The Journal of Accounting and Management, Vol 7, No 2 (2017)

Awareness Of State-Facilitated Sources Of Finance Among Owner/Managers Of Small And Medium-Sized Enterprises In South Africa

Emmanuel Oseifuah, David Charles Manda

Abstract


The contribution of small businesses tojob creation and economic growth in both developed and developing economies iswidely acknowledged in the finance and economics literature. Despitetheir significant importance, numerous challenges inhibit their development andgrowth. A major barrieris lack of access to external finance, derived from three main sources namely banks,venture capital, and the government. Recognizing this challenge, the South Africangovernment have established numerous business support and assistance measuresto help the SME sector obtain better access and affordable finance. However, recent studies claim that there is a general lack ofawareness of state-facilitated sources of finance among SME owner/managers (Magoand Toro, 2013; Khan, 2014).  The purpose of this study therefore was toinvestigate the level of awareness of state-facilitated sources of financeamong owner/managers of small and medium-sized enterprises (SMEs) in SouthAfrica, especially in rural communities. The data used in this study wasobtained via a structured questionnaire administered to a randomly selectedsample of 50 SMEs in the Thohoyandou Central Business District (CBD), ThulamelaMunicipality. This area is characterised by similar socio-economic environmentlike other rural communities in South Africa. Theresults show that most SMEs in the ThulamelaMunicipality have little knowledge of state-facilitated sources of finance. Forexample, only 26% of the sampled SMEs are aware of SEFA, Land Bank (46%) andPost Bank (34%). On the basis of these results, the study recommends thatvarious state-facilitated sources of finance should make themselves morevisible and accessible to the public.

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