Financing Small and Medium Enterprises in the Republic of South Africa

Numerous studies worldwide have highlighted the important contribution made by small and medium-sized enterprises (SMEs) to employment, income and economic growth. In a study of 76 developed and developing economies, Ayyagari and others (2007) found that SMEs account for more than 60 percent of total manufacturing employment and that SMEs contributed significant proportions of Gross Domestic Product (GDP). SME growth requires external financing, but constraints to accessing credit, consistently rated as some of the greatest barriers to the operation and growth of firms, affect SMEs more severely than large firms (Beck and Demirguc-Kunt 2006; Beck and others 2006). The purposes of this report are to: a) analyze the availability of bank finance to SMEs in South Africa and how availability might be enhanced in the context of the economic downturn; and b) offer concrete policy recommendations on how to lessen obstacles to bank SME financing and reduce the negative effects of the economic downturn (or of a similar downturn in future) on access to finance. The report is structured in 5 sections: section two provides a short overview of existing studies and data on SME finance in South Africa. Section three presents the main results of the surveys. Section four provides policy considerations. Section five concludes.

Bibliographic Details

Main Authors:	Fuchs, Michael, Iacovone, Leonardo, Jaeggi, Thomas, Napier, Mark, Pearson, Roland, Pellegrini, Giulia, Villegas Sanchez, Carolina
Format:	Other Financial Sector Study biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2011
Subjects:	ACCESS TO BANK, ACCESS TO CREDIT, ACCESS TO FINANCE, ACCESS TO FINANCIAL SERVICES, ACCOUNT MANAGEMENT, ADVANCED ECONOMY, APPLICATION PROCEDURES, APPROVAL PROCESS, ASSET CLASS, ASSET CLASSES, BALANCE SHEET, BALANCE SHEETS, BANK ACCOUNT, BANK CREDIT, BANK FINANCING, BANK PROFITS, BANK RATES, BANK SERVICES, BANKING INDUSTRY, BANKING MARKET, BANKING SECTOR, BORROWER, BORROWING, BUSINESS ACTIVITY, BUSINESS DEVELOPMENT, BUSINESS DEVELOPMENT SERVICES, BUSINESS ENTERPRISES, BUSINESS EXPERIENCE, BUSINESS OWNERS, BUSINESS PLANS, BUSINESS TRAINING, CAPITAL LOANS, CASH FLOW, CHECKING ACCOUNTS, COLLATERAL, COLLATERAL REQUIREMENTS, COMMERCIAL BANK, COMMERCIAL BANKING, COMMERCIAL BANKS, CONSUMER LENDING, CREDIT ACCESS, CREDIT APPLICATION, CREDIT APPLICATIONS, CREDIT BUREAUS, CREDIT CONSTRAINTS, CREDIT DECISIONS, CREDIT FACILITIES, CREDIT GUARANTEE, CREDIT GUARANTEES, CREDIT INFORMATION, CREDIT MANAGEMENT, CREDIT PRODUCTS, CREDIT QUALITY, CREDIT RISK, CREDIT SCHEME, CREDIT SCORING, DEBT, DEPOSIT, DEPOSITS, DEVELOPING COUNTRIES, DEVELOPMENT CORPORATION, DEVELOPMENT FINANCE, DEVELOPMENT FINANCE INSTITUTIONS, DIRECT CREDIT, DIVERSIFICATION, ECONOMIC