A Microenterprise

Training Guide 

for

Peace Corps Volunteers

Peace Corps

2003

Information Collection and Exchange

Publication No. M0068
Information Collection and Exchange

The Peace Corps Information Collection and Exchange (ICE), a unit of the Office of 

Overseas Programming and Training Support (OPATS), makes available the strategies 

and technologies developed by Peace Corps Volunteers, their co-workers, and their 

counterparts to development organizations and workers who might find them useful. 

ICE works with Peace Corps technical and training specialists to identify and develop 

information of all kinds to support Volunteers and overseas staff. ICE also collects 

and disseminates training guides, curricula, lesson plans, project reports, manuals, 

and other Peace Corps-generated materials developed in the field. Some materials are 

reprinted “as is”; others provide a source of field-based information for the production 

of manuals or for research in particular program areas. Materials that you submit to 

ICE become part of the Peace Corps’ larger contribution to development.

This publication was produced by Peace Corps OPATS. It is distributed through the 

ICE unit. For further information about ICE materials (periodicals, books, videos, 

etc.) and information services, or for additional copies of this manual, please contact 

ICE and refer to the ICE catalog number that appears on the publication.

Peace Corps

Office of Overseas Programming and Training Support

Information Collection and Exchange

1111 20th Street, NW, Sixth Floor

Washington, DC 20526

Tel: 202.692.2640

Fax: 202.692.2641

Abridged Dewey Decimal Classification (DDC) Number: 338.7

Share your experience!

Add your experience to the ICE Resource Center. Send your materials to us so we can 

share them with other development workers. Your technical insights serve as the basis 

for the generation of ICE materials, reprints, and training materials. They also ensure 

that ICE is providing the most up-to-date innovative problem-solving techniques and 

information available to you and your fellow development workers.
A Microenterprise

Training Guide 

for

Peace Corps Volunteers

Peace Corps

2003

Information Collection and Exchange

Publication No. M0068

Reprinted _____________

Page iii

CONTENTS

Introduction

Reasons to Promote Microenterprises................................................................................. 1

How to Use a Microenterprise Training Guide for Peace Corps Volunteers ...................... 3

Experiential Learning Cycle ............................................................................................... 4

Trainer’s Notes for Introduction.......................................................................................... 6

Module 1: Microfinance—An Effective 

Poverty-Reduction Strategy ....................................................... 5

Why Do Hard-Working Families Remain in Poverty? ....................................................... 9

Activity 1:1: Attitude Survey ............................................................................................ 10

Activity 1:2: A Case Study about a Poor Working Family ............................................... 13

What is the Relationship between Education and Poverty?.............................................. 17

Activity 1:3: Who Goes to School? .................................................................................. 19

How Can the Working Poor Acquire Productive Assets? ................................................. 20

Thaneakea Phum Village Banking Project........................................................................ 23

Activity 1:4: The Best Game............................................................................................. 27

Key Terms......................................................................................................................... 28

Resources.......................................................................................................................... 29

Activity 1:1 Reference: Attitude Survey: Discussion of Answers.................................... 32

Trainer’s Notes for Module 1: Microfinance—An Effective Poverty-Reduction Strategy ....34

Module 2: Microfinance Methods ............................................. 41

Financial Services............................................................................................................. 41

Activity 2:1: Family Financial Habits............................................................................... 42

Activity 2:2: Bank Visit .................................................................................................... 44

Traditional Informal Financial Services............................................................................ 46

Activity 2:3: Rotating Savings and Credit Associations................................................... 48

Microfinancing Methodologies......................................................................................... 49

Organizations Involved in Microfinance........................................................................... 56

Activity 2:4: The Learning Game ..................................................................................... 58

Key Terms......................................................................................................................... 59

Resources.......................................................................................................................... 60

Trainer’s Notes for Module 2: Microfinance Methods ..................................................... 61

General Principles of the Lending Methodologies............................................................ 67

Module 3: Operating a Microfinance Institution ...................... 69

Local Microenterprises...................................................................................................... 70

Activity 3:1: Getting to Know Microentrepreneurs.......................................................... 72

Mass-Marketing Microfinancial Services......................................................................... 74

Activity 3:2: What Makes Discount Mass Marketing Successful?................................... 75

MFIs’ Organizational Development.................................................................................. 76

Activity 3:3: MFI Site Visit............................................................................................... 77

Activity 3:4: SWOT Analysis Using an MFI Case Study................................................. 84
Page iv

Key Terms......................................................................................................................... 87

Resources.......................................................................................................................... 88

Activity 3:2 Sample Responses......................................................................................... 90

Activity 3:4 Sample Responses......................................................................................... 91

Trainer’s Notes for Module 3: Operating a Microfinance Institution ............................... 93

Module 4: Nonfinancial Business Development Services...... 101

What Are Nonfinancial Business Development Services?.............................................. 102

Activity 4:1: A BDS Session Plan Portfolio.................................................................... 104

Two BDS Debates........................................................................................................... 105

Income Generators vs. Entrepreneurs............................................................................. 105

Should and Can MFIs Afford to Deliver BDS? .............................................................. 106

Activity 4:2: Mind Mapping BDS Interventions for a Microenterprise ......................... 110

Innovative BDS Approaches........................................................................................... 111

Identification of Additional Constraints and Opportunities............................................ 113

Activity 4:3: Subsector Targeting.................................................................................... 114

Privatization of BDS ....................................................................................................... 115

Good BDS Practices........................................................................................................ 115

Activity 4:4: Microenterprise Attitude Survey................................................................ 117

Key Terms....................................................................................................................... 119

Resources........................................................................................................................ 120

Activity 4:4 Reference .................................................................................................... 124

Trainer’s Notes for Module 4: Nonfinancial Business Development Services............... 125

Module 5: Business Counselor and Extensionist................... 131

The Role of a Volunteer as Business Counselor and Extensionist.................................. 133

In Business Culture Matters............................................................................................ 135

The Questioning Methodology ....................................................................................... 136

Activity 5:1: Questioning Role Play ............................................................................... 139

What Areas Present Problems for Micro and Small Businesses? ................................... 140

Activity 5:2: Four Microenterprise Case Studies............................................................ 143

Microenterprise Owner-Manager Capacity Building...................................................... 146

Client Counseling Record ............................................................................................... 148

Activity 5:3: Practicing the Counseling and Extensionist Skills You Have Learned...... 149

Key Terms....................................................................................................................... 150

Resources........................................................................................................................ 151

Activity 5:2 Reference .................................................................................................... 154

Trainer’s Notes for Module 5: Business Counselor and Extensionist............................. 156
A Microenterprise Training Guide 

for Peace Corps Volunteers

Introduction

Introduction Page 

A Microenterprise Training Guide for Peace Corps Volunteers

INTRODUCTION

REASONS TO PROMOTE MICROENTERPRISES

Around the world, millions of low-income entrepreneurs are building better 

lives for themselves and their families by starting and expanding tiny businesses. 

The vast informal sector of the economy is comprised of microenterprises—

microbusinesses with one to 10 workers, including the owner. Poor families 

launch microenterprises to generate income, build savings, and acquire assets as 

a cushion against natural disasters, illness or death, and other crises. As these 

enterprising households pull themselves out of poverty, they can improve their 

access to safe drinking water and more nutritious food, improve their housing, and 

educate their children. This is grass-roots development! 

• Microenterprises provide most of the goods and services that meet people’s 

basic needs in developing and redeveloping countries (such as the former 

Soviet states).

• Often microenterprises are the only economic organizations that function in 

a time of crisis.

• Microenterprises require small amounts of capital to enter the market and 

produce results quickly.

• The small size of microenterprises makes them simple to operate.

• Microenterprises use local products and skills. 

• Microenterprises are labor intensive and create jobs.

• Microenterprises improve the income of the entrepreneurial poor.

• Microenterprises are a catalyst for comprehensive community economic 

development.

