Financial Inclusion on Entrepreneurship in South African Townships: Lessons for Practioners and Policy Makers from Literature

Shadreck Matindike and Stephen Mago ()
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Stephen Mago: Nelson Mandela University

Africagrowth Agenda, 2022, vol. 19, issue 2, 22-23

Abstract: Inequality in Southern Africa (SA) is currently at an alarming rate. The recent assessment of inequality of countries in Southern Africa Customs Union (SACU) shows that the highest 10 percent in the income hierarch owns 80.6 percent of the total financial assets (Sulla, Zikhali and Cuevas, 2022). The 10 percent at the bottom of the income hierarchy owns nearly no assets and their livelihoods are heavily dependent on transfers from well-wishers (Sulla, Zikhali and Cuevas, 2022). As a result, inequality in rural areas is likely to be worse than that existing in urban settings. This is because livelihoods in urban area may relatively not be directly attached to agricultural activities and ultimately, land. Entrepreneurship was pointed out in the recent World Bank report as one of the ways through which South Africa can reduce inequalities. Entrepreneurship can be developed by removing barriers and obstacles hindering formulation of business ideas and creation of new enterprises. Financial inclusion is one of the ways through which constraints that hinder entrepreneurship can be addressed. Statistics show that 70 percent of all adults in SA have a transaction account. This indicates a high level of financial inclusivity. However, entrepreneurship is relatively low. As a result, there is need to revisit the relationship between financial inclusion and entrepreneurship. Systematic literature is acknowledged as a useful way of revealing the current state of knowledge as well as identifying gaps in existing studies (Xiao and Watson, 2019). As a result, the current study is an attempt to find the current state of knowledge on the relationship between financial inclusion and entrepreneurship in South African townships. The current study aims to answer the following questions: 1. What is the status of financial inclusion and entrepreneurship in South African townships? 2. Which methods/ approaches common in investigating effects or impacts of financial inclusion on entrepreneurship in South African townships? 4. What are the trends and gaps in the studies on the effects of financial inclusion on entrepreneurship? 5. Which lessons are derived and what is the way forward on the relationship between financial inclusion and entrepreneurship for practioners and policy makers?

Date: 2022
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