Research on World Agricultural Economy

Differential Impact of Financial Access Factors on South African Small Businesses and Smallholder Farmers

Joseph Olorunfemi Akande

Department of Accounting Science, Walter Sisulu University, Mthatha, South Africa

Yiseyon Sunday Hosu

Department of Business Management and Economics, Walter Sisulu University, Mthatha, South Africa

DOI: https://doi.org/10.36956/rwae.v6i2.1262

Received: 22 August 2024 | Revised: 27 September 2024 | Accepted: 17 October 2024 | Published Online: 26 March 2025

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Abstract

Purpose: Securing finance is critical for all enterprises, and there is a wealth of literature discussing factors that restrict such access, particularly for small business owners. However, current literature often overlooks the importance of understanding which factors are paramount to different business categories. This study aimed to profile the aspects influencing financial access among smallholder farmers and small businesses. Design/Methodology/Approach: Data collected from the Eastern Cape province of South Africa were analysed using latent class analysis. Nine dichotomous variables concerning finance access were surveyed across 189 participants. Findings: Our evidence shows that these factors do not affect all farmers or businesses uniformly. We found these factors pervasive for 38% of the surveyed sample, while they had a low to moderate impact on 39% and 23% of farmers. Practical implication: These findings have significant implications for policy on rural business development, food security and credit risk profiling by business capital providers.

Keywords: Financial Access; Smallholder Farmers; Subsistence Businesses; Latent Class Analysis; Rural Business Development

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