Financing tools, firm life cycle and growth of small, medium and micro enterprises in selected sub-Sahara African economies
- Authors: Ngonisa, Phillip https://orcid.org/0000-0002-0145-9062
- Date: 2022-03
- Subjects: Small business -- Finance , Small business -- Africa
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/21794 , vital:51754
- Description: Finance is of paramount importance for small, medium and micro enterprises’ (SMMEs) growth, without which many firms fail to move along their growth continuum. Against this background, the study sought to examine the growth effects of financing tools across the different phases of SMMEs' life cycle in Sub Sahara Africa (SSA) economies for the period spanning from 2003 to 2019. Firstly, due to the inherent heterogeneity nature of the SMMEs' financing landscapes across the world, the study starts by identifying the commonly used financing tools in the context of Sub-Saharan Africa. These were found to be internal finance, bank debt, trade credit, non-bank finance and informal finance, with internal finance being the most prevalent financing tool. The second aspect of the study was to examine the growth effects of the identified financing tools on SMMEs' performance in Sub Sahara Africa. In achieving this objective, several panel estimation techniques were employed, which are the feasible generalised least squares (FGLS), cross-sectional dependence (SCC), random effects model (REM) and pooled ordinary least squares (POLS). The empirical results show that internal finance or savings, bank financing, trade credit, non-bank financing and informal financing are positive and statistically significant in explaining SMMEs growth in the region, with stronger evidence for a positive relationship between external finance (trade credit and bank finance) on SMMEs growth in Sub-Saharan African region. The third objective of the study was to investigate the growth effects of SMMEs’ financing tools across different phases of the firm life cycle. The same panel techniques as used in achieving the previous objective were utilized again. The empirical findings show that the growth effects of SMME financing tools evolve as SMMEs move along their growth continuum, and only bank finance proved to be a fundamental variable for SMMEs growth throughout the different phases of firm growth. Finally, motivated by SMMEs’ high dependence on internal finance or savings, the study explored the saving practices of SMMEs in Sub Saharan Africa using thematic analysis. The study findings show that SMMEs in Sub Sahara African economies systematically save through formal and informal financial systems. These findings are contrary to conventional wisdom, which suggests that SMMEs are a financial basket case. Basing on the study findings, policies aimed at reducing or lessening the burden of accessing finance are important to stimulate the growth of SMMEs. Most importantly, there is a need for lenders and sponsors to understand the firm life cycle-financing tool nexus to ensure SMMEs growth. Moreover, SMMEs in Sub Sahara African economies need to cultivate a spirit of thrift to minimize firm attrition rate, thereby promoting SMMEs' growth in the region. , Thesis (PhD) -- Faculty of Management and Commerce, 2022
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- Date Issued: 2022-03
A service delivery framework to unlock the revenue potential of the SME segments of commercercial banks in South Africa
- Authors: Mahlati, Mphenduli Mncedi
- Date: 2018
- Subjects: Small business -- Finance , Financial services industry -- Information technology Banks and banking Technological innovations
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: http://hdl.handle.net/10948/31633 , vital:31639
- Description: Small and Medium sized Enterprises (SMEs) are a vital driver to the world economy. They provide more than 60% of overall employment globally and approximately 80% of jobs in developed economies. This segment however remains underserved by banks who have struggled to serve SMEs effectively. Nevertheless banks are still perfectly placed to capture the needs of SME customers and to provide them with greater value adding services that address their needs. However, this must be done in a cost-effective manner to ensure long-term portfolio and banking profitability. SME Banking faces several challenges centred on the high cost to serve and profitability. For the banking sector to overcome these challenges and still meet increasing and changing customer needs, significant investment in digital technology is required. The literature reviewed identified that in order to unlock the revenue potential embedded within the SME segment; banks need ground-breaking solutions to solve their revenue and profitability conundrum. This study mentions that such solutions will need to be focused around placing banks as market enablers, by way of providing SMEs with a growth platform and not just financial transaction services. The study also identified a hybrid service delivery model and a digital ecosystem approach to SME banking as being pivotal to unlocking the revenue potential embedded within the segment. Through a digital ecosystem approach, banks can leverage their intra and inter banking network to assist SMEs to grow their businesses. In the process, this will serve as a way of increasing penetration into this underserved segment. In addition, such an approach to banking necessitates an acceptance of how interconnected business relationships have the capacity to enable business growth and subsequently to address SME banking risk. To also consider that banks in South Africa continue to view SMEs as being too risky and costly to serve. This study attempts to address this perceived riskiness by presenting a service delivery framework, which consists of key factors that would influence the revenue potential of the SME segments of Commercial Banks in South Africa. The empirical part of the research evaluated banking official’s awareness and understanding of key concepts that is likely to influence their views with regards to the revenue potential of the SME market.
