Microfinance programmes have emerged as a critical tool for financial inclusion in South Africa's informal sector, offering small loans and other financial services to entrepreneurs who lack access to traditional banking systems. The research employs a comprehensive literature review combined with qualitative data analysis from interviews conducted with microfinance programme participants and local community leaders to explore the dynamics between microfinance programmes and financial stability outcomes in the informal sector. While microfinance has potential benefits for informal sector businesses, its effectiveness is contingent upon addressing specific operational issues that impact the sustainability of these programmes. Policy makers should prioritise reforms aimed at improving the regulatory framework governing microfinance operations and enhancing access to collateral options. Additionally, targeted support services for business owners could mitigate risks associated with volatile interest rates.
Gogoshwili et al. (Wed,) studied this question.