South African government palliative funds for SMMEs during COVID-19 : challenges of implementation and suggestions for improvement

Abstract

PURPOSE: The implementation of the lockdown on 28th March 2020 due to the COVID-19 pandemic disrupted business and economic activities completely, which has serious consequences for SMME survival in South Africa and the world at large. Subsequently, there was a contingent need to provide funding to SMMEs to ensure their survival. This study, therefore, explored the meaning of SMME in the South African context and their experiences during the COVID-19 pandemic. The study further investigated the palliative funds given to SMMEs during COVID-19 by the South African government, the challenges encountered during its implementation process, and the measures to improve the funding implementation.

METHODOLOGY: The study adopted a qualitative research approach with an exploratory research design, and this enhanced in-depth findings through the adoption of interviews as the only source of primary data collection. Data collected from the participants were analyzed using a thematic analytical technique with the help of Atlasti software (Version 22).

FINDINGS: Findings obtained from the study revealed that SMMEs are separate and distinct business entities, including co-operatives and non-governmental organizations (NGOs), managed by one or more owners, including their branches and subsidiaries. Another finding revealed that during the COVID-19 period, SMMEs experienced supply chain disruptions, inventory shortages, cash flow issues, and low income due to the inability to engage in active business. In the empirical study, participants attested that the scoring system, lack of business and managerial experience, communication barriers, and business registration requirements are some of the challenges encountered in funding implementation by the government departments. Furthermore, the participants highlighted that funding based on merit, consideration of the scoring system, and the application of communication dynamics to reach SMMEs should be applied to improve SMME funding implementation.

ORIGINALITY/VALUE: This study is meant to inform the government on how to handle SMME funding and measures to assist them to enhance employment and to improve economic development.