CRISIS, ECONOMIC DEVELOPMENT, ECONOMIC EMPOWERMENT, ECONOMIC GROWTH, ECONOMIES OF SCALE, EMPOWERMENT, ENDOWMENTS, ENTERPRISE CREDIT, ENTERPRISE FINANCE, ENTREPRENEURS, EQUITY CAPITAL, EQUITY INVESTMENTS, EXTERNAL FINANCING, FACTORING, FINANCIAL ACCESS, FINANCIAL CRISIS, FINANCIAL EDUCATION, FINANCIAL HISTORY, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL LITERACY, FINANCIAL PRODUCT, FINANCIAL PRODUCTS, FINANCIAL SERVICE, FINANCIAL SKILLS, FINANCIAL STABILITY, FINANCIAL STATEMENTS, FINANCING OF INVESTMENT, FIRMS, FIXED ASSETS, FIXED COSTS, FORM OF COLLATERAL, FORMAL FINANCIAL SECTOR, FUNDING SOURCE, GENDER, GOVERNMENT INVOLVEMENT, GOVERNMENT POLICIES, GOVERNMENT POLICY, GOVERNMENT SPENDING, GOVERNMENT SUPPORT, GUARANTEE SCHEME, GUARANTEE SCHEMES, HIGH INTEREST RATES, HOME LOANS, HOUSEHOLDS, INCOME STATEMENTS, INCOME STREAM, INFLATION, INFORMAL ECONOMY, INSTRUMENT, INSURANCE, INSURANCE PRODUCTS, INTEREST INCOME, INTEREST RATE, INTEREST RATES, INTERNAL FUNDS, INTERNATIONAL BANK, INTERNATIONAL FINANCE, INVESTMENT CLIMATE, INVESTMENT PROJECTS, JUDICIAL PROCESSES, LABOR MARKET, LACK OF ACCESS, LEGAL FRAMEWORK, LENDER, LENDERS, LINE OF CREDIT, LIQUIDITY, LOAN, LOAN APPLICATION, LOAN APPLICATION PROCEDURES, LOAN APPLICATIONS, LOAN APPROVAL, LOAN APPROVAL RATES, LOAN APPROVALS, LOAN GUARANTEE, LOAN MATURITY, LOAN OFFICERS, LOAN REPAYMENT, LOAN SIZE, LOAN VOLUMES, LOW INTEREST RATES, MACROECONOMIC CONDITIONS, MACROECONOMIC INSTABILITY, MACROECONOMIC RISK, MACROECONOMIC RISKS, MANDATES, MARKET DATA, MARKET PARTICIPANTS, MARKET SHARE, MARKET SIZE, MEDIUM ENTERPRISES, MICROENTERPRISES, MORTGAGE, MORTGAGE LENDING, MORTGAGES, NATIONAL CREDIT, NATIONAL TREASURY, NEW COMPANIES, NONBANK FINANCIAL INSTITUTIONS, NONPERFORMING LOANS, NPL, OUTREACH, OUTSTANDING LOANS, OVERDRAFTS, PARTIAL CREDIT, PERC, PERSONAL BANKING, POLITICAL ECONOMY, PORTFOLIO, PRIME RATE, PRIVATE SECTOR COMMERCIAL BANKS, PROFITABILITY, PROFITABLE BUSINESS, PROPRIETORSHIP, PROPRIETORSHIPS, PROVISION OF FINANCE, PUBLIC POLICY, REPAYMENT HISTORY, RESERVE, RESERVE BANK, RETAIL BANKING, RETURN, RETURN ON ASSETS, RETURNS, RISK EVALUATION, RISK MANAGEMENT, RISK MANAGEMENT SYSTEMS, SAVINGS, SHARE OF INVESTMENT, SHORT-TERM FINANCE, SMALL BANKS, SMALL BUSINESS, SMALL BUSINESS BANKING, SMALL BUSINESS OWNERS, SMALL BUSINESSES, SMALL ENTERPRISE, SMALL ENTERPRISES, SME, SME FINANCE, SME FINANCING, START-UPS, SUBSIDIARY, SUPPLIERS, SUPPLY CHAIN, SUPPLY OF FINANCE, TAX, TRADE FINANCE, TRANSACTION, TURNOVER, UNEMPLOYMENT, UNINCORPORATED BUSINESS, UNINCORPORATED BUSINESSES, UNION, UNIVERSAL BANK, UNIVERSAL BANKS, WORKING CAPITAL,
Online Access:	http://documents.worldbank.org/curated/en/2011/01/16465228/financing-small-medium-enterprises-republic-south-africa http://hdl.handle.net/10986/12687
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