Investigating the contributions of SMMEs toward economic development in Nongoma Local Muinicipality.

Abstract

Since 1994, the South African government has recognised the important role of fostering an enabling environment for the creation and growth of the Small, Medium and Micro Enterprises (SMMEs). The purpose has been to ensure that small businesses progressively increase their contribution to economic growth, and strengthen the South African economy in critical areas such as job creation, equity and poverty alleviation. In light of this background, this study is designed to determine the extent to which the Small, Medium and Micro Enterprises (SMMEs) contribute to the economic development of local communities in the Province of KwaZulu-Natal in general, and more specifically in the Nongoma Local Municipality. Although SMMEs are regarded as an economic breakthrough for local communities and the backbone of a second economy, the contemporary literature on economic development is awash with topics detailing challenges affecting the survival and sustainability of this economic development strategy. Despite the challenges facing SMMEs, this study argues that job creation through SMMEs is particularly important for South African communities which are plagued by high levels of unemployment. However, a concerted effort should be made in this regard to uplift their influence at community levels. Furthermore, the literature review has described SMMEs as efficient and prolific job creators, the seeds of big businesses and the fuel of national economic engines. Even in developed industrial economies, it is the SMME sector rather than the multinationals that is the largest employer of workers. In conducting this study, the researcher used a mixed methods approach to solicit information about factors affecting SMMEs, from the emerging entrepreneurs as well as the officials of the Nongoma Local Municipality. The qualitative study was conducted with the municipal officials who provided their input in terms of developing entrepreneurial skills with the Nongoma Municipal Area. In addition, the quantitative study was conducted with the members of the community who participate in one or more entrepreneurial activities. The research findings point to a need for active engagement between various municipal stakeholders and communities in cementing a role that can be played by the SMMEs in creating maximum employment opportunities. Since funding is the main factor affecting the sustainability of SMMEs, the study recommends a financial support model which will be sensitive to the needs of the SMMEs, which should be coordinated by National Department of National Department of Economic Development.