How to leverage oil resources to enhance SME financing in South Sudan

James Alic Garang

International Journal of Economic Policy in Emerging Economies, 2015, vol. 8, issue 2, 119-137

Abstract: The attention to financial sector development in development policy is currently shifting away from microfinance alone toward the development of inclusive financial markets more broadly under the rubric of 'finance for all'. This policy orientation underscores that financial inclusion is a requisite for economic development and poverty reduction. This paper draws on evidence from field research in South Sudan and Kenya on the role of financial sector development for small and medium-sized enterprise (SME) financing in these two countries. The analysis of the data indicates that distance from the capital city; firm size and gender of the firm owner significantly affect the likelihood of applying for a loan and receiving a loan. Institutional, regulatory and credit market imperfections stand in the way of expanding the access frontier in South Sudan. Drawing lessons from the Kenyan experience with regard to financial inclusion, the paper argues for enhancing linkages between rate of oil extraction and the financial sector development strategies. The aim is to harness South Sudan's oil wealth in promoting financial sector development in general and SME financing in particular.

Keywords: South Sudan; SMEs; financial sector development; access frontier; financial inclusion; oil rent; leveraging; oil resources; SME financing; economic development; poverty reduction; Kenya; small and medium-sized enterprises; distance from the capital; firm size; owner gender; oil wealth. (search for similar items in EconPapers)
Date: 2015
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