SME's access to Finance in South Africa - A Supply-Side Regulatory Review

Analyses and findings The Task Group covered the following areas in its review: (i) the profile of South African SMEs and their contribution to the South African economy, (ii) access of SMEs to equity capital and debt, and (iii) access to other bank services. In this context, the Task Group considered the role of banks, the role of non-bank financial institutions, the role of the securities markets and the competitive environment within which these different institutions function. It is important to point out that the SMME sector includes a wide range of enterprises. There are major differences between medium-sized enterprises on the one hand, and very small or micro-enterprises on the other. The primary focus of this Report has been on small and medium-enterprises rather than on the micro-sector, and the acronym ‘SME’ is thus used throughout. However, micro-enterprises play a critical role in income generation in the lives of many South Africans and the Task Group has not ignored this group. In fact, many of the Task Group’s proposals would be beneficial to micro-enterprise finance as well. For instance, improvement in the competitive environment in the banking sector and a more “enabling environment” for non-bank lenders would also contribute to better access to finance for the very small and micro-enterprise sector. This ambiguity having been clarified, the following main findings emerged from the Task Group’s study. The recommendations follow. (1) Magnitude and contribution to the economy.