Craig and Friends,
Another approach from informal to formal is to build on traditional savings clubs that abound throughout the world and with a little external training improve transparency, increase savings and orient lending to business purposes. Savings groups - now with 10 million members in an estimated 125,000 villages in 65 countries worldwide - have proved to be simple virally self-replicating means of at least making a start that can be serve as a platform for business education and financial literacy to get the process underway. This is not the only approach but is may be the simplest, least expensive and most easily scalable.
See intheirownhands.com and savings-revolution.org.
Jeff
Jeffrey Ashe
jaashe@aol.com
-----Original Message-----
From: 'Churchill, Craig' churchill@ilo.org [MicrofinancePractice]
[MicrofinancePractice] <MicrofinancePractice@yahoogroups.com>
To: MicrofinancePractice <MicrofinancePractice@yahoogroups.com>
Sent: Fri, Oct 10, 2014 10:37 am
Subject: RE: [MFP] Formalization of informal businesses
Many thanks Malcom and JD for your suggestions. If anyone else has some suggestions, I am interested in additional ones as well.
Anuj, to answer your question, indeed informality remains an ongoing challenge. I think that the typical means to tackle this challenge, by designing and implementing business regulations, needs to be supplemented with compliance incentives…and this is where I think financial insitutions can play role.
cheers,
Craig
The latest issue of 'Enterprise Development and Microfinance' (the bright red journal that used to be called 'Small Enterprise Development' and maybe should be again), September 2014, volume 25 number 3, focuses on SME lending and includes several papers that relate to your question.
Sent: Wednesday, October 08, 2014 1:08 PM
Subject: [MFP] Formalization of informal businesses
Dear all
I am looking for example of financial institutions that use their relationships with micro and small businesses to encouage those enterprises to formalize, to become registered, meet safety and health requirements, and perhaps even pay taxes. I know that ABA in Egypt does that, requiring a greater degree of formalization as businesses want to access larger loans. I would be keen to learn more about any other examples.
Many thanks,
Craig
Craig Churchill
Chief, Social Finance Programme
International Labour Organization
Route des Morillons 4, Geneva
Switzerland CH-1211
Tel +41 22 799 6242
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