SMEs, Economic Growth, and Business Incubation Conundrum in South Africa. A Literature Appraisal

Abstract

Despite the South African government's desire to encourage economic growth via SME growth, attempts to ameliorate the difficulties encountered by SMEs are often hindered by a lack of resources, one of which is business incubation. This paper employs a descriptive literature review to declutter the varying concerns of SME growth and development from the narratives around the role of business incubators (BIs) and the government. This, we believe, would provide clarity on the challenges faced by SMEs development in South Africa by filtering the roles of both BIs and the government. Descriptive literature review as a qualitative technique helps to reveal an interpretable pattern in the current literature and was thus employed in this study. Even while the literature points to the importance of SMEs in economic growth, their volatility makes them an unreliable partner for the South African government currently. This is because the literature suggests that the government is failing them in one way or the other through limited and failed support systems. Because of their excessive reliance on government funding, BIs cannot help SMEs as they should because of the lack of funding. Consequently, one might argue that the & quot; law of unintended consequences," or the unexpected repercussions of government policies and actions/inactions, hinder South Africa's government from achieving its objectives. We flag some implications and future research directions in our closing arguments.

Influence of Financial Management Capabilities on Semi-Formal Financial Accessibility among Incubated Small and Medium Entrepreneurs in Tanzania

“…Similarly, financial planning capabilities have no impact on the semi-formal financial accessibility of incubated entrepreneurs as well. It is also an unexpected result as it contradicts most studies, including the study by Robison et al (2021), which has shown that financial planning capabilities significantly impact financial accessibility. This could be because semi-formal financiers need to use financial planning variable items like preparing quarterly, semi-annual and annual budgets.…”

“…Limited accessibility to semi-formal finance among small and medium-incubated entrepreneurs is associated with their lack of financial management capabilities (Yi et.al., 2022). In turn, financial management capabilities influence financial accessibility (Robison et al, 2021). Incubated entrepreneurs with strong financial management skills are viewed as more creditworthy by semi-formal lenders (FinScope, 2023).…”

“…This is essential for maintaining liquidity, meeting financial obligations, and seizing new business opportunities, which can indirectly enhance their access to semi-formal finance (FinScope, 2023). Financial management capabilities can help incubated entrepreneurs build stronger relationships and negotiate better terms with semi-formal lenders (Robison et al, 2021). The trust and credibility, often established through responsible financial practices, are crucial in the semi-formal finance sector (FinScope, 2023).…”

“…To solve this problem, researchers have argued that business incubation programmes have proved to be very successful in helping entrepreneurs improve their accessibility to finance by building their financial management capabilities. Rens et al (2021) point out that business incubators contribute significantly to financial accessibility among incubated entrepreneurs. Generally, the study showed a positive relationship between business incubation and financial accessibility.…”

A bibliometric analysis of the development of business incubation literature in South Africa

“…Entrepreneurial incubation in South Africa has been growing in significance over the past decade as the country recognises the importance of fostering innovation, job creation, and economic growth through startups and small businesses (Lose & Tengeh, 2015;Van der Spuy, 2019). South Africa has adopted business incubation as a tool to strengthen the economy through SMEs (Dubihlela & van Schalkwyk 2014;Rens et al, 2021).…”