The role of microfinance institutions on entrepreneurship development: the case of Swaziland

Abstract

The primary aim of the microfinance initiative is to eradicate poverty especially in developing countries. This is possible through the provision of micro-loans, microsavings and insurance to previously disadvantaged communities. Entrepreneurship is the role that individuals undertake to create, an organization, product from an idea to implementation. With high unemployment and poverty levels, Swaziland is engaging the Microfinance Institutions and entrepreneurship to help drive employment, and poverty alleviation.

The study assessed several issues: Does microfinance contribute to Improvements in the economic welfare of borrowers’ households, enterprise growth, diversification or stability? Do entrepreneur development programs; like training workshops have an impact on participant’s attitude and behavior in conducting entrepreneurship activities. Is there a relationship between microfinance institution growth and entrepreneurship development?

Results indicated that microfinance institutions were still sorely focusing on providing credit and credit facilities, which meant that it had positive effects on capital assets but not the overall welfare of entrepreneurs. The behaviors that programs influenced were also in relation to credit, and not other aspects of entrepreneurship like innovation and technology. This meant that there’s a gap in the effect of microfinance institutions on entrepreneurship growth as indicated chisquare was significant at 9.43 indicating no effect on the sampled population.

Therefore it is important that Microfinance institutions focus on the primary objective of developmental finance. They need to prioritize training programs that will cultivate a culture of building sound businesses, with proper risk management, and are willing to adapt to change. As currently the key focus seems to be on credit facilitation which could be profit driven?