According to information presented at the 1997 Microcredit Summit, February 

2–4, in Washington, D.C., in which the Peace Corps was a participant, there 

are more than 1 billion microenterprises worldwide. The income from these 

microbusinesses enables the working poor to take some control over their lives. 

Additionally, the benefits of microenterprise development extend to the broader 

society. In both transition economies and the developing world, microenterprises 

play an important role in the nation’s economic growth and job creation for those 

unable to find employment in the formal sector. Through microenterprise, the 

poor become business owners, build assets, and invest in their communities. 

International private volunteer organizations (PVOs), indigenous nongovernmental 

organizations (NGOs), and government-sponsored development organizations, 

such as the United Nations Development Programme (UNDP), the World Bank, 

and the U.S. Agency for International Development (USAID), and the Peace 

Corps, all realize the value in helping to create and sustain microenterprises. 

Assistance for microenterprises falls into three broad categories: 
Introduction Page 

A Microenterprise Training Guide for Peace Corps Volunteers

1. Financial services—credit and savings: Microfinance institutions (MFIs), 

usually indigenous NGOs, are the direct providers of credit and saving 

services. International PVOs and government development agencies 

frequently provide MFIs with capital and technical assistance until the MFIs 

can become self-sustaining.

2. Nonfinancial services—business development services (BDS): Nonfinancial 

services include: entrepreneurship training, consulting services, information 

technology assistance, etc. Ideally, these services also are provided by 

local organizations with international PVOs and government development 

organizations supporting the projects only until they can become selfsustaining.

3. Subsector targeting: Often a number of microenterprises operate in the same 

subsector. Intervening to improve the subsector can increase the profitability 

of a large number of similar microbusinesses. Analysis of a subsector may 

result in efforts to expand markets, improve production methods, introduce 

new raw materials, and/or work to secure more favorable or less restrictive 

regulations for the subsector.

All three approaches are valid and, when implemented appropriately, effective. 

Millions of microentrepreneurs have been reached through microfinancial services. 

As you learn more about the microfinance movement, you may recognize that 

these approaches to development are similar to those of the Peace Corps. Both 

MFIs and the Peace Corps are committed to:

• Working with the poorest of the poor,

• Focusing on women, 

• Using locally available resources,

• Designing replicable projects, and

• Striving for sustainability.

There is a major difference in resources offered by the Peace Corps and most 

other international development organizations. The Peace Corps supplies skilled 

Volunteers, not loan capital. Local organizations request business Volunteers 

to help strengthen their operations, and work side-by-side with host country 

colleagues to deliver financial and nonfinancial services. Municipalities and 

regional governments as well as local development organizations seek Volunteers 

to help with subsector analysis and to implement strategies to increase the 

profitability of microenterprise subsectors. 
Introduction Page 

A Microenterprise Training Guide for Peace Corps Volunteers

HOW TO USE A MICROENTERPRISE TRAINING GUIDE 

FOR PEACE CORPS VOLUNTEERS

Each of the five modules in this manual is designed as a travel guide. It suggests 

an itinerary that highlights microenterprise information relating to microfinance 

history and methodology, nonfinancial business development services, and 

subsector analysis. Peace Corps Volunteers are serious travelers. They want 

to learn about microenterprise in their host countries and become involved to 

improve the quality of people’s lives.

Travel guides often include sections on the local culture and some useful words 

of the local language. These training materials do the same. Gender issues 

related to culture are especially relevant since women operate the majority of 

microenterprises. 

Throughout the microenterprise modules are activities to promote learning. Adults 

learn best through experience—the most relevant experiences are in communities 

similar to those where you will live during your Peace Corps service. Many of 

the activities include community observation, information gathering, and/or 

involvement—technical expertise is nearly useless until you learn how to adapt 

and apply what you know to fit the local culture and share that expertise in the 

local language.

Near the end of each module key microenterprise terms are explained as they are 

used in the module. There is a space to write the local language translation of 

each key term. 

There is flexibility in the time spent and opportunities to explore areas that 

interest you. How much you learn during your visits is up to you. If you observe 

carefully, interact with the local people, and are open to new ideas, it will be a 

rewarding experience. As you begin learning about microenterprise as a strategy 

for development, it is useful to have a journal to record your observations, 

experiences, and thoughts; a camera; and an open mind. 

Learning is not a spectator sport! You are in charge of your own learning. Your 

host community is a place for discovery, a place for observing, experiencing, 

processing, and implementing your learnings. Even “what you think you know” 

needs to be reevaluated in your new cultural environment. Incorporate local 

technical language into your vocabulary. In each module you are reminded to 

analyze what you know and what you are learning in the context of the local 

culture. Technical training is not complete without the integration of language 

and culture.

A Microenterprise Training Guide for Peace Corps Volunteers is designed for 

the self-directed adult learner. Self-directed does not imply a solitary learning 

experience, but rather that the learner takes responsibility for mastering the 

knowledge, skills, and attitudes. This self-directed approach is based on the 

“experiential learning” process, which is the way adults are most likely to learn. 
Introduction Page 

A Microenterprise Training Guide for Peace Corps Volunteers

Each module contains several activities, case studies, and/or hands-on exercises 

to present learning experiences.

EXPERIENTIAL LEARNING CYCLE

The experience that activates the experiential learning cycle may come from your 

past, an activity in your host community, a simulation game, or a written case 

study in a module. 

Reflection is a special kind of thinking—it is both active and controlled. You are 

only reflecting as long as you stick to the problem or task at hand. Reflection is 

the kind of thinking that looks for the reasons for believing one thing rather than 

another, the kind of thinking that asks questions. It aims at making sense out of an 

experience. Practice reflecting on your experience, imagine the possibilities, and 

consider alternative meanings.

Many Volunteers find that keeping a journal encourages reflective thinking. Try 

writing in a journal every day for two or three weeks to determine if this works 

for you. 
Introduction Page 

A Microenterprise Training Guide for Peace Corps Volunteers

Socrates believed that it is through this kind of 

thinking that people shape their lives. 

He felt people need to think 

about what they do and why they do it, 

about what they believe and why they believe it. 

He said that a day should never pass without such 

questions and that a life without such questions 

is not worth living. 

— reprinted with permission from Developing 

Creative and Critical Thinking: an Integrated 

Approach, Robert Boostrom, National Textbook 

Company, Lincolnwood, IL, USA, p. 4

During generalization, you expand on what you are learning to fit new and 

different situations. Generalization is especially relevant for Volunteers operating 

in a new and different country and culture. 

The last step of the cycle, application, requires that you actually use what you 

have learned. As you apply what you have learned, you generate new experiences 

and the experiential learning cycle begins again. 

As a self-directed learner, you are responsible for:

• Thoughtfully reading the modules;

• Actively participating in the suggested activities;

• Engaging with community residents to learn about microenterprises in 

the local context;

• Integrating cultural and language learnings to understand the technical 

subject matter in the local context;

• Provocatively seeking additional information to understand the 

microenterprise topics;

• Keeping an open mind to different ideas and ways of doing things; 

and

• Assuring that learning objectives are achieved.
A Microenterprise Training Guide for Peace Corps Volunteers

TRAINER’S NOTES

INTRODUCTION

The trainer is responsible for facilitating the learners’ understanding of 

microenterprise development by:

• Identifying opportunities and materials that enable learners to experience, 

observe, and gather information related to the activities and topics;

• Helping learners contextualize their experiences and observations based 

on the trainer’s understanding of the local business environment and 

culture;

• Encouraging learners to take an appreciative approach to value local 

knowledge, using local resources and strengths; 

• Facilitating the experiential learning cycle (experience, reflection, 

generalization, and application) using the trainer’s technical, crosscultural, and country-specific expertise.

A Microenterprise Training Guide for Peace Corps Volunteers is written 

for Peace Corps trainees and Volunteers who expect to serve as community 

development Volunteers and/or assist microfinance institutions in the delivery 

of microfinancial and related social and business development services. These 

materials also should be useful for Peace Corps staff in understanding the 

possibilities associated with the creation and promotion of microenterprises. 

