The purpose of the research was to investigate the proposition that current Microfinance solutions are not adequate for Microenterprises operating at the Base of the Pyramid. The research proposes Microfinance solutions for Microenterprises should provide all-inclusive solutions; encompassing both financial and business development services. While the government can lead the debate and deliver on some of the enabling requirements, the limited government resources cannot deliver fully on development requirements at the Base of the Pyramid. There is an increasing need for the private sector to participate in sustainable development initiatives. A key limiting factor is a lack of in-depth understanding of the needs of Microenterprises operating at the Base of the Pyramid. Quantitative research was conducted, using a survey-based method. The results show there is appetite amongst Microenterprise owners at the BOP for holistic Microfinance solutions that can deliver financial and business development services. The study also found business development services, focusing on developing business knowledge and business management skills, were rated the highest. BOP markets for Microenterprises are complex and require dedicated initiatives to understand them and deliver solutions tailored to their needs accordingly. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

Small businesses are regarded as economic growth engines with the potential to address the unemployment crisis in South Africa. The government has limited capacity to employ the majority of the unskilled and semi-skilled who are unemployed. Agencies and private organisations offering business development services (BDS) are required to assist small, medium and micro enterprises (SMMEs) help government to address unemployment. Small and medium enterprises (SMEs) are recognised for the crucial role they play in activating and supporting economic growth. While much attention and hope has been placed on SMEs to provide the much-needed jobs, they are faced with enormous challenges and continue to fail. These challenges make it impractical for SMEs to realise their full potential and deliver to the government's and society's expectations. It is documented that SMEs face unique problems, which negatively affect their prospects and as a result, weaken their capacity to contribute to sustainable economic growth. Government and other private sector stakeholders have availed various types of business support in South Africa both as financial and non-financial support to assist SMEs overcome these problems. There has also been an emergence of business development service providers (BDSPs) that seek to extend support to SMEs, to ensure their sustainability, improve production techniques, market access and increase competitiveness but this has not yielded the desired results. Business development services refer to services that improve the performance of the enterprise, its access to markets, and its ability to compete. This study sought to explore the nature of BDS offered to SMMEs with a view to help them remain sustainable. Further, the study explored the challenges faced by BDSP. The study used an inductive qualitative research approach and employed semi-structured interviews to collect data. The population of the study consisted of SME business development service providers in South Africa, with an eventual study sample size comprised of ten providers. The findings indicate that there is a range of services offered to SMEs, with training and technical assistance and market access being the focus areas. While providers offer these services to SMEs, they themselves experience various challenges such as internal challenges which include funding and resources; expertise and skills levels of providers; and design of services. In addition, there are external challenges such as payment inability of SMMEs; low market awareness; commitment to and from SMMEs; perceived value of BDS; finding the right clients; and the business operating environment, which hinder their service provision. iii The study concludes by providing recommendations on approaches that BDS providers can adopt to offer solutions to some of the identified challenges. These approaches include: developing sector-specific approaches in delivering business development service; attracting enterprise and supplier development funds as a possible strategy to solve the lack of resources in this sector; alignment of the Broad-Based Black Economic legislative framework to business development services strategies; introduction of professional standards and guidelines in the business development services sector and implementation of an impact assessment matrix.

Poor people benefit from microfinance and positively improve their poverty and socio-economic conditions. Microfinance support serves as development tool to redress the exclusion of the poor from the development process and outcomes in the mainstream intervention frameworks. As developing countries and poverty context are diverse and contextual, comprehensive knowledge about and empirical evidence on the impact of microfinance is scant. Specifically, the impact of microfinance services on the development of micro and small enterprises (MSEs) owned by women is scant. The findings of available studies and policy practice reports on microfinance in Ethiopia are not holistic in terms of a theoretical lens and methodological pluralism. Available studies do not consider the impact of microfinance and non-financial services on women-owned MSEs at household, individual and enterprise levels thereby reducing the poverty context and holistic empowerment at these levels. This study used multiple theoretical and conceptual frameworks: Hulme’s (2000, p. 79 - 81) microfinance impact assessment tool, debates on survivalist and growth-orientation perspectives of MSEs (Harvie, 2003, p. 27; Snodgrass & Biggs, 1996, p. 43; Hallberg, 2001, p. 19; Nichter & Goldmark, 2005, p. 67), women empowerment continuum model of interpretation (Filmon, 2009, p. 87) and policy practice at the epicenter of governance and policy decision-making (Addis Ababa, Ethiopia’s capital). The assessment considered three elements of microfinance impact assessment, generating primary evidence from 120 micro and small business owners (women entrepreneurs) whose firms stayed two years and above in the market and as clients of selected microfinance institutions. The clients considered were those who accessed at least two loan cycles and above. The respondents were randomly selected from three randomly selected microfinance institutions and a survey questionnaire was administered. The data sets were analysed using multiple tests (non-parametric statistical tests such as Pearson Correlation, Paired-Sample, Chi-Square, Wilcoxon Rank and McNemar tests) as well as parametric tests were conducted using logit econometric model. These tests were conducted to determine statistical difference of microfinance services after program intervention and the contribution of total loans taken on expenditure and businesses investment. The results indicated both developmental or survivalist firms. The result also indicated the empowerment of the women (MSEs owners). A significant number of women entrepreneurs owning MSEs improved their living house, cash savings, household income, child education, household health, household food and diet, business investment, and decision making status in their households. In terms of policy support, the study identified that there were specific affirmative interventions (as stipulated in the policy documents) to support women entrepreneurs owning MSEs in terms of targeted financial service, provision of working and selling premises, designing and implementing training and skill development programs, market networking and tax support on their products and sales. The study recommends that different institutions that work on women empowerment and women associations have to design women focused affirmative policy and strategy interventions to scale-up the positive results (growth-orientation of the MSEs) and address the bottlenecks that limit women entrepreneurs who own MSEs from accessing services that can transform the survivalist MSEs to profitable and empowering businesses for women. The recommendations are proposed to link women empowerment with working policy support. / Development Studies / D. Ph. (Development Studies)

