SOUTH AFRICA’S FINANCIAL POLICY FRAMEWORK TO SUPPORT AGRO-PROCESSING SMMEs
Date
2011-11-14
Authors
Mazibuko, Sphamandla Shepherd
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Abstract
Agro-processing is one of the key sectors that bear a greater potential to contribute to the country‟s economic growth, income generation, sustainable livelihoods and employment creation. South Africa‟s agro-processing sector is highly concentrated with large listed companies controlling both the production capacity and the sales in most food categories. This underscores the significant imbalance in the representation of small, medium and micro-enterprises (SMMEs) in the sector.
Agro-processing SMMEs face a number of growth challenges. These include, amongst others, access to finance, quality standards, infrastructure, access to markets, capacity constraints and skills shortage. However, according to Oxford, et al., (2003), lack of adequate access to financial support is widely regarded as the main problem facing entrepreneurs in SA. The South African government, through different SMME support units, offers a wide range of measures tailored to addressing the aforementioned agro-processing SMME challenges. This is done to unlock the potential of the agro-processing sector and maximise its contribution to the economy as envisaged in the National Industrial Policy Framework (2006a).
This research project sets out to explore the adequacy of the financial policy framework to support agro-processing SMMEs. In order to explore this challenge, a combination of literature review, policy analysis and interviews was used. Relevant SMME policy documents and guidelines were analysed and key findings were noted. Interviews were conducted with the key officials knowledgeable about the agro-processing SMME financial policy framework. The key results of the study were that the existing financial policy framework to support agro-processing SMMEs is inadequate. While acknowledging the existence of generally good policies and institutions, it transpired that there is weaker coordination, marketing or awareness of policies, high concentration of support institutions in urban areas, capacity constraints and lack of visibility on the ground. All these challenges consequently contribute to the weaker and ineffective implementation of the financial policy framework.
Description
MM thesis - P&DM
Keywords
Small, medium and micro businesses, Policy frameworks, Agro-processing