SME FINANCING OPPORTUNITIES – BRIDGING THE GAP

Transcript:SME FINANCING OPPORTUNITIES – BRIDGING THE GAP:
SME FINANCING OPPORTUNITIES – BRIDGING THE GAP South Africa SMME Conference Services Forum 1 South Africa SMME Conference Birchwood Hotel 21 October 2010 Outline Introduction SMME financing landscape Factors inhibiting small business growth Challenges in Financing SMEs– lender’s perspective Role of Development Financial Institutions in Financing SMEs Bridging the Gap Concluding remarks Medium enterprises Small enterprises Micro enterprises Survivalist enterprises Less than 200 employees Turnover > R25m p.a. Developed technical & business skills Less than 50 employees Turnover < R25m p.a. Developed technical /limited business skills Less than 5 employees Turnover < R150k p.a. Some technical /limited business skills Individual self employment Turnover < R50k p.a. Limited technical and business skills Opportunity-driven/Entrepreneurial Necessity-driven/Survival Medium enterprises Small enterprises Micro enterprises Survivalist enterprises Characteristics SMME Financing Landscape Profile of small businesses in South Africa ■ There are approximately 5 979 510 small businesses in South Africa ■ There are 5 579 767 small business owners, 16 years and older, in South Africa (one in six individuals, aged 16 years and older, generate an income through small business activity) ■ 17% of small business owners have registered businesses ■ 79% of small business owners are traders (sell products) o Of these, 62% sell their products in the same form they bought it (they do not add any value) ■ 21% of small business owners are service providers. Of these, 5% render professional services (e.g. accountants, doctors, lawyers, etc.) Two-thirds of small business owners needed start-up money and most of these funds came from own sources, with 37% claiming to borrow from other sources. Only 5% percent of small business owners claim to have current borrowings or loans for their business and 39% claim to save for business purposes. Awareness of support for small business owners is extremely low with 74% of business owners unable to name any organisation that gives help and advice to small businesses Source: FinScope South Africa Small Business Survey 2010 Medium enterprises Small enterprises Micro enterprises Survivalist enterprises Corporates Banks/Financial Institutions Private Equity/Venture Capitalists Khula, IDC, NEF Own resources Banks & Corporates Khula & PDCs Own & family resources Microlenders & Banks SAMAF & PDCs Own & family resources Microlenders SAMAF Medium enterprises Small enterprises Micro enterprises Survivalist enterprises Financing Needs - Supply SME Financing Landscape …Supply 8 SME Financiers Source: Roussos and Ferrandi (2008) Long-term Short-term TERM Micro Medium Large Small MONEY-LENDERS STOKVELS, BURIAL SOCIETIES CONSUMPTION LENDERS MICRO-FINANCE