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.

Thesis (PhD)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: Microinsurance services have been operating in Ghana for the last decade, but the question whether they have enhanced the welfare of low-income households, mostly in the informal sector, is largely unresearched. In particular the study asks: does microinsurance improve the welfare of households through asset retention, consumption smoothing and inequality reduction? This question has been examined through the use of the 2010 FINSCOPE survey which contains in-depth information on 3 642 households across the rural and urban settings of the country. In order to control for selection bias and endogeneity bias, Heckman sample selection, instrumental variable and treatment effect models were employed for the evaluation. The results of the assessment have been compiled into four empirical essays. The first essay investigates the impact of microinsurance on household asset accumulation. The findings show that microinsurance has a positive welfare impact in terms of household asset accumulation. This suggests that microinsurance prevents asset pawning and liquidation of essential household assets at ‘give away’ prices. By absorbing the risk of low-income households, insurance equips them to cope effectively with risk, empowers them to escape poverty and sustains the welfare gains achieved. The second essay examines the impact of microinsurance on consumption smoothing. It delves into the capacity of microinsurance to enable households to avoid costly risk-coping methods which are detrimental to health and well-being. The results reveal that insured households are less likely to reduce the daily intake of meals, which is an indication that microinsurance is a better option for managing consumption smoothing among low-income households. The third essay investigates the effect of microinsurance on households’ asset inequality. The findings indicate that the asset inequality of insured households is less than that of uninsured households. Insured female-headed households have much lower asset inequality than male-headed households, but uninsured female-headed households are worse off than both uninsured and insured male-headed households. The regional trend reveals that developmental gaps impede the capacity of microinsurance to bridge the asset inequality gap. The fourth essay asks: Does microcredit improve the well-being of low-income households in the absence of microinsurance? The findings show a weak influence of microcredit on household welfare. However households using microcredit in combination with microinsurance derive significant gains in terms of welfare improvement. Microcredit may be good, but its real benefits to the poor is best realised if the poverty trapping risks are covered with microinsurance. To this extent, combining microcredit with microinsurance will empower the poor to make a sustainable exit from poverty. The findings of this thesis have pertinent policy implications for the government, the development community and stakeholders in the insurance industry. Microinsurance is a good instrument for improving the welfare of households and thus this research recommends its integration into the poverty reduction strategy of Ghana and a greater insurance inclusion for the lower end of the market.

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

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.

Magister Commercii - MCom / The aim of this study is to determine the extent to which the UN/OSCAL (United Nations Office of the Special Coordinator for Africa and the Least Development Countries) model of microfinance is being applied in the South African context, its scope for application and recommendations for implementation. The hypothesis is that, the better South African microfinance initiatives conform to the model, the more successful it will be in fulfilling the ultimate mission of microfinance which is to supply financial services to the poor by cutting the cost of outreach with beneficial effects on poverty.. / South Africa

The three chapters of my dissertation study household finance, with a particular interest in financial institutions and poor households. Specifically, I study constraints households have that are unobservable to institutions yet impact their interaction and the effectiveness of government interventions that aim to ease or facilitate these exchanges. Chapter 1 studies the behavior of payday loan borrowers by using bank-transaction level data on household spending, income, and loan activity to document three novel stylized facts. They suggest that a payday borrower is poor, has volatile income, and uses payday loans to smooth baseline consumption needs after an adverse idiosyncratic income shock. Chapter 2 builds on these findings to motivate a short-term lending model. The equilibrium contract under realistic frictions matches the observed payday loan contract on multiple dimensions, specifically when borrowers have low expected income and high-income volatility. I then calibrate my model using my bank-transaction dataset and find welfare increases between 5% and 28.7% when rollover fees decrease and initial fees increase. Chapter 3 studies the efficiency of government healthcare subsidization schemes, with a specific interest in the underlying mechanisms that financially motivate hospitals to serve the uninsured. We study a Disproportionate Care Hospital (DSH) payment scheme that supports hospitals treating a disproportionately higher fraction of uninsured patients. We demonstrate that DSH payments lead to social welfare loss, especially in a system with large and small hospitals, compared to the second-best mechanism. We then use the setting of the Global Payment Program (GPP) program, which compliments DSH by providing primary care, to show that direct and assured payment for primary care improves social welfare. Overall, my dissertation seeks to understand the development of an equilibrium contract structure between financial institutions and the poor, examine methods of greater efficiency, and evaluate the impact of government interventions to alleviate tensions between these parties.

