CHAPTER 5: CONCLUSION AND RECOMMENDATIONS 5.1 Introduction
5.2 Overview of the research
The research design adopted was exploratory and descriptive in nature (Akhtar, 2016:73-77). The study employed a mixed research method, i.e., a combination of quantitative and qualitative methodologies in an integrated fashion. This ensured that useful data were gathered using explanatory and descriptive designs. The study area analysed was three townships located in three provinces in South Africa, namely:
Gauteng Province – Saulsville Township; KwaZulu-Natal Province – Ezakheni Township; Mpumalanga Province – Matsulu Township.
The unit of analysis samples were drawn from these three townships, using a three- stage sampling approach. First, three townships classified as being urban, rurban and rural areas were purposively sampled using non-probability sampling. Next, the dominant sectors were identified and businesses were targeted that have a physical address in the dominant traditional business areas in these townships. A random selection of 392 entities across all three townships and the five dominant sectors was then drawn, for inclusion in the study. An interview and a questionnaire were used to collect data. A total of 392 surveys and 125 interviews were completed.
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The literature review reported on in Chapter 2 focussed on previous research conducted on factors that impact the growth of small businesses in townships. The review focused on behavioural economics, business management principles and public demand, in order to support the development of a public sector demand-led business growth strategy. The study evaluated SMEs in BRICS and SADC (as these geographical areas are considered to be comparable to townships), and these were then compared to the SMEs sampled in this study. This secondary research was important to this study for two reasons. First, investigating and comparing SMEs in BRICS and SADC provided a benchmark and suggested possible collaboration as a result of similarities. Second, it demonstrated the level of development of SMEs in South Africa, with the leading SMEs possibly serving as points of reference and learning examples for those that are lagging behind.
Small business growth theory states that the strategic adaptation approach entails making continuous adjustments to support business growth. This is similar to the environment experienced by township businesses.
From a behavioural economics point of view, the prevalent psychological, emotional, cognitive, cultural and social factors in townships are important in assessing businesses growth. Luqman et al. (2023) assert that the emotions that affect psychological power are sometimes discrete. SMEs should not under-estimate or undermine their potential, just because they are in townships. They can do well, despite the location of their business. There is a wide market in townships, and greater population outside towns and cities. Liu, Chakravarty and Beamish (2023) demonstrated that SMEs success means displacing other player in the markets and increasing market share to match and eventually outperform competitors operating in developed areas.
An assessment of business management principles in townships shows that township businesses must contend with the remnants of apartheid. Tu and Akhter (2023) stress the role of entrepreneurial education, employing technology wisely, creativity and innovation, which should be considered to offset the after-effects of apartheid This insinuates that blaming the past legacy signals a lack of preparