The role of microfinance on entrepreneurial development: the case of urban Maseru
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Date
2020-11
Authors
Tau, Motsoeli
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Publisher
University of the Free State
Abstract
Small, Medium and Micro Enterprises have been identified as one of the key components to advancing growth and development in Lesotho. This study assessed the role of microfinance on entrepreneurial development with the aim to identify the key inhibitors for Small, Medium and Micro Eenterprises (SMMEs) to have access to microfinance services. The study was conducted in Urban Maseru, Lesotho with the aim to assess the challenges faced by SMMEs in Urban Maseru in accessing microfinance services, then examine the impact of micro-finance on the output of SMMEs in Urban Maseru and further examine the contribution of microfinance on business growth of selected SMMEs in Urban Maseru. The study made use of quantitative research method and questionnaires for collection of primary data and analysed by using Statistical Package for Social Sciences (SPSS) and tables and figures for the presentation of results. A descriptive variable sampling technique was employed and the Solvin’s formula was used in selecting the sample of 400 respondents from SMMEs in Urban Maseru that have benefited from microfinance services between 2016 and 2019. The study concludes that there are various barriers that impede entrepreneurs’ development. The fundamental impediment faced by SMMEs is the burdensome procedure that is related to access for credit of which high- interest rates and collateral security are major setbacks. The study submits that microfinance has had a positive influence on entrepreneurial performance measured in terms of output. In the same vein, the study concludes that microfinance has had a significantly positive effect on the business growth of the SMMEs sampled in Urban Maseru. To this end, SMMEs need to be assisted to use the identified factors to promote growth in order to realise full potential of microfinance contribution on SMMEs development. As such Microfinance Institutions (MFIs) need to review their policies on the terms of credit extension and other finance related development to SMMEs to enhance accessibility to finance by SMMEs. Furthermore, government’s support through appropriate policies and business extension services is necessary for SMMEs’ capacity development.
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Keywords
Dissertation (MDS (Development Studies))--University of the Free State, 2020, Entrepreneurship, Formal and informal small business, Indigenous small business, Small, medium and micro enterprises -- Lesotho -- Maseru, Local economy -- Lesotho -- Maseru