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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Commercial banking services for micro-entrepreneurs in South Africa
Author:Schoombee, A.ISNI
Year:1998
Periodical:South African Journal of Economics
Volume:66
Issue:3
Pages:337-363
Language:English
Geographic term:South Africa
Subjects:credit
informal sector
entrepreneurs
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.1998.tb01257.x/pdf
Abstract:In South Africa the informal sector, i.e. individuals and micro-enterprises whose economic activities are not fully reflected in the official economic statistics, is the sole source of employment for many black households. Empirical research has documented that one of the major constraints faced by micro-enterprises is the lack of financing facilities. This paper examines the possibilities of commercial banking services for micro-entrepreneurs in South Africa. Section 1 contemplates why formal banks are unable to provide micro-entrepreneurs with sufficient deposit and credit facilities, and how informal financial intermediaries solve this market failure. Section 2 examines semiformal and informal financial intermediaries (stokvels and credit-granting NGOs) that are already prominent in supplying South African micro-entrepreneurs with deposit or credit services. Section 3 considers the different strategies banks could pursue to satisfy the demand of micro-entrepreneurs for banking services, for example by setting up specialized banks for micro-entrepreneurs, by creating specialized divisions and programmes exclusively to serve micro-entrepreneurs, and by linking the activities of banks and the semiformal or informal financial sectors. Bibliogr., notes, ref.
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