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Drivers for the Formation of Informal Financial Associations by Immigrant Entrepreneurs in South Africa: the Case of Cameroonians

Author

Listed:
  • Linus Nkem

    (Cape Peninsula University of Technology)

  • Robertson K. Tengeh

    (Cape Peninsula University of Technology)

Abstract

The sometimes, selective exclusion by the legislation and the financial houses of the host country, force immigrants of African origin to setup stokvels to sustain their businesses and livelihood in South Africa. Aim: To provide the basis for inclusive policy initiatives, this paper investigated the drivers for the formation of business support stokvels by Cameroonians in South Africa. Method: The paper adopted a mix research paradigm with the survey questionnaire and personal interviews as the tools of choice. The purposive sampling technique was implored to reach the 132 respondents. Results: It was apparent that the participants form stokvels to compensate for the lack of access to finance from formal financial intermediaries. The dire need for startup and later expansion capital drove them to form stokvels and even to belong to multiple stokvels as they strive to improve their chances. Beyond this, stokvels provide the platform for the mobilization of savings and the opportunity to run their own bank on their own terms. Implications: while aligned to the Cameroonian community, other minority groups can draw vital lessons. Beyond this, the paper informs the inclusive finance debate and may therefore be relevant to policy makers and academics.

Suggested Citation

  • Linus Nkem & Robertson K. Tengeh, 2017. "Drivers for the Formation of Informal Financial Associations by Immigrant Entrepreneurs in South Africa: the Case of Cameroonians," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(5), pages 107-122, OCTOBER.
    • Handle: RePEc:dug:actaec:y:2017:i:5:p:107-122
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    References listed on IDEAS

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    1. Bates, Timothy, 1997. "Financing small business creation: The case of Chinese and Korean immigrant entrepreneurs," Journal of Business Venturing, Elsevier, vol. 12(2), pages 109-124, March.
    2. Verhoef, Grietjie, 2001. "Informal Financial Service Institutions for Survival: African Women and Stokvels in Urban South Africa, 1930–1998," Enterprise & Society, Cambridge University Press, vol. 2(2), pages 259-296, June.
    3. Tengeh, Robertson Khan & Ballard, Harry & Slabbert, Andre, 2011. "A framework for acquiring the resources vital for the start-up of a business in South Africa:an African Immigrant’s Perspective," MPRA Paper 34211, University Library of Munich, Germany.
    4. Thobekani Lose & Robertson K. Tengeh, 2015. "The Sustainability and Challenges of Business Incubators in the Western Cape Province, South Africa," Sustainability, MDPI, vol. 7(10), pages 1-14, October.
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