With some modifications, A Microenterprise Training Guide for Peace Corps 

Volunteers can be adapted for indigenous NGO staff and local community 

development workers. 

These training materials were designed primarily for use during Pre-Service 

Training (PST) and In-Service Training (IST). Also, Volunteers can use 

them for self-study anytime during their Peace Corps service. Because the 

modules are designed for the self-directed learner, they can be adapted to a 

center-based, a community-based, or a hybrid PST model. Although a trainee 

or Volunteer benefits from individual study, working with a small group is 

usually more interesting, and sharing ideas deepens understanding. Interaction 

of a knowledgeable skilled technical trainer is not essential but desirable.

Writing training materials to fit every Peace Corps country and training situation 

is not possible. A Microenterprise Training Guide for Peace Corps Volunteers 

is furnished electronically to facilitate local adaptation. We urge you to make 

changes! Work with the post’s programming and training staff to: 

Continued

Introduction Trainer’s Notes — Page 
A Microenterprise Training Guide for Peace Corps Volunteers

Trainer’s Notes, continued

• Rewrite sections that are not applicable to the local microenterprise or 

training situation, 

• Add country-specific examples and graphics, 

• Replace names of people and places with local names, and

• Replace dollar amounts with the local currency to make examples realistic.

Trainer’s Notes for each module and activities in the module are located 

at the end of the module. When printing copies of the modules for training 

participants, the Trainers Notes can easily be omitted. These notes contain:

• Overview of information and concepts covered in the module or activities.

• Time to complete the module or activities. (Check times to determine if 

they need to be adjusted to fit your training schedule.) 

• Materials that should be on hand before starting the module or activities.

• Preparation to take place before beginning the module or activities. 

• Debriefing the experience and processing the learnings is included 

to remind trainers of ideas, attitudes, and skills that may need to be 

highlighted or could be used to bring closure to the module or activity. 

During debriefing and processing, the skilled trainer works cooperatively 

with learners, to coach them as they reflect on what they have experienced, 

adapt learnings to fit the local culture, and begin to understand how their 

learnings can be applied during their Peace Corps service.

The training participant’s section of each module contains key terms and 

knowledge, skills, and attitude objectives.

Key terms include words and phrases defined as they are used in the module. 

A space is provided for the local language translation. Work with your 

language teachers to find the right translations and build your technical 

vocabulary as you study each module.

Learning objectives are stated in behavioral terms and stress application of 

the learnings. Application is the final step in the experiential learning cycle.

Continued

Introduction Trainer’s Notes — Page 
A Microenterprise Training Guide for Peace Corps Volunteers

Trainer’s Notes, continued

At the end of each module are resources. These are readily available 

materials provide training participants and trainers additional information on 

microenterprises.

The following books are recommended for trainers of A Microenterprise 

Training Guide for Peace Corps Volunteers.

Methods for Development Work and Research: A Guide for 

Practitioners. Britha Mikkelson. (Sage Publications.) 1995. 269 pp. 

 Describes and analyzes different development research models, 

devoting special attention to the participatory approach, but also 

considering conventional and quantitative research methods that 

can complement this approach. Discusses the development issues 

that are being researched, with a separate chapter on poverty and 

gender analysis. Offers detailed information that can be useful in 

training field workers to do research.

Training Trainers for Development – Conducting a Workshop on 

Participatory Training Techniques. The CEDPA Training Manual 

Series Volume I, 1999. 

 Compilation of training activities that CEDPA has used in many 

programs to strengthen the training capacity of health, family 

planning, and other types of development organizations. Manual 

prepares managers and trainers to conduct interactive, learnerbased training of trainers.

The Thin Book of Appreciative Inquiry. Sue Annis Hammond. (Kodiak 

Consulting.) 1996. 61 pp. 

 Simple, practical explanation of appreciative inquiry and how to 

use it. Also includes useful information on project planning and 

nongovernmental organization development.

Introduction Trainer’s Notes — Page 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 

A Microenterprise Training Guide for Peace Corps Volunteers

MODULE 1

MICROFINANCE—AN EFFECTIVE 

POVERTY-REDUCTION STRATEGY

Working through Microfinance—An Effective Poverty-Reduction Strategy

increases your awareness of the reasons working poor families remain in the 

poverty cycle. You will also learn about the relationship between gender and 

microfinance and a couple of promising strategies to help families break out of the 

poverty cycle. By the time you finish this module you should have the knowledge, 

skills, and attitudes to:

• Explain why families are stuck in the poverty cycle. 

• Give at least three reasons why efforts to break the poverty cycle should 

focus on women. 

• State under what, if any, circumstances you think small grants are better than 

microloans.

• Recommend two strategies to break the poverty cycle.

• Identify indicators, other than change in family income, that can be used 

to determine the impact of microfinance services. How would you collect 

the data? Why do you think these would be valid indicators to measure the 

impact of microfinance activities?

WHY DO HARD-WORKING FAMILIES REMAIN IN 

POVERTY?

Think about your experiences with poverty and your assumptions regarding the 

poor? Do beggars approach you on the street? Do you assume they are there 

because they are lazy, or addicted to drugs or alcohol, or because of a physical or 

mental handicap? When you see desperately poor people on TV news broadcasts, 

do you wonder why they are not receiving adequate assistance? What is the cause 

of their precarious situation—a natural disaster, civil strife, or ethnic conflicts? 

How do you react—give money; volunteer your time to help; wonder, given 

the magnitude of the problem, if there is a solution? Or do you feel helpless—

convinced that individual efforts will not make a difference? 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 10

A Microenterprise Training Guide for Peace Corps Volunteers

ACTIVITY 1:1 

ATTITUDE SURVEY

This self-assessment activity allows you to get in touch with your feelings and 

identify your assumptions. You can keep your answers private, but it might 

be more interesting to discuss them with your fellow training participants, 

Peace Corps trainers, or community members. Below are 10 statements 

relating to ways in which microlending can help the poor start their own 

microenterprises. This is an attitude survey. There are no absolute right or 

wrong answers. 

Attitude Survey

1. It is impossible to evaluate our work in enterprise development for the 

poor in terms of financial costs and benefits; human development cannot 

be valued in dollars. 

Agree / Don’t Know / Disagree

2. The best way to help poor people increase their incomes is to help a few 

people, who may not themselves be poor, to develop enterprises that will 

employ the poor. 

Agree / Don’t Know / Disagree

3. Poor people are unlikely to have their own good business ideas; MFIs 

must help them by giving them ideas. 

Agree/ Don’t Know / Disagree

4. Loans for poor people’s businesses must be at lower than market interest 

rates or interest free. 

Agree / Don’t Know / Disagree

5. MFIs, usually indigenous NGOs that are direct providers of credit and 

savings services, should charge the poor for enterprise development 

services, so that the MFIs themselves can become self-sustaining.

Agree / Don’t Know / Disagree

6. MFIs should always encourage poor people to start group- or communityowned enterprises rather than individual businesses. 

Agree / Don’t Know / Disagree

Continued
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 11

A Microenterprise Training Guide for Peace Corps Volunteers

Activity 1:1, continued

7. It is better to give grants to the poor to help them develop enterprises 

than to make loans to the poor.

Agree / Don’t know / Disagree

8. If we do make loans to the poor for enterprise development, we cannot 

expect them to repay them on time; we must be lenient. 

Agree / Don’t know / Disagree

9. Women are better at microenterprise than men; they re-invest the profits, 

or spend them on their families, and they repay loans better. 

Agree / Don’t know / Disagree

10. Most poor people do not need training to enable them to start a business; 

all they need is access to finance. 

Agree / Don’t Know / Disagree 

(This attitude survey is adapted with permission from Empowerment Through 

Enterprise. Malcolm Harper. Intermediate Technology Publications, London, 

1996.) 

