Value chain financing and profitability of edible oil manufacturing companies in South Africa.

Abstract

The study aimed to evaluate the impact of Value Chain Financing on the profitability of edible oil manufacturing companies in South Africa. Utilising secondary data collected from the financial statements of edible oil manufacturing companies from 2012 to 2022. Throughout the research, a positivism paradigm was applied using a descriptive retrospective panel data approach. Multiple regression analysis was used to determine the relationship between the value chain financing variables and the profitability of edible oil manufacturing companies in South Africa. The first objective was to ascertain the impact of financing in the raw material on the profitability of edible oil manufacturing companies in South Africa. This objective was achieved using descriptive statistics. The second objective was to assess the impact of financing in the working capital on the profitability of edible oil manufacturing companies in South Africa. This objective was achieved using correlation analysis between the variables. The third objective was to ascertain the impact of financing in the primary activities on the profitability of edible oil manufacturing companies in South Africa. The fourth objective was to determine the impact of financing in the support activities on the profitability of edible oil manufacturing companies in South Africa. The fifth objective was to establish the impact of firm characteristics on the link between financing in the value-chain and profitability in edible oil manufacturing companies in South Africa. The three last objectives used data panel regression for the period from 2012 to 2022. In this analysis, the study extends the Unit root test to confirm that the data was stationary; the multi-collinearity test to guarantee that the independent variables had not been correlated; the Hausman test aided in choosing the best model for the data among the fixed effect model with the random effect model; and the study included the Normality test to guarantee that the findings could be generalised and utilised in the edible oil industry. The study results suggest that value chain financing gave firms a competitive advantage amongst other competitors in the field and increased profitability.