Constraints to business growth in low- and medium-income countries
Limited access to finance is cited as a significant constraint to the growth and performance of businesses
Abstract
Limited access to finance is cited in much of the literature reviewed as a significant constraint to the growth and performance of businesses in low and middle income countries. Firms in these countries, particularly small and medium enterprises (SMEs) experience financial constraints due to high interest rates; complex application procedures; inability to meet collateral requirements; and/or insufficient financial records. While the financing gap is a problem throughout the developing world, countries in Africa are often less financially developed than countries in other regions. Women-owned SMEs may experience greater challenges in accessing finance, particularly in the case in Sub-Saharan Africa . This may be a factor of size, however. Larger businesses often have better access to external finance rather than smaller companies, which are more likely to be run by females. Studies on other regions, such as South Asia, do not necessarily exhibit a financial bias against women-owned enterprises.
K4D helpdesk reports provide summaries of current research, evidence and lessons learned. This report was commissioned by the UK Department for International Development
Citation
Haider, H. (2018). Constraints to business growth in low- and medium-income countries. K4D Helpdesk Report. Brighton, UK: Institute of Development Studies.
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