Note: A discussion with answers is found at the end of this module. As you 

learn more about how microenterprises help the poor break out of the poverty 

cycle look for information to support or refute each statement in this survey.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 12

A Microenterprise Training Guide for Peace Corps Volunteers

Although their situation is heartbreaking, street people and the poor you see on 

TV are not representative of the working poor. The majority of the world’s poor 

are working families. The term poor is used to identify those who do not have 

sufficient food to meet their basic nutritional requirements. Most of these families 

live in developing countries. Women head many of these families. “An estimated 

200 million women in the developing world live in severe poverty. Most are selfemployed, struggling to ensure the survival of their families through multiple 

economic pursuits that yield marginal returns” (Village Banking: The State of 

the Practice, Candace Nelson, Barbara McNelly, Kathleen Stack, and Lawrence 

Yanovitch, The Small Enterprise Education and Promotion Network and the 

United Nations Development Fund for Women, New York, 1996, p. 3).

What can be done to make a difference in the lives of the productive poor? 

Humanitarians have struggled with this question for many years. Before you get 

to the end of this module you will learn about two proven strategies. First, we 

need to determine why hard-working families remain in poverty. The following 

case study provides some insights into the vicious cycle of poverty.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 13

A Microenterprise Training Guide for Peace Corps Volunteers

ACTIVITY 1:2 

A CASE STUDY ABOUT A POOR WORKING FAMILY

(Sakhubai and Rambhau’s family is not real, but it is typical.)

Sakhubai and Rambhau’s family, besides themselves, consisted of their oneyear-old baby girl, Rambhau’s 10-year-old sister, and his mother. The sister 

did not attend school; she worked doing laundry for a rich family in the 

village. Rambhau owned two acres of land and even a bullock-cart.

Every year Rambhau would borrow money from the moneylender at the rate 

of 10 percent per month (120 percent annual interest!). The money was used to 

purchase seeds, fertilizer, and pesticides for his field. But as soon as he reaped 

the harvest, all his income would go to repaying the loan and interest.

When Rambhau’s mother died he didn’t know where to get the money for 

performing the funeral rites. This was a crisis. Poor Rambhau was forced to 

mortgage one acre of his land for the money. His income was now decreasing.

After some years Sakhubai had a son. They now started running short of money 

even for his medicines, house repairs, and for so many other basic needs of 

the home. The expenses as well as prices were constantly on the rise. How 

much money could one get after selling the grain? Besides, the production of 

the land was declining each year. Finally, to repay his ever-increasing loan, 

Rambhau had to sell off the remaining acre of land they owned.

Two years later, when his sister was 14 years old, Rambhau decided to get 

her married since she was now of “marriageable age.” He borrowed money 

from a sugarcane contractor for the dowry, purchases, and other expenses for 

the wedding. The entire family now had to work for the sugarcane contractor 

in order to repay the loan. In spite of working themselves to exhaustion, and 

almost starving themselves, their problems kept increasing. Their needs were 

constantly increasing, and it was impossible to make ends meet. The family 

now had no land; they had even lost their bullock-cart repaying the loans. 

Sakhubai and Rambhau could not find a way out of their situation.

Continued
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 14

A Microenterprise Training Guide for Peace Corps Volunteers

Activity 1:2, continued

Answering the following questions will help you reflect on Sakhubai and 

Rambhau’s situation, understand generally the factors that contribute to 

poverty, and finally suggest solutions that might reduce poverty. A small 

group discussion with other participants, your trainers, and/or community 

members will be more interesting than answering the questions by yourself 

and is likely to provide additional insights.

• What were the family’s sources of income?

• What were the family’s resources? Who in the family owned the land?

• What were the goods and services the family needed to purchase?

• What factors made the family poorer day by day?

• How are the circumstances of working poor families in your country of 

service similar to and different from those of Sakhubai and Rambhau?

• What development strategies would you suggest to help these poor 

working families improve their economic well-being?

• Are your proposed strategies culturally appropriate, feasible, costeffective, long-lasting or sustainable, and replicable? (You may want to 

get the opinion of your language instructors, local friends, host family, 

or discuss these issues with your technical trainer.) 

(This case study is used with the permission of the author, Dr. Marcella 

D’Souza, Little Drops of Water Make a Mighty Ocean, WOTR Management 

Series, Watershed Organization Trust (WOTR), Maharashtra, India, 1998. 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 15

A Microenterprise Training Guide for Peace Corps Volunteers

Although the names are different; the crops may be coffee beans or bananas 

instead of sugarcane; and the family may reside in an urban slum rather than 

a rural area, hundreds of millions of working poor families on our planet face 

similar circumstances. They are caught in a vicious cycle of poverty.

The Poverty Cycle

How can the poverty cycle be broken? Experience shows there are two 

promising strategies. 

1. By acquiring productive assets through savings, small grants, or affordable 

microloans, a family can increase their capacity to produce income by starting 

or expanding an income-generating activity. A small amount of capital is all 

that is needed to purchase a bicycle to get produce to market or purchase 

raw materials to make handicrafts or other homemade items to sell. A little 

additional income can make a big difference. It is difficult for people without 

education to find employment, and self-employment or microenterprise is 

thus the only option for millions of poor people. Lack of capital to acquire 

equipment, raw materials, seeds and fertilizer, or farm animals is an 

insurmountable barrier. 

2. Education not only allows family members to earn higher wages, but also 

enables them to better manage the family’s scarce resources. Unfortunately, an 

education even at the primary level costs money. Although attending schools 

may be “free,” students need school clothes and supplies. Additionally, there 

is an opportunity cost for children attending school. The time that a son 

or daughter spends in school limits the amount of time they can spend on 

income-producing activities or household chores, which allows adult family 

members to generate income. Children of the poorest families cannot attend 

school regularly until the family’s basic nutritional, clothing, shelter, and 

health needs are met.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 16

A Microenterprise Training Guide for Peace Corps Volunteers

Breaking the Vicious Poverty Cycle

Education and the ability to secure productive assets are effective strategies in 

breaking the poverty cycle. Does it matter who in the family receives the education 

and controls productive assets? The experience of microfinance organizations in 

Africa, Latin America, and Asia indicates families benefit most when women 

control the assets and girls and women are educated.

Note: At the Microcredit Summit in Washington, D.C., February 2–4, 1997, 

attended by more than 2,900 people representing 1,500 organizations from 137 

countries, a nine-year campaign was launched. They plan to reach 100 million of 

the world’s poorest families, especially the women of these families with credit 

for self-employment and other financial and business services by 2005. Also, in 

1999 the United Nations Development Program (UNDP) funded $3 million for 

a women’s MicroStart Global Pilot Program. They did this because, “Evaluation 

of the results of microcredit have shown that these efforts can enhance the role of 

women in society, resulting in, among other things, prolonged education, reduced 

fertility and delayed age of marriage.” 

(UNDP website http://www.unfoundation.org/grants/3_6_microstart.asp )
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 17

A Microenterprise Training Guide for Peace Corps Volunteers

WHAT IS THE RELATIONSHIP BETWEEN EDUCATION 

AND POVERTY?

(The following is excerpted from the comments of John Tucker, manager, Special 

Unit for Microfinance, United Nations Development Programme, given at the 

Microcredit Summit of Councils 1999, Abidjan, Côte d’Ivoire.)

Although families usually choose to educate their sons before their daughters, 

development professionals and world leaders agree the poverty cycle is not 

broken until girls are educated. At the annual meeting of the Economic and 

Social Council (ECOSOC) in Geneva, United Nations Secretary-General 

Kofi Annan called on the international community to do more to promote 

women’s prospects. “Women are among the poorest of the poor,” he said. 

“They work long days, walk long distances to fetch water, and must find 

time and energy for informal sector activities, which are their only source of 

income. Their jobs are truly never done.”

