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Financing the Start-up and Operation of Immigrant-owned Businesses: the path taken by African Immigrants in the Cape Town Metropolitan Area of South Africa

Author

Listed:
  • Tengeh, Robertson Khan
  • Ballard, Harry
  • Slabbert, Andre

Abstract

Drawing a sample of 135 successful African immigrant-owned businesses, this paper sets out to investigate how their owners acquired the necessary capital for start-up and growth thereafter. The paper was designed within the quantitative and qualitative research paradigms, in which a triangulation of three methods was utilised to collect and analyse the data. The paper revealed that although African immigrants are characteristically at the disadvantage when it comes to accessing capital from formal financial institutions, this does not stop them from pursuing entrepreneurial activities. At the start-up stage, they typically resort to personal savings, business credit, family credit, and loans from informal financial institutions. According to the ability to raise capital, we found that a varying range of start-up capital was utilised, which tended to vary across the different ethnic groups studied. Once started, we found that the sources of additional finance available to these immigrants did not change significantly. They conventionally turned to friends, co-ethnics and self-help financial associations to ‘feed’ their need for further funding.

Suggested Citation

  • Tengeh, Robertson Khan & Ballard, Harry & Slabbert, Andre, 2011. "Financing the Start-up and Operation of Immigrant-owned Businesses: the path taken by African Immigrants in the Cape Town Metropolitan Area of South Africa," MPRA Paper 38405, University Library of Munich, Germany, revised 19 Dec 2011.
  • Handle: RePEc:pra:mprapa:38405
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    File URL: https://mpra.ub.uni-muenchen.de/38405/1/MPRA_paper_38405.pdf
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    References listed on IDEAS

    as
    1. Alicia Robb & Robert Fairlie, 2009. "Determinants of business success: an examination of Asian-owned businesses in the USA," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(4), pages 827-858, October.
    2. Colombo, Massimo G. & Delmastro, Marco & Grilli, Luca, 2004. "Entrepreneurs' human capital and the start-up size of new technology-based firms," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1183-1211, November.
    3. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Regional Economic Growth: Towards A General Theory of Start-Ups," WIDER Working Paper Series 070, World Institute for Development Economic Research (UNU-WIDER).
    4. Tengeh, Robertson Khan & Ballard, Harry & Slabbert, Andre, 2011. "A framework for acquiring the resources vital for the start-up of a business in South Africa:an African Immigrant’s Perspective," MPRA Paper 34211, University Library of Munich, Germany.
    5. C. Mirjam van Praag, 2003. "Business Survival and Success of Young Small Business Owners," Tinbergen Institute Discussion Papers 03-050/3, Tinbergen Institute.
    6. Lucio Cassia & Alessandra Colombelli, 2006. "Entrepreneurship As Regional Development Catalyst," ERSA conference papers ersa06p627, European Regional Science Association.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    business start-up; immigrant-owned businesses; African immigrants; finance; capital; and South Africa;

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • A10 - General Economics and Teaching - - General Economics - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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