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THE ISSUE OF MICRO-ENTERPRISE FINANCING IN CAPE VERDE i

By José André, Galvão Baptista and Jacinto Vidigal Da Silva Ii

Abstract

Financial literature recognizes the crucial importance of micro enterprises both for the development of developed economies and developing countries. This study identifies the principal financing sources of the micro-enterprises in Cape Verde and the conditioning factors of their financing needs. Data collection for the study has been ensured through local micro-entrepreneur oriented inquiries while the target samples were selected on a random basis consistent with the population's characteristics. The relationship between the financing needs and the explanatory variables was estimated by using an econometric model- a regression model such as Logit, which seems to be adequate to the objective of this study. Lack of a start-up capital is pointed out as one of the sector's main constraints. Resort to credit/loan, chiefly granted by family members, acts as excellence initial funding source, especially in the midst of the rural environment. Furthermore, the econometric analysis undertaken shows that the microentrepreneur's age, schooling level, gender, the way he enters into the business world (voluntarily or involuntarily) and also the economic reforms that took place in 1991 are significant factors that condition his start-up funding needs. KEYWORDS: Micro-enterprise, Micro-credit, Informal Sector, Poverty Reductio

Year: 2011
OAI identifier: oai:CiteSeerX.psu:10.1.1.198.542
Provided by: CiteSeerX
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