Borrower-specific financial constraints to black youth entrepreneurs in the Tshwane metropolitan area

Abstract

This research aims to explore the borrower-specific financial constraints that prevent black youth entrepreneurs in Tshwane from accessing finance to for their own start-ups. To achieve its goal, the research seeks to explore whether there are significant differences between black youth entrepreneurs in Tshwane in terms of their personal demographics, business information and personal factors towards business. The empirical results and theoretical literature are examined to facilitate a better understanding of the borrower-specific financial constraints preventing access to finance for start-ups by youth entrepreneurs. These learnings contributed to the body of knowledge relating to entrepreneurship development in South Africa. The literature review revealed that although youth entrepreneurial activity is vital to sustained economic growth, access to finance is the challenge that negatively impacts youth entrepreneurial activity globally. More specifically, the literature indicates that borrower-specific factors to a large extent prevent youth entrepreneurs from accessing finance for their start-ups. The borrower-specific financial constraints are described. During this research, data was obtained by way of a judgment sample using a structured questionnaire consisting of 40 questions. A total of 110 useable questionnaires were returned. The findings of the study reveal that there are no significant differences for respondents in relation to factors for personal savings, business acumen and credibility differences. There are significant differences to certain factors for borrower-specific financial constraints, such as the intention to commence business start-up, gender and the educational level of respondents in relation to their attempt to access finance. Finally, significant learnings from the research are that the poor attitude of black youth towards saving are similar to youth reviewed in the literature, and the culture of South African black youth towards entrepreneurship has improved.