Improving the well-being of the poor through microfinance : evidence from the Small Enterprise Foundation in South Africa

Kirsten, Maria Albertina (Stellenbosch : Stellenbosch University, 2011-12)

Thesis

ENGLISH ABSTRACT: Poverty in South Africa’s rural areas is complex and severe, especially among female-headed households. The marginalisation of South Africa’s rural areas over a period of decades resulted in an acute lack of economic opportunities, limited infrastructure and a serious breakdown of social capital. Women living in rural areas are particularly poor in moneymetric terms; they are often illiterate and therefore isolated from economic and social opportunities; and many fall victim to violence in the household. They eke out a meagre existence, based on small-scale agriculture, marginal self-employment or limited wage and remittance income. While such income diversification, combined with the government’s range of development interventions, helps to buffer them against risks such as illness, death and disaster, rural poverty is not just a matter of income and assets. It is also rooted in other disadvantages, such as exclusion, disempowerment and unequal power relations. These all contribute to making poverty a multidimensional phenomenon. The South African government has committed significant resources to poverty intervention over the past 17 years. These interventions, which include social assistance grants, basic municipal services and free water, electricity, schooling and health services, certainly have an impact on the livelihoods of the rural poor, but they do not seem to bring a significant improvement in the standard of living of the most vulnerable people in marginalised areas. There is increasing recognition in the poverty literature that vulnerabilities – of income, health, social exclusion and service delivery – are linked, and that support programmes should focus not only on increasing the poor’s access to resources and assets but also on empowering individuals to use these assets and make decisions. This study investigates the potential of microfinance to address the overlapping vulnerabilities experienced by women in South Africa’s rural areas. It suggests that microfinance has the potential to generate positive shifts in selected indicators of empowerment and well-being among participating women in rural areas. These claims are tested by evaluating data gathered among clients of the Small Enterprise Foundation (SEF) against a conceptual framework. The framework offers a stepwise progression away from vulnerability: acquiring internal skills (empowerment), strengthening social capital, accumulating assets and, eventually, transforming these assets into wealth. Existing datasets, gathered over a period of five years in rural Limpopo and representing both a group that received microfinance from SEF and a control group, were examined. No evidence could be found that the recipients of SEF’s microfinance experienced increased empowerment, but the results did provide evidence that belonging to the group that received microfinance increased the likelihood of experiencing livelihood security and well-being. The findings show that microfinance can, even over the short term, make a difference in people’s ability to smooth their consumption and, as such, provide them with more secure livelihoods. The research also suggests that microfinance assists women in rural areas in constructing and maintaining a portfolio of assets, thus improving well-being among the recipients of microfinance. The scope of the study was confined to measuring the effect of microfinance on selected poverty indicators, and it did not attempt to prove that microfinance alleviates poverty. As such, the research demonstrates that the government’s efforts to reduce rural poverty can be complemented by micro-level interventions such as access to finance.

AFRIKAANSE OPSOMMING: Armoede in Suid-Afrika se landelike gebiede is kompleks en straf, veral vir huishoudings met vroue aan die hoof. Landelike gebiede is vir dekades lank gemarginaliseer en dit het gelei tot gebrekkige ekonomiese geleenthede, beperkte infrastruktuur en ‘n ineenstorting van sosiale kapitaal. Vroue in Suid-Afrika se landelike gebiede is nie net arm in monetêre terme nie, maar ook dikwels ongelettered, geïsoleerd van ekonomiese en sosiale geleenthede, en dikwels die slagoffers van huishoudelike geweld. Hul huishoudings oorleef deur die skamele bestaan wat hulle maak uit bestaansboerdery, gebrekkige besoldiging en trekarbeider lone. Alhoewel die regering se wydverspreide ontwikkelingshulp daartoe bydra om arm mense te help om risiko’s soos siekte, dood en natuurrampe te kan hanteer, gaan landelike armoede oor veel meer as net inkomste en bates, en sluit dit ook ontmagtiging, uitsluiting en ongelyke magsverdeling in. Al hierdie ontberinge maak armoede ‘n multidimensionele verskynsel. Die Suid-Afrikaanse regering het oor die afgelope 17 jaar aansienlike bronne op armoede verligting gespandeer. Die hulp, wat maatskaplike toelaes, basiese munisipale dienslewering, gratis water, elektrisiteit, opvoeding en gesondheidsdienste insluit, het sonder twyfel die oorlewing van die armes in landelike gebiede meer houdbaar gemaak, maar tog lyk dit nie of die lewenskwaliteit van die mees kwesbare huishoudings in die gemarginaliseerde areas verbeter het nie. Die armoede-literatuur dui daarop dat verskillende vorms van kwesbaarheid – kwesbaarheid in terme van inkomste, gesondheid, sosiale uitsluiting en dienslewering – met mekaar verband hou. Daarom is dit belangrik dat hulpverlening nie alleen vir die armes toegang gee tot hulpbronne en bates nie, maar ook die individue bemagtig om die bronne te gebruik en besluite te neem. Hierdie studie ondersoek die potensiaal van mikrofinansiering om die verskeidenheid sosiale kwesbaarhede wat vroue in Suid Afrika se landelike gebiede ervaar aan te spreek. Die studie voer aan dat mikrofinansiering kan lei tot positiewe veranderinge in geselekteerde bemagtigings- en welvaarts-indikatore onder deelnemende vroue. Data wat versamel is onder die kliente van die Small Enterprise Foundation (SEF) word gebruik om hierdie aansprake te evalueer. Die studie is gedoen teen die agtergrond van ‘n konseptuele model, wat voorhou dat armoede en kwesbaarheid oorkom kan word as ‘n trapsgewyse program gevolg word – deur eerstens kundigheid (bemagtiging) te verkry, daarna sosiale kapitaal te versterk, bates op te bou en uiteindelik die bates in rykdom te omskep beweeg die vroue, en hul huishoudings, al verder weg van hulle aanvanklike kwesbaarheid. Bestaande data, versamel oor ‘n tydperk van vyf jaar in die landelike gebiede van Limpopo is geanaliseer. Die data verteenwoordig twee groepe – ‘n groep wat mikrofinansiering ontvang het en ‘n kontrole groep. Geen empiriese bewyse kon gevind word dat die vroue wat mikrofinansiering van SEF ontvang het, bemagtig is nie. Die resultate het wel daarop gedui dat vroue wat mikrofinansiering ontvang na alle waarskynlikheid meer bestaans-sekerheid het en dat hulle welvaart verbeter het. Die bevindinge dui daarop dat mikrofinansiering, selfs oor die kort termyn, ‘n wesenlike verskil kan maak in die vermoë van kwesbare vroue om hulle verbruik, oor tyd, beter te bestuur en sodoende bestaans-sekuriteit te verseker. Die navorsing toon ook dat mikrofinansiering vroue in landelike gebiede kan help om ‘n portefeulje van bates te skep en te handhaaf, wat bydra tot groter welvaart. Hierdie studie het die impak van mikrofinansiering op geselekteerde armoede indikatore geevalueer, en het nie gepoog om te bewys dat mikrofinansiering armoede verlig nie. Sodoende dui die navorsing daarop dat die regering se pogings om armoede te verlig kan baat vind by mikrovlakintervensies soos mikrofinansiering.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/18002
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