Entrepreneurship and Alternative finance models: The potential to increase access to capital for entrepreneurs and small business enterprises in West African Francophone Countries

Entrepreneuriat et modèles de financement alternatifs: un potentiel pour améliorer l'accès au capital des entrepreneurs et des petites entreprises dans les pays francophones d'Afrique de l'Ouest

Pépin Ilonga N'Kupo, Loredana Cultrera and Mélanie Croquet
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Pépin Ilonga N'Kupo: UMONS - Université de Mons = University of Mons
Loredana Cultrera: UMONS - Université de Mons = University of Mons
Mélanie Croquet: UMONS - Université de Mons = University of Mons

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Abstract: New businesses play an important role in economic dynamism, contributing to job creation, innovation, and productivity growth, but also identify the predominance of informal employment and the lack of access to capital as barriers to entrepreneurship and SME development in Sub-Saharan Africa. The purpose of this chapter is to investigate the potential of alternative finance models as financial innovations to improve access to capital for entrepreneurs and small businesses in West African Francophone countries. The research questions are the following: What are the causal relationships between entrepreneurship and alternative financing models? How do alternative financing models potentially improve access to capital and support economic growth in the region? We collected data from a panel of 8 countries in West Africa (Benin, Burkina Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo), computed in Stata, and structural equation modeling was used to analyze the relationship between entrepreneurship and alternative financing models. Our results revealed a positive and statistically significant direct relationship between alternative financial models, and access to capital, highlighting their essential role in strengthening entrepreneurial development, and a positive and direct link between technological innovation and entrepreneurial success, indicating that technological advancements lead to an increase in entrepreneurial achievements. The importance of financial inclusion emerged when we established its substantial and positive direct effect on alternative financing models, access to capital, and entrepreneurship outcomes. This suggests that strengthening financial inclusion can lead to better alternative financing options, expanded access to capital, and, ultimately, better entrepreneurial outcomes. This chapter contributes to the broader literature on entrepreneurship, particularly in the African context, where institutions supporting entrepreneurship development may be weak or even non-existent as our findings demonstrate, and our study provides valuable recommendations to policymakers, and practitioners to improve access to capital for entrepreneurs and SMEs. Such recommendations can play a role in fostering economic growth, job creation, and sustainable development in the region.

Date: 2024-09-24
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Published in Alternative Finance: A Framework for Innovative and Sustainable Business Models, 1, Routledge Taylor & Francis Group, pp.231-253, 2024, 978-1-032-71462-2. ⟨10.4324/9781032713533-20⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05773523

DOI: 10.4324/9781032713533-20

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