Access to finance in south africa

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  • Publié le : 13 juillet 2010
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« Choose any sector: how important is access to finance »

In some surveys asking entrepreneurs to classify their different problems in order of importance, they ranked “problems around access to finance” in the top place because they think bankers show only a weak interest in helping them because they are so often turn down their applications. However, the importanceof the finance need depends on the enterprise’s size.
Financing is an interne or external investment in a project, without spend immediately money which allow a risk to increase the future income.
In order to reach an economic development, we have to see what’s happen on the different sectors of activity (growth, expansion or stagnation). That’s why we will focus on the Trade sector in SouthAfrica and around the world. We will divide our study in three different parts:
1. Which are the issues concerning the access to finance for businesses?

a) Self-financing
The self-financing is the financing of the investments by many internal means. But in the case where entrepreneurs do not have these money savings, they have to borrow some money by an external mean. However the access to aloan is not easy for entrepreneur because they have no way to act as their own guarantor.
Furthermore, many entrepreneurs do not have fund to start their business that’s why some people prefer to begin with a more approachable activity, which don’t need real investment. In order to create a benefit and invest further in the real activity they want to create.

b) Banking investment
There aretwo different kinds of bankers:
The first are the national and international bankers who based their loan on financial and statistical analysis without taking into account the importance of sectors in specific areas. They have a standardised system of banking operations based on uniform indicators which do not let a place to the balancing of the real strengths and weaknesses of the businesspotential. To answer to these needs only the branch office bankers are able to analyse the potential of the closer businesses. Because the branch-office bankers are more engage to allow a loan to an applicant in checking his references in the community. It deals with a concrete approach of small businesses than the strict financing policy of the biggest banks. They do not want to take too many risks.However, micro-credits appeared and his potential is really important because this new market segment concerns more than half of the world population.

c) Governmental help
In many countries we can find government help to start new businesses however it is necessary to register his business. Unfortunately, many SMME’s have no reason to exist if they have to pay taxes. Moreover, the ruralenterprises beneficiate scarcely of government supports which are in general spread into only on the larger urban areas. Their action is too limited to be efficient on a regional coverage.

d) FDI
Sometimes foreign direct investments are seen as a disloyal competition. That’s why some of them invest in a new SMME in order to be view as an ethic company. Actually they ask to a return on the investment.e) Business angels
Some rich investors believe in social investments they are called business angels and they become shareholders in many SMME. But even if it is a social act they are still waiting for a return on the investment.

f) Family financing
Some SMME begin with loans or grants from relatives and friends. These non-banking funds are really different between each other. In lots ofcountries these kind of financing is not well perceived because of its effect on the country economic development. Otherwise, this financing is really important in a country where the access to the banking financing is less accessible. This kind of financing has lots of advantages because it permits to the young person to go on the apprenticeship process; the transition from family employee to...
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