MICRO-CREDIT FINANCE AND UNEMPLOYMENT IN SOUTH AFRICA

Abstract

The South African government has to address high rates of unemployment and whether the provision of micro-credit finance can reduce unemployment. The study analysed the relationship between micro-credit finance and unemployment using quarterly data covering the period from 1994-2014. The study utilized the Vector Error Correction Model (VECM) to provide short run and long run dynamic effects of micro-credit finance on unemployment. The results indicated that micro-credit finance has a negative relationship with unemployment. Therefore, it is recommended that microcredit finance can be used as a tool to reduce unemployment and boost economic growth.

Keywords

• Micro-credit, unemployment, Vector Error Correction Model

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