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Journal of Public Administration (JOPA)

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ISSN : 2
South Africa's Lending Infrastructure: Does it Facilitate or Constrain Access to Credit Finance by Small and Medium Enterprises (SMEs)?

Author: Lavisa Tala

Affiliation: University of Limpopo

Source: Journal of Public Administration, 2024-03-11 11:02:37

Accreditation: Department of Higher Education and Training (DHET)



Abstract: South Africa's Lending Infrastructure: Does it Facilitate or Constrain Access to Credit Finance by Small and Medium Enterprises (SMEs)?

This study examines the role of lending infrastructure in facilitating or constraining access to credit finance by SMEs in South Africa. Empirical literature identified access to financing as critical for the development of SMEs. SMEs are seen as playing an important role in the development of the South African economy. Important as the sector may be, it is faced with many challenges, difficulties in accessing financial credit is prominent. FinMark Trust undertook a study in 2015 wherein, out of 5 676 SMEs included in the survey, findings revealed that nine percent never had access to financial credit in South Africa. This study draws from existing literature to review problems faced by SMEs in accessing financial credit. It contends that they are a manifestation of the lending infrastructure that supports financial transactions. The findings indicate that SMEs lack financial statements, which is a key contributing factor in an infor