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Understanding the microenterprise sector to design a tailor-made microfinance policy for Cape Verde


  • José A. G. Baptista

    () (Banco de Cabo Verde)

  • Joaquim J.S. Ramalho

    () (Department of Economics, University of Évora)

  • Jacinto Vidigal da Silva

    () (Department of Managment, University of Évora)


Two of the central challenges faced by Cape Verde at the present are the high level of unemployment and the increasing proportion of the population that lives below the poverty line. Microenterprise development can be an effective means of addressing both problems in a developing country like Cape Verde, where microenterprises account for about 50% of employment. In this paper we provide a detailed profile of micro firms? owners and investigate the relationship between their characteristics and the resort to outside seed capital. We find a cluster of factors - the microentrepreneur?s age, gender, level of education and reason for being self-employed - which influence significantly the probability of being in need for external startup capital. The policy implications of these findings for the design of a specific microfinance program for Cape Verde are discussed.

Suggested Citation

  • José A. G. Baptista & Joaquim J.S. Ramalho & Jacinto Vidigal da Silva, 2006. "Understanding the microenterprise sector to design a tailor-made microfinance policy for Cape Verde," Economics Working Papers 1_2006, University of Évora, Department of Economics (Portugal).
  • Handle: RePEc:evo:wpecon:1_2006

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    References listed on IDEAS

    1. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    2. Shaw, Judith, 2004. "Microenterprise Occupation and Poverty Reduction in Microfinance Programs: Evidence from Sri Lanka," World Development, Elsevier, vol. 32(7), pages 1247-1264, July.
    3. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    4. Davidson, Russell & MacKinnon, James G., 1984. "Convenient specification tests for logit and probit models," Journal of Econometrics, Elsevier, vol. 25(3), pages 241-262, July.
    5. J. Copestake & S. Bhalotra & S. Johnson, 2001. "Assessing the Impact of Microcredit: A Zambian Case Study," Journal of Development Studies, Taylor & Francis Journals, vol. 37(4), pages 81-100.
    6. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    7. Evans, Timothy G. & Adams, Alayne M. & Mohammed, Rafi & Norris, Alison H., 1999. "Demystifying Nonparticipation in Microcredit: A Population-Based Analysis," World Development, Elsevier, vol. 27(2), pages 419-430, February.
    8. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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    10. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    11. P. Mosley, 2001. "Microfinance and Poverty in Bolivia," Journal of Development Studies, Taylor & Francis Journals, vol. 37(4), pages 101-132.
    12. Pagan, Adrian & Vella, Frank, 1989. "Diagnostic Tests for Models Based on Individual Data: A Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages 29-59, Supplemen.
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    Cited by:

    1. Boza Chirino, José & Maroto Santana, Octavio & Cáceres Apolinario, Rosa Mª., 2010. "Los Microcréditos como medio de Financiación Alternativa. Estudio aplicado a Cabo Verde/The Microcredits Like Way of Alternative Funding. Study Applied to Cape Verde," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 28, pages 199(20á)-19, Abril.

    More about this item


    Cape Verde; Microfinance; Microenterprise; Microcredit; Poverty;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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