Factors affecting SMEs growth in Lesotho
Date
2023
Authors
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Journal ISSN
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Publisher
University of the Witswatersrand, Johannesburg
Abstract
Orientation: SMEs are considered the main drivers behind the economic systems in both developing and developed economies However, SMEs are prone to the factors that preclude their growth. These factors include the challenge of access to finance, which is renowned to threaten SMEs continued growth and long-term sustainability.
Motivation of the study: Likewise, in Lesotho, SMEs are considered crucial drivers towards achieving socio-economic objectives. However, according to the World Bank, the SMEs in Lesotho fail to contribute to the socio-economic objectives as per the expectations, hence the motivation to determine the challenges faced by SMEs, and how they preclude their growth. Purpose of the study: The objective of this study is to determine the impact of the challenge of access to finance on the growth and profitability of SMEs in Lesotho.
Methodology: The study adopts a quantitative approach and utilises a survey questionnaire for data collection. A sample of 400 SMEs was selected using a simple random sampling technique from a population of 76 000 SMEs in Lesotho. The data collected was analysed using Multiple Linear Regression Analysis.
The key findings: The study findings revealed that there is an insignificant negative relationship between collateral security requirement, interest rates and SMEs sales growth, and a significant negative relationship between the business plan requirement and SMEs sales growth. It also showed that there is a significant negative relationship between collateral security requirement and SMEs profitability, and an insignificant negative relationship between the business plan requirement, interest rates and SMEs profitability
Description
A research article submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Business Administration
Keywords
Access to Finance, Business Plan, Collateral Security, Interest Rates, Small and Medium Enterprise, Sales Growth, Profitability