Proceedings of Business and Social Sciences Research Conference
10 - 11 December 2015, Ambassador Hotel, Bangkok, Thailand, ISBN: 978-1-922069-90-0
An Investigation of Access to Financial Services by Micro
Enterprises in Open Markets in Windhoek
Udai Lal Paliwal
1. Introduction
A country’s wellbeing can be measured in terms of its people’s access to basic services including
financial services. Access to finance is defined in the Namibia Financial Sector Strategy (2011) as access
to financial services and products as well as access to financial service infrastructure.
The National Planning Commission’s National Development Plan 4 (2012), highlights access to finance
by startup and micro and small enterprises as a challenge. Due to their small scale operations, financial
institutions do not find micro-enterprises profitable to do business with (Koveos & Randhawa, 2004). The
inability to provide collateral by the poor and micro-enterprises makes financing inaccessible and
unaffordable.
Collins, Morduch, Rutherford, and Ruthven (2009) argued that poor people including micro traders, need
financial services more than any other group, because of the uncertainty and irregularity of their income.
The access to financial services will enable them to engage in projects that can generate income to
sustain them and their families. The Bank of Namibia has embarked on various strategies to ensure
financial inclusion in Namibia. The Minister of Finance, Calle Schlettwein said that although statistics
show that financial inclusion is on track, and more people opened bank accounts, more needs to be done
when it comes to availing funds to micro businesses. He noted that access to funding for new and
existing businesses is still a challenge that needs to be looked into if financial inclusion is to materialize
(Shihepo, 2015).
Although it appears as if financial inclusion is on track, no further study was carried out to confirm this and
therefore this study is carried out with the objective of establishing whether micro traders in selected open
markets in Windhoek have access to financial services.
1.1 Research objectives
The main objectives of this study are to:
1. Identify whether micro-enterprises have access to financial services.
2. Identify the financial institutions used by micro-enterprises.
3. Identify variables that enable micro-enterprises to have access to financial services or causes
lack of access to it.
2 Literature review
Commercial banks never penetrated the informal markets, as it is not regarded as profitable, leading to
financial exclusion of many (Keulder & Naidoo, 2012). The survey also found that only 62% of adults in
Namibia are banked, which means that 38% of the population to not have access to banking services.
Madichie and Nkamnebe’s (2009) study, which was based on in-depth interviews with a sample of 20
women entrepreneurs drawn, using convenience sampling, found that one of the constraints for access
to credit by women traders in Nigeria are internal constraints. Green, Kirkpatrick and Murinde (2006)
argue that inadequate access to finance and other financial services has long been recognized as a
constraint on the expansion of medium and small enterprises. Quayes and Hasan (2014) noted in their
work that micro credit has emerged as a viable financial alternative for people with no access to credit
from formal financial institutions. Micro credit therefore provides easy access to credit by small scale
entrepreneurs. In contrast, Block (2012), argues that micro-finance will not help the poor; on the contrary
it reduces the effectiveness of the market’s ongoing fight against poverty. He further states that microfinance is either a mischievous attempt to undermine the libertarian society, or the embodiment of a
benevolent, but ill-conceived, attempt to promote prosperity among the poor.
Beck and de la Torre (2006) by using the concept of an access possibilities frontier identified three types
of access problems, which lead to the banked population being lower than the bankable population,
namely the self-exclusion of agents, inefficiency due to high costs from suppliers of financial services and
low bankable population.
3. Research Methodology
The research uses a cross-sectional design with a mix of qualitative and quantitative approaches. A
quantitative approach is used in obtaining insight into how different variables affect the access to financial
services, while qualitative approach is used to probe the standardized responses deeper to get more
information, regarding the opinions and needs of the subjects.
Proceedings of Business and Social Sciences Research Conference
10 - 11 December 2015, Ambassador Hotel, Bangkok, Thailand, ISBN: 978-1-922069-90-0
The population for the study consists of four hundred traders from five open markets in Windhoek. A list
of stands with traders at the open markets in Katutura was obtained from the City of Windhoek. A
selection was made from this population for administering questionnaires and then in-depth interviews,
using simple random sampling with random numbers. Using a confidence level of 95% translated into a
sample of 162 stands. Interviews were conducted with 10 entrepreneurs as well as representatives of four
banks, selected using purposive sampling. The research instruments used were face-to-face interviews
and questionnaires for collecting primary data while secondary data was collected from variety of
published and unpublished sources including the information available on the internet.
A financial access strand (Johnson & Nino-Zarazua, 2011) was used to analyse and categorize the
information to identify the variables that enable micro-enterprises to have access to financial services or
causes lack of access to it. The independent variables to be used include age, type of business activity,
gender, education, location and the dependent variable (outcome) will be the access strands.
Qualitative data will be analyzed using a deductive approach. The data will be coded and grouped based
on the research objectives and then will be sorted according to the similarities and differences.
_____________________________________________________________________
Dr. Udai Lal Paliwal, Associate Professor, University of Namibia
Ms. Clareta Gamses, Lecturer, University of Namibia
Corresponding author’s email: ulpaliwal@unam.na; drudai@rediffmail.com