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Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening
Thesis (PhD)--Stellenbosch University, 2025.
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Stellenbosch : Stellenbosch University
2025
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| access_status_str | Open Access |
| author | Sanga, Bahati Joel |
| author2 | Aziakpono, Meshach Jesse |
| author_browse | Aziakpono, Meshach Jesse Sanga, Bahati Joel |
| author_facet | Aziakpono, Meshach Jesse Sanga, Bahati Joel |
| author_sort | Sanga, Bahati Joel |
| collection | Thesis |
| dc_rights_str_mv | Stellenbosch University |
| description | Thesis (PhD)--Stellenbosch University, 2025. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/132448 |
| institution | Stellenbosch University (South Africa) |
| language | English |
| last_indexed | 2026-06-10T12:45:13.015Z |
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| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2025 |
| publishDateRange | 2025 |
| publishDateSort | 2025 |
| publisher | Stellenbosch : Stellenbosch University |
| publisherStr | Stellenbosch : Stellenbosch University |
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| spelling | oai:scholar.sun.ac.za:10019.1/132448 Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening Sanga, Bahati Joel Aziakpono, Meshach Jesse Matsebula, Velenkosini Stellenbosch University. Faculty of Economic and Management Sciences. University of Stellenbosch Business School. Business enterprises -- Finance -- Africa Capital investments -- Africa Small business -- Statistics -- Africa UCTD Thesis (PhD)--Stellenbosch University, 2025. Sanga, B. J. 2025. Unlocking Financing for Small and Medium-Sized Enterprises and Entrepreneurship in Africa: Empirical Insights on the Role of Financial Technology and Financial Deepening. Unpublished doctoral dissertation. Stellenbosch: Stellenbosch University [online]. Available: https://scholar.sun.ac.za/items/afcaa9d6-5747-4de0-84d5-374d15e87c2f ENGLISH SUMMARY: Small and medium-sized enterprises (SMEs) are considered the emerging private sector of developing countries and the engine for accelerating economic and social development. However, entrepreneurs and SMEs face obstacles in raising capital and accessing financial services, which are critical for their growth, primarily due to information asymmetry. Financial technology (FinTech) can help lenders mitigate SMEs’ credit risks and reduce lenders’ costs and time to collect information and assess SMEs’ creditworthiness. Furthermore, financial deepening enhances financial intermediation with efficient mobilisation and allocation of resources, which can foster entrepreneurship and lessen financing constraints for SMEs. This thesis empirically examines the role of FinTech and financial deepening in unlocking financing for SMEs and entrepreneurs in Africa. The empirical analyses and results are organised into eight chapters of original publishable articles. The first chapter introduces the themes, terminologies, objectives, and significance of the research, as well as market trends in entrepreneurship and SME financing. The second chapter conducts a systematic literature review and bibliometric analysis on the novel topic of FinTech and SME financing. The chapter employs two systematic review protocols on two world-leading citation databases from 2008 to 2022: (i) Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) and (ii) Protocol, Search, Appraisal, Synthesis, Analysis and Reporting (PSALSAR). The findings show that FinTech has increased lenders’ ability to collect and process SMEs’ information, thus reducing their financing constraints. The third chapter empirically examines the effect of FinTech developments and their implication on digital finance for SMEs and entrepreneurship in 47 African countries from 2013 to 2020 using the novel Method of Moments Quantile Regression (MMQR) and two-stage least square regression (2SLS). The empirical findings show that: (i) FinTech developments have a strong and positive effect in countries with higher levels of digital finance than those with lower levels. (ii) FinTech developments and digital finance positively and statistically significantly influence African entrepreneurship, particularly for entrepreneurs in the early development stage. The fourth chapter empirically analyses the influence of FinTech developments on bank credit to the private sector in 35 African countries from 2013 to 2020 using the new MMQR and 2SLS. While the private sector credit by banks may not adequately represent the credits to SMEs, the fact that bank credits remain the primary source of finance for SMEs in Africa makes it a good choice without a better alternative. The findings show that FinTech developments (i) positively and strongly influence bank credit to the private sector in Africa. Most