Entrepreneurship, poverty alleviation and the natural environment: Examining the structure and function of green microfinance

It is estimated that more than 100 million people have borrowed small amounts of money to start or grow very small businesses and improve their quality of life through microfinance. As an economic development vehicle microfinance is considered by most to be a resounding success, amplifying annual income of the borrower by several hundred percent and generating high interest payments for the lender. Today, it appears that microfinance might have the momentum to greatly reduce poverty worldwide. Still, a handful of scholars and practitioners are concerned that the potentially negative environmental impact of small business on such a massive scale threatens to dilute or eventually counteract the effectiveness of microfinance. Those who would embed a concern for the natural environment into the practice of microfinance would call the result 'green microfinance.' Inspired by this relatively recent development this dissertation investigates the entrepreneurship of microfinance, its agents and their motivations, and assesses how and why their activities relate to the natural environment. A descriptive content analysis of a popular field apparatus catalog confirms that; (1) microfinance borrowers motivated in large part by basic physiological needs are necessity entrepreneurs, (2) microfinance institutions (MFIs) that finance this activity are mission-driven social entrepreneurs, and (3) the device manufacturers whose products are purchased with microfinance loans are simply commercial entrepreneurs. A broad and multidisciplinary literature review explains that environmental protection could be integrated in the practice microfinance for the benefit of no fewer than four constituencies; the poor, the women, and their children if not for the natural environment itself. Yet, a second content analysis finds that only one in ten MFI lenders actually incorporate environmental protection language into their lending criteria. Together these findings suggest new theoretical frameworks for the researcher and practical opportunities for MFIs to improve the effectiveness of their lending. Specifically it is argued that if entrepreneurship that damages the natural environment threatens to counteract the core poverty alleviation mission of microfinance lending, MFIs should instead facilitate the pursuit of environmental entrepreneurship; the act of creating future goods and services with positive environmental consequences.