Credit counselling: a contemporary strategy for survival of micro small and medium-sized enterprises in under-developed financial markets post COVID-19 pandemic
Journal of Entrepreneurship and Public Policy
ISSN: 2045-2101
Article publication date: 27 February 2024
Abstract
Purpose
The main purpose of this paper is to establish the mediating effect of credit counselling in the relationship between access to microcredit and survival of micro small and medium-sized enterprises (MSMEs) in developing countries in sub-Saharan Africa post COVID-19 pandemic with data collected from rural Uganda.
Design/methodology/approach
Structural equation modelling (SEM) through SmartPLS 4.0 was used to generate the standardized parameters to test whether credit counselling mediates the relationship between access to microcredit and survival of MSMEs in developing countries in sub-Saharan Africa post COVID-19 pandemic with data collected from rural Uganda.
Findings
The SEM bootstrap results revealed that credit counselling enhances access to microcredit by 27% to promote survival of MSMEs in developing countries in sub-Saharan Africa post COVID-19 pandemic with data collected from rural Uganda.
Research limitations
The current study focused only on women MSMEs. Future studies may possibly collect data from all the MSMEs to draw better generalization of the findings within the sector.
Practical implications
The findings can help public finance policy to ensure provision of credit counselling to microentrepreneurs who borrow from different financial institutions to reduce the problem of loan defaults and delinquency rampant in lending. This could be done through conducting routine business education and counselling sessions for microentrepreneurs who often need credit to grow their businesses.
Originality/value
This study is amongst the first few studies to establish the mediating effect of credit counselling in the relationship between access to microcredit and survival of MSMEs in developing countries in sub-Saharan Africa in the aftermath of COVID-19 pandemic with data collected from rural Uganda. There is a dearth in literature and theory on the rehabilitative and preventive role of credit counselling in reducing repayment defaults amongst borrowers within the credit market to spur survival of MSMEs seen as the main enabler of economic growth, especially in developing countries. In fact, credit counselling acts as a safety net by substituting financial literacy and education to solve the rampant problem of overindebtedness amongst borrowers who are debt illiterate within the credit market.
Keywords
Acknowledgements
The authors would like to thank the anonymous reviewers for the exceptional and constructive comments and the editors for the attention and feedback given to this manuscript, which have helped to significantly improve it to publishable standard. The corresponding author also acknowledges great support from Prof. Issouf Soumare and the excellent academic environment at Laboratory for Financial Engineering at FSA, Laval University.
Author contributions: All efforts of authors who contributed to this manuscript, especially the corresponding author are greatly acknowledged. All authors read and approved the final manuscript.
Funding: The authors declare that no funds, grants, or other support were received during the preparation of this manuscript.
Citation
Okello Candiya Bongomin, G., Chrysostome, E., Nkongolo-Bakenda, J.-M. and Yourougou, P. (2024), "Credit counselling: a contemporary strategy for survival of micro small and medium-sized enterprises in under-developed financial markets post COVID-19 pandemic", Journal of Entrepreneurship and Public Policy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEPP-06-2023-0053
Publisher
:Emerald Publishing Limited
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