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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Linking banking for micro-enterprises in South Africa
Author:Schoombee, A.ISNI
Periodical:South African Journal of Economics
Geographic term:South Africa
small enterprises
business financing
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.1999.tb01149.x/pdf
Abstract:The formal financial sector in South Africa has traditionally not been interested in transacting with microenterprises because of the combination of high risks, high costs and low returns associated with such business. Financial options available to micro-entrepreneurs are donor funds, government funds and privately owned funds of the formal financial sector. Linking banks and semiformal and informal sectors seems to be the favourite strategy. The extensive branch network of South African commercial banks creates the potential for reaching very large numbers of micro-entrepreneurs. And the widespread existence of 'stokvels' in black communities, the most prevalent type of self-help groups (SHGs) in South Africa, make them natural linkage partners. Linking banks and SHGs indirectly via an NGO intermediary, and linking banks and SHGs directly, with NGO involvement, are currently suitable prospects for implementation locally. Under these circumstances, banks do not need to solve the problems of high risk and high costs involved with micro-entrepreneur lending. Nevertheless, linkage banking is found only to a limited extent in South Africa. Bibliogr., notes, ref.