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- Date Issued: 2018
Financial constraints of SMMEs in the Fezile Dabi District Municipality, Freestate Province
- Authors: Mashiyi, Gcobani
- Date: 2018
- Subjects: Small business -- Finance , Business enterprises -- Finance Development credit corporations
- Language: English
- Type: Thesis , Masters , MPhil
- Identifier: http://hdl.handle.net/10948/22672 , vital:30053
- Description: SMMEs have been identified as key role players in economic growth and development in South Africa. SMMEs contribute fifty two percent in the Growth and Domestic Product. Subsequently to that there various interventions by South African Government to support small enterprise developments with intentions to address financial constraints faced by SMMEs emanating from lack of access to funding. Despite these efforts or interventions by South African Government SMMEs are still confronted by financial constraints that if difficult for them to sustain themselves. Financial Institutions are still reluctant to avail finances to SMMEs because of their risk profile being in the new venture category. Tedious and complex funding application processes, complex funding criteria and geographical location of SMMEs prohibits SMMEs in accessing funding from Development Finance Institutions. To do this a survey existing literatures was viewed and analysed. Viewed and analysed literature indicated various constraints faced by SMMEs in South Africa. Among factors contribute to SMMEs financial constraints are the size and capacity of SMMEs serves as stumbling blocks to financial access, extent to which the complex requirements on the funding application forms affect access to funding by SMMEs in the District Municipality and geographic location of SMMEs effects on their access to funding from DFIs.
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- Date Issued: 2018
Credit risk management in development finance institutions and SMME sustainability
- Authors: Derrocks, Velda Charmaine
- Date: 2017
- Subjects: Credit -- Management Business enterprises -- Finance , Small business -- Finance
- Language: English
- Type: Thesis , Masters , MPhil
- Identifier: http://hdl.handle.net/10948/14862 , vital:27884
- Description: Small, Medium and Micro Enterprises (SMMEs) make a significant contribution to the South African Economy. Regardless of size, these businesses have the ability to create employment, make a generous contribution to tax collections, uplift communities and serve as a beacon of hope for those trapped in the cycle of poverty and unemployment. However, SMMEs lack access to much-needed financial resources that are critical for their growth. Development Finance Institutions (DFIs) aim to bridge the gap between the SMME’s financial needs and the development of the respective SMME businesses, by providing funding to entrepreneurs with potentially viable businesses and ideas. Debt funding to these SMMEs are based on sound commercial lending principles that take various non-quantitative variables into account. The sustainability of SMMEs is a primary concern to all participants in the economy, as it is known that SMME failure rates are high Therefore, the primary objective of this study was to investigate the impact that the credit risk management practices of DFIs have on the sustainability of SMMEs, by examining a case study of a typical DFI. An electronic questionnaire survey was considered as an appropriate measurement method for this study. The targeted population of the study included SMMEs in the Eastern Cape that are Trust for Urban Housing (TUHF) clients and 23 SMMEs were identified as part of the study sampling frame. A total number of 14 questionnaires were returned out of the 23 targeted SMMEs - giving a response rate of 61%. The quantitative data was processed using the STATISTICA program, leading to appropriate descriptive statistical analyses. In order to better understand the impact of credit risk management practices on the sustainability of SMMEs, a hypothesis was formulated and linear regression analysis was used to establish the statistical significance of certain credit risk principles and sustainability characteristics. The results of the empirical study revealed that credit risk management practises do impact on the sustainability of SMMEs. Further, by testing the hypothesis, it was also revealed that certain sustainability variables are regarded as more important than others.
