Microenterprises constitute the vast majority of business firms in low- and middle-income developing countries. In Latin America, the sector contributes significantly to employment and gross domestic product. Recently, the expansion of microlending programs has been viewed as an effective means of developing the microenterprise sector and alleviating poverty. However, the nexus between microenterprise development and environmental degradation has remained largely unexplored. It is suspected that the pervasive informality of the microenterprise sector, its sheer size, and the high incidence of poverty in the sector contribute to cumulative environmental degradation and low standards of occupational safety. This paper highlights commonly observed patterns of pollution and occupational safety risks in the sector and examines feasible ways of promoting improved environmental management and occupational safety. The main recommendations are that microfinance institutions should not be excessively regulated and that environmental and occupational safety issues in the sector should be confronted directly through a combination of private and public actions. In addition, microfinance institutions can and should begin to take steps to promote environmental awareness and eco-efficiency among clients and limit their own exposure to lending risks due to environmental and occupational safety problems.
Mark Wenner is a financial specialist at the Inter-American Development Bank, in Washington, D.C.; Norman Wright is the Chair of the Management and Marketing Department at the American University of Sharjah. He is currently on a leave of absence from Brigham Young University-Hawaii where he is an associate professor of International Business Management.; Abhishek Lal is Vice President at Green Microfinance, a nongovernmental organization based in Maryland dedicated to improving environmental management in the microfinance industry.
Journal of Microfinance
Issue and Volume
BYU ScholarsArchive Citation
Wenner, Mark D.; Wright, Norman; and Lal, Abhishek
"Environmental Protection and Microenterprise Development in the Developing World: A Model Based on the Latin American Experience,"
Journal of Microfinance / ESR Review: Vol. 6
, Article 7.
Available at: http://scholarsarchive.byu.edu/esr/vol6/iss1/7