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Keywords:

  • micro-credit;
  • micro-equity;
  • poverty alleviation and social return
  • G21

I argue that micro-equity may be used to complement or substitute micro-credit programmes, which involve lending rather than risk sharing. By becoming a stockholder in the micro-enterprise rather than a lender, the micro-equity provider is in a more tightly coupled relationship, providing knowledge and guidance necessary for ensuring success of the venture. Moreover, I show that while micro-credit financing places a heavy cash drain on micro-enterprises and leads to sub-optimal growth during the course of the evolution of the micro-enterprise, the mix of micro-equity with micro-credit may prove to be more valuable to nurture the sustainable growth of micro-enterprises.