The government initiatives mainly concentrated on the following three areas: De-regulation in terms of policy and legislative measures so as to create favourable regulatory environment to serve as an incentive to SMME, programmes designed to overcome constraints towards the development of the sector in the areas of finance, marketing, technology transfer, purchasing of inputs by SMME and sites and premises for SMME to operate from, and institutional support, whereby the Ministry of Trade and Industry serves as the lead ministry for the small business sector.
In this case, the country’s exchange rate would appreciate as investors rebalance their portfolios in favor of assets denominated in its currency in response to the higher interest rate differential. 5 There is also evidence that monetary policy actions can influence investors’ willingness to hold risky assets, the so-called risk-taking channel. 6 Such effects seem to be most potent when financial conditions are stressed.