The Impact of enterprise supply and development funds on SMMEs’ performance

Abstract

Small, medium, and micro enterprises (SMMEs) play a vital role in South Africa’s economy by generating employment, fostering income, and stimulating local economies, especially in rural and previously disadvantaged areas. As drivers of innovation, competition, and a diverse marketplace, SMMEs contribute significantly to national productivity and inclusive economic growth. Their adaptability makes them key agents of socio-economic transformation, supporting poverty reduction and the fight against inequality. Ensuring the sustainability and success of SMMEs is essential for continued socio-economic development, economic stability, and achieving national developmental objectives. This research investigates how Enterprise Supply and Development (ESD) Funds impact the financial performance, innovation, and workforce development of SMMEs in South Africa. Guided by the dynamic capabilities theory, the study quantitatively assesses how ESD Funds help SMMEs access resources, drive innovation, and build a skilled workforce. It further examines the effectiveness of targeted financial support in enabling SMMEs to respond to evolving market and regulatory conditions, thereby enhancing their sustainability and economic contribution. The findings aim to inform policymakers and practitioners on optimal strategies for supporting the growth and resilience of SMMEs in a rapidly changing business environment.