Annan said investments in women, particularly in the education of women 

and girls, are the key to sustainable development and will give the greatest 

benefits to families and society. “By right and by reason, women must have 

equal opportunities,” he said.

World Bank President James Wolfensohn echoed Annan’s remarks, telling 

ECOSOC delegates that providing equal rights to women is vital for the 

eradication of poverty, and that stable economic growth cannot be achieved 

without providing voting rights and job opportunities to the world’s 3 billion 

women. (Source: United Nations Wire on line, July 7, 1999.)

Educating girls has great promise as a long-term strategy for increasing the economic 

well-being of women, their families, their communities, and their nations. If you 

would like to learn more about this exciting development opportunity, check out 

Gender and Development Training: Girls’ Education (ICE No. M0054) listed in 

the Resources section at the end of this module.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 18

A Microenterprise Training Guide for Peace Corps Volunteers

* * * * * * * * *

A LEARNING MOMENT

Appreciative Inquiry (AI) is a capacity-building process that 

begins by valuing the individual, the organization, the community, 

and the culture in which they exist. Over time, AI develops four 

important competencies that support the unfolding of an ongoing 

appreciative learning experience: 

• Appreciative competence: the capacity to focus on what 

individuals, organizations, and communities have done well 

in the past and are doing well in the present; 

• Generative competence: a capacity to allow members to 

reflect on the impact of their contribution toward a higher 

purpose;

• Expansive competence: the ability to go beyond familiar 

ways of thinking; and 

• Collaborative competence: the power of dialogue to 

transform systems. 

There are parallels between the experiential learning approach 

and appreciative inquiry. Appreciative competence encourages 

us to look at what has gone well, to use past experience. 

The generative competence relates to the reflection step in 

experiential learning. The expansive competence correlates to 

expansion and the collaborative competence to the application 

step where learning is implemented.

* * * * * * * * *

You are encouraged to use an appreciative approach when interacting with 

members of your host community. 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 19

A Microenterprise Training Guide for Peace Corps Volunteers

ACTIVITY 1:3 

WHO GOES TO SCHOOL?

The relationship between lack of educational opportunities and poverty is 

well documented. School can prepare young people to take advantage of 

opportunities in their adult lives; the lack of adequate schooling leaves them 

with few options. 

To learn about educational opportunities in your host country ask a kid(s), 

a parent(s), a teacher(s), school administrators, your language instructors, 

and/or Peace Corps staff. Visit a school. Watch a class. Remember to ask 

questions “appreciatively”!

• Are schools “free” and available to all? 

• Do children from rural and urban areas attend equally?

• What about children from poor families?

• What are the ages of children who attend?

• Do more boys than girls attend?

• What impact does the level of education reached and who attends school 

have on the economy?

• Do the schools prepare students for jobs that are available in the 

community?

• When they graduate do most young people find jobs? 

• How many start their own businesses?

• How much education do people who operate the microbusinesses in the 

community have?

• What changes in the school system do you feel would improve the 

economic well-being of community residents?

If you are lucky enough to have Internet access, visit www.UNICEF.org to 

view educational information by country.

After you have gathered information on educational opportunities in your 

host country and reflected on the information, what generalizations would 

you make? Do your fellow training participants and Peace Corps trainers 

agree with your generalizations? To what extent does the lack of educational 

opportunity contribute to the poverty level?

Based on your understanding of the local school system, what possibilities do 

you see for involvement during your Peace Corps service? You might want to 

talk to current Volunteers about their experiences working with local schools.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 20

A Microenterprise Training Guide for Peace Corps Volunteers

HOW CAN THE WORKING POOR ACQUIRE 

PRODUCTIVE ASSETS?

Some innovative approaches are being used to place productive assets in the hands 

of poor families. Heifer Project International offers animals (and training in the 

care of animals) to hungry families around the world as a way to feed themselves 

and become self-reliant. Children receive nutritious milk or eggs; families earn 

income for school, health care, and better housing. Farmers learn sustainable, 

environmentally sound agricultural techniques. 

The project, when started in the 1930s, gave heifers (young cows that have not 

borne a calf) to hungry families. In return, they could help another family become 

self-reliant by passing on to them one of their animal’s female calves. Today the 

Heifer Project supplies animals, including chickens, rabbits, sheep, goats, and 

cows, to families in more than 115 countries.

While numerous families have benefited from the Heifer Project, the logistics 

of providing the animals, training families to care for the animals, and making 

arrangements to transfer the offspring to other families are staff-labor intensive. 

This limits the number of families who can be helped.

Trickle-Up, established in 1979, is another program with a unique approach. 

The Trickle-Up Program is dedicated to reducing poverty by helping the lowestincome people around the world start or expand their microenterprises. Local 

representatives provide basic business training and a conditional grant. It is based 

on the assumption that people already have the capability and ingenuity to create 

viable enterprises. Seventy percent of those applying for Trickle-Up grants are 

women. It is one of the few programs where youth at least 16 years old can get 

funds to start a business. 

Transaction costs for administering these small grants ($50 to $100) are usually 

high, and since it is not expected that the loans will be repaid, capital is rapidly 

depleted. The high transaction cost limits the grant program’s ability to reach large 

numbers of the poor. Other disadvantages of grant programs are that they contain 

no provision for accumulation of family savings or for providing continuing 

financial services for newly formed microenterprises. Realistically, the small 

businesses started with grants will need ongoing financial services. 

The challenge is to reach large numbers of the productive poor cost-effectively, 

provide them with productive assets that enable them to increase their economic 

well-being, and do so in ways that fit the culture. 

The following hypothetical but typical story about the business of five Kenyan 

women highlights some of these cultural issues and explains: 

• Why they were reluctant to do even simple business reports after they had 

operated for three months; 

• How their families were better off economically because of a small grant;
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 21

A Microenterprise Training Guide for Peace Corps Volunteers

• The important role that mutual trust plays in improving the economic wellbeing of the poor; and

• How the women’s business practices were consistent with their traditions and 

culture. 

Five Kenyan women prepared a simple business plan and received 

a $50 Trickle-Up grant. They take turns selling green vegetables 

and grain in the local market. All five women grow the produce 

in their gardens. At the end of the week each takes home two kilos 

of maize, three kilos of beans, and a kilo each of rice and wimbi. 

Each day the one tending the stall takes home the unsold green 

vegetables that will not keep. Enough money is set aside to replace 

what has been sold and the remainder is placed in a safe place. 

Periodically the group decides on a joint purchase with each 

member going home with six new plastic cups or a cooking pot. 

The utensils are considered group property and can be recalled for 

special occasions. The group hopes to someday have enough saved 

to purchase some land. If a member becomes ill, the group will 

purchase medication or pay the hospital fee. If there is a wedding 

or a funeral, money is given to the group member to cover expenses. 

School fees are paid for members’ children, even where members 

have different numbers of school age children. No records are kept, 

except in their heads, of who gets what, but each member trusts that 

when she is in need, the group will respond.

Traditionally, Kenyan women sell their extra vegetables, eggs, or 

chickens in the market to earn money to buy things for their families. 

These transactions typically take place on market days. What is carried 

home is the new purchase. Though over time significant amounts might 

be involved, records are never kept. In order to maintain control of this 

income and how it is spent, women do not reveal to their husbands the 

particulars of their business dealings. The fear is that if men know just 

how much money is involved, they will take control of it, and the basic 

needs of the children and household would not be met. 

These women’s business practices differ from Western business standards 

of careful accounting and distributing of profits according to a partnership 

agreement. Despite frequent seeming inequities in who gets what, depending on 

how tragedies strike, women seem satisfied with the system, feeling that if the 

balance of misfortune shifts they will be cared for. (Adapted from stories in The 

Trickle-Up Program in Kenya: An Evaluation Report. Lani van Ryzin-Havens 

and Ruth Kobia. 1987. Trickle-Up Program Inc.) 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 22

A Microenterprise Training Guide for Peace Corps Volunteers

Today, women still need to protect income from husbands or male family 

members. Most women do not want cash from their businesses, preferring food or 

household items. If a husband finds cash he might drink it away, so even recording 

cash amounts in a book could be a threat. If a man wants to sell a new cooking pot, 

he is told it belongs to the group and the wife is only keeping it for them. 

