Sourcing Working Capital Finance: The Case of Mauritian SMEs

Kesseven Padachi


For almost three decades, small firm finance has
captured the attention of academicians and policy makers
across the world. Despite the government efforts to bridge
the ‘financial gap’ yet the small to medium-sized
enterprises(SMEs) rated access to finance, especially
working capital finance (WCF) as a main hindrance to
move along the business life cycle. This study is an attempt
to identify the main factors affecting the Mauritian SMEs
access to WCF. The methodology used for this study
involves the collection of primary data through a
comprehensive survey questionnaire administered to the
owner manager of firms operating in six main industry
groups of the Mauritian manufacturing sector. The
research findings provided some new evidences as regards
to the difficulties which firms faced while procuring
working capital. They are often constrained by their lack
of financial knowledge and their inability to formulate
good business plan. Access to finance is also constrained by
the market conditions, where the seasonality of the market
has a greater incidence on the working capital
requirements. Further, firms experiencing significant
information costs have difficulty getting access to
traditional sources of finance. There was also evidence to
support that financially constrained firms suffer from late
payment problem, have longer production cycle and
operate in seasonal markets. The findings of the study will
be useful to financial institutions funding SME and policy
makers. The study finds working capital is the major
concern for the SME and its timely availability is critical
for the success of ventures. In many cases, SMEs have no
option but to extend or provide longer credit period and it
needs not be seen negatively for funding. This paper
provides evidence on the difficulties which Mauritian
manufacturing SMEs faced while procuring WCF and
adds to the growing literature on SMEs financing.


SMEs; Working Capital Finance; Financial Knowledge; Sources of Finance; Logistics Regression

Full Text:



  • There are currently no refbacks.