MSMEs are fundamental to both developed and developing countries because of their effect on national gross domestic product, innovation, creation of employment and reduction of poverty, however, access to finance remains a global challenge for the sector. As a result, this study sought to explore the barriers impeding MSME access to finance in Mbabane Eswatini. Moreover, the objectives of the study were to establish the relationship between collateral, financial literacy, information asymmetry, firm & owner or manager characteristics and access to finance for MSMEs. Additionally, four research questions and four null hyotheses were derived from the research objectives.
The mixed methods research methodology and convergent design was adopted. Moreover, 566 MSMEs in Mbabane and 6 financial institutions (4 banks and 2 DFIs) constituted the target population. Consequently, an optimal sample size of 188 MSMEs was determined using the University requirement of 1/3 of the target population and all 6 financial institutions were purposively requested to participate in the study. Furthermore, structured questionnaires with closed ended questions were used to collect data from MSMEs and semi structured interviews conducted through Skype or face to face to collect data from the financial institutions.
Significantly, the results divulged that there is a relationship between collateral and access to finance for MSMEs; there is a relationship between financial literacy and access to finance for MSMEs; there is a relationship between information asymmetry and access to finance for MSMEs. In contrast, no relationship was found between firm and owner or manager characteristics and access to finance for MSMEs. Additionally, the results revealed other factors affecting access to finance for MSMEs: business viability, contribution by the borrower or commitment, loan size, repayment ability, experience and character of the owner.
Consequently, in alignment with the study objectives it was concluded that the barriers impeding access to finance for MSMEs in Mbabane Eswatini are: collateral, financial literacy, information asymmetry, business viability, contribution by the borrower, loan size, repayment ability, experience and character of the owner. Moreover, the results are significance to all the stakeholders (government, MSMEs and financial institutions) and contribute to the body of knowledge in a number of ways: methodological, knowledge gap, theoretical, unexpected results and significance of conclusions. Furthermore, the study presented implications and recommendations for practice and future research.