Abstract
Small retail businesses are essential for the growth of the South African economy. Though many of these business entities need more assets to seize business opportunities, previous research studies suggest that their overall access to finance through banks and other finance providers seems to be limited. In general, small retail businesses are usually managed by entrepreneurs who lack financial knowledge, but banks, when deciding on credit applications, rely heavily on financial information, which is provided by these entrepreneurs. Notwithstanding the aforementioned, this study aimed to explore barriers that limit access to finance for South African small retailers, from the perspectives of finance providers (banking institutions) and finance seekers (small retailers). Additionally, measures were highlighted to show how those hurdles could be overcome. Qualitative research was conducted, whereby data were collected via semi-structured interviews with management personnel at banks and other financial institutions, as well as independent experts and small retail business owners and managers. The findings show that many financing opportunities are available to small retail businesses, but access to these opportunities is limited mainly owing to, inter alia, strict bank regulations and factors that are inherent to small retail business owners.
Highlights
Not unusual for the African continent, South Africa’s Wholesale and Retail (W&R) sector is a significant component of the country’s economy and a major employer, which provides jobs for an estimated 20% (3.1 million citizens) of the national workforce (Ndungu and Theron, 2008; Steyn, 2013; W&RSETA, 2014; Statistics South Africa, 2015)
It is estimated that 75 000 retail businesses are formally registered with the W&R Sector Training Authority (W&RSETA, n.d.), while more than 100 000 informal retailer businesses are believed to operate accounting for ±10% of turnover in the W&R sector (W&RSETA, 2013)
Notwithstanding the aforementioned, about 96% of W&RSETA registered retail businesses are classified as small- and Holger J
Summary
Not unusual for the African continent, South Africa’s Wholesale and Retail (W&R) sector is a significant component of the country’s economy and a major employer, which provides jobs for an estimated 20% (3.1 million citizens) of the national workforce (Ndungu and Theron, 2008; Steyn, 2013; W&RSETA, 2014; Statistics South Africa, 2015). Notwithstanding the aforementioned, about 96% of W&RSETA registered retail businesses are classified as small- and Holger J. Wholesale and Retail Leadership Chair, Cape Peninsula University of Technology, South Africa. Juan-Pierré Bruwer, Dr, DTech, Cost and Management Accounting, Cape Peninsula University of Technology, South Africa. Jonathan Aspeling, MCom, Retail Business Management, Cape Peninsula University of Technology, South Africa
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