The Effects of Access to Microfinance on Entrepreneurial Development in Eastern Region of Afghanistan

Abstract

Entrepreneurship development has been shown to be important to economic growth, job creation and poverty alleviation, especially in developing and post-conflict countries. But the lack of financial resources is still one of the challenges in the growth and sustainability of SMEs. This study explores the impact of accessing microfinance on the development of entrepreneurship in eastern Afghanistan and the role of technology use. The quantitative research method was adopted in which the primary data was gathered through a structured questionnaire from 150 SME owners and managers from Nangarhar, Kunar and Laghman provinces. The relationships among the study variables were analyzed using descriptive statistics, Pearson correlation and multiple regression analysis. The results show that the access to microfinance and technology adoption have positive and statistically significant impact on entrepreneurial development. The results of the correlation analysis showed that entrepreneurship development was positively correlated with technologies and access to microfinance with high positive correlations of r = 0.723 and r = 0.674 respectively and significant at 1% level. The regression results also showed that technologies (β = 0.496, p < 0.001) have a more significant influence on entrepreneurial development than access to microfinance (β = 0.367, p < 0.001). The model had an explanatory power of 60.6% (R² = 0.606), which is considered significant. The study suggests that the improvement of access to microfinance and the promotion of the adoption of technology can have a significant impact on the development of entrepreneurship and business activity of SMEs in eastern Afghanistan.