Investigating the finance needs of small manufacturing businesses in the eThekwini metropolitan area.
Date
2016
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Abstract
The manufacturing sector is one of the drivers of economic empowerment, job creation
and poverty alleviation through its stimulation of growth. This is possible due to the nature
and clustering of this sector. SMMEs in this sector are facing many challenges, including
access to markets, the inability to export their products, access to finance as well as basic
cyclical cash flow management. The study was conducted to tackle the issue of access to
finance. In particular, it investigated the needs of the small manufacturers operating within
the eThekwini Metropolitan area. The study was quantitative in nature and targeted owners
and managers of these businesses. The study revealed that the lack of access to finance
was a hindrance to the growth of these small businesses. Consequently, this also made it
difficult for these manufacturers to service their existing clients due to low cash flow and
the inability to produce on demand. Most of the financial assistance that manufacturing
business owners used to start up their businesses was sourced from family and friends.
This form of access to funding could not be repeated nor was it available on demand.
Therefore, there is a need for financial institutions from both the government and private
sector to create financial instruments based on the needs of these small manufacturers.
Despite the challenges experienced by these business owners, the study revealed
opportunities for creative or specialised funding mechanism such as cash flow cycle
management, opening of credit lines and invoice discounting. These schemes will go a
long way in assisting small manufacturers in staying liquid and being able to produce and
deliver on time.
Description
Master’s degree. University of KwaZulu-Natal, Durban.