* * * * * * * * *

Programs such as The Heifer Project and Trickle-Up have helped thousands of 

families. There are many success stories to report. However, these programs are 

labor-intensive, and it is not possible to reach the 100s of millions of families who 

need additional productive assets. 

A different approach to providing cash to acquire productive assets is the 

Microfinance Movement. It is built on the principles of mass-marketing—lowcost products, high volume, and efficient delivery systems. The loans are generic, 

the overhead is low, there are no frills, and the number of loans delivered to clients 

is enormous. Therefore, the transaction cost is low. Microloan programs have 

reached millions of low-income families and have the potential of reaching the 

100s of millions. 

More than 20 years ago, in the late 1970s, some highly inventive nongovernmental 

organizations (NGOs) and banks saw the promise of microlending and pioneered 

techniques to issue loans to the self-employed: those who know their trade 

well but lack conventional means to secure a loan. The descendants of these 

microfinance institutions (MFIs) have prospered in some of the poorest countries 

of Africa, Latin America, and Asia. In Bangladesh, the Grameen Bank pioneered 

“peer lending,” which now reaches 2 million women. (Village Banking, Candace 

Nelson, Barbara McNelly, Kathleen Stack, and Lawrence Yanovitch, The Small 

Enterprise Education and Promotion Network and the United Nations Development 

Fund for Women, New York, 1996, p. 3.) In Central and South America, FINCA 

International started “village banking” independently at about the same time, using 

slightly different methodologies, but embracing the same basic concepts. By 1996, 

more than 10 million clients around the world had received microfinance services, 

“the vast majority of whom are below the official poverty line (usually defined 

by caloric intake).” (MicroStart, United Nations Development Programme, New 

York, 1997, p. 12.)

The fact that more than 10 million clients have received microfinance services is 

not nearly as impressive as the impact these services have on the lives of the savings 

and loan clients. Until recently, evaluation information focused on verifiable 

quantitative numbers—how many loans, number of savers, default rates, etc. Now 

MFIs are beginning to collect data showing the changes their services are making 

in the lives of their clients. Jeffrey Ashe collected the information below as part 

of a program evaluation in Cambodia. The survey findings document substantial 

change in the lives of the village bank members. 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 23

A Microenterprise Training Guide for Peace Corps Volunteers

THANEAKEA PHUM VILLAGE BANKING PROJECT

In 1998, village bank members were interviewed. The sample consisted 

of 197 randomly selected members.

Members’ income increased. 

• 34 percent said what they earned from their microenterprises 

represented “most” of their family’s income, compared with only 6 

percent before they joined the village bank.

Members’ families eat better. 

• 67 percent said they ate better food and more of it.

Members are better housed. 

• 19 percent said they had made major improvements to their homes 

and 57 percent more said they had made minor improvements.

Members invested their additional income in consumer goods.

• 65 percent purchased pots and pans.

• 21 percent purchased radios.

• 14 percent purchased watches.

• 9 percent purchased TVs.

Members invested their additional income in productive assets for their 

businesses, or for their family’s agricultural activities. These investments 

can lead to greater productivity and more profits in the future:

• 61 percent purchased tools and equipment for their businesses.

• 50 percent purchased tools for farming.

• 26 percent purchased bicycles.

• 13 percent purchased motorcycles.

• 11 percent purchased land.

• 11 percent purchased a cow that also could be used for plowing.

Members said they helped each other:

• 80 percent were given advice by other members on how to sell 

their goods.

• 71 percent were given advice on how to produce.

• 70 percent were given advice on where to sell.

• 57 percent shared transportation.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 24

A Microenterprise Training Guide for Peace Corps Volunteers

• 47 percent sold another member’s goods at the market.

• 28 percent produced the goods together.

• 24 percent shared tools.

Members were available to each other in times of crisis.

• Nearly three-quarters say they “often” help each other in times of 

personal crisis—sickness, illness, and fire, for example.

• Only 20 percent say they help each other “occasionally” or “never.”

• Close to 60 percent say they help each other with their loan payments.

* * * * * * * * *

It would be difficult to find anyone who would argue against educating girls or 

providing poor women with assets to increase their ability to generate income. 

However, some development professionals believe lending to poor, often illiterate, 

women is not an effective use of limited development funds. 

In the field of microenterprise, there are two main views on the growth and 

dynamics of microenterprises: growth and expansion; and equity and poverty 

alleviation. A third view has emerged, growth through equity and security.

If the goal is to create jobs through a vibrant sustainable microenterprise sector, 

then invest in those literate people with the skills, motivation, and the risk 

tolerance to grow and expand their businesses. Society calls these risk takers 

“entrepreneurs” who take risks by starting “enterprises.” This is the growth 

and expansion economic development point of view. Proponents of this view 

characterize most women’s enterprises as having limited potential for growth due 

to the nature of the enterprises or the women themselves.

Most low-income women in developing countries live and work in high-risk 

environments and seek to minimize risk and increase their family’s security. 

Because low-income women often try to avoid risk and provide for the basic needs 

of their families, rather than to take risk and expand their economic activities, their 

activities often are not classified as enterprises. The terms “subsistence activities” 

or “income generating activities” are often used instead of enterprise. 

Proponents of equity and poverty alleviation characterize most women’s 

enterprises as low-growth enterprises; they favor providing funds to enable 

women to start their minibusinesses. There is no expectation that these women’s 

businesses will grow; the expectation is they will maintain the families’ basic 

needs. They don’t believe extra funding is justified to work toward removing the 

barriers that prevent women from moving up the economic ladder–—education, 

rights to own property, cultural biases that deny women access to nontraditional 

higher paid jobs, and benefits (like social security) male workers are provided in 

their formal sector jobs.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 25

A Microenterprise Training Guide for Peace Corps Volunteers

Proponents of growth through equity and security also recognize that most 

women’s enterprises have low returns and low productivity but argue that many 

women’s enterprises have potential for growth if cultural, policy, and market 

barriers are removed. They favor women-focused programs, which address these 

barriers and provide credit to help low-income women start their businesses. 

(Discussion of these three views can be found in “Gender and the Growth and 

Dynamics of Microenterprises,” GEMINI Working Paper No. 5. Washington, 

D.C.: The GEMINI Project, Development Alternatives, Inc., 1990.)

Today different enterprise development projects take different views. Some 

projects are designed assuming growth and expansion is the optimal approach. 

Other enterprise development projects implement the equity and poverty 

alleviation approach, and still others take the growth through equity and security 

approach. There are many variations in projects. Project results are not clear as to 

the most effective long-term approach. 

What we do know with certainty is that unless both women and men of poor 

populations become more productive, the likelihood of significant improvements 

in their standard of living is unlikely.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 26

A Microenterprise Training Guide for Peace Corps Volunteers

* * * * * * * * *

A LEARNING MOMENT

What can you do during your Peace Corps service to increase 

the participation of women and girls?

• Plan meetings and other events at times when women can 

attend—based on knowledge of their daily schedules.

• Plan for child care—arrange for on-site child care or 

structure events so children can attend.

• Consider women’s ability to travel or lack of access to travel 

in locating trainings and other events.

* * * * * * * * *

Before we complete this first module, it is time to play the Best Game. You 

will experience making decisions as a poor working family in managing its 

microenterprise and trying to meet basic needs. Enjoy the experience, and may the 

cleverest family win. The challenge is to have money left at the end of the month!
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 27

A Microenterprise Training Guide for Peace Corps Volunteers

ACTIVITY 1:4

THE BEST GAME

The Best Game introduces players to the economic realities a poor family 

faces on a daily basis and lets them experience the tough choices enterprising 

families make in managing scarce funds.

