Abstract
This paper investigates factors determining co-operative small enterprises access to the co-operative grant incentive scheme in South Africa. The raw data used in this study were extracted from the Cooperative Incentive Scheme (CIS) database over the sample financial period FY 2010/11 to FY 2014/15. The amount approved was modelled as the dependent variable, while the turnover prior to application, number of employees, number of members, number of males, number of females, number of youth, number of the disabled, and purpose of application for additional capital were the exploratory variables in the model. Statistical Package for Social Sciences (SPSS) version 24 for Windows was used to perform data processing and statistical analysis using the multiple linear regression method for the overall model and stepwise multiple linear regression method at sectoral level. Estimated results indicate that turnover prior to application, the number of members, males, females and youth had a significant impact on the amount approved for the applications submitted by firms in the agricultural and manufacturing sectors during the sample financial years under review. The paper concludes that the department of small business development should focus on implementing strategies that promote access to the CIS grant funding targeting SMEs co-operatives in the agriculture and manufacturing sectors located mainly in the rural areas of South Africa. Keywords: small and medium enterprises, co-operative, grant, incentive, South Africa. JEL Classification: L26, H81
Highlights
Government support for small and medium enterprises (SMEs) appears to be based on the general notion that SME is an incubator of economic development
In respect of the turnover prior to application, the firm with the least turnover had R0.00. This meant that firms are not mandated to be operating as long they meet the requirements of being co-operative enterprises
This paper focuses on factors that determine cooperative small enterprises access to co-operative incentive scheme funding in South Africa
Summary
Government support for small and medium enterprises (SMEs) appears to be based on the general notion that SME is an incubator of economic development. In South Africa, the issues of employment creation and poverty reduction put together have become a challenge to economic development, while demand for numbers of SMEs has increased over the last two decades (Chandler, 2012; Fatoki, 2012). This increase has been necessitated by individuals’ desire to generate additional income through self-employment (Snow and Buss, 2001). SMEs are seen to be too risky, either because the entrepreneurs are too young or do not have sufficient credit history that could assist them to qualify for credit
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