On the suitability of group lending model in South Sudan’s small and medium enterprises sector
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On the suitability of group lending model in South Sudan’s small and medium enterprises sector
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Pub: 2017-12-19 09:27:42
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Post-conflict societies, such as South Sudan are characterised by weak
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regulatory frameworks and lack of political will to implement much needed
reforms. This often impacts directly on the economy. The legal, social and
financial environment is also weakened in the process, leading to the demise of
key economic drivers. The small and medium enterprise (SME) sector is critical
for the growth of nascent economies such as South Sudan’s. The effectiveness
of SMEs as key economic drivers is amongst other things dependent on their
access to credit. With only a few SME-specific credit facilities in South Sudan
at the moment, it is important that these institutions adopt funding models that
will suit the poor, most of whom do not have collateral and credit history. Group
lending appears as a suitable model for the poor. The success of this mode of
SME funding in selected jurisdictions, namely Angola, Bangladesh, Bolivia,
Burundi, and Colombia underscores such a position. The socio-economic, legal
and political environment of the three jurisdictions studied in this paper where
group lending has been successful closely mirror that of South Sudan. The
dynamics of group lending will, therefore, likely suit the needs of South Sudan.
Hence it is suggested as one solution to uplifting the small business sector of
Africa’s newest country, although attention must also be given to other critical
development factors such as a sound regulatory regime, an effective taxation
system and access to credit
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Keywords
South Sudan, SMEs, Group lending model, Post-conflict, Economic growth
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Keywords
South Sudan, SMEs, Group lending model, Post-conflict, Economic growth