Investigating Funding Challenges Experienced by SMMEs in Komani, South Africa

All around the world there are small, medium and micro-enterprises (SMMEs) that help by creating jobs and contributing to gross domestic product. However, funding is a major problem that limits the growth and development of SMMEs. Funding challenges have increased, hence the need for research to be conducted in Komani, in South Africa‟s Eastern Cape Province, to see how the challenge can be overcome. This research aims at investigating the funding challenges experienced by SMMEs in Komani. The objectives of the research were to: evaluate the effect of funding challenges on the number of people employed in SMMEs; establish reasons why SMMEs fail to obtain funding from major financial institutions; to examine the avenues available for funding SMMEs; and to recommend to policymakers and SMMEs how to solve the problem of funding. However, previous research in Komani has not managed to investigate this problem with regard to the research process and the method used. This research is based on the positivistic paradigm and used the quantitative method to investigate the funding challenges. The research population was 441 SMMEs; of them 82 SMMEs were sampled using questionnaires. Data collected was analysed using Excel and Stata. Pearson Chi-square test of association from Stata and Excel Analysis ToolPak were used. The study found that most SMMEs use retained earnings and informal funding to finance their operations. It also found that most SMMEs were unaware of government support agencies like SEFA. The research recommends that more must be done to raise awareness on a regular basis to make sure that all SMMEs are aware of the financial support system that the government has for the SMMEs. Financial institutions will need to lower their requirements when SMMEs apply for finance. Finally, SMMEs are supported financially by both the government and the private sector to employ more people. However, the government could also create a guarantee scheme for SMMEs to ensure successful credit applicationsThesis (MA) -- Faculty of business and economic sciences, 202