Bank finance in developing small and medium enterprise: an appraisal of relevent determinants in Rwanda
- Authors: Gatabazi , Emmanuel Thomas
- Date: 2012-04
- Subjects: Economic assistance , Developing countries -- Economic conditions
- Language: English
- Type: text
- Identifier: http://hdl.handle.net/10353/25096 , vital:63974
- Description: This study examines the perceived non-availability of adequate bank financing to Small and Medium Enterprises (SMEs) with reference to Rwanda. Evidence from both developed and developing countries show that SMEs are more constrained in their operations and growth than large enterprises and access to finance features importantly among the constraints, with their proprietors typically perceiving finance as their most pressing input constraints. The problem is more severe in less developed countries like Rwanda. SMEs do not get adequate finance from financial systems despite their valuable contribution in the economic development of all nations across the globe. They are well recognized from their contribution to the socio-economic objectives of growth in employment generation, product output, export, and in their function as seed beds of entrepreneurship. This study aims to investigate the causes of the problem and what could be done to mitigate the problem. The primary objective of the study is to determine how to improve the availability of bank financing to SMEs in Rwanda. The argument is that there are SMEs internal factors that cause unavailability of bank financing. Understanding the causes of this problem is important to determining how to improve availability of credit to SMEs. For this purpose, the questionnaire was administered to 122 respondents from four commercial banks and 26 respondents from one development bank. All together 148 questionnaires were administered and 120 questionnaires returned. The response rate was 81 percent. Six major SMEs internal factors which included; business information, collateral, managerial competency, internal funds, networking and ethical practices were investigated to find out their impact on the availability of bank financing to SMEs. Quantitative data were analysed using a Statistical Package for Social Sciences (SPSS) with statistical tools including descriptive statistics, frequency distributions and chi-square test. The Cronbach’s alpha was used as a measure of reliability. While the data from the open-end question analysis involved classifying data, extracting themes, identifying patterns, tallying and quantifying responses and making generalization out of these patterns. This implies that the research methodology focused on the methods, tools and techniques used to assist in achieving the objectives of the study and answering the research questions that the research sought to address. To this end, the study sought the perceptions of bank staff on reasons why bank credit is not available to SMEs. The study focused on four research questions as outlined in chapter one and other relevant sections of the study. The major finding of this study is that there is a significant positive relationship between six SMEs internal factors (lack of business information, lack of collateral, lack of managerial competency, lack of internal funds, lack of networking and unethical practices) and non-availability of banks finance in Rwanda. On the basis of these findings, the study recommended that SMEs owners and staff should be trained in key strategic areas such as business management and financial management to effectively and efficiently manage their businesses and curb information asymmetry. The study also recommends that the government should introduce more practical guarantee facilities to enable banks access the funds as soon as the SME defaults. This will encourage bank to extend more credit to SMEs. Furthermore, the study suggests that the government should categorise SMEs as a priority sector and come up with a policy requiring banks to compulsorily ensure that a certain earmarked percentage of their overall lending is made to SMEs as a priority sector. Lastly, the study recommends that Rwanda Private Sector Federation should conduct trainings on ethical management to SMEs. Unethical behaviours such as deliberately not paying back loans should be heavily punished to limit occurrences of these behaviours among SMEs which may results in huge stock of non-performing loans. , Thesis (PhD) -- Faculty of Management and Commerce, 2012
- Full Text:
- Date Issued: 2012-04
- Authors: Gatabazi , Emmanuel Thomas
- Date: 2012-04
- Subjects: Economic assistance , Developing countries -- Economic conditions
- Language: English
- Type: text
- Identifier: http://hdl.handle.net/10353/25096 , vital:63974
- Description: This study examines the perceived non-availability of adequate bank financing to Small and Medium Enterprises (SMEs) with reference to Rwanda. Evidence from both developed and developing countries show that SMEs are more constrained in their operations and growth than large enterprises and access to finance features importantly among the constraints, with their proprietors typically perceiving finance as their most pressing input constraints. The problem is more severe in less developed countries like Rwanda. SMEs do not get adequate finance from financial systems despite their valuable contribution in the economic development of all nations across the globe. They are well recognized from their contribution to the socio-economic objectives of growth in employment generation, product output, export, and in their function as seed beds of entrepreneurship. This study aims to investigate the causes of the problem and what could be done to mitigate the problem. The primary objective of the study is to determine how to improve the availability of bank financing to SMEs in Rwanda. The argument is that there are SMEs internal factors that cause unavailability