The role of microfinance institutions in enhancing the sustainability of women-owned SMMES

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Microfinance plays a catalytic role in the sustainability of small, micro, and medium enterprises (SMMEs). Given the prevailing failure rate of SMMEs in South Africa, a holistic view of microfinance institutions (MFIs) regarding microfinance is essential. This paper explores how MFIs enhance women-owned SMMEs’ sustainability in the Gqeberha area focusing on three MFIs subsidized by the South African government in Nelson Mandela Bay municipality. Systems theory was used to explore areas that MFIs should focus on to enhance the sustainability of women-owned SMMEs. A qualitative case study using semi-structured interviews and open-ended questionnaires was employed. The research sample was drawn from three public MFIs in Gqeberha and 21 women-owned SMMEs who are beneficiaries of the MFIs. Coding and thematic analysis were used for data analysis. MFIs encounter challenges in adequately servicing women-owned SMMEs. A mismatch was identified in the provision and demand of microfinance services due to limited funding for MFIs. The non-financial support essential to keeping SMMEs afloat does not meet the needs of women-owned businesses. The microfinance services provided by MFIs play a significant role in supporting SMMEs to achieve sustainability. However, there is a need for a complementary service that should offer sector-specific business support because current services provided by the MFIs are generic, and SMMEs need sector-specific assistance.

Acknowledgments
Our special thanks go to the Department of Development Studies and Nelson Mandela University for the support that contributed to the success of this manuscript. We also acknowledge Dr. Ruth Albertyn for her technical and editorial support.

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    • Table 1. Participants understanding microfinance
    • Table 2. MFIs’ capacity to administer microfinance
    • Table 3. SMME owners’ experience with microfinance
    • Table 4. Business sustainability
    • Conceptualization
      Kundai Koti
    • Data curation
      Kundai Koti, Florah Sewela Modiba
    • Investigation
      Kundai Koti
    • Methodology
      Kundai Koti
    • Project administration
      Kundai Koti
    • Formal Analysis
      Kundai Koti
    • Writing – original draft
      Kundai Koti
    • Writing – review & editing
      Kundai Koti, Florah Sewela Modiba
    • Supervision
      Florah Sewela Modiba
    • Validation
      Florah Sewela Modiba