By Aidil Zulkifli, CEO of UangTeman
May 24, 2016
With access to small-dollar value loans over a short term, microbusinesses will be armed with a financial framework, which is supportive and relevant; enabling owners to expand their businesses during periods of growth.
Encouraging enterprise across the spectrum
An appetite for risk often kindles the heart to soar higher, aim wider and embrace uncertain ventures. While the aforementioned mantra has encouraged those in the middle and upper strata to improve their living standards by exploiting business opportunities for generations, the unbanked's encounter with risk tends to be limited to preying loansharks and the ever-present spectre of poverty. Research has revealed that the lower brackets of society are more open to undertaking risk - in terms of microenterprises - if they have access to safe and reliable credit avenues. Empowerment of the economically disadvantaged forms the crux of the roadmap to financial inclusion. Unless the poorest of the poor unshackle the albatross of fear and embrace opportunity, social mobility will remain a pipedream.
Microlending is not the end-game
While microcredit shows great promise, it is paramount to avoid conflating tools with solutions. Mircolending isn't a revolutionary panacea that is going to transform villages into hubs of enterprise. However, it addresses important gaps in the market and holds the potential to shift the economic foundation of Southeast Asia by facilitating financial services for millions of citisens who have been denied the opportunity to improve their living standards. The ability to tap on the unbanked population in ASEAN has the potential to power economic growth in the region, which the World Bank estimates to be between 17 and 52 billion dollars. If microlending picks up pace, it could become the lynchpin for not just financial mobility but, as a sum of it's parts, powerful economic change.