of bank financing. Understanding the causes of this problem is important to determining how to improve availability of credit to SMEs. For this purpose, the questionnaire was administered to 122 respondents from four commercial banks and 26 respondents from one development bank. All together 148 questionnaires were administered and 120 questionnaires returned. The response rate was 81 percent. Six major SMEs internal factors which included; business information, collateral, managerial competency, internal funds, networking and ethical practices were investigated to find out their impact on the availability of bank financing to SMEs. Quantitative data were analysed using a Statistical Package for Social Sciences (SPSS) with statistical tools including descriptive statistics, frequency distributions and chi-square test. The Cronbach’s alpha was used as a measure of reliability. While the data from the open-end question analysis involved classifying data, extracting themes, identifying patterns, tallying and quantifying responses and making generalization out of these patterns. This implies that the research methodology focused on the methods, tools and techniques used to assist in achieving the objectives of the study and answering the research questions that the research sought to address. To this end, the study sought the perceptions of bank staff on reasons why bank credit is not available to SMEs. The study focused on four research questions as outlined in chapter one and other relevant sections of the study. The major finding of this study is that there is a significant positive relationship between six SMEs internal factors (lack of business information, lack of collateral, lack of managerial competency, lack of internal funds, lack of networking and unethical practices) and non-availability of banks finance in Rwanda. On the basis of these findings, the study recommended that SMEs owners and staff should be trained in key strategic areas such as business management and financial management to effectively and efficiently manage their businesses and curb information asymmetry. The study also recommends that the government should introduce more practical guarantee facilities to enable banks access the funds as soon as the SME defaults. This will encourage bank to extend more credit to SMEs. Furthermore, the study suggests that the government should categorise SMEs as a priority sector and come up with a policy requiring banks to compulsorily ensure that a certain earmarked percentage of their overall lending is made to SMEs as a priority sector. Lastly, the study recommends that Rwanda Private Sector Federation should conduct trainings on ethical management to SMEs. Unethical behaviours such as deliberately not paying back loans should be heavily punished to limit occurrences of these behaviours among SMEs which may results in huge stock of non-performing loans. , Thesis (PhD) -- Faculty of Management and Commerce, 2012
- Full Text:
- Date Issued: 2012-04
An investigation into factors impacting on exports from South Africa to the Southern African Development Community (SADC)
- Authors: Fish, Colin
- Date: 2012
- Subjects: Exports -- South Africa , Exports -- Africa, Southern , Manufactures -- South Africa , Manufactures -- Africa, Southern , Economic assistance
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8800 , http://hdl.handle.net/10948/d1016494
- Description: Globalisation has changed the world economy. Manufacturers face vigorous competition in both local and export markets and need to have a genuine competitive advantage in order to prosper and grow. South Africa is still predominantly a resource based exporter with high aspirations of developing trade in value-added products. The government has recognised the importance of developing national manufacturing capacity as a means of increasing employment and reducing poverty. To this end the government provides substantial support to both the manufacturing and exporting sectors. The government also negotiated the Southern African Development Community (SADC) agreement which leverages some powerful competitive advantages for South African manufacturers exporting into the region. However, since ratification of the SADC agreement in 2008 there has been no perceptible increase in export activity to the region when compared to other markets. This research study was conducted to determine why this is the case and what factors are influencing the process. A literature review was undertaken encapsulating three principal themes; namely, export barriers, the role of the South African government in the export process, and the SADC agreement. Based on the findings of the literature review a research questionnaire was constructed and subsequently completed by a cross section of manufacturers in the Eastern Cape. It was found that export barriers do not pose a major obstacle to trade into the SADC region. The role the government plays was less conclusive with some successes noted, but on the whole the impact is not meaningfully positive. On the other hand the SADC agreement and the dynamics prevailing in the free trade area do have a positive impact on exports to the region. The level of awareness with regard to the government support initiatives was disappointingly low. The government offers a number of helpful support initiatives which are unknown to more than half the response group. The awareness level of the dynamics prevailing in the SADC region are an improvement but are still surprisingly low. South African manufacturers enjoy significant competitive advantages within the region that are going largely unnoticed. It is recommended, inter alia, that the government consolidates some of its support initiatives, as well as provides a dedicated SADC support desk. Management should adopt an export culture and re-evaluate the opportunity to trade with the SADC region.
