3. Electronic Theses and Dissertations (ETDs) - All submissions

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    The role FinTech Start-ups play in the personal banking industry in South Africa
    (2018) Nkosi, Doctor Teddy
    The global financial crisis of 2008 became a platform for Financial Technology (FinTech). Investment in the sector has been growing substantially. Investment is largely driven by financial institutions who see that there is a real risk of them being disrupted. The failure of a number of such institutions across the globe was a turning point for FinTech start-up’s. What drives the FinTech disruption is not necessarily what product or service is offered but by who is offering that particular product or service. Due to its sound regulation, South Africa has avoided a great deal of the negative impact that banks across the globe have faced during the 2008 global financial crisis. The South African personal banking industry is largely dominated by five banks, namely ABSA, FNB (First National Bank), Standard Bank, Capitec and Nedbank. The researcher investigated the role FinTech Start-up’s play in the personal banking industry in South Africa. The research was focused on three areas within corporate entrepreneurship literature. Internal corporate venturing, external corporate venturing and collaboration A quantitative research method was employed to test the relationships. The first hypothesis looked at the positive relationship between personal banks and fintech start-ups in relation to external corporate venturing; the second explored the positive relationship between personal banks and fintech start-ups in relation to internal corporate venturing; and lastly, the third hypothesis examined the positive relationship between personal banks and fintech start-ups in relation to collaboration. Data was collected from individuals who were in management , mainly employed in the banking industry. The respondents were sent the questionnaire by email and a mobile link was provided for them to complete the questionnaire. Exploratory factor analysis was used to test validity of the constructs and all the constructs had a Kaiser-Meyer-Olkin value that is above 0.5. The Cronbach value of the constructs was above 0.7, thus demonstrating good reliability. The study found that no relationship exists between the personal banking industry and FinTech start-ups in relation to external corporate venturing, internal corporate venturing and collaboration. This suggests that the South African personal banking industry has not significantly sought to venture with FinTech start-ups internally or externally. This is also the case with collaboration. From a theoretical point of view the research has provided empirical evidence regarding corporate venturing in the South African personal banking space in relation to FinTech start-ups. The study therefore speaks to the need for South African banks to drive corporate entrepreneurial strategies for greater profitability, innovation and strategic renewal
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    Micro-finance institutions (MFIs) and poverty reduction in South Africa: a case study of Ethekwini metropolitan municipality
    (2017) Mkhize, Zonke Queeneth Pearl
    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.
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    Small, micro and medium enterprises access to credit in the Eastern Cape, South Africa
    (2017) Dlova, Mzwanele Roadwell
    The study is aimed at empirically investigating the dynamic interaction between the demand and supply factors affecting SMME access to credit in the Eastern Cape. The study is also aimed at conducting a comparative evaluation of lending criteria used by development finance institutions (DFIs) and commercial banks in evaluating SMME funding applications. The study is geared towards proposing a funding framework aligned to the characteristics of SMMEs which can be used by both DFIs and commercial banks to assess applications for SMME funding. In order to meet the objectives of the study, a sample of 80 SMMEs from the manufacturing, construction, services, agriculture, automotive, mining, security, merchandising and retail sectors was, through proportionate stratified sampling, selected from the population of all the SMMEs from the eight metropolitan and district municipalities (Nelson Mandela, Buffalo City, Joe Gqabi, Chris Hani, OR Tambo, Cacadu, Alfred Nzo and Amathole) constituting the Eastern Cape Province. Three separate structured open and closed-ended questionnaires were used to collect data from the 80 SMMEs owner/managers, 8 DFIs’ regional/branch managers and 5 major commercial banks branch managers in the province. The design of both questionnaires was underpinned by the credit rationing theoretical framework as well as the 5C’s of credit (capacity, collateral, capital, condition and character). A response rate of 100% was achieved. Content analysis and Relative Importance Index (RII) were used to analyse data. The results of the dynamic interaction between the supply and demand factors affecting SMME access to credit show that generally, there is an alignment between the SMME and the funding institutions survey results. This shows that the lending criteria of funding institutions are transparent. On the other hand, it is evident that there is poor awareness of the funding institutions criteria by SMMEs. SMMEs seem not to know what funding institutions are looking for when they evaluate funding applications. The results also pointed out that the characteristics of SMMEs in the study are representative of those of SMMEs countrywide. SMMEs in the study are characterised by poor/no business plans, lack of financial statements, lack of collateral, tax clearance certificates, poor cash flow, lack of owners’ contribution and lack of previous industry experience. The results also indicate that funding institutions’ lending criteria do not take into account the unique characteristics of SMMEs in the Eastern Cape. The results of the comparative evaluation of the lending criteria of DFIs and commercial banks show that there are no substantive differences between how commercial