Acta Universitatis Danubius. Œconomica, Vol 14, No 4 (2018)

Analysing the Role and Impact of Public and Private Supporting Institutions Interventions on SMMEs Access to Funding: A Comparative Study Between Lesotho and South Africa

Refiloe Gladys Khoase, Patrick Ndayizigamiye

Abstract


Lesotho and South Africa have both put in place public and private supporting institutions to assist SMMEs in accessing funding. However, previous studies indicate that SMMEs are still struggling to access funds at both the start-up and growth phases. Hence, using a mixed method approach, this paper investigates the nature and impact of supporting institutions interventions in the Maseru and Pietermaritzburg cities of Lesotho and South Africa respectively. The mixed method study was conducted with the aim of depicting the state of SMMEs support to access funding within the Southern African context and the perceived barriers to accessing funding. On one hand, interviews with six (6) supporting institutions’ representatives conveniently sampled from each country, reveal commonality of interventions such as the provision of start-up capital and additional funding, and referral services. On the other hand, data collected by means of a questionnaire from 270 and 210 SMMEs owners/managers in Maseru and Pietermaritzburg respectively, reveal that SMMEs owners in both countries face similar challenges such as high interest rates and the inability to meet the collateral requirements. The paper concludes that notwithstanding the interventions, SMMEs still face challenges related to accessing finances. Thus, the paper suggests that interventions that seek to enhance SMMEs access to finance need to be designed to suit SMMEs idiosyncratic nature to be relevant and appealing to SMMEs owners.

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