Cette thèse est composée de quatre chapitres. Le chapitre 1 analyse comment les différentes interventions publiques impactent l'octroi des microcrédits. Nous montrons que la garantie des prêts peut avoir un effet contreproductif en réduisant le nombre d'entrepreneurs bénéficiant de l'accompagnement offert par l'Institution de Microfinance (IMF). Alternativement, nous montrons que les subventions visant l'accompagnement peuvent être plus efficaces relativement à la garantie des prêts.Le chapitre 2 étudie comment les décisions d'une IMF concernant l'accompagnement peuvent impacter le comportement des emprunteurs. Nous montrons que l'asymétrie d'information renversée peut conduire à une relation non-monotone entre le type de l'emprunteur et l'offre de l'accompagnement. Cet équilibre apparaît suite à l'effet "soi-miroir". Notre modèle probit bivarié confirme l'existence d'un tel équilibre.Le chapitre 3 s'intéresse aux seuils de crédit imposés aux IMFs. Nous montrons que les seuils de crédit peuvent générer l'éloignement de la mission en facilitant le co-financement avec les banques classiques des projets les plus larges au détriment des projets les plus petits. Notre modèle probit différence-en-différences confirme l'existence de cet effet pervers à partir des données d'une IMF française.Le chapitre 4 compare les prêts octroyés aux entrepreneurs hommes et femmes par une IMF française avant et après l'introduction du seuil de crédit. Nous montrons que, sans le seuil, l'IMF choisit les femmes avec les demandes de crédit les plus élevées. Cependant, cela n'est plus le cas après l'introduction du seuil de crédits qui détériore la situation des entrepreneurs femmes. / This thesis is organized in four chapters.Chapter 1 theoretically analyses how various forms of state intervention impact microfinance institutions' (MFIs') lending behavior. We show that loan guarantees can have a counterproductive effect on financial inclusion triggered by unsubsidized business development services (BDS). Alternatively, we show that, BDS subsidization can do better in terms of financial inclusion than the loan guarantee. Chapter 2 analyses how decisions of an MFI on BDS provision can impact borrowers' behavior. We show that, reversed asymmetric information can lead to a non monotonic relationship between borrowers' type and assignment to BDS. In this equilibrium the MFI does not train the lowest and the highest type borrowers. This relationship occurs due to the "looking-glass self" effect. Our empirical bivariate probit model confirms the existence of such equilibrium. Chapter 3 tackles the issue of loan ceilings imposed to MFIs. We show that loan ceilings can trigger mission drift by facilitating the co-financing of large projects with regular banks at the expense of small projects. We test this prediction by exploiting the natural experiment of a French MFI. Difference-in-differences probit estimations show that the risk of the mission drift is real.Chapter 4 compares the loans granted to male and female entrepreneurs by a French MFI before and after the enforcement of the loan ceiling. We find that the ceiling free MFI selected women with larger requested amounts. However, under ceiling enforcement this was no longer the case, suggesting that female entrepreneurs are worse off after ceiling enforcement.

This thesis is about the quest to build effective strategies to support the development of enterprise on the margins of the economy, to create jobs and reduce poverty. A core part of this challenge includes grappling with the role of markets in development, and of markets as a critical part of the context in which enterprise development in rural and peri-urban areas can either provide a path out of poverty – or instead serve to lock people into poverty. The thesis explores these issues by tracking the experience of the Mineworkers Development Agency (MDA) as it attempted to grapple with this challenge. MDA is the development wing of South Africa’s National Union of Mineworkers (NUM) , and was set up to create jobs and support enterprise development for communities affected by the loss of jobs on the mines. The thesis covers a fourteen-year period in MDA’s history, from its inception in 1988 until 2002. It tracks the learning process across several phases in the development of MDA’s approach. These included the development of worker co-operatives, the establishment of business service centres, value-chain work in the craft sector, and the commercialization of a juice product from the indigenous marula berry. In the process, MDA engaged with an emergent paradigm in the development sector called ‘Making Markets Work for the Poor’. Can markets really be made to work for the poor? Or even just made to work ‘better’ for the poor? Or is the process of inclusion in markets inexorably and inevitably one of making the poor work for markets? The thesis explores these issues in the context of MDA’s experience, locating this within a wider set of theoretical concerns over the role of markets in society, and the ways in which societies have protected themselves from the negative impacts of the development of market economies. It draws on wider political economy approaches to argue that markets are institutions that are socially constructed, and explores what scope there might therefore be to construct them differently. While recognising the importance of social protection, the thesis argues that there is a need to go beyond defensive strategies aimed at protecting society from markets, to identify new terms of engagement within markets to shape markets, and to harness their wealth-creating potential in ways that have different distributional consequences, as part of a long-term agenda of eradicating poverty.