banks and DFIs evaluate the credit applications made by SMMEs. Both groups of lenders place significance on the business plans, financial statements, cash flows, owners’ contribution, collateral and experience of owner/managers. Moreover, the study also found that there is significant discrepancy between what the lending documentation of DFIs and commercial banks indicates as key requirements and what the survey results indicate. This means that what funding institutions practice is not congruent with what is enshrined in their lending criteria/policy. If we proxy lend in practice with what the key informants indicated as critical variables, the results show that both groups are more stringent in practice in key areas of their lending criteria. The review of the characteristics of SMMEs in South Africa showed that they lack collateral, are low on savings and experience. Furthermore, they have little capacity for writing business plans and cash flow management. The results here indicate that these are the very same areas which the financial institutions place significant importance on. The findings indicate that the lending criteria used by both groups tend to favour large and well established firms which have the required capacities. Based on the above findings, it is evident that in order to address the SMME access to credit constraint, a new framework that can be used by DFIs to lend to SMMEs needs to be developed. The framework must take into account the peculiar nature of SMME characteristics. Without such an approach, the funding gap for SMMEs in SA will continue. In response to the above findings, the study proposes that government must incentivise funding institutions to innovatively provide capacity building and training programmes targeted at improving the skills and expertise of their staff. It is proposed that DFIs should simplify their loan application forms to cater for the historically low literacy levels of SMMEs in the Eastern Cape. In addition, DFIs should adopt a more streamlined loan application process as well as a shared due diligence process. Credit application forms as well as key lending documents should be standardised. DFIs should conduct road shows to take their potential SMME customers through their application form, how they must be completed and the documents to accompany the form. SMMEs must be personally involved in the gathering of the relevant business plan information as well as in the writing up of their business plans. DFIs must organise quarterly workshops aimed at taking their potential clients through their lending criteria. The SEFA Credit Guarantee Scheme must be reviewed. Government must provide support to its venture capital industry by creating a good investment climate. The study proposes that a knowledge portal that will enable the sharing of knowledge and learning among SMMEs in the Eastern Cape be established. DFIs must set up SMME divisions or units to provide specialised credit services to their SMME customers. DFIs should evaluate SMME credit applications based on alternative risk evaluation methodologies such as the psychometric screening developed by the Harvard University’s Entrepreneurial Finance Laboratory. DFIs should explore alternative means of financing that do not require collateral. To increase SMME access to credit, government should establish specialised banks that can exclusively cater for the needs of the SMME sector. Government could consider granting certain incentives to funding institutions that actively promote SMME financing and have achieved a sizeable SMME loan book.
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    Women’s empowerment and gender mainstreaming in post-apartheid South Africa: an analysis of governmental policy frameworks and practices
    (2016) Malinga, Bongekile
    During the apartheid era, black women were forced into the rural areas to live off the land, without opportunities and choices to allow them to build decent lives for themselves. After many decades of apartheid, South Africa finally became a democratic country in 1994. Following the establishment of democracy in 1994, the South African society experienced quite a number of changes on the economic, social, and political level. Amongst those changes was the rectification of the constitution which recognized all citizens (men and women, black and white) as equal. Numerous acts were put in place to promote equality in all spheres of life. However, to this day, poverty and inequality remain evident on many black women in the country. Microfinance is embraced by many development organizations, states and agencies around the world as the main and efficient form of women’s empowerment. South Africa is also one of the states which have joined the bandwagon, with its Department of Trade and Industry (dti) having various microfinance programmes aimed at empowering women. However, with all the programmes, there seems to be no changes in the situations of black women, especially rural poor women in the country as illustrated by statistics. This paper, therefore, attempts to find out the reason behind the low status of women in post-apartheid South Africa by reviewing critical literature on empowerment and microfinance as an empowerment strategy to understand their impact on women’s lives. The study also analyse the dti’s policy documents on empowerment as one of the state’s institutions which promotes women’s empowerment through microfinance. Furthermore, this study argues that the current women’s empowerment strategy (microfinance) is not for the benefit of poor black women, but for that of the institutions offering these programmes. This argument is supported by an analysis conducted on dti’s women’s empowerment strategic documents and programmes, which was used as a case study for this paper. This study suggests that changes in the designing and implementation of the policies are required.
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    Turning on the townships: a study of discourses of financial inclusion in South Africa
    (2016-10-10) Kruger, Graunt
    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
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