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Impact of Elements of Finance and Business Support on the SME Business Ecosystem in South Africa: An Econometric Analysis

Author

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  • Kanayo K. Ogujiuba

    (School of Development Studies, Centre for Entrepreneurship Rapid Incubator [CFERI], University of Mpumalanga, Nelspruit 1200, South Africa)

  • Maria Eggink

    (School of Development Studies, Centre for Entrepreneurship Rapid Incubator [CFERI], University of Mpumalanga, Nelspruit 1200, South Africa)

  • Ebenezer Olamide

    (School of Development Studies, Centre for Entrepreneurship Rapid Incubator [CFERI], University of Mpumalanga, Nelspruit 1200, South Africa)

Abstract

Studies conducted in South Africa have revealed that despite SMEs’ contributions to economic growth, financing is still a problem, and business supports such as management and business development training and the creation of business plans are additional obstacles to their expansion and survival. This article specifically investigates the combined effects of financing and business support on the business environment of South African SMEs. We calculated a necessary sample size of 1937 using a sample size calculator, a margin of error of 2%, a confidence level of 95%, and a response rate of 20%. As a result, 2200 questionnaires were distributed, the target population was split into 3 strata, and then samples were chosen for the survey from each stratum. The SPSS version 25.0 was employed to analyze the data in three parts, namely, descriptive, correlation, and the outcome of the regression (coefficients/model summary/ANOVA). The level of significance was determined at 5%. The test–re-test reliability method (trustworthiness assessment of the questionnaire) and Cronbach Alpha test (internal constancy) resulted in values of 0.70 and 0.875, respectively, which were regarded as satisfactory. The SME business ecosystem in South Africa was positively and significantly impacted by each of these financial and business support components. The findings also give policymakers vital information about the need for more research into how money and business assistance interact throughout the business ecosystem. It is advised that the South African government intensify its current policies and programs on SMEs’ access to financing, particularly in the areas of grants, equity financing, and loan financing. Additionally, it is necessary to build an adequate information system that ensures unrestricted information flow to rural areas.

Suggested Citation

  • Kanayo K. Ogujiuba & Maria Eggink & Ebenezer Olamide, 2023. "Impact of Elements of Finance and Business Support on the SME Business Ecosystem in South Africa: An Econometric Analysis," Sustainability, MDPI, vol. 15(11), pages 1-19, May.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:11:p:8461-:d:1153565
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    SME; ecosystem; finance; business;
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