Thesis (MTech. degree in Business Information Systems) -- Tshwane University of Technology, 2010. / This study addresses the key need for access to finance through ICT. A qualitative research approach with a multiple case study design was adopted to provide an in-depth understanding of the situation from the perspective of the development finance institutions (DFIs) providing financial support for small, medium and micro enterprises (SMMEs), as well as SMMEs that have been beneficiaries. After analysing the findings obtained from the interviews, survey and other sources, an e-finance model was developed. This model comprises three environments, namely the lending subsystem, the service consumer environment and the financial provider environment. The e-finance model is perceived as representing a new distribution channel (an add-on channel rather than a substitute) for the DFIs products and services and it offers a way of reaching a broader range of new clients. Moreover, it serves to improve the turnaround time of the application by automating the process and making it efficient and effective.

In a world where almost half of the population lives in poverty, the alleviation of poverty is a serious developmental challenge for many states. Microfinance has grown in popularity as a means for achieving poverty reduction all over the world. Due to the success of microfinance institutions, such as the Grameen Bank, in achieving self-sufficiency and improving the lives of its clients, the expectations for similar institutions are high. MFIs attempt to find a balance between business and development goals. It is not necessarily a contradiction to be a business seeking profit as well as being an institution committed to development. However, the values coupled with these two objectives are sometimes conflicting. Thus it is important to see how equilibrium can be achieved and to note what sacrifices must be made in order to reach a balance. This thesis will focus on examining and assessing the challenges faced by South African MFIs in balancing development goals while at the same time having to be self-sufficient. The Small Enterprise Foundation will be used as a case study to consider the particular experiences of a South African MFI. The evaluation of the unique challenges that the South African landscape presents will provide a context in which to understand microfinance operations and a clearer understanding of the particular problems and challenges faced by the South African micro-finance industry in balancing the achievement of development goals against the imperative to be self sustainable in providing services to the poor. Through that understanding the common conception of what makes a “successful” MFI will also be challenged.

Thesis (MDF)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: The approach to offering financial services to the poor has evolved over the past decades. The microfinance schism between the two paradigms, institutionist and welfarist, has yet to be narrowed by evidence of greater success of the one over the other. The drive for commercialisation of microfinance institutions has spurred many crises across the globe and the validity of the argument that commercial microfinance is more sustainable has come under scrutiny. This research report dissects the sustainability of African Bank and Capitec, two commercial microfinance institutions. Accounting ratios are applied to the audited financial data of both microfinance institutions to measure their sustainability from 2007 up to their most recent audited results. The research has found that both microfinance institutions experienced rapid growth since 2007, primarily driven by larger average loan sizes over longer terms. The research shows that Capitec has more diverse sources of revenue and depends less on its loan portfolio to generate income than African Bank. It also shows that Capitec has a more conservative approach with regard to provisioning for loans, and is consequently better prepared for loan write-offs than African Bank. Overall, Capitec is found to be more sustainable in each period measured.

thesis submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa in fulfilment of the requirements for the degree of Doctor of Philosophy (PhD) Johannesburg, August 2015 / Financial inclusion is promoted as an important economic development program to solve the lack of access to formal financial services for billions of people around the world. The concept “financial inclusion” has entered mainstream business and development discourses as an all-encompassing term for innovation in financial services for the poor. South African policymakers and financial service providers have embraced this approach to address some of the country’s political, social and economic imbalances. A number of examples are held up as successes of financial inclusion such as India’s “Jan Dhan Yojana” initiative. The program, launched in August 2014, signed up 75 million people to new bank accounts in under three months. South African policymakers and financial service providers have also embraced financial inclusion to address the country’s political, social and economic imbalances. Several consequences challenge this optimistic view. The first issue is the high level of dormancy across various services. India’s account has up to 75% dormancy, much like South Africa’s Mzansi account launched expressly for financial inclusion in 2005. It was abandoned by 2012 due to lack of use. The second major issue is adverse inclusion that arises after people are “financially included” and they end up worse off than before. In August 2014 African Bank, the largest lender to low-income individuals in South Africa, failed because it had issued loans to customers who eventually could not afford to repay them. Despite these issues, the focus of financial inclusion remains on targets of density, penetration and geographic access as measured in the World Bank’s Findex, a global financial inclusion database. Practitioners and researchers tend to be concerned with how people as borrowers, savers, bank account users and mobile phone users access and use financial services. Yet an unexplored issue is how these subject positions came to be, how they are maintained and the specific rationalities that accompany them. Following Foucault, this study is an attempt to understand how the concept of financial inclusion has functioned in our society to create human beings as subjects. This is a seven-year genealogical research project of South Africa’s national financial inclusion effort. Over this period, three discourse clusters were identified and analysed. The first cluster consists of 12 texts produced by a range of public, private and civil society institutions. The second cluster of academic discourses on financial inclusion consists of 3 83 peer-reviewed journal articles published between 2009 and 2013. The third cluster is a collection of texts from local sources in two townships produced by those individuals who are often the subjects in the other discourse clusters. The analysis reveals dominant modes of objectification in each cluster and the synthesis enables the search for evidence of a regime of truth on financial inclusion. Evidence indicates that dominant discourses of financial inclusion, irrespective of origin, limit subjects to existing practices of money management. Therefore, despite claims of the sweeping changes that can result from financial inclusion, this study argues that this form of development discourse perpetuates existing concentrations of wealth. Counter-narratives that link financial inclusion and asset building offer an important break in this dominance / MT2016

