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Inhibiting Factors for SME Growth

This program aims to address the factors that inhibit the growth of SMEs in Africa, such as low literacy levels and lack of job opportunities. It will explore key requirements for funding and propose practical interventions to overcome these challenges.

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Inhibiting Factors for SME Growth

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  1. 2011 AFRICA SMME CONFERENCE PROGRAM 13 OCTOBER 2011 GOLD REEF CITY HOTEL, GAUTENG “FACTORS INHIBITTING THE GROWTH OF SMEs”

  2. Background • SMME financing institutions faced with a challenge of applications that are not ready – low literacy levels • Market is “flooded” with necessity as opposed to opportunity driven entrepreneurs – due to lack of job opportunities, amongst others • At what point do we measure the SMME financing gap – no conclusive research on the extent of the gap • South Africa relatively has a lot of SMME funding programmes – availability of capital not a key problem • Where is the Problem? 2 3

  3. Funders’ Key Requirements • Character - Jockey • Entrepreneur determines his/her destiny • Viability - Horse • Identify a niche – real opportunity • Equity • Have a some level of commitment – “skin in the game” • Collateral • Khula’s indemnity scheme and other similar interventions provide a solution

  4. Factors Inhibiting Small Business Growth * * Source: FinScope South Africa Small Business Survey 2010

  5. Other Factors • Unity amongst SMMEs (compromise lobbying and bargaining potential) • Access to information (SMMEs are not au fait of intervention available in the market – both public or private • SMME transactions don’t always find their way to the traditional Credit Bureau platforms - credit information of certain categories of SMMEs are not tracked 5

  6. What are we Doing? • SMME practitioners need to develop effective and practical interventions to address each inhibiting factor • Research outcomes should be used for policy formulation and programme development - minimise the level of talk shops • There must be pressure (interest) groups to foster tangible delivery • Minimise duplicating efforts – coordinated approach • SMEs need to be channeled to the right doors (shopping mall experience – one stop shops for SMMEs) Call to Action! 6 3

  7. THANK YOU Don Mashele Cell: 083 679 9498 Email: donm@khula.org.za Website - http://www.khula.org.za

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