importantly, their effect is more prevalent in countries with low and medium bank credit levels to the private sector. (ii) increase bank credit to the private sector in countries with strong banking sector stability. The fifth chapter shifts from the first theme of this thesis, “FinTech, entrepreneurship and SME financing”, to the second theme, “financial deepening, entrepreneurship and SME financing”. Most African entrepreneurs are SMEs, and a lack of access to finance constrains their growth. The chapter empirically investigates whether financial deepening promoted entrepreneurship and SME financing in 42 African countries from 2006 to 2020 using the new MMQR and 2SLS. The empirical findings show that financial deepening heterogeneously influences entrepreneurship and SME financing, especially at the nascent stages. We therefore examine the factors that increase financial deepening in Africa, including institutional, technological innovations, and macroeconomic and financial factors. The sixth chapter empirically examines the impact of institutional factors on financial deepening in 50 African countries from 2000 to 2019. The chapter employs different panel econometric models. The empirical results show that institutional qualities significantly enhance financial deepening in Africa differently depending on institution, credit, and income levels. The seventh chapter investigates whether technological innovations such as mobile phone subscriptions and secure internet servers increased financial deepening in 43 African countries from 2010 to 2019. The chapter uses various estimation methods, such as MMQR and 2SLS. The empirical findings show that technological innovations positively and significantly influence financial deepening in Africa regarding banks’ mobilisation of deposits and credit allocation to enterprises. Furthermore, the technological indicators strongly and positively affect higher bank credits than lower levels. The eighth and last empirical chapter addresses whether macroeconomic and financial factors play a crucial role in financial deepening in Africa by analysing panel data from 22 countries from 2010 to 2019. The MMQR results show that macroeconomic factors have a significant impact at a higher level of financial depth, almost doubling those with lower levels, except for trade openness and inflation. Furthermore, the findings indicate that financial factors have a more substantial impact at a low level of financial depth than at a high level, except for bank concentration. Lastly, the concluding chapter synthesises the study's key findings, highlighting their implications, relevant policy and future research recommendations. AFRIKAANSE OPSOMMING: Klein en mediumgrootte ondernemings (KMO's) word beskou as die ontluikende privaatsektor van ontwikkelende lande, en die dryfkrag vir die versnelling van ekonomiese en sosiale ontwikkeling. Tog staar entrepreneurs en KMO's hindernisse in die gesig wanneer hulle kapitaal wil opbou en finansiele dienste wil bekom wat krities is vir hul groei, hoofsaaklik as gevolg van inligtingsasimmetrie. Finansiele tegnologie (FinTech) kan finansiele verskaffers help om die kredietrisiko's van KMO's te verminder, en hulle kostes en tyd om inligting in te win en KMO's se kredietwaardigheid te assesseer, te verminder. Verder versterk finansiele verdieping finansiele bemiddeling deur doeltreffende mobilisering en toedeling van hulpbronne, wat ondernemerskap kan bevorder en finansieringsbeperkings vir KMO's kan verminder. Hierdie tesis ondersoek empiries die rol van FinTech en finansiele verdieping in die ontsluiting van finansiering vir KMO's en entrepreneurs in Afrika. Die empiriese analises en resultate is georganiseer in agt hoofstukke van oorspronklike publiseerbare artikels. Die eerste hoofstuk stel die temas, terminologiee, doelwitte, en belangrikheid van die navorsing voor, sowel as marktendense in entrepreneurskap en KMO finansiering. Die tweede hoofstuk voer 'n sistematiese literatuurstudie en bibliometriese analise uit oor die nuwe onderwerp van FinTech en KMO finansiering. Die hoofstuk gebruik twee sistematiese hersieningsprotokolle op twee wereldleidende aanhalingsdatabasisse vanaf 2008 tot 2022: (i) Voorkeur Rapporteringsitems vir Sistematiese Hersienings en Meta-Analises (PRISMA) en (ii) Protokol, Soektog, Waardering, Samevatting, Analise en Rapportering (PSALSAR). Die bevindinge toon dat FinTech die vermoe van finansiele borge verhoog het om inligting van KMO's te versamel en te verwerk, en sodoende hul finansieringsbeperkings te verminder. Die derde hoofstuk ondersoek empiries die effek van FinTech ontwikkeling en hul implikasie vir digitale finansies vir KMO's en entrepreneurs in 47 Afrika-lande vanaf 2013 tot 2020, met behulp van die nuwe Metode van Momentkwantielregressie (MMQR) en tweefase kleinste-kwadrate regressie (2SLS). Die empiriese bevindinge toon dat: (i) FinTech