Abstract
M.Comm.
South Africa's Minister of Trade and Industry, Alec Irwin, stated that "one of the most striking features of the South African economy is the underdevelopment of small and medium enterprises" (Polkinghorne, 2001).
A lack of sufficient capital and credit is often a major handicap to the development of
SMMEs, particularly in their early growth stages. The growth and development .ofthe small, medium and micro enterprise (SMME) sector is acknowledged by most interest groups and policy-makers as being of critical importance to South Africa's ability to address the serious problems of unemployment.
The South African government suggests that the SMME sector -with the help of government support -is capable of fulfilling these obj ectives and has introduced a number of supply-side measures to promote the formerly neglected sector. The overall objective is "to create an enabling environment" and "to level the playing field" (South Africa, 1995) in terms of national, regional and local policy frameworks for SMME development.
Khula Enterprise Finance Ltd. was established in 1996 in terms of a Department of Trade and Industry (DT!) initiative and provides access to credit to SMMEs through various delivery mechanisms. One of these delivery mechanisms is a scheme that was created to assist SMMEs to access finance from traditional financial intermediaries by providing guarantees on a risksharing basis. Khula Enterprise Finance Ltd. has assisted in delivering almost 103 000 loans, credit guarantees and other facilities to SMMEs since the agency started operating in 1996. The total value of the loans and guarantees exceeds R550 million (Martins, 2001).
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However, Khula Enterprise Finance Ltd. has to contend with intermediaries applying its programmes -banks that are not renowned for their spirit of adventure, and welfare-oriented service organisations that lack business acumen (Khula: Some business ... , 2002: 53).
The perception among the general population in South Africa is that most banks have neither the capacity nor the will to actively and creatively manage SMME loans to South Africa's emerging markets -"emerging" meaning political customers who have not been seen as critical in the past, but who are seen as such in the future. In South Africa these are largely people of black African descent (Polkinghorne, 2001).
The target of Peoples Bank Business includes previously disadvantaged communities such as black persons, women and the disabled. Additionally, clients are assisted with venture capital or loans to fund start-up businesses. Emphasis is placed on assistance to the community in addition to traditional criteria such as bottom-line results.
This study attempted to assess the service provided by Peoples Bank Business to clients sponsored by the Khula Indemnity Scheme. This study did not attempt to provide solutions to problems experienced, but rather to identify the deficiencies/gaps in service as experienced by clients of Peoples Bank Business.