South Africa is characterised as having high unemployment rates, low GDP forecast growth rates and a high percentage of the population living in rural areas. Therefore, the research explored the ability of microfinance, using the Grameen Bank model, to increase economic development in the rural areas of South Africa. Grameen Bank is considered to be the mother of conscience driven microfinance. The Bank's approach to poverty alleviation provides the poor with direct access to micro loans in order to increase their earnings from productive self-employment activities. Among other things, the loans are characterised as being advanced to small groups without the requirement of collateral. These loans are considered to have helped to alleviate poverty and increase physical and human resources, and confirm that poverty alleviation and human resource development is possible with targeted credit (Khandker, 1996). The model has been successful in improving the livelihoods of the borrowers using various measures such as providing the ability to afford three meals a day, electricity in their homes and to educate their children. In addition, borrowers are able to grow business and create employment in their communities. Although the Grameen Bank model has been successfully applied throughout the world, it has attainted limited success in South Africa. The business model has not been able to achieve operational or financial sustainability due to high staff and regulatory costs in relation to other emerging markets compounded by the inability to utilise borrower savings. In addition, borrowers are unable to create microenterprises that effectively compete with the formal economy. Microfinance institutions could address operational inefficiency by making use of the community based lending structures already operating under the Grameen philosophy, known as stokvels, and by embracing cell phone technology. In addition, institutions that provide social upliftment should focus on the skills training required by entrepreneurs to operate more successfully and for the employee to be more employable. The Grameen Bank model is not a panacea for South African growth based poverty alleviation. However, when combined with wide reaching economic and social policies, microfinance may assist in the creation of long term economic growth and social upliftment while improving the current lives of the poor.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uct/oai:localhost:11427/39021 |
| Date | 03 October 2023 |
| Creators | Kobrin, Peta |
| Publisher | Faculty of Commerce, Department of Finance and Tax |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Master Thesis, Masters, MCOM |
| Format | application/pdf |
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