ontwikkeling 'n sterk en positiewe effek het in lande met hoer vlakke van digitale finansies as die met laer vlakke. (ii) FinTech ontwikkeling en digitale finansies beinvloed Afrika-entrepreneurskap positief en statisties betekenisvol, veral vir entrepreneurs in die vroee ontwikkelingsfase. Die vierde hoofstuk ontleed empiries die invloed van FinTech ontwikkeling op bankkrediet aan die privaatsektor in 35 Afrika-lande vanaf 2013 tot 2020 met behulp van die nuwe MMQR en 2SLS. Alhoewel bankkrediet aan die privaatsektor dalk nie die krediete aan KMO's genoegsaam verteenwoordig nie, is die feit dat bankkrediete steeds die primere bron van finansiering vir KMO's in Afrika is, die enigste opsie in die afwesigheid van ander alternatiewe. Die bevindinge toon dat FinTech ontwikkeling (i) 'n positiewe en sterk invloed het op bankkrediet aan die privaatsektor in Afrika. Belangriker nog, hul effek is meer prominent in lande met lae en medium bankkredietvlakke aan die privaatsektor. (ii) verhoog bankkrediet aan die privaatsektor in lande met 'n sterk banksektorstabiliteit. Die vyfde hoofstuk skuif van die eerste tema van hierdie tesis, "FinTech, entrepreneurskap en KMO finansiering", na die tweede tema, "finansiele verdieping, entrepreneurskap en KMO-finansiering". Die meeste Afrika entrepreneurs is KMO's, en 'n gebrek aan toegang tot finansiering belemmer hul groei. Die hoofstuk ondersoek empiries of finansiele verdieping entrepreneurskap en KMO finansiering bevorder het in 42 Afrika-lande vanaf 2006 tot 2020 met behulp van die nuwe MMQR en 2SLS. Die empiriese bevindinge toon dat finansiele verdieping heterogeen entrepreneurskap en KMO finansiering beinvloed, veral in die beginfases. Ons ondersoek dus die faktore wat finansiele verdieping in Afrika verhoog, insluitende institusionele, tegnologiese innovasies, en makro-ekonomiese en finansiele faktore. Die sesde hoofstuk ondersoek empiries die impak van institusionele faktore op finansiele verdieping in 50 Afrika-lande vanaf 2000 tot 2019. Die hoofstuk gebruik verskillende paneelekonometriese modelle. Die empiriese resultate toon dat institusionele kwaliteite finansiele verdieping in Afrika betekenisvol versterk, afhangende van institusie-, krediet- en inkomstevlakke. Die sewende hoofstuk ondersoek of tegnologiese innovasies soos mobielefooninskrywings en veilige internetbedieners finansiele verdieping verhoog het in 43 Afrika lande vanaf 2010 tot 2019. Die hoofstuk gebruik verskeie skattingsmetodes, soos MMQR en 2SLS. Die empiriese bevindinge toon dat tegnologiese innovasies finansiele verdieping in Afrika positief en betekenisvol beinvloed ten opsigte van bankdeposito's en krediettoedeling aan ondernemings. Verder beinvloed die tegnologiese aanwysers sterk en positief hoer bankkrediete as laer vlakke. Die agtste en laaste empiriese hoofstuk ondersoek of makro-ekonomiese en finansiele faktore 'n belangrike rol speel in finansiele verdieping in Afrika deur paneeldata van 22 lande vanaf 2010 tot 2019 te analiseer. Die MMQR-resultate toon dat makro-ekonomiese faktore 'n beduidende impak het op 'n hoer vlak van finansiele diepte, wat amper die aantal van die met laer vlakke verdubbel, behalwe vir handelsopenheid en inflasie. Verder dui die bevindinge daarop dat finansiele faktore 'n meer substansiele impak het op 'n lae vlak van finansiele diepte as op 'n hoe vlak, behalwe vir bankkonsentrasie. Laastens, die finale hoofstuk integreer die sleutelbevindinge van die studie, waar die implikasies, relevante beleid, en aanbevelings vir toekomstige navorsing uitgelig word. Doctoral 2025-06-09T06:59:19Z 2025-06-09T06:59:19Z 2025-03 Thesis https://scholar.sun.ac.za/handle/10019.1/132448 en Stellenbosch University xxvi, 176 pages : illustrations application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Business enterprises -- Finance -- Africa Capital investments -- Africa Small business -- Statistics -- Africa UCTD Sanga, Bahati Joel Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening |
| title | Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening |
| title_full | Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening |
| title_fullStr | Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening |
| title_full_unstemmed | Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening |
| title_short | Unlocking financing for small and medium-sized enterprises and entrepreneurship in Africa : empirical insights on the role of financial technology and financial deepening |
| title_sort | unlocking financing for small and medium sized enterprises and entrepreneurship in africa empirical insights on the role of financial technology and financial deepening |
| topic | Business enterprises -- Finance -- Africa Capital investments -- Africa Small business -- Statistics -- Africa UCTD |
| url | https://scholar.sun.ac.za/handle/10019.1/132448 |
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