Analysis of microenterprises financing needs in Togo: the role of microcredit

Abstract

The microenterprises constitute an important range of private sector operators in Togo. Their room for maneuver is very limited in terms of access to resources to finance their needs. If one accepts that in the long term, full formalization of all production units is desirable, understanding the key elements of the entrepreneurial dynamics of these units shows the importance of their need for financing. Therefore, we ask the following question: What is the contribution of microcredit to the satisfaction of the financing needs of microenterprises? The objective of this paper is to assess the share that microcredit represents in the sources of financing used by these enterprises in Togo. The literature on the sources of financing for businesses and microenterprises in particular has allowed us to deepen our knowledge on the subject and, above all, to understand the theoretical framework of the importance of financing small businesses. As analytical tools, descriptive analysis and the chi-square test was used. After a quantitative study of 30 microenterprises in Togo, the results were revealing. These results show that microenterprises have a greater need for microcredit for their financing needs and that microcredit occupies an important place in the composition of the capital of these microenterprises. From these results, if microentrepreneurs are interested in exploring the financing needs of their businesses, it is important not to overlook microcredit financing.

JEL classification: G32 

Paper type: Empirical research