The Power of Microenterprise: An Analysis of the Economic and Social Impact of a Weaving Collective in Rural Nicaragua

This paper explores the potential economic and social impacts of a weaving microenterprise located in a small rural Nicaraguan village. First, I examine the determinants of a female head of household’s decision to join the weaving collective. Based on the decisions to join the weaving collective or not, I test if joining the collective impacts key economic indicators and levels of female empowerment. Over 840,000,000 women, 12 percent of the world population, live in extreme poverty on less than a dollar a day . Understanding the factors that contribute to a female head of household becoming involved in the development of a microenterprise has implications for the design of female targeted development programs. The ability to quantify the benefits of microenterprise will assist policy makers in allocating scarce resources for microenterprise development, and justifying microenterprise development to funders. With the continued growth of female targeted development initiatives particularly in regards to conditional cash transfer and microfinance initiatives, there is a need for a better understanding of the benefits of microenterprise development, to be able to present it as a viable alternative to these other initiatives. To justify additional funding for the development of more female targeted microenterprise initiative there is a need for more rigorous impact evaluations, linking them to improved family well-being and female empowerment. The weaving microenterprise initiative has yet to have a significant overall impact on the economic indicators so I cannot claim that it has had a positive impact on the economic well-being of the women and households that are participating in the weaving project. One of the main limitations of this analysis is the very small number of observations. More rigorous analysis over a longer period of time with a larger dataset is likely to generate evidence to strengthen microenterprise development and provide support for microenterprise projects that have already taken place. Even though the weaving project has not had clear short term economic impacts, in developing a specific skill and a new type of knowledge, the weavers have begun to believe in themselves as actual business women, to be creative and innovative and to involve their families in that process. This impact is evidenced by the relative statistical significance of the empowerment variable. The weaving enterprise is building a sustainable framework that will hopefully continue to propel the women, their families, and the communit