Financial Constraints to SMME Growth: Investigating the Moderating Effect of Microfinance
Financial Constraints to SMME Growth: Investigating the Moderating Effect of Microfinance

Author(s): Nasraldin Omer
Subject(s): Social Sciences
Published by: Scientia Moralitas Research Institute
Keywords: SMME growth; financial constraints; microfinance; moderating effect; South Africa
Summary/Abstract: Small, Medium and Micro Enterprises (SMME) play a significant role in an economy. SMMEs are an important source of jobs, entrepreneurial spirit and innovation. However, despite the noted contribution of SMMEs, in many countries they face serious constraints, often resulting in failure. The constraints and economic environment have significant and unequal effects on SMMEs indifferent industries and in different locations. Constraints have been used, amongst other growth factors, to understand why some SMMEs fail to grow. The aim of this study was to examine the effect of financial constraints on SMME growth and to investigate the moderating effect of microfinance on overcoming, avoiding or mitigating the financial constraints to SMME growth. The study found evidence that the lack of professional financial advisors, lack of access to finance and lack of awareness of financial services and assistance were significant constraints to SMME growth in South Africa.

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