Thesis (MTech. degree in Business Administration)--Tshwane University of Technology, 2009. / The extant microfinance literature provides an array of paradigms on microfinancial services delivery. The Ohio Paradigm advocates for the packaging and provision of microfinancial services along ordinary market practices in which there are both buyers and sellers of services. As such, the poor are not considered as mere beneficiaries but only as clients or at least a segment of financial services market.This study stems from the need to broaden the scope of research on this growing sector, which in comparison to other developing nations is fairly young. The aim of this research was to investigate the applicability of the Ohio Paradigm in South Africa as well as its impact on eventuating sustainable grass root financial systems.

M.Com. (Business Management) / The aim of this research study is to investigate the effect of the National Credit Act on a micro-lending financial institution, namely Old Mutual Finance. The objective of the study is to gain insight from Old Mutual management staff on how their sales and operations have been affected since the inception of the Act and to reflect on their experiences and perception regarding the Act. The study also assesses Old Mutual Finance customers’ level of awareness and perceptions regarding the Act. The purpose of the National Credit Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers. A mixed model research was used where both qualitative and quantitative data collection techniques and analysis procedures were used and combined. For qualitative data collection, five senior management staff of Old Mutual Finance were interviewed. This entailed face-to-face interviews which were semi-structured, their responses were manually written and also digitally recorded. The quantitative method involved the use of a survey of two hundred and thirty two of their customers from four different Old Mutual Finance branches located in Johannesburg. The results of the study indicate that the National Credit Act is considered to be appropriate legislation with good intentions. However, some aspects of the legislation need to be addressed to ensure that credit providers are able to smoothly implement its rules and regulations in the lending market. Concerns pertaining to the lack of consumer knowledge or low financial literacy were also raised. Using the promax rotation and eigenvalues exceeding one, three factors namely, Knowledge of the Act, Attitudes towards the Act and Perception towards credit in general were identified which together explained the 47% of the variance for the entire set of variables. These three factors corresponded to the themes of the customer questionnaire.

Thesis (MBA)--Stellenbosch University, 2011. / Little research has yet been undertaken in South Africa about commercial banks that are servicing the microenterprise market. The objective for the current research was to investigate the key factors that should be considered by commercial banks in South Africa servicing the microenterprise market. The focus for the study was on identifying the key factors and on investigating how the key factors were being considered. There are a number of case studies documenting the key factors that international commercial banks have considered. However, in South Africa, there are relatively few documented cases, which rightfully confirms that commercial banks providing microfinance to microentrepreneurs are still in a new line of business that is in its early developmental stages. The first part of the current study aimed to identify the key factors that required consideration, which have been well documented in a number of research reports. The focus was also laid on international commercial banks that offered microfinance services, especially to microenterprises. The intention was to obtain an overview of how international banks have considered the key factors concerned. The second part of the research study aimed to see how South African commercial banks have considered the above-mentioned key factors, using Absa and Capitec banks as case studies. The key factors identified are the following: the operating model; the delivery model; institutional commitment; product development; funding; technical assistance; human resource (recruitment, retention and remuneration); and operations (credit methodology; loan appraisals; lending methodology; collections; branch network; and support services). The international commercial banks whose case studies are reviewed include: Banco do Nordeste; Bank Rakyat Indonesia; the Commercial Bank of Zimbabwe; the Cooperative Bank of Kenya; Banque du Caire; the Agricultural Bank of Mongolia; Hatton National Bank; the Industrial Credit and Investment Corporation of India; and Banco de la Empressa. From the case studies it was seen that some of the commercial banks considered certain factors more than others. The other differentiating factor is how the key factors were considered, because the operating context of the different commercial banks differs. In South Africa, Absa and Capitec Bank have also considered the key factors, however, the operating model and the delivery model are the biggest differentiator as to how the other factors are considered.

