World Development, Elsevier, vol. 32(7), pages 1247-1264, July.
    3. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
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    6. International Monetary Fund, 2005. "Cape Verde: Poverty Reduction Strategy Paper," IMF Staff Country Reports 2005/135, International Monetary Fund.
    7. Evans, Timothy G. & Adams, Alayne M. & Mohammed, Rafi & Norris, Alison H., 1999. "Demystifying Nonparticipation in Microcredit: A Population-Based Analysis," World Development, Elsevier, vol. 27(2), pages 419-430, February.
    8. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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    Cited by:

    1. Arvind Ashta & Chandralekha Ghosh & Samapti Guha & Frank Lentz, 2021. "Knowledge in Microsocial Milieus: the Case of Microfinance Practices Among Women in India," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(1), pages 146-165, March.
    2. Icíar García-Pérez & María Ángeles Fernández-Izquierdo & María Jesús Muñoz-Torres, 2020. "Microfinance Institutions Fostering Sustainable Development by Region," Sustainability, MDPI, vol. 12(7), pages 1-23, March.
    3. Boza Chirino, José & Maroto Santana, Octavio & Cáceres Apolinario, Rosa Mª., 2010. "Los Microcréditos como medio de Financiación Alternativa. Estudio aplicado a Cabo Verde/The Microcredits Like Way of Alternative Funding. Study Applied to Cape Verde," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 28, pages 199(20á)-19, Abril.
    4. So Young Sohn & Yonghan Ju, 2023. "Mission Efficiency Analysis of For-Profit Microfinance Institutions with Categorical Output Variables," Sustainability, MDPI, vol. 15(3), pages 1-12, February.

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    More about this item

    Keywords

    Cape Verde; Microfinance; Microenterprise; Microcredit; Poverty; O18; G32;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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