- Full Text:
- Date Issued: 2012
- Authors: Fish, Colin
- Date: 2012
- Subjects: Exports -- South Africa , Exports -- Africa, Southern , Manufactures -- South Africa , Manufactures -- Africa, Southern , Economic assistance
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8800 , http://hdl.handle.net/10948/d1016494
- Description: Globalisation has changed the world economy. Manufacturers face vigorous competition in both local and export markets and need to have a genuine competitive advantage in order to prosper and grow. South Africa is still predominantly a resource based exporter with high aspirations of developing trade in value-added products. The government has recognised the importance of developing national manufacturing capacity as a means of increasing employment and reducing poverty. To this end the government provides substantial support to both the manufacturing and exporting sectors. The government also negotiated the Southern African Development Community (SADC) agreement which leverages some powerful competitive advantages for South African manufacturers exporting into the region. However, since ratification of the SADC agreement in 2008 there has been no perceptible increase in export activity to the region when compared to other markets. This research study was conducted to determine why this is the case and what factors are influencing the process. A literature review was undertaken encapsulating three principal themes; namely, export barriers, the role of the South African government in the export process, and the SADC agreement. Based on the findings of the literature review a research questionnaire was constructed and subsequently completed by a cross section of manufacturers in the Eastern Cape. It was found that export barriers do not pose a major obstacle to trade into the SADC region. The role the government plays was less conclusive with some successes noted, but on the whole the impact is not meaningfully positive. On the other hand the SADC agreement and the dynamics prevailing in the free trade area do have a positive impact on exports to the region. The level of awareness with regard to the government support initiatives was disappointingly low. The government offers a number of helpful support initiatives which are unknown to more than half the response group. The awareness level of the dynamics prevailing in the SADC region are an improvement but are still surprisingly low. South African manufacturers enjoy significant competitive advantages within the region that are going largely unnoticed. It is recommended, inter alia, that the government consolidates some of its support initiatives, as well as provides a dedicated SADC support desk. Management should adopt an export culture and re-evaluate the opportunity to trade with the SADC region.
- Full Text:
- Date Issued: 2012
The impact of aid dependence on social development: the case of Zimbabwe
- Authors: Nyatoro, Tinashe
- Date: 2008
- Subjects: Economic assistance , Zimbabwe
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26649 , vital:65735
- Description: The purpose of this study was to look at how a foreign aid dependent economy is vulnerable to external manipulations. This study came up with the conclusion that foreign capital dependence is detrimental to long-term social, economic, and sustainable development of developing countries. The study also noted how foreign aid is used as a foreign policy instrument by western countries to influence the behaviour of the developing countries. The study noted that Zimbabwe is an aid dependent country hence its vulnerability to external manipulation. This has been demonstrated by capital flight from Zimbabwe since 1997. Multilateral Financial Institutions, the European Union, United States of America and other bilateral donors withdrew their financial support to the country due to policy disagreements with the Zimbabwean government. This incidence of donors withdrawing their financial support to Zimbabwe raises fundamental questions as to whether the African state is autonomous or is it possible for the African state to delink itself from the current global international market and at what costs? What has come out very clearly from this study is that a dependent state has no autonomy to decide on its domestic and foreign policies without considering the interests of its donors, and hence its vulnerability to external manipulations. , Thesis (MSoc) -- Faculty of Management and Commerce, 2008
- Full Text:
- Date Issued: 2008
- Authors: Nyatoro, Tinashe
- Date: 2008
- Subjects: Economic assistance , Zimbabwe
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26649 , vital:65735
- Description: The purpose of this study was to look at how a foreign aid dependent economy is vulnerable to external manipulations. This study came up with the conclusion that foreign capital dependence is detrimental to long-term social, economic, and sustainable development of developing countries. The study also noted how foreign aid is used as a foreign policy instrument by western countries to influence the behaviour of the developing countries. The study noted that Zimbabwe is an aid dependent country hence its vulnerability to external manipulation. This has been demonstrated by capital flight from Zimbabwe since 1997. Multilateral Financial Institutions, the European Union, United States of America and other bilateral donors withdrew their financial support to the country due to policy disagreements with the Zimbabwean government. This incidence of donors withdrawing their financial support to Zimbabwe raises fundamental questions as to whether the African state is autonomous or is it possible for the African state to delink itself from the current global international market and at what costs? What has come out very clearly from this study is that a dependent state has no autonomy to decide on its domestic and foreign policies without considering the interests of its donors, and hence its vulnerability to external manipulations. , Thesis (MSoc) -- Faculty of Management and Commerce, 2008
- Full Text:
- Date Issued: 2008
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