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'Access to finance not only hurdle'

Nov 25 2010 08:34 I-Net Bridge

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Johannesburg - Access to finance is only one of the impediments to the development of small and medium enterprises (SMEs) in South Africa, the South African Chamber of Commerce and Industry (Sacci) has said.
Sacci president Chose Choeu said that the organisation gave evidence on Wednesday to the parliamentary portfolio committee on economic development during the hearings on SME Access to Finance.
In its submission, Sacci pointed out that access to finance was only one of the impediments to SME development in South Africa. Urgent attention to the sector was necessary, because the economic crisis had intractably harmed it and short-term prospects for employment recovery after the global downturn were low.
"Liquidation figures remained obstinately high and the businesses currently being lost were previously healthy enterprises. In addition to encouraging the establishment of new businesses, 'repair' of the SME sector could be facilitated by the movement of informal operations into the formal sector," Sacci said.
Local government business retention and expansion programmes could be harnessed to improve SME sustainability. Sacci believed a vibrant SME sector was necessary for the successful implementation of the recently announced national growth plan.
Sacci drew attention to the challenges and impediments SMEs faced. These included a restrictive regulatory burden and a lack of understanding and/or trust in banks and insurance companies (resulting in attempts to self-finance start-ups), bank requirements for collateral which SMEs had difficulty in finding, cash flow problems resulting from slow receipt of payments and intimidating procurement procedures.
Sacci also drew attention to programmes offered by chambers of commerce that cover the movement of informal businesses into the formal sector, training and business linkages, advice on the development of business plans and access to finance.
Sacci stressed the need to align national strategies, such as the new growth plan and incentives to make access to products and services easier to facilitate growth and improve the sustainability of SMEs.
sacci  |  sme  |  entrepreneurs



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