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- Date Issued: 2017
The challenges of banks in financing SMEs in Harare, Zimbabwe
- Authors: Msimanga, Dumisile
- Date: 2017
- Subjects: Small business -- Finance , Business enterprises -- Zimbabwe -- Harare -- Finance Credit -- Zimbabwe -- Harare Entrepreneurship -- Zimbabwe -- Harare
- Language: English
- Type: Thesis , Masters , MPhil
- Identifier: http://hdl.handle.net/10948/14058 , vital:27412
- Description: This research is a diagnosis of the supply side of SME (small and medium enterprises) credit. Its objectives are to determine the current level of bank lending to SMEs to validate the financing gap, to explore the strategies and mechanisms employed by banks to provide tailor-made lending for SMEs and finally to conclude by identifying some of the key challenges the banks face in their quest to lend to SMEs. This, then, culminated in some recommendations for increasing bank funding to SMEs. This study employed a deductive qualitative research.. The research used a non-probability, purposive/judgmental sampling method to choose the heads of bank SME units to include in the research. There are twelve banks with dedicated SME units, out of a total of 18. The researcher carried out in-depth face to face interviews using semi-structured questions. The qualitative data was coded, deductively analysed and conclusions drawn and incorporated into a report. Banks’ most outstanding challenges in dealing with SMEs in terms of information asymmetry, an unsupportive business environment, poor quality of SME clients and inflexible regulatory requirements.
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- Date Issued: 2017
Barriers faced by SMMEs in accessing finance
- Authors: Caga, Siyabonga Macpherson
- Date: 2012
- Subjects: Small business -- Finance , Small business
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8784 , http://hdl.handle.net/10948/d1013348
- Description: SMMEs have been cited as major players in economic development in South Africa and in other developing countries. In South Africa SMMEs contribute more than 52 percent towards the GDP. Subsequently, the South African government has taken various steps to encourage their growth and to improve access to finance for SMMEs. Despite this, securing finance remains a challenge in this group of enterprises. Since SMMEs have unique financial needs, commercial banks and other funders are faced with difficulties in catering for them. Banks in particular have been reluctant in financing these high-risk ventures. SMME owners as a result still prefer informal sources of finance such as personal savings, retained earnings or friends or family rather than bank loans. The study purpose was to examine the barriers that are faced by SMMEs in accessing finance. To do this a survey was conducted on 40 SMMEs operating in the manufacturing sector in Tshwane Metropolitan Municipality. The research findings indicated various barriers that are faced by SMMEs in accessing finance. Dominating among the barriers are those that are related to perceived risks of SMMEs by funders, including lack of collateral or business assets, lack of financial statements, excessive red tape by funders, administrative burden associated with applications as well as unfair evaluation of risks and profitability of SMMEs by funders. Other factors that were identified as barriers were those that are associated with poor business plan development, poor business training and development and source of funding. The majority of the respondents recommended that there must be better risk and profitability evaluation, easy loan repayment methods, more government support for SMMEs, flexible eligibility criteria for SMME loans and proper loan amount allocations.
