The effectiveness of microfinance program on job creation and poverty reduction : the case of South Africa Microfinance Apex Fund (SAMAF)

Aluko, Timothy Olaniyi (2012-12)

Thesis (MDF (Development Finance))--Stellenbosch University, 2012.


The efforts of government in creating jobs and eradicating poverty in developing countries have received major attention among policy makers and operators of microfinance in the last one decade. One of such efforts is the establishment of a microfinance program known as South Africa Microfinance Apex fund (samaf) by South African government. Samaf was established in 2006 with the aims and objective to provide micro loan and credit to poor people living in peri-uban and rural areas of South Africa. This was brought about as a result of a gap created by major financial institutions that are neither available nor operating in such rural and remote areas. This research attempts to explore the effectiveness of samaf on job creation and poverty reduction as mandated by its aims and objective. The study was a case study, and data analysis mainly used descriptive statistics and inferential statistics to analyze the quantitative data that was collected in the research field. Findings from the study reveal that samaf was effective in terms of number of jobs creation. Also, it was found that there was an improvement in the life styles of beneficiaries than before they took samaf loan. However, samaf itself do have its shortcoming in term of quick delivery of funds to the MFIs. The study further discovered that, majority of samaf MFIs are not willing to expand their operations into informal settlement areas because of two reasons. First, majority of people living in such areas are considered vulnerable because due to the possibility non repayment of loans as they live in abject poverty. Secondly, majority do not have a fixed or permanent address which makes it difficult for MFIs to trace them. Based on the observation above, samaf will need a guiding and better strategy in terms of its delivery as there is none currently. This is necessary if it plans to achieve its aims and objectives and delivers on its mandate.

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