The of banks on SMME's development in Vhembe District Municipality

Abstract

In the aftermath of the worldwide financial crisis that happened in 2008, there has been an increased interest in the role of small, medium, and micro enterprises (SMMEs) in economic growth and fighting unemployment. In a country with a high unemployment rate, such as South Africa, the role played by SMMEs cannot be undermined in creating jobs opportunity. However, the lack of financing from banks have somewhat hindered SMMEs in playing that role in the communities. This study was therefore undertaken to explore the role that banks play in the development of SMMEs in Vhembe District Municipality. The aim of this study was to determine the role that banks play in the development of SMMEs in the Vhembe District Municipality area. The study adopted a qualitative research method and drew in participants, which included officials from managers, or owners of small businesses derived from stratified sampling which was used to determine various characteristics of the study population. The study was based on the data collected from SMMEs around Vhembe District Municipality in Limpopo province. The research adopted an interview guide using semi-structured interviews to allow discretion on the number and order of predefined questions posed to the participants. By using semi-structured interviews, it allowed the possibility of exploring topics in a depth and breadth that may be harder to achieve with fully structured interviews. The collected data were analysed using ATLAS.ti software which offers a variety of tools for accomplishing the tasks associated with any systematic approach to unstructured data. The challenges identified in this study were collateral security, lack of financial assistance education, credit access regulations, qualifying criteria, stringent credit system as well as stringent documentation requirements. The study also found that for SMMEs to develop and maintain sustainability, there should be a well-established partnership, relation building and business development programmes between banks and SMMEs. Based on the findings of this study, small business owners should make every effort to gather information on credit or funding they require from banks and they must also be involved in credit policy formulation, which will lead to informed policy. It was concluded that the development of SMMEs can be realized if the banks can do away with their stringent credit application system.