An Exploratory Study of Rotating Stokvels and Migrant Entrepreneurs

Abstract

Background

Migrant entrepreneurs in Gauteng province rely on rotating stokvels due to difficulty in securing business loans from other sources such as commercial banks and microfinance institutions.

Aim

The study aims to assess and evaluate the extent to which migrant entrepreneurs in Gauteng province, South Africa rely on rotating stokvels for raising start-up and working capital for conducting retail business activities in small, micro and medium-sized enterprises (SMMEs).

Setting

The target population of the study was migrant entrepreneurs who conduct retail business activities in Gauteng province. Data was gathered from a stratified random sample of size

Methods

Data was gathered from a stratified random sample of size n=608 retail businesses owned and operated by migrant entrepreneurs in Gauteng province by using a structured, pre-tested and validated questionnaire of study.

Results

The study found that the percentage of participants who used rotating stokvels for raising start-up capital was 36%. The percentage of participants who used rotating stokvels for raising working capital was 66%. The effective utilisation of money raised from stokvels was significantly associated with the level of entrepreneurial skills, the perceived level of ease of loan repayment, and the operation of business over extended hours.   

Conclusion

Rotating stokvels are being used by retail entrepreneurs to raise start-up and working capital.

Contribution

The study shows that the effective utilisation of money raised from rotating stokvels is dependent upon the level of entrepreneurial skills, the perceived level of ease of loan repayment, and the operation of business over extended hours.