The Influence of Government Financial Incentive Schemes (Gfiss) on Small and Micro Enteprises’ (Smes’) Operational Performance:Case Study

The small, medium and micro enterprises (SMMEs) play a pivotal role in the South African economy through job creation and development.  Hence, SMMEs should operate efficiently and run their businesses effectively in order to grow within their respective sectors.  One of their challenges is access to different methods of finance in order to improve their operations.  As a result, this paper examines the influence of the financial incentive schemes (GFIS) on small and micro enterprises’ (SMEs’) operational performance in the textile and clothing manufacturing sector in the eThekwini District Municipality.

Of the 94 SMEs that were identified, 80 participated in the study.  The owners of SMEs were the target population.  Descriptive and one-sample statistics were used to analyse the three objectives.  That is, to examine SME awareness of government financial incentive schemes; to establish SME knowledge of accessing government financial incentive schemes; and to determine the influence of GFIS for SMEs’ operational performance.  The results indicate that the majority of SMEs are not aware of GFIS.  They are less knowledgeable as to where to access government’s finance assistance.  However, those that have accessed the government financial schemes indicate that such schemes help achieve their operational performance objectives for growth. 

The original value of this paper is its approach in uncovering strengths and weaknesses of government’s financial incentive scheme for SMEs’ operational performance in the eThekwini District Municipality.  It provides the initial baseline data upon which to base future work.