Acta Universitatis Danubius. Œconomica, Vol 15, No 7 (2019)

Abstract

This paper aims to discover the contribution of the government support structures and policies towards the growth of informal small businesses of the Cape Winelands in the Western Cape beyond seed funding grant. It has been observed that despite the financial support from the government, informal small businesses in rural areas, continue to face barriers to growth. The main research question of this study was to ascertain the effect of government support and policies to the growth of the informal businesses who have received seed funding in particular those in the Wineland District. The study utilized a quantitative approach to collect data, questionnaires were administered to 60 entrepreneurs who received seed funding from Cape Winelands district municipality. The data was analysed using Statistical Package for the Social Sciences (SPSS). Findings indicated that there are still factors that are hindering the growth of their business such as lack of finance due to lack of access to financial facilities and insufficiency of the seed fund, instability of businesses, limited business space, crime, lack of infrastructure, marketing, coaching and mentoring, business management skills and transport. Government support structures and policies were analyzed and the findings included a lack of access and restrictions to qualify, as well as a blue print to manage financial assistance / grants received. There is a gap between the alignment of government business development policies and the informal businesses, as well as mentoring and coaching, which means complete involvement of government officials. 

Recommendations were made for government should provide flexible policies that allow them to determine what support is necessary per individual business. Granting the same standard amount of money to every informal small business does not help, as some of the businesses have more start-up needs than others. This will lead them to provide more realistic essential support to the informal businesses.