Thesis (MBA)--Stellenbosch University, 2002. / ENGLISH ABSTRACT: The efficiency and availability of financial services for the poor is a global problem, and has only recently started to enjoy attention in South Africa. This dissertation aims to study the problems experienced by the South African microfinance industry, which includes a vast range of financial products. The survey conducted of the South African industry indicates that its makeup is significantly different from the industries in Latin America and Asia. The problems in the industry are prioritised and show the high cost structure to be the most pressing issue. A number of these issues show agreement as expressed by Spearman rank correlation coefficients. Clear trends exist between distinct market-segments in the industry. Tests for differences in location of specific populations indicate significant differences in perceptions regarding these segments. The government's recent suggestion to unify the financial service regulators into a mega-regulator is based on the assumption that the microcredit and commercial credit industries share the same priorities and problems. The very low Spearman rank correlation coefficient found in this study, on the other hand, seems to indicate that no reason exists to assume the priorities are the same at the two levels. Finally, it is shown by means of a "best practice matrix", that solutions to most problems can be found, but that the fit is dependent on a large number of variables. / AFRIKAANSE OPSOMMING: Die beskikbaarheid van finansiële dienste vir armes is 'n wêreldwye probleem, en het eers onlangs meer aandag in Suid Afrika begin geniet. Hierdie studie fokus op die probleme wat ervaar word in die mikrokrediet (mikrolenings) industrie. Die opname toon dat die Suid-Afrikaanse industrie beduidend verskil in samestelling van die ooreenstemmende industrieë in Suid-Amerika en Asië. Die probleme in die industrie is geprioritiseer en toon dat die hoë koste-struktuur die grootste probleem is. Sekere kwelpunte toon ooreenstemming, uitgedruk by wyse van Spearman se rangkorrelasie-koëffesiënt. Duidelike tendense bestaan tussen onderskeie mark-segmente in die industrie. Toetse vir ooreenstemming in die ligging van sekere populasies toon beduidende verskille in persepsies rakende hierdie segmente. Die regering se onlangse voorstel om die beheer-liggame van finansiële dienste saam te snoer in een liggaam is gebaseer op die aanname dat die mikrokrediet en kommersiële krediet industrië dieselfde probleme en prioriteite deel. Die baie lae Spearman rangkorrelasie-koëffisiënt impliseer egter dat daar geen grondige rede bestaan om aan te neem dat die prioriteite dieselfde is vir die twee vlakke nie. Laastens word beste praktyke aangedui in die vorm van 'n "beste praktyk matriks". Oplossings vir byna alle probleme kan gevind word, maar die toepaslikheid is afhanklik van 'n wye verskeidenheid veranderlikes.