Ask your technical trainer, Pre-Service Training Director, or business program 

manager for a copy of the Best Game.

You need at least six people to play the game, plus a facilitator. The ideal 

number of players is 9 to 15. The game requires three teams (families). Invite 

some of your host country friends to join you in playing the game. You might 

want one member of each family who can translate if a local language version 

of the game is not available. The game facilitator will provide instructions 

and manage play. The rules and hints for planning the Best Game are included 

in a trainer’s manual that accompanies the game.

After you have played one round of the game, take time to discuss with other 

players what you have learned. How could you have managed resources 

better to increase your profit? Will “your family” have to borrow again next 

month to continue your microenterprise? If you did not keep your savings in 

a bank or you could not borrow, what would be the impact on “your family’s” 

economic well-being? 

May the best family win.

Consider producing a local language version of the Best Game. Adapt both 

the pictures and words to fit your host country. Use the talents of artists 

in your group; involve your language instructors. A local language version 

would be a useful training tool to take to your site for teaching about 

managing a microenterprise. 
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 28

A Microenterprise Training Guide for Peace Corps Volunteers

KEY TERMS

Key terms are defined as they are used in the module. A space is provided 

to write the local translation of the word or phrase. Work with your language 

teachers to find the right translations and build your vocabulary as you study 

this module.

Entrepreneur: someone with the motivation, ideas, and capacity to combine 

the factors of production (land, labor, capital, and information) into goods and/

or services. 

Indicator: a surrogate measurement for a change. Example: A new roof on the 

home is an indicator of the family’s increased economic well-being.

Informal sector: consists of numerous microbusinesses, which typically have no 

legal status and do not pay taxes. The informal sector accounts for more than 50 

percent of the economy in many developing countries and is the major source of 

income of the poor. 

Microenterprise: nonagricultural income–generating activity with fewer 

than 10 employees including the owner; the owner and employees have few 

personal assets. 

Microfinance institution (MFI): organization that provides nonexploitative 

credit and savings services, generally for the poor.

Microlending: lending programs that normally range from $50 to a maximum of 

$300 to $500 (in U.S. dollars).

* * * * * * * * *
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 29

A Microenterprise Training Guide for Peace Corps Volunteers

RESOURCES

Building Communities from the Inside Out: A Path Toward Finding and Mobilizing 

a Community’s Assets. John P. Kretzmann and John L. McKnight. (ACTA 

Publications.) 1993. 

Guide to asset-based community development, summarizing lessons learned 

by studying successful community-building initiatives in hundreds of U.S. 

neighborhoods. Outlines what local communities can do to start their own 

asset-based development, including how to rediscover their local assets; how 

to combine and mobilize these strengths; and how “outsiders” in government 

can effectively contribute to the process of asset-based development.

Gender and Development Training: Girls’ Education. (Peace Corps ICE.) 1998. 

(ICE No. M0054)

Product of the Gender and Development Training Initiative. Seeks to 

institutionalize the consideration of gender issues throughout the Peace 

Corps. Contains eight booklets that provide background and training design 

for various participants; session plans and handouts; and insights from the 

field.

Income Generation and Money Management. PCV Sheila Reed. (Peace Corps 

ICE.) 1994. 70 pp. (ICE No. R0087)

Originally titled Income Generation and Money Management: How to Train 

Gambian Women, this manual applies to low-literate entrepreneurs in other 

parts of Africa and perhaps elsewhere as well. Contains helpful numeracy 

activities and good materials for small business/women in development 

projects.

No Short Cuts: A Starter Resource Book for Women’s Group Field Workers. Nicky 

May and Mia Hyrun. (Change International.) 1992. 60 pp. 

Provides practical information on how to organize a women’s group and have 

it operate effectively. After a general discussion, relates the information to 

groups formed for specific purposes. These include creating a savings and 

loan association; producing handicrafts; initiating agricultural projects and 

improving farming techniques; processing foods; providing potable water, 

planting trees, and conserving energy; and improved health, education, child 

care, and home management. A detailed but easy to understand manual that 

is an excellent resource to use when working with host country women.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 30

A Microenterprise Training Guide for Peace Corps Volunteers

PACA: Participatory Analysis for Community Action. (Peace Corps ICE.) 1996. 

350 pp. (ICE No. M0053)

Participatory Analysis for Community Action (PACA) is an approach used 

to facilitate communities’ exploration of their own realities in order to make 

desired changes. Based on earlier participatory analysis methods, such as Rapid 

Rural Appraisal and Participatory Rural Appraisal, PACA turns the appraisal 

activity into a process where the development agent and community develop a 

partnership that leads to community control of their own projects. As a defining 

criterion, PACA distinguishes the role of gender in development by applying 

the participatory exercises with separate groups of women and men, girls and 

boys, which allows the community to compare and analyze together the roles 

that shape their reality. In similar ways, PACA can be used to understand age, 

ethnicity, or any other source of societal differentiation that has implications for 

development. The tools can be used in schools, organizations, institutions, and 

any other group, rural or urban, where different voices need to be heard.

A Question of Access: A Training Manual on Planning Credit Projects That Take 

Women into Account. (UNIFEM.) 1995. 180 pp. 

Comprehensive look at issues surrounding the impact of credit on women and 

how to integrate this awareness into setting up a microcredit delivery system. 

Provides suggestions and instructions for organizing training workshops that 

can be used in developing materials and session plans.

Internet:

www.cedpa.org — The Center for Development and Population Activities 

(CEDPA) is a nonprofit international organization founded in 1975. 

CEDPA’s mission is to empower women of all levels of society to be 

full partners in development. Good publications, training manuals, and 

section on lessons learned.

www.girlsright.org — Information from two working groups on girls 

established as part of the international movement to support the human 

rights of girls and their issues. Site has information on advocacy, 

communications, and a summary of “Cleaning a path for girls: NGOs 

report from the field on progress since Beijing.”

www.heifer.org — Overview of Heifer International’s history, success stories, 

and current program.
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 31

A Microenterprise Training Guide for Peace Corps Volunteers

www.trickleup.org — Overview of Trickle-Up International’s history, success 

stories, and current program.

www.UNIFEM.org — Good resource especially if looking at statistics 

worldwide on education.

* * * * * * * * *
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 32

A Microenterprise Training Guide for Peace Corps Volunteers

ACTIVITY 1:1 Reference

ATTITUDE SURVEY: DISCUSSION OF ANSWERS

1. Financial evaluation is impossible.

Agree: Human welfare and dignity cannot be “priced”; they 

are priceless.

Disagree: Business enterprise is about money; we are spending 

money to help people earn money; we must compare the two.

2. Jobs for the poor, not self-employment.

Agree: The poor do not have the education, the skills, or the contacts 

to start businesses; it is better for them to be employed by others 

who do have the resources.

Disagree: When the poor are employed they are usually exploited; if 

they have their own businesses they will be genuinely “empowered.”

3. We have to give the poor business ideas.

Agree: The poor have not been exposed to business ideas. A primary 

function of outsiders is to show them what they can do.

Disagree: The poor know their own situation better than we 

do; they know what their own resources are, and what they can 

produce or sell.

4. Charge the poor low interest or no interest.

Agree: Poverty means having little or no money, so it is self-evident 

that poor people cannot afford to pay a high price for money itself.

Disagree: Access to finance is more important for poor people than 

its price. High interest may be necessary to pay for this service.

5. Charge the poor fees for our services.

Agree: People only value services if they pay for them; free services 

are valued for what they cost, that is, nothing.

Disagree: Donors have given us their money to help poor people; 

we are breaking our trust if we sell services to the poor.

Continued
Module 1: Microfinance—An Effective Poverty-Reduction Strategy Page 33

A Microenterprise Training Guide for Peace Corps Volunteers

Discussion of Answers, continued

6. Always promote groups.

Agree: Individual business people always exploit poor people, even 

if they come from the same community. Strength comes from unity.

