The mismatch in small-business funding’s supply and demand

Asha Speckman provides a wellwritten summary of the refreshing Finfind 2017 report on the state of SMME access to finance in South Africa, “Funding for small business must be made a priority” (July 15).

But she errs when she attributes to the report some defence of the banks for the funding gap.

The report is not about blaming small businesses (for a lack of preparedness for finance), or the concentrated nature of the banking sector, or the government (with the Small Business Development Department seemingly in her sights).

It genuinely explores the mismatch between SMME finance needs and the financial products accessible to them.

Among the report’s groundbreaking contributions is its ability to analyse a unique but credible database to illuminate the characteristics of those SMMEs seeking finance and their experiences.

The focus on formal businesses is understandable, not because the informal sector is less important, but to keep the study manageable.

There is clear evidence that many SMMEs face huge hurdles in accessing the finance they need. Where sources of finance have stepped in to close the gap, the report tells us to improve financial record-keeping so firms are able to produce vital financial documents. Banks must learn to rely less on traditional lending methods that use collateral and traditional financing scorecards “as a one-sizefits-all” approach.

Without a doubt, more has to be done for the financial sector to be more responsive to the needs of SMMEs (in their various shapes and sizes). The Finfind 2017 report is a welcome contribution, and its recommendations ought to be taken seriously by stakeholders.

Muzi Maziya, Mazra Solutions, Pretoria