Microfinance and development of entrepreneurship in Senegal: an empirical study of the three largest and most representative MFIs

Abstract

The main objective of this study is to assess the impact of microfinance on the development of entrepreneurship in Senegal. To verify this, we administered a questionnaire to 111 clients of three microfinance institutions in Senegal (CMS, PAMECAS, ACEP). Logistic regression and ordered logit regression were used to measure, respectively, business creation by MFIs and value creation by entrepreneurial clients. The results show, firstly, that only the variables characterising the sustainability of microfinance institutions have a positive influence on entrepreneurship (business creation) through the availability of funds, the minimisation of agency costs and transaction costs. Secondly, the development of entrepreneurship through the creation of value is influenced both by variables of credit massification (the popularisation of microcredit positively, support for micro-entrepreneurs negatively) and the sustainability of institutions (funds available negatively and minimisation of agency costs and transaction costs positively).  These mixed results show that microfinance has little impact on the development of entrepreneurship in Senegal. This work calls for an examination of the ease of lending, mass accessibility and the quality between the credit offered by microfinance institutions and the needs of their users.

Key words: Microfinance, Entrepreneurship, Generalized Linear Models (GLM), Senegal .

Classification JEL : G21, L25, L26.

Paper type : Empirical recherch