The value-added services of development finance institutions in providing non-financial support to small, micro and medium enterprises (SMMEs) in South Africa .

Abstract

Globally, Development Finance Institutions (DFIs) provide financial and non-financial services to small and medium enterprises (SMMEs). Do these services add value and how effective are these interventions? This report investigated the role of DFIs in providing non-financial value-added activities, specifically to SMMEs in South Africa. The research was qualitative and perception-based; two questionnaires were designed; one to capture views of the 20 purposively-selected SMME recipients of the non-financial services, and the other of the, also convience-selected five DFIs who provide the offering. Perceptions of both the SMME recipients and DFIs were very similar and their general view was that non-financial services added value not only to the SMME, but the funding institutions as well. However, the perceived impact of the value-added services was different between the two groups; with some services being considered helpful and others not. The successful DFIs benefited as their portfolio performance improved greatly through higher SMME loan repayment rates and increased revenue, which improved their stated overall performance and success rate.