- Lack of security
- Ignorance of finances available
- Most of them are risky businesses as there are no feasibility studies done (chances of failure have been put to 80%).
- Their size being small tends to make them UNKNOWN i.e. they are not a significant competitor to the big companies.
- Cost of finance may be high – their market share may not allow them to secure debt.
- Small loans are expensive to extend bank i.e. administration costs are very high.
- Lack of business principles that are sound and difficult in evaluating their performance.
Solutions to the Above Problems
- There should be diversification of securities e.g. to accept guarantees.
- Education of such businessmen on sound business principles.
- The government should set up a special fund to assist the jua kali businessmen.
- Encourage formation of co-operative societies.
- To request bankers to follow up the use of these loans.
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