Factors Influencing Access to Debt Financing among Small And Medium Enterprises in the Democratic Rebublic of the Congo: A Case of Agribusiness Enterprises in Beni Town

Abstract

This study focused on factors influencing access to debt financing among small and medium agribusiness enterprises in Beni town, Democratic Republic of the Congo. The objectives were to identify factors influencing debt financing accessibility, examine the extent of access to debt financing, and investigate the relationship between firm-level factors and access to debt financing among Agribusiness-SMEs in Beni. Capital structure theories were used to form the basis for the study. The study’s target population consisted of 91 employees working in the respective finance departments of the 27 small and medium-sized agribusiness enterprises registered in the commercial register in Beni. A self-administered questionnaire was used to collect primary data which was analysed using the Statistical Package for Social Sciences (SPSS) version 23.0. Both descriptive and inferential statistical analysis was conducted. Findings showed that firm-specific factors, financial factors, and manager/owner factors play a significant role as far as access to debt financing in terms of borrowing frequency and loan amount is concerned. The study indicated that the three categories of factors combined together explain 66.4% of the access to debt financing among Agribusiness-SMEs in Beni. Individually, firm-specific factors (number of years in existence, size and location) explain access to debt financing at 44.8%; the financial factors (collateral, performance and quality of financial statements) explain access to debt financing at 59.8%; while manager/owner factors (education level and business experience) explain access to debt financing at 52.1%. The study recommended that Agribusiness-SMEs should have accounting in order to increase their chances of accessing debt financing.