Financial inclusion and intersectionality: A case of business funding in the South African informal sector

Financial inclusion is a critical tool in the fight against poverty. This is especially important in economies where informal markets are prevalent due to the pervasion of market failures. Marginal identities such as gender, income and race are generally noted in the literature as factors influencing access to finance. However, these marginalities are often investigated linearly, with little attention paid to the fact that they interact to compound financial exclusion. Using a survey of informal traders, the paper investigates how having multiple marginalities influences the choice of start-up capital. A sample is drawn from three different provinces in South Africa. A multinomial logit model is estimated. Using a simulation of representative groups, the paper shows that multiple marginalities matter in accessing finance. Education emerges as the most important factor that can temper the effect of other marginalities in the financial sector. Both females and blacks with higher levels of education have better access to more stable sources of start-up capital.