Financial sector support for small business development
- Authors: Molapo, Sekoala
- Date: 2008-06-13T09:34:00Z
- Subjects: Small business finance , Small business growth
- Type: Thesis
- Identifier: uj:2769 , http://hdl.handle.net/10210/620
- Description: The study examines the relationships between the financial sector and small businesses, and the small business policy framework in South Africa. The study also measures the perception of the Business Chambers and Commercial Banks on the effectiveness of financial sector support to small businesses in the Gauteng area through a questionnaire. The Small Business Development Policy of 1996 outlines the functions of various small business support institutions such as Ntsika Enterprise Promotion Agency, Khula Finance Ltd, the DTI institutions and the Provincial SMME Desks. Ntsika was established in 1996 to implement the national small business strategy. It provides non-financial support to small businesses through a number of programmes including Local Business Service Centres (LBSC), Tender Advice Centres (TAC), and Manufacturing Advice Centres (MAC). These non-financial support services are essential for creating access and utilisation of financial resources. Khula was also established in 1996 to provide loan guarantees to small businesses in order to increase their access to finance through commercial banks. Khula manages a number of programmes namely business loan schemes, guarantee schemes, Khula start funds and equity funds. Khula guarantees 80 percent while commercial banks bear 20 percent of the risk. This has enabled small business without collateral to have access to financial resources. The DTI provides a number of incentive schemes for registered small businesses, namely, Standard Leased Factory Building Scheme (SLFBS), Small and Medium Manufacturing Development Programme (SMEDP), Economic Empowerment Scheme (EES), Venture Capital Scheme (VCS), Normal Finance Scheme (NFS), Import Finance Scheme (IFS), Short-term Export Finance Guarantee Facility (STEFGF), and Export Marketing and Investment Assistance Scheme (EMIA). The Provincial SMME desks are established to represent the interests of small businesses and to contribute to the implementation of the national small business strategy. The DTI incentive schemes provide the necessary infrastructure and contribute towards increasing the performance in the small businesses sector. The small business support programmes are evaluated using a number of criteria, namely, the small entrepreneurs’ awareness of the programmes, if small businesses ever approached these schemes, if small businesses received assistance, what quality of assistance was offered, the cost of assistance, employment creation, poverty alleviation and economic empowerment. Small businesses face a number of challenges such as the lack of competent human resources, 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, cyclical sensitivity of their products, and high inflation rates. The selection criteria of commercial banks is based on factors such as whether or not the borrower is organised and knowledgeable, his competence in terms of understanding accounting, management, and financial and marketing aspects of the business, the borrower’s character, his capability, capital contribution, credit rating, insurance coverage, and collateral pledged, the purpose of the loan, local economic conditions, and the length of lending relationship. However, in South Africa lending criteria is more inclined towards the ability to pledge collateral instead of the viability of the project being financed. Commercial banks face a number of risks when lending to small businesses. The most common risk is the credit risk which results from the inability of the small businesses to honour their financial obligations. High failure rate in the small business sector also contribute towards high credit risk to commercial banks. The study concludes that there is a need for mentorship programmes in the small business sector in order to increase the success rate. The government should also assist commercial banks to reduce their stringent requirements in order to accommodate small businesses. Viability based lending is recommended. The government should facilitate provision of non-financial services in order to address internal incapacities of small businesses. More research is required 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 government should reduce barriers to entry into the banking sector. The government should educate the population on the importance of personal savings in order to reduce over-dependence on financing from commercial banking sector. Women are still marginalised in terms of accessing funds from commercial banks. However, they have low rate of default and pose lower credit risk to commercial banks. The government should level the playing field to facilitate access of women to financial resources. , Prof. R.R. Mears Mrs. J.M.M. Viljoen.
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The management of high-technological development in a small-to-medium enterprise within the mobile and portable power industry
- Authors: Van der Merwe, Gabriel Jacobus
- Date: 2009-01-22T05:38:19Z
- Subjects: Small business technological innovations , Small business finance , New products marketing , Power electronics equipment industry
- Type: Thesis
- Identifier: uj:14817 , http://hdl.handle.net/10210/1942
- Description: D.Ing. , During the last pre-millennium decade South African engineers were involved mainly in military product development. The downscaling of development within the military arena, forced the engineering as well as other industries to refocus on commercial product development and marketing (the engineers in the military environment were not the only ones influenced by the change in the economic climate. Many others were also affected, but for the sake of explanation, the military environment was used). This stage led to the creation of various small- to-medium enterprises (SMEs), which were set up by creative, determined engineers and entrepreneurs. However, by the latter part of the last decade, these initiatives ended sadly in the liquidation of quite a number of companies. These ongoing liquidations are a result of various aspects, such as cash flow restrictions, growing currency value and a low national- growth figure. The research done in fulfilment of this thesis, addresses some of the events of the last decade and offers general, practical suggestions on how to overcome some of these hurdles within the current economic climate. It illustrates that experience enables an entrepreneur to develop methods and provide suggestions on how to create, establish, survive and grow within a high-technology driven SME. Shortfalls, methods and products are discussed by means of case studies. The products discussed in the thesis, are all classified among the field of mobile, portable and static electronic power-conversion. Thirty high-technology companies participated in a survey in support of the research statements. As a summary, it is shown that various aspects often restrict new product development (NPD) for SMEs. Optimum and effective usage of knowledge and experience in areas of technology, marketing, human resources, organisational, operational, manufacturing and financial management is required to achieve goals successfully and to survive in today’s industry. An investigation was done to determine the relationship between these interdivisions of an SME. In conclusion, methods and models are presented to optimise the techniques that are currently used within SMEs. These techniques are then further expanded on and presented as guidelines for business discussions. Practical examples are presented in support of the actual models.
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An assessment of Peoples Bank Business' service to SMME's sponsored by the Khula Indemnity Scheme
- Authors: Bredenkamp, Monique
- Date: 2012-01-16
- Subjects: Small business , Small business finance , Banks and banking , Risk management , Commercial credit
- Type: Mini-Dissertation
- Identifier: uj:1910 , http://hdl.handle.net/10210/4271
- Description: 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). ii 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.
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