Published In

oikos free case collection

Document Type

Article

Publication Date

2010

Subjects

Social responsibility of business -- Case studies, Sustainable development, Microfinance -- Developing countries, Agriculture -- Economic aspects -- Developing countries

Abstract

In Sanjay Karki’s role as Deputy Director for the Nepal office of Mercy Corps, he had worked on a number of poverty reduction programs. But his current initiative presents the most daunting challenges he has yet faced. One of the most promising innovations in poverty alleviation was the concept of microfinance, the provision of small-scale loans and other financial services to poor entrepreneurs. And although the government of Nepal strongly supported microfinance models, a decade-long civil war ending in 2006 had severely disrupted government services and worsened poverty. In the terai, or plains, of Nepal, government and non-profit microfinance institutions are able to access the population densities and transportation infrastructure necessary to operate poverty relief programs. However, in the rugged and undeveloped mid-mountain and high-mountain regions where Sanjay is hoping to establish microfinance activities, little is being done to help the poor.

Sanjay is considering launching a for-profit social enterprise focusing on agricultural microfinance and technical services for the rural poor, one formed with the assistance of Mercy Corps that could extend the reach of Mercy Corps’ programs. In a unique approach, and with the full support of potential donors, the organization would start as a non-profit until it became financially self-sustaining, at which time it would transition to a for-profit social business model. Such an organization might be better positioned than the government and private, purely for-profit institutions that had previously failed to deliver essential financial services. However, starting a social enterprise was risky even in developed nations, and in a geographically rugged, developing nation recovering from a recently ended civil war, it seemed nearly impossible. Aside from the normal questions of market size, which customers to target, what products and services to provide, how to obtain startup funding, and how to manage competition, Sanjay faced the near total collapse of the national financial system. And yet, some of the very same conditions that increased the difficulty of starting a new business or securing funds spoke to the desperate need for basic financial services. Confronting some of the most daunting challenges to business formation in the world, could a for-profit social enterprise be established to help impoverished farmers improve their livelihoods?

Description

Copyright © 2010 by the Author(s). This case was prepared by Prof. Scott Marshall and Mr. Jacen Greene as a basis for class discussion rather than to illustrate the effective or ineffective handling of an administrative situation.

This is a free online copy. This work is licensed under the Creative Commons AttributionNoDerivs 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nd/3.0/

This case is accompanied by a teaching note, available upon request (supplemental file, hidden from public view).

Persistent Identifier

http://archives.pdx.edu/ds/psu/16345

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