SUNConferences, Southern African Institute of Industrial Engineering 2013

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Formulating a Strategic Framework to Promote SME Development
Denzil Kennon, Hendrik Snyman, Corne Schutte, Konrad Von Leipzig

Last modified: 2013-07-01

Abstract


SMEs are critical to economic development within the South African economy by contributing considerably to the national GDP and private sector employment. However they are unable to overcome the primary obstacle of access to funding which translates in an inability to attain the necessary physical, human and consulting resources.

Private equity and the venture capital sector has been critical in providing this necessary funding to support SME creation and growth in developed countries, but has been under-represented in South Africa. This is set to change by an amendment to Regulation 28 which allows pension funds to legally allocate a portion of the fund to private equity investments.

SMEs currently lack an understanding of the business value curve utilized by financiers to gauge the risk-reward characteristics of an investment. SME strategies need to be aligned to mitigate internal and external risks which will translate into the necessary value for financiers.

This paper utilizes a Systems Engineering approach through functional analysis to develop a framework which is being applied to the fledging local tooling sector which will rebuild its reputation and deliver good quality products on time to the local and international market through access to the necessary funding.


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