The copyright of this thesis vests in the author. No quotation from it or information derived from it is to be published without full acknowledgementTown of the source. The thesis is to be used for private study or non- commercial research purposes only. Cape Published by the University ofof Cape Town (UCT) in terms of the non-exclusive license granted to UCT by the author. University UNIVERSITY OF CAPE TOWN DEPARTMENT OF SOCIOLOGY PLANET, PEOPLE & PROSPERITY An Exploration of Sustainable Microfinance PracticesTown in South Africa: A Case Study of the Kuyasa Fund in Cape Town Jenna Larsen LRSJEN002Cape 2011of A minor dissertation submitted in partial fulfillment of the requirements for the award of the degree of Master of Philosophy (MPHIL), Development Studies UniversitySupervisor: Dr Frank Matose COMPULSORY DECLARATION This work has not been previously submitted in whole, or in part, for the award of any degree. It is my own work. Each significant contribution to, and quotation in, this dissertation from the work, or works, of other people has been attributed, and has been cited and referenced. Signature: Date: Acknowledgements This project has led me on an incredible and challenging journey; one of intellectual development and self-discovery. I wish to express my sincere gratitude to those that made this dissertation possible: My supervisor, Dr. Frank Matose, thank you for your invaluable guidance, support and patience throughout this process. My colleagues and fellow students from the Land Reform and Democracy Chair and Seminar at the University of Cape Town, your feedback, advice and support are truly appreciated. I have learned so much from each and every one of you. Particularly Dr. Gavin Capps, your encouragement has led me to consider things I never thought possible. My friends Danya Davis and Rachael Masey. Danya, I cannot express enough how grateful I am for your encouragement. The study sessions you held were paramount to completing this work and overcoming the feeling of isolation. Rachael, thank you for your opinions, support and amazing revising skills that you provided from across the world. The end result was stunning. Town My family; mom and dad, my siblings Becky, Tracey and Alan, Auntie Sue and Grandma Pat, even though you were across the world, I knew you were behind me the whole way through. I’d like to especially thank my parents for fostering my educational growth. I am forever indebted to your struggle that opened up my future of opportunities. Cape My heartfelt thanks goes to all of the people offrom the organizations that contributed to the findings of this study. Above all thank you Zainab Panday from the Kuyasa Fund, I really could not have completed this research without you. Thank you for your patience, your belief in me and the study and your willingness to help in whichever way you could. Also thank you to Anne Maftei, if it was not for you, I would have been lost in the pursuit of this topic. Your advice and contacts were essential to me successfully completing and for this I cannot thank you enough. Also thank you Martha Deacon, Mazwi Mkhulisi, Nir Hermelin, Rhoda Kadalie, Anouk Verheijen, John de Wit, Max Pichulik, Dr. Gisela Prasad, Michael Brand, Gordon Hodgetts, Waleed Waja, Brianna Mersey, Zukiswa Pikini and Lindiwe who all made essential contributions to this study. University Lastly but definitely not least, thank you to my partner in life, Lwando Tanale. You have seen me through since day one. You have done a wonderful job at putting up with my demanding schedule and being overly stressed. Your love gives me strength each and every day. I love you. i Abstract This dissertation explored sustainable microfinance (SMF) practices in South Africa through an investigation of the microfinance sector nationally. Since recipients of microfinance largely depend on local ecosystems and natural resource bases for sustaining livelihoods and improving quality of life (QOL), microfinance has been identified as an important development strategy for reducing the vulnerabilities associated with changing environmental conditions for impoverished people. A framework for SMF consisting of four principles was assembled based on the sustainable development theory and microfinance literature. The qualitative methodology encompassed two main approaches: (1) a literature review that located examples of SMF practices found internationally, which contributed to understanding the concept and provided insights for South Africa and; (2) a case study where a sample of organisations across the country and an in-depth look at one housing microfinance institution (MFI) offered insight into SMF practices. Data was collected from the sample by way of interviews and personal correspondence with key players from eight organisations from four provinces. Data gathered from the housing MFI was through 20 interviews with management,Town staff, partnering organisations and loan recipients; as well as through direct observation of the loan collections process and by reviewing organisation documents. The main finding was that SMF does not yet exist in practice but that it is emerging although it is not yet recognized by the industry at large. Four organisations were beginning to consider the environmentCape in practice through exposure, awareness, environmental initiatives, renewableof energy (RE) and by promoting SMF. The evidence was analysed against the SMF framework, which found that two-thirds (2/3) of the criteria supported the framework while the other one-third (1/3) did not. This suggests that more research is needed; since finding relevant organisations was challenging, the housing MFI was a ‘loose’ fit for the framework where not all aspects of SMF were integrated and the sample organisations were not investigated with enough depth. If sustainability continues to be sacrificed in microfinanceUniversity practice, it is apparent that loan recipient’s lives and the industry will face many challenges and microfinance runs the risk of becoming another development failure. Key words: microfinance, sustainable development, environment, South Africa ii Table of Contents Acknowledgements ............................................................................................................................................................ i Abstract ................................................................................................................................................................................. ii Table of Contents .............................................................................................................................................................. iii List of Tables & Figures .................................................................................................................................................... v Acronyms Abbreviations .............................................................................................................................................. vi CHAPTER 1: Introduction ............................................................................................................................................... 1 1.1 Aims and Objectives .................................................................................................................................................................. 2 1.2 Research Questions ................................................................................................................................................................... 3 1.3 Contextual Background ........................................................................................................................................................... 3 1.3.1 Sustainable Development .............................................................................................................................................. 3 1.3.2 Microfinance ........................................................................................................................................................................ 4 1.3.3 The Microfinance Gap...................................................................................................................................................... 5 1.4 The South African Context ...................................................................................................................................................... 6 1.4.1 Sustainable Development .............................................................................................................................................Town 7 1.4.2 Microfinance ........................................................................................................................................................................ 7 1.5 Approach and Methods .......................................................................................................................................................... 11 1.5.1 Justification of the Approach ...................................................................................................................................... 11 1.5.2 The Case Study ................................................................................................................................................................Cape . 11 1.5.3 Methods and the Case Study Selection ..................................................................................................................of