Disagree: Group enterprises have bad records everywhere, they are 

more difficult to manage, and they usually either fail or are “hijacked.”

7. Grants are better than loans.

Agree: The poor need every cent for survival; it is wrong to make them 

repay, and it costs more to administer the recovery than is recovered.

Disagree: Grants demean people and make them dependent on 

the donor.

8. The poor cannot repay loans on time.

Agree: Poor people are vulnerable to personal and natural disasters. 

They and their families will suffer if they are forced to repay.

Disagree: If a loan has been correctly approved, the borrower should 

have no difficulty in repaying it on schedule.

9. Women are better at microenterprise than men.

Agree: Women always have to plan further ahead and to think of their 

children; men tend to spend any surplus on drink or other enjoyment.

Disagree: Men are nearly always better educated than women, 

and they understand money better; most successful big business 

owners are men.

10. Most poor people don’t need business training.

Agree: Success in microenterprise depends on shrewdness and local 

knowledge, not on things that can be taught in a course.

Disagree: Poor people have no knowledge of business, 

particularly of record-keeping; they must be taught these things 

if they are to succeed.
A Microenterprise Training Guide for Peace Corps Volunteers

TRAINER’S NOTES

MODULE 1

Microfinance—An Effective PovertyReduction Strategy

Overview:

This module was designed to:

• Increase the reader’s awareness of why the working poor have difficulty 

breaking the poverty cycle.

• Suggest some strategies that are promising in reducing poverty.

• Provide information to support the focus on girls’ education and financial 

services for women. 

• Reinforce concepts with an attitude survey, a case study, an activity 

on local microfinance conditions, and the Best Game, which allows 

participants to experience managing funds as a poor working family.

Time:

Reading 1 hour

Activities, including debriefing 7 hours

Materials: 

The Best Game.

Preparation: 

• Read the module and adapt activities if necessary to fit the local situation 

and training schedule. 

• Arrange to have as many of the references listed at the end of the module 

as possible available at training site(s). 

• Identify local microfinance NGOs and their staff for future field trips 

and/or discussions of local microfinance issues with trainees.

• Secure sufficient copies of the Best Game. Read instructions for the Best 

Game and be prepared to facilitate or train game facilitators.

• Schedule at least one hour to review and discuss learning objectives 

with trainees. 

Module 1: Microfinance—An Effective Poverty-Reduction Strategy 

Trainer’s Notes — Page 34
A Microenterprise Training Guide for Peace Corps Volunteers

TRAINER’S NOTES

ACTIVITY 1:1 

ATTITUDE SURVEY

Overview:

The attitude survey is intended to get trainees to think about the plight of the 

poor and what interventions are effective and not effective. 

Time: 15 minutes

Materials: 

Copies of the attitude survey and discussion of survey. Both are included in 

the module.

Preparation: 

None.

Debriefing the experience and processing the learnings: 

Trainees come to their host country with different backgrounds, and, 

predictably, they will have different attitudes. This activity allows training 

participants to reflect on their attitudes and better understand how they feel 

about issues related to helping the poor. Encourage trainees to consider the 

arguments for and against each statement in the attitude survey and to look for 

information that would support one or the other position as they learn more 

about how microenterprises help people move out of the poverty cycle.

Module 1: Microfinance—An Effective Poverty-Reduction Strategy

Trainer’s Notes — Page 35
A Microenterprise Training Guide for Peace Corps Volunteers

TRAINER’S NOTES

ACTIVITY 1:2 

A CASE STUDY ABOUT A POOR WORKING FAMILY

Overview:

This activity provides insights into why so many families in developing 

countries are poor.

Time: 1 to 1 1/2 hours

Materials:

Case study included in module.

Preparation: 

Identify a trainee who will be responsible for scheduling the debriefing and 

leading the discussion.

Debriefing the experience and processing the learnings:

Sakhubai and Rambhau’s family story can be used to promote a rich 

discussion of:

• How families spend their money.

• Gender issues related to poverty.

• Culture—expectations for spending at weddings and funerals.

• The relationship between education and poverty.

• The role of the government in helping the productive poor.

• The role of Volunteers in helping the productive poor.

Possible answers to the case study questions:

• Sources of income: farming, labor, or service.

• Needs for money: nutrition, clothing, health needs, medication, marriages 

and funerals, agricultural expenses, house repairs, and education.

• Reasons for remaining in poverty: low level of education, lack of 

adequate resources to earn a living, high cost of borrowing money.

Continued

Module 1: Microfinance—An Effective Poverty-Reduction Strategy 

Trainer’s Notes — Page 36
A Microenterprise Training Guide for Peace Corps Volunteers

Trainer’s Notes: Activity 1:2, continued

• Possible development strategies:

• Open a factory in the village to provide jobs.

• Distribute land to the poor.

• Provide scholarships so children can attend school.

• Start a cooperative so agricultural supplies can be purchased cheaply 

and crops sold at higher prices.

• Provide productive assets like cows and chickens; provide small 

grants or financial lending and saving services to enable the poor to 

start their own microenterprises.

Discuss how the poorest of the poor situation locally is similar to and different 

from the family in the case study.

Encourage participants to look at the cultural appropriateness, feasibility, 

cost-effectiveness, and sustainability and replicability of their proposed 

development strategies.

Module 1: Microfinance—An Effective Poverty-Reduction Strategy

Trainer’s Notes — Page 37
A Microenterprise Training Guide for Peace Corps Volunteers

TRAINER’S NOTES

ACTIVITY 1:3 

WHO GOES TO SCHOOL?

Overview: 

A knowledge of the country’s educational system is part of understanding 

a country’s culture. School can prepare young people to be ready to take 

advantage of opportunities in their adult lives; the lack of adequate schooling 

can leave them with few options. This activity encourages training participants 

to learn about educational opportunities in the local community by asking 

questions of community members and visiting a school.

Time: 

Can be adjusted by each training participant to fit his or her interest in 

this topic.

Materials: 

None.

Preparation:

Gather articles and information on the country’s educational system and have 

them available for training participants. Identify local schools that would 

welcome visitors.

Debriefing the experience and processing the learnings: 

If one of the training participants has a strong interest in education, you may 

want to ask him or her to facilitate the debriefing.

Consider and discuss the following:

• There is a strong correlation between a well-educated population and a 

high standard of living. Why?

• Who benefits from the local schools and who does not?

• What are the connections between education, economic well-being, and 

the economy? 

• What are the strengths and weaknesses of the local school system? 

• What changes would community members like to see in their 

educational system? 

• How can Volunteers be effective in working with local schools?

Module 1: Microfinance—An Effective Poverty-Reduction Strategy 

Trainer’s Notes — Page 38
A Microenterprise Training Guide for Peace Corps Volunteers

TRAINER’S NOTES

ACTIVITY 1:4

THE BEST GAME

Overview: 

The Best Game introduces trainees to the economic realities that a poor 

family faces on a daily basis and lets them experience the tough choices 

enterprising families make in managing scarce funds.

Time: 

To introduce and play the game 2 hours

To discuss learnings from the game 30 minutes

Materials:

The Best Game.

Preparation: 

Instructions for preparation and facilitating the Best Game are found in the 

instructor’s manual in the kit. Allow yourself two hours or more to familiarize 

yourself with the game. Consider asking one of the training participants to 

facilitate the game.

Debriefing the exercise and processing the learnings: 

Suggestions for debriefing the Best Game are found in the instructor’s manual 

that accompanies the game.

Module 1: Microfinance—An Effective Poverty-Reduction Strategy

Trainer’s Notes — Page 39
A Microenterprise Training Guide for Peace Corps Volunteers

Module 1: Microfinance—An Effective Poverty-Reduction Strategy 

Trainer’s Notes — Page 40
A Microenterprise Training Guide 

for Peace Corps Volunteers

MODULE

2

Microfinance 

Methods

Traditional 

Artisans and

Entrepreneurs