Development finance institutions' opportunity evaluation process in South Africa
Date
2015-02-23
Authors
Likotsi, Nthabeleng
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Abstract
South Africa is a member of the BRICS and also a member of the G20, which includes a number of countries who make up what is known as the emerging markets. By their name, emerging markets are considered high potential economies which can grow at a faster pace. Within the context of entrepreneurship, emerging markets are interested in new and growth-oriented enterprises, which are able to generate sustainable economic development.
The South African Government through the Department of Trade and Industry (the dti) established the Development Finance Institutions as a response to the challenges faced by SMMEs for the purposes of facilitating development programmes for SMME to accelerate growth and assist to bridge the financial gap faced by SMMEs.
This has implications for a country like South Africa, which needs to ramp up its level of total entrepreneurial activity from the current 14%, against a comparable benchmark of 27% for other efficiency-driven economies (GEM, 2012). How Development Finance Institutions appraise loan funding applications has potential implications for how the gap between potential entrepreneurs and intentional entrepreneurs can be narrowed, thereby minimising the fear of failure associated with actual start-ups.
A lot of assumptions have been done regarding the nature of the opportunity, sustainability and their end-means relationship. Opportunities have been assumed to have minimal impact on the growth of an existing organization, because the results are believed to be an act of collective and difficult information processing.
The issue of access to funding by under-privileged entrepreneurs, such as youth and women in South Africa, has been interrogated (Ashton, 2010); with allegations of prejudice being levelled against banks. An empirical understanding of the decision-making process in DFIs is critical at this time, when the government is promoting entrepreneurship and SMMEs as key drivers of job creation, economic growth and social transformation.
Description
Thesis (M.M. (Entrepreneurship and New Venture Creation))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Graduate School of Business Administration, 2014.