Credit demand and credit rationing in the informal financial sector in Uganda

Dissertation (PhD) -- University of Stellenbosch, 2005.ENGLISH ABSTRACT: This study was motivated by the need to determine the key factors that influence credit demand and credit rationing in the informal financial markets so as to contribute to policy formulation to improve access for the poor in Uganda to the broader (formal and informal) financial sector. The results of the study suggest that credit demand in the informal financial sector is positively and significantly influenced by capacity related variables (education level, and household expenditure) at the household level, and the informal lenders' credit rationing behaviour is also negatively and significantly influenced by household wealth factors (asset values). The same variables have similar effects in the models for credit demand and credit rationing in the broader financial sector. Since households demand credit for both investment and consumption smoothing, improved access to the broader financial sector will enable them to acquire more wealth, and move out of poverty in the long run. The policy options to improve small borrower access to the broader financial sector include provision of incentives to banks to serve the smaller borrowers, development of credit reference bureaus, provision of innovative insurance products to the poor, and broader economic policies that enable households to acquire more wealth. In addition appropriate linkages need to be developed between the formal and informal financial sectors so as to broaden the financial system.AFRIKAANSE OPSOMMING: Hierdie studie is gemotiveer deur die behoefte om die sleutelfaktore te identifiseer wat die vraag na krediet en kredietrantsoenering in die informele finansiele markte bemvloed ten einde In bydrae te kan maak tot beleid om beter toegang vir die armes tot die bree (formele en informele) finansiele sektor in Uganda te bewerkstellig. Die resultate van die studie dui aan dat die vraag na informele krediet In betekenisvolle en positiewe verwantskap toon met kapasiteitsverwante veranderlikes (vlak van opvoeding en huishoudelike besteding) op die huishoudingvlak. Informele uitleners se kredietrantsoeneringsoptrede toon In betekenisvolle en negatiewe verwantskap met huishoudings se vlak van rykdom (batewaardes). Dieselfde veranderlikes toon soortgelyke verwantskappe in die geval van die modelle vir kredietvraag en kredietrantsoenering in die bree finansiele sektor. Huishoudings se vraag na krediet is vir beide investeringsdoeleindes en om In meer egalige verspreiding van verbruik te verkry. Daarom sal verbeterde toegang tot die bree finansiele sektor hulle in staat stel om meer rykdom te bekom en so uit armoede in die langer termyn te ontsnap. Die beleidsopsies om kleiner leners beter toegang tot die bree finansiele sektor te bied, sluit in voorsiening vir insentiewe aan banke om klein leners te bedien, die ontwikkeling van kredietverwysingsburo's, die voorsiening van innoverende versekeringsprodukte aan die armes, en breer ekonomiese beleid wat huishoudings in staat sal stel om meer rydom te bekom. Toepaslike skakeling tussen die formele en informele finansiele sektore moet ook ontwikkel word ten einde In verbreding van die finansiele sektor te bewerkstellig

Women and Youth Entrepreneurship in Botswana

The study on women and youth entrepreneurship in Botswana investigated the environmental factors that affect the performance of Small and Medium Scale Enterprises (SMEs) with specific focus on microenterprises (defined as those that employ less than 6 people including owner and annual turnover of less than P60,000) and the extent to which the microenterprises have utilized the government institutional credit and capacity building programmes to expand their enterprises.

The determinants of health care demand in Uganda: the case study of Lira District, Northern Uganda

The study investigated the price and non-price factors that affect health care demand in rural Uganda using household data from Lira district in northern Uganda, which is the poorest region. The government had introduced the user-fee scheme as a strategy for supplementing government budgets to improve health care delivery systems. The results suggested that the demand for government heath care services was negatively and significantly influenced by the user-fees and drug unavailability. A simulation analysis suggested that an increase in medical charges (user-fees) leads to a fall in demand for government health facilities but increases the demand for both private health facilities and self-medication. Controlling for drugs availability, the demand for government health facilities falls when drugs are not available while demand for private health facilities rises. The policy implication is that government should be able to put resources from things like debt relief to stocking the drugs in public health facilities while the internally generated tax revenues could be utilized to provide free health services especially to the poor. In the long run, the policy option of a social health insurance scheme may be explored

Informal financial markets in Botswana: a case study of Gaborone City

The present study investigated informal financial markets in Gaborone, Botswana, with specific focus on the terms and conditions for informal credit, its main uses and the target clientele. The study used primary data, and analytical techniques that included descriptive statistics and analysis of variance. The results show that informal lenders give short-term consumption loans consisting of small amounts, charge very high interest rates, use innovative collateral substitutes such as automatic teller machine (ATM) cards plus personal identification numbers (PINs) and valuable household assets as security, and target mainly the non-poor. The paper makes three policy recommendations: an appropriate regulatory framework for the informal financial sector should be developed, interest rates and other charges should be systematically disclosed so as to encourage competition and reduce the high interest rates, and there should be legislation against the use of ATMs and PINs as security.Informal financial markets, Botswana,

Determinants of schooling in Botswana: do family background and location matter?

Education is a key development goal that is critical in the fight against poverty through the creation of human capital. For this reason, the Botswana Government has prioritised the provision of free basic education to its citizens as part of the strategy to achieve the millennium development goals (MDGs). However, not all school going age children are in school despite the free basic education. This motivated the study to investigate the determinants of schooling in Botswana using the HIES 2002/2003 and LFS 2005/2006 datasets and the probit model. The probit regression results indicate that children's current schooling is positively and significantly influenced by the age of the children themselves; education level of the household head; having at least one of the parents alive; urban location; employment status of household head and household income.schooling determinants; Botswana; child labour; school education; children; family background; urban location; child age; adult education levels; employment status; household income.

Dynamics of corporate dividend policy under hyperinflation and dollarization: A quantile regression approach

Purpose: Zimbabwe experienced hyperinflation (2000-2008) followed by dollarization from 2009 onwards which had implications on dividend policy. In this context, this study isolates the main determinants and examines their behaviour across the distribution of dividend policy. Design/methodology/approach: The study employs quantile regression analysis and a sample of 30 firms listed on the Zimbabwe Stock Exchange (ZSE), covering the period 2000 to 2016. The fixed effects (FE) analysis is applied as a base model. Finding(s): The most robust determinants are ownership structure, earnings per share (EPS) and taxation. In our context, results are more informative, than those based on FE analysis by showing the change in the impact of each explanatory variable across the distribution. EPS has a positive and significant impact on dividend policy throughout the distribution in both sample periods. Its effect increases in magnitude as firms move from low to high quantiles. The other variables are useful in explaining dividend policy at selected points of the distribution. Thus, there is clear heterogeneity in the determinants of dividend policy. Research limitations/implications: The study shows the importance of developing dividend policy by focusing on the position of the firm on the distribution. Dividend policy should be developed in view of the earnings potential of the firm, ownership concentration and perceived changes in fiscal policy. A welldesigned policy should have a differentiated approach to influencing corporate dividends. Originality/value: This study enhances our understanding of dividend policy in unique markets. It confirms the applicability of dividend relevance theories. Furthermore, It shows that quantile analysis provides more reliable estimates than those obtained using standard panel data models