This paper investigates the determinants of access to formal credit by poor
households in South Africa. Despite some progress in poverty reduction in the recent
years, it remains astonishingly high by historical and international standards. Access
to credit is believed by some scholars to be a primary means to address poverty and
improve the standards of living of poor households. Thus, it is necessary to identify
the determinants of the propensity to borrow and of the amount that is borrowed.
Using 2008-2012 data from the National Income Dynamics Study (NIDS), a
Heckman Selection model was estimated. The results from this study suggest that
age of the household head, race, educational level, gender, employment, geographic
location of households affect the propensity to borrow by poor households in South
Africa.