Microfinancing for macro results

She attended a training program in confectionery-making and soon after, she bought ingredients to try making sweets at home. She loved it and saw she could make profit from the practice, but had no money to get started. So she took out a microfinance loan.

With the borrowed money, Lalani was able to develop her confectionery business: starting with small quantities first, attending training programs to acquire business knowledge, developing links with the local small entrepreneurs’ association, and constantly revising her production techniques and business practices. As demand for her product grew, so did the scale of her production. She even has a delivery service now – her husband uses his motorbike to distribute the batches of sweets in bulk around the local area.

Today, Lalani’s confectionery business is large, successful and remains comfortably built around her family responsibilities. She’s the chairperson of the local entrepreneurs’ association and proud of her achievements: very satisfied with a thriving business and its profit, all while being able to spend time with her family.

These are the kind of stories Dr Nadeera Ranabahu has personally witnessed as part of her PhD research on improving entrepreneurial practices among women in rural communities. Her passion and dedication for the subject have seen her spend time on the ground in Sri Lanka, observing how women micro-entrepreneurs use a variety of mechanisms to start and develop their ventures – including microfinancing.

"Microfinance is useful for providing small loans to people who may have a problem accessing traditional banking credit or loan services, particularly in developing countries with under-developed financial systems, like Sri Lanka,” she explains.

“Microfinance institutions provide an option for these entrepreneurs, commonly women with small, home-based ventures requiring very small loans – just $200-$1000 AUD. These institutions grant loans using a peer guarantee system, where three to five members who live close by and know each other, guarantee each other’s loans.”

Motivated to explore deeper, Dr Ranabahu’s research examines how female entrepreneurs in Sri Lanka not only use micro-loans to get their entrepreneurial ideas off the ground – often grocery shops, dressmaking ventures and agriculture-related businesses – but also how they acquire business expertise during the process.

“Repetitively conducting activities with the intention of improving them, known as ‘deliberate practice’, is an effective way to gain expertise in tasks. With microfinance loans, entrepreneurs get the opportunity to conduct tasks more often, such as arranging cash inflow to repay loans, calculating returns, and forming networks and linkages with other institutions. Therefore, these loans contribute to deliberate practice – entrepreneurs continuously obtain feedback, reflect on tasks and learn from them, becoming experts in their business tasks.

It was Dr Ranabahu’s own background in microfinance in Sri Lanka that inspired her to complete her PhD on the microfinance-entrepreneurship interface. “I started my career working within the microfinance and development sector in Sri Lanka in various capacities, alternating between industry and academia. It’s been useful, I’ve found having industry experience helps in developing research relevant to industry, and also in explaining theory in practical terms.” Dr Ranabahu said it was a strategic decision to choose UOW for her PhD, as it had “the best research supervision combination”.

“My PhD journey at UOW equipped me with many skills for further independent research; tools and techniques for critical thinking and academic writing, and how to communicate findings through publications and presentations. My supervisors, Professor Mary Barrett and Associate Professor Lee Moerman, encouraged me to make the most of opportunities and supported me all the way.

“One of my fondest memories is also the time I spent with fellow UOW PhD students. We came from different countries, studied different topics, but we all had common PhD challenges and were passionate about global social and economic issues; we all cheered for sports together, shared food, and talked about our families. It helped us to be more open-minded, global citizens. Many remain great friends, even now.”

Dr Ranabahu’s research is making an impact, already receiving international recognition. She names her Examiners’ Commendation for Outstanding Thesis Award and ANZAM Best Doctoral Dissertation Award 2018 as her proudest research achievements to date. “Receiving best doctoral dissertation was recognition of all my hard work. It’s also recognition of the excellent PhD supervision I received and my supervisors’ work.

“In academia, getting your research published is a continuous and long-term task. I’ve learned the key to success is not getting demotivated, and always keeping the bigger picture and your goals in mind.”

Now a lecturer in entrepreneurship and innovation at New Zealand’s University of Canterbury, Dr Ranabahu says she loves the research-teaching nexus and the opportunity to research more broadly within the entrepreneurship space.

“I’m now not just researching microfinance borrowers, but also social entrepreneurs, refugee entrepreneurs and women business owners, even in developed countries such as New Zealand and Australia.

“I’m definitely putting down roots in academia now. I aim to become a world-class researcher in my field, doing theory-focused work with practical relevance. The thing I enjoy most about my job is the ability to help people, create new knowledge and make change. Entrepreneurship is not just a livelihood; it’s a vehicle to better life.”

Nadeera Ranabahu
Doctor of Philosophy Integrated (Commerce), 2018