Finance plays a major role in influencing micro-enterprises and any process of change they undergo. This research provides both a study of such a process and an understanding of how finance and micro-enterprises relate within the context of the wider economv. The thesis is the product of fourteen months field research in the squatter community of Cato Crest. Durban, South Africa. A sample of 138 mainly retail micro-enterprises was studied using a variety of techniques, including semi-structured interviews and occupational biographies. Three categories of enterprise were developed based on current literature; capitalist, petty commodity production (PCP) and survival. The research then sought to operationalise them. It was found that between 18% and 29% of each group either changed into one of the other categories or ceased to operate during the period. The process however is not one of inevitable growth into capitalist enterprises. A dynamic process of growth and decline was observed during the research period and in the occupational biographies. Therefore while there was some growth in capitalist enterprises the main finding was that petty commodity production was conserved through the growth in aggregate numbers of PCP enterprises. Having identified the process of change five types of finance that played a role in Cato Crest were identified; external finance, waged employment, own finance, finance reducing measures (including partnerships) and hire purchase. The influence of each was as follows: • External finance from the banks and suppliers was not available to most micro-enterprises. • Full time waged employment by the owner or another household member was associated with the process of growth in micro-enterprises. In contrast the lack of such employment was associated with the perpetuation of survival enterprises or their cessation. The implication is that those who are marginalised or excluded from full time waged employment are likely to be excluded from owning micro-enterprises that grow. • Own finance through the use of stokvels, bank accounts and the re-investment of profit were all identified as important components in the growth of micro-enterprises. In all three cases they provided both a mechanism to save both directly and indirectly for investment purposes in the enterprise. However savings institutions need to be seen in the context of the wider economy in which they act as a channel for outflows of finance from the micro-enterprise sector to the formal capitalist sector. This is a net outflow since there is no corresponding lending of finance from the banking sector to micro-enterprises. • Finance reducing measures were observed to be important in the process of change. However it would appear that survival enterprises, which were often limited in their access to other financial options, were often perpetuated by the use of such measures. • Finally hire purchase was identified as being associated with the growth of micro-enterprises However its key role was not the provision of finance, but as a means for the capitalist sector to extend the sale of certain of its products into new areas of the economy. In summary the thesis is important in terms of the development and opcrationalisation of the three classifications of retail micro-enterprises, the identification of the role of finance In the process of change and the linkages between finance and the capitalist economy within which retail microenterprises operate
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