Abstract
M.Comm.
The study examines the impact of regulations on small businesses in the Republic of South Africa. It analyses the Small Business Development Policy of 1996 which categorised small businesses into micro, small, very small, and medium enterprises (SMMEs).
This policy outlines the functions of the large number of small business support institutions such as Ntsika Enterprise Promotion Agency, Khula Finance, the Department of Trade and Industry (DTI) institutions and the Gauteng Provincial SMME desks.
Ntsika was formed in 1996 to implement the small business strategy. The institution provides non-financial support to small businesses through a number of programmes. These programmes include Tender Advise Centres and Manufacturing Centres.
Khula Enterprise Promotion Agency was established in 1996 to provide loans and guarantees to small businesses in order to increase their access to finance through commercial banks. Khula manages a large number of programmes, namely, business loan schemes, guarantee schemes, Khula star funds and equity funds.
The DTI provides a number of incentive schemes for registered small businesses. The DTI incentive schemes provide the necessary infrastructure and contribute towards increasing the performance in the small businesses sector.
Small businesses face a large number of challenges such as the lack of competent human capital, low profit margins, inadequate financing, stiff competition from large monopolistic and well established businesses, inadequate marketing strategies, unfavourable policy and legal environment, lack of information about government support initiatives, and cyclical sensitivity of their products.
The study concludes that there is a need for mentorship programmes in the small business sector in order to increase the success rate. More research is needed in the small business sector to create awareness about potential benefits accruing to the financial sector and the economy as a whole. More players are required in the commercial banking sector in order to enhance competition. The state should reduce barriers to entry into the banking and the SMME sector. Furthermore, the state should level the playing field to facilitate access of women to financial resources. These institutions must publish all their results regularly so that the success of their financing can be evaluated. Transparency is needed and non-performing loans must be reported to judge the small business support institutions.