Thesis (Ph.D.)--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2017. / The study is aimed at empirically investigating the dynamic interaction between the demand and supply factors affecting SMME access to credit in the Eastern Cape. The study is also aimed at conducting a comparative evaluation of lending criteria used by development finance institutions (DFIs) and commercial banks in evaluating SMME funding applications. The study is geared towards proposing a funding framework aligned to the characteristics of SMMEs which can be used by both DFIs and commercial banks to assess applications for SMME funding. In order to meet the objectives of the study, a sample of 80 SMMEs from the manufacturing, construction, services, agriculture, automotive, mining, security, merchandising and retail sectors was, through proportionate stratified sampling, selected from the population of all the SMMEs from the eight metropolitan and district municipalities (Nelson Mandela, Buffalo City, Joe Gqabi, Chris Hani, OR Tambo, Cacadu, Alfred Nzo and Amathole) constituting the Eastern Cape Province. Three separate structured open and closed-ended questionnaires were used to collect data from the 80 SMMEs owner/managers, 8 DFIs’ regional/branch managers and 5 major commercial banks branch managers in the province. The design of both questionnaires was underpinned by the credit rationing theoretical framework as well as the 5C’s of credit (capacity, collateral, capital, condition and character). A response rate of 100% was achieved. Content analysis and Relative Importance Index (RII) were used to analyse data. The results of the dynamic interaction between the supply and demand factors affecting SMME access to credit show that generally, there is an alignment between the SMME and the funding institutions survey results. This shows that the lending criteria of funding institutions are transparent. On the other hand, it is evident that there is poor awareness of the funding institutions criteria by SMMEs. SMMEs seem not to know what funding institutions are looking for when they evaluate funding applications. The results also pointed out that the characteristics of SMMEs in the study are representative of those of SMMEs countrywide. SMMEs in the study are characterised by poor/no business plans, lack of financial statements, lack of collateral, tax clearance certificates, poor cash flow, lack of owners’ contribution and lack of previous industry experience. The results also indicate that funding institutions’ lending criteria do not take into account the unique characteristics of SMMEs in the Eastern Cape. The results of the comparative evaluation of the lending criteria of DFIs and commercial banks show that there are no substantive differences between how commercial banks and DFIs evaluate the credit applications made by SMMEs. Both groups of lenders place significance on the business plans, financial statements, cash flows, owners’ contribution, collateral and experience of owner/managers. Moreover, the study also found that there is significant discrepancy between what the lending documentation of DFIs and commercial banks indicates as key requirements and what the survey results indicate. This means that what funding institutions practice is not congruent with what is enshrined in their lending criteria/policy. If we proxy lend in practice with what the key informants indicated as critical variables, the results show that both groups are more stringent in practice in key areas of their lending criteria. The review of the characteristics of SMMEs in South Africa showed that they lack collateral, are low on savings and experience. Furthermore, they have little capacity for writing business plans and cash flow management. The results here indicate that these are the very same areas which the financial institutions place significant importance on. The findings indicate that the lending criteria used by both groups tend to favour large and well established firms which have the required capacities. Based on the above findings, it is evident that in order to address the SMME access to credit constraint, a new framework that can be used by DFIs to lend to SMMEs needs to be developed. The framework must take into account the peculiar nature of SMME characteristics. Without such an approach, the funding gap for SMMEs in SA will continue. In response to the above findings, the study proposes that government must incentivise funding institutions to innovatively provide capacity building and training programmes targeted at improving the skills and expertise of their staff. It is proposed that DFIs should simplify their loan application forms to cater for the historically low literacy levels of SMMEs in the Eastern Cape. In addition, DFIs should adopt a more streamlined loan application process as well as a shared due diligence process. Credit application forms as well as key lending documents should be standardised. DFIs should conduct road shows to take their potential SMME customers through their application form, how they must be completed and the documents to accompany the form. SMMEs must be personally involved in the gathering of the relevant business plan information as well as in the writing up of their business plans. DFIs must organise quarterly workshops aimed at taking their potential clients through their lending criteria. The SEFA Credit Guarantee Scheme must be reviewed. Government must provide support to its venture capital industry by creating a good investment climate. The study proposes that a knowledge portal that will enable the sharing of knowledge and learning among SMMEs in the Eastern Cape be established. DFIs must set up SMME divisions or units to provide specialised credit services to their SMME customers. DFIs should evaluate SMME credit applications based on alternative risk evaluation methodologies such as the psychometric screening developed by the Harvard University’s Entrepreneurial Finance Laboratory. DFIs should explore alternative means of financing that do not require collateral. To increase SMME access to credit, government should establish specialised banks that can exclusively cater for the needs of the SMME sector. Government could consider granting certain incentives to funding institutions that actively promote SMME financing and have achieved a sizeable SMME loan book. / MT 2017

Thesis (M.M. (Finance & Investment))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2017. / Microfinance Institutions (MFIs) are proving to be a pivotal asset in providing essential access to financial services to the urban and rural poor who are traditionally shunned by the mainstream blue-chip financial service providers in developing countries. However, in the literature, MFIs providing entrepreneurial assistance have been lumped together with MFIs providing a more exploitative and consumption loan offering. This then masks the value or the poverty reducing effect of MFIs that have financial products geared to assist the creation of small businesses for the poor. The aim of this study is to examine South Africa’s microfinance institutions and their impact on poverty reduction in urban and rural areas. To this end the research question is as follows: what is the impact of the MFI on poverty reduction around eThekwini region? This study was conducted among microfinance institutions and the beneficiaries of MFIs in eThekwini region. In order to gain better insights and in order to better understand the real depth and knowledge of this topic, the researcher needed a view of both the service provider and their customers. A structured close ended survey questionnaire was designed for MFI managers and borrowers. The responses received show that Microfinance institutions are a useful means to reduce poverty among the poor. On this basis, it is recommended that the government must play an active role to regulate MFIs but more importantly to find innovate ways to help fund or subsidize their activities among the poor. / MT 2017