Thesis (MDevF (Business Management))--University of Stellenbosch, 2010. / ENGLISH ABSTRACT: In the realm of consumer behaviour research, discussions regarding materialism – commonly defined as the desire to consume – indebtedness and low-income consumerism have become almost unavoidable. This is to be expected in a society where spending patterns are constantly evolving, levels of indebtedness are steadily increasing and interest in the so-called ‘bottom of the pyramid’ consumers has been heightened. In South Africa, studies have found changes in consumption and credit usage to not only be significant, but also particularly relevant amongst low-income consumers. While this changing culture of consumption has been widely acknowledged, there has been little empirical research on consumer behaviour in South Africa and even less on low-income consumerism. For this reason a study was developed, which sought to explore the relationship between materialism and indebtedness among a sample of low-income, instalment paying consumers of South Africa’s leading catalogue retailer. Through use of a mailed self-completion survey questionnaire, consumers of the targeted retailer were asked to indicate their level of materialism, as measured using a materialism scale, and to report their level of indebtedness, measured as the number of retail store accounts held. In addition, key demographic data, consisting of the respondents’ age, gender and monthly income, was drawn from the retailer’s database. Using this data the study assessed whether (i) the sampled consumers displayed strong characteristics of materialism and (ii) whether materialism is a significant variable in predicting the sampled consumers’ propensity for incurring debt. Data analysis techniques applied in this study included tests to measure the reliability of the materialism scale as well as a variety of descriptive and inferential statistical tools, designed to identify relationships in the collected data. Using these techniques, this study found that sampled low-income consumers are indeed highly materialistic, with levels of materialism observed in this study being significantly higher than in a previous materialism study where a low-income earning consumer sample was used. Regarding levels of indebtedness, regression and correlation analysis performed suggested the presence of statistically significant relationships between consumers’ levels of indebtedness and each of the demographic variables of age and gender. However, materialism and monthly income was not found to be significant variables in determining a consumer’s level of indebtedness. While the decision to delineate this study based on the consumers of one particular retailer limits the extent to which findings can be generalised to the larger South African population, the results do provide a number of important insights, which contributes to the scant body of literature on low-income consumer behaviour in this country. / AFRIKAANSE OPSOMMING: Op die navorsingsveld oor verbruikersgedrag het die gesprek rondom die voorkoms van materialisme (wat gewoonlik gedefinieer word as die behoefte om te verbruik), verbruikersdruk en die skuldlas onder lae inkomstegroepe byna onvermydelik geword. Dit is te verwagte in ’n samelewing waar bestedingspatrone voortdurend ontwikkel, skuldlasvlakke aan die groei is en die belangstelling in verbruikers op die onderste vlak van die sogenaamde piramide verskerp het. Studies in Suid-Afrika dui aan dat, onder lae inkomste verbruikers, die verskille in verbruikersgedrag en kredietgebruik nie net opvallend nie maar ook besonder ter saaklik is. Hoewel die verandering in verbruikerskultuur rondom besteding reeds wyd beskryf is, is daar nog nie veel empiriese navorsing oor verbruikersgedrag gedoen nie – en nog minder onder lae inkomstegroepe. Dit is om hierdie rede dat ’n studie ontwerp is om die verhouding tussen materialisme en skuldlas te ondersoek onder ’n steekproef van lae inkomste huurkoopverbruikers van Suid-Afrika se grootste kataloguskleinhandelaar. Daar is gebruik gemaak van ’n vraelys vir die opname, wat aan die verbruikers gepos is en deur hulle ingevul is. Verbruikers is gevra om die vlak van hul materialisme aan te dui, soos gemeet volgens die gebruik van ’n skaal of maatstaf vir materialisme; en om hul skuldlas weer te gee, gemeet aan die aantal rekeninge wat hulle by kleinhandelwinkels het. Belangrike demografiese data, soos die respondente se ouderdom, geslag en maandelikse inkomste, is verkry uit die kleinhandelaar se databasis. Hierdie data is gebruik om te bepaal, (i) of die steekproefverbruikers ’n sterk neiging tot materialisme toon, en (ii) of materialisme ’n beduidende rol speel in die voorspelbaarheid van die mate waartoe die steekproefverbruikers hulle aan skuld sal blootstel. Tegnieke wat in die studie gebruik is vir data-analise sluit toetse in wat die betroubaarheid van die maatstawwe vir materialisme meet, asook ’n aantal beskrywende en afleibare statistiese metodes wat ontwerp is om verhoudings in die versamelde data te identifiseer. Deur die gebruik van hierdie tegnieke het die studie gevind dat hierdie steekproef van lae inkomste verbruikers inderdaad hoogs materialisties is, en dat die vlakke van materialisme wat waargeneem is, beduidend hoër is as wat gevind is in ’n vorige studie onder ’n steekproef van lae-inkomste verbruikers. Met betrekking tot skuldlasverpligtinge, het die regressie- en korrelasie-analise wat gedoen is die bestaan van statisties beduidende verhoudinge tussen verbruikers se skuldlasvlakke en die demografiese veranderlikes van ouderdom en geslag aangedui. Daar is egter gevind materialisme en maandelikse inkomste is nie beduidende veranderlikes in die bepaling van ’n verbruiker se skuldlas nie. Hoewel die ontwerp van hierdie studie om verbruikers van slegs ’n enkele kleinhandelaar in te sluit ’n beperking plaas op die toepasbaarheid van die bevindinge op die wyer Suid-Afrikaanse bevolking, het die resultate ’n aantal belangrike insigte verskaf wat bydra tot die klein hoeveelheid bestaande literatuur oor lae inkomste verbruikersgedrag in die land.

This investigation focused on why the poor are in debt, what they are indebted for, when debt was incurred, why a loan was incurred, and from whom it was aquired and for what purpose. In addition, it investigated the reasons for indebtedness, as well as the possibilities of how this situation may be addressed and the indebtedness reduced.

This investigation focused on why the poor are in debt, what they are indebted for, when debt was incurred, why a loan was incurred, and from whom it was aquired and for what purpose. In addition, it investigated the reasons for indebtedness, as well as the possibilities of how this situation may be addressed and the indebtedness reduced.