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- Date Issued: 2012
The role played by business development services providers (BDSs) in improving access to finance by start-up SMEs in the Buffalo City Municipality
- Authors: Musara, Mazanai
- Date: 2010
- Subjects: Small business -- Finance , New business enterprises , Business enterprises -- Finance , Corporations -- Finance , Small business marketing
- Language: English
- Type: Thesis , Masters , M Com (Business Management)
- Identifier: vital:11315 , http://hdl.handle.net/10353/359 , Small business -- Finance , New business enterprises , Business enterprises -- Finance , Corporations -- Finance , Small business marketing
- Description: Small and medium enterprises (SMEs) are very important to employment creation, poverty alleviation and the sustainable economic development of a nation. Encouraging SMEs, especially start-ups is crucial for sustainable economic growth. However, the failure rate of start-up SMEs in South Africa is one of the highest in the world. In reviewing the literature of the causes of the failure of start-up SMEs, access to finance emerged as a prime challenge. Start-up SMEs find it very difficult to obtain external finance from commercial banks and venture capitalists. The national and provincial governments in South Africa have realised that access to finance is a major constraint to the growth and survival of start-up SMEs and have put in place certain measures to improve access to finance by start-up SMEs. One of the primary measures put in place by government to improve access to finance by start-up SMEs is the provision of Business Development Service by some government agencies. This research investigates the role of Business Development Services Providers (BDSs) in improving access to finance for start-up SMEs. Questions arise as to why the failure rate of start-up SMEs is high in South Africa despite all these government measures aimed at assisting start-ups to access finance. Empirical research was conducted to investigate the role of BDS in improving access to finance by start-up SMEs. The instrument used for data collection was the self-administered questionnaire. The statistical analyses included descriptive statistics, T-test, ANOVA, correlation and regression analysis. The Cronbach‟s alpha was used as a measure of reliability. The results of the study revealed that: Access to finance is still a major problem hindering the survival of start-up SMEs. There is a lack of awareness of BDS providers and their services by the majority of start-up SMEs. There is a significant positive relationship between the use of BDS by start-up SMEs and success in accessing finance. Start-up SMEs that are aware of BDS do make use of the services. The results suggest that BDS are important to improving access to finance by start-up SMEs. However, there is a need to build awareness and encourage the use of BDS by start-up SMEs to improve their access to finance and ultimately increase their chances of survival.
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- Date Issued: 2010
Deriving value from IT investments within botique hotels: a Buffalo City case study
- Authors: Mathe, Thabelang
- Date: 2009
- Subjects: Information technology , Hotels -- Finance , Boardinghouses -- Finance , Small business -- South Africa -- Eastern Cape , Small business -- Finance
- Language: English
- Type: Thesis , Masters , MCom (Information Systems)
- Identifier: vital:11134 , http://hdl.handle.net/10353/d1000975 , Information technology , Hotels -- Finance , Boardinghouses -- Finance , Small business -- South Africa -- Eastern Cape , Small business -- Finance
- Description: Even though many organizations invest in IT, the value that IT is expected to contribute is still not clearly understood. Researchers agree that IT has become a crucial element to business operations and business existence. However, while there is continued investment in new information technologies and systems, organizations are not certain whether significant value is derived from IT investments. The failure to realize good return on IT investments is ascribed to a lack of understanding of IT by organizations and also the failure by organizations to align IT strategies with business strategies. The lack of alignment leads to the failure to match the right IT to the correct task, which leads to the poor application of systems and poor allocation of human resources to tasks. Therefore, organizations such as Small and Medium Enterprises (SMEs) in particular Boutique Hotels, are noted for their failure to derive better IT value. Their unique characteristics are understood to be influential in the way IT is used and managed by affecting the delivery of value from technology. In order to enable Boutique Hotels to derive more value from IT, the IT governance frameworks, Val IT and CobiT (ITGI, 2007), were examined as these integrate good practices to ensure that an organization‘s IT supports the business objectives. In addition, the Task Technology Fit (TTF) (Goodhue and Thompson, 1995) and Gap Analysis (Heeks, 2001) theories were highlighted as these prescribe the platform ideal for more value to be derived from IT. The current status of Boutique Hotels in Buffalo City was assessed through the use of questionnaires and interviews. The collected data was analyzed and resulted in the development of a model that can be used by Boutique Hotels in order to derive more value from IT and to maximize the use of IT.
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- Date Issued: 2009