Financial services and poverty reduction : a case study of the use and impact of microfinance services among women street traders in Durban, South Africa.
This dissertation analyses the role of financial services in an attempt to understand how they might reduce the vulnerability to income risk for women street traders in Durban, South Africa. The street traders are exposed to income risks such as unpredictable markets, high levels of crime and lack of possibilities for business development. The stated hypothesis for this dissertation is that 'good' financial services may help poor individuals and households to better handle income risks and thereby lower the vulnerability to risks and reduce poverty. The access to financial services for the street traders in South Africa is rather limited and commercial banks are only willing to facilitate clients that have collaterals with an economic value. There are thus alternative financial institutions, such as microfinance organisations, that use social collateral like, for example, group-lending and frequent repayment schemes. This dissertation will discuss the use and impact of fmancial services on poverty reduction with a particular focus on a microfinance organisation and savings. The dissertation will consist of a literature review, a theoretical framework and an analysis of the findings from a case study. The literature review discusses the relation between risks, vulnerability, poverty and financial services in order to provide an introduction to the problem behind the stated hypothesis. The theoretical framework describes the cost of an imperfect market, why formal financial institutions fail the poor, solutions to the problem used by informal and microfinance institutions and the impact financial services have on poverty. The case study is based on a qualitative method through focus group discussions and individual in-depth interviews with clients in a microfinance organisation. To analyse the differences in saving behaviour and business related issues, the clients are divided into two groups with regards to how long they have been using financial services. One group consists of 'old' clients that have access and use the credit and deposit facilities accessible, and one group of 'new' clients that have just started and still have no access to the services. The findings show that 'old' clients have a higher level of income and more advanced businesses according to skill/capital intensity. Risk related to income and expenditures that the street traders mentioned are sensitive to the state of the economy, unbeneficial stock, weather conditions, seasonal trends, business agreements, crime and trade permits. Regarding savings, the street traders used a wide range of saving alternatives such as insurance schemes, bank accounts, money collectors, rotating credit and saving clubs and cash savings. There were thus a lack of 'good' saving opportunities and even the deposit schemes offered by the microfinance organisation was not used due to lack oftrust and accessibility. Both the 'old' and the 'new' clients were thus aware ofthe need of savings in order to protect themselves for future income and expenditure risks. The main conclusion is that the use of financial services through the microfinance organisation and other institutions may have helped the 'old' clients to develop their businesses and reach a higher income level. There is thus a lack of 'good' financial options for the street traders and their position is still very vulnerable.
Showing items related by title, author, creator and subject.
Lutchman, Vishaal. (2005)The study investigates, with an intension to establish, the strategic significance of concessioning of the Durban Container Terminal in the Port of Durban. A strategic perspective firstly considers the concessioning in ...
Local is lekker? : a study of the perceptions of contemporary South African popular music among Durban adolescents at five culturally diverse schools in the greater Durban area. Ralfe, Sarah Isabel. (2005)Is local lekker? This study looks at the perceptions the youth in Durban hold towards local music. Through a study of the Grade 11 learners at Bonela Secondary, Gelofte Skool, Hillcrest High School, Thomas More College ...
Exploring current views and methods of recycling in Durban's CBD : a design proposal for a self-sustaining waste recycling system in Durban. Lott, Derryn Richard. (2016)The management of urban waste streams is increasingly becoming an issue as modernisation and a new consumerist culture takes hold of cities globally, resulting in greater production of waste and an even greater need for ...