Obstacles faced by owners of township micro, small and medium enterprises to acquire funds for survival and growth (2010-2020)

Johannes A. Wiid () and Michael C. Cant ()
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Johannes A. Wiid: University of South Africa, South Africa
Michael C. Cant: University of South Africa, South Africa

Entrepreneurship and Sustainability Issues, 2021, vol. 9, issue 1, 52-65

Abstract: It is the belief of many governments that the development of micro, small and medium enterprises (MSMEs) will stimulate economic growth, create jobs and assist in the obliteration of poverty. However, the achievement of these envisaged benefits is dependent on healthy and growing MSMEs as well as the provision of funds to facilitate and stimulate growth. Despite various interventions by the SA government, many MSMEs have failed due to a lack of support from the financial institutions tasked with providing capital and funding to these enterprises. This article focuses on the obstacles that restrain business growth and identifies the challenges that owners of township MSMEs face and need to overcome to acquire funds from financial institutions and government support programmes. Exploratory research, conducted among 498 MSMEs located in South African townships, revealed that the obstacles, which are restraining growth relate to the economic climate, business environment, personnel and finances. The challenges to access funds can be grouped into three possible constructs: institutional requirements, administrative aspects and perceptions of financial institutions. Despite the many obstacles in the path to acquiring funds for their survival and growth, MSMEs have continued to operate on a small scale. However, the reality is that, without much needed funds and financial support, it will be difficult for MSMEs to grow and reach their full potential, which will hinder their ability to bear the envisaged fruits of economic growth and the obliteration of poverty.

Keywords: MSMEs; finance; obstacles restrain growth; financial institutions; acquiring funds; South Africa; challenges to access funds (search for similar items in EconPapers)
JEL-codes: M10 M21 M31 M38 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:9:y:2021:i:1:p:52-65

DOI: 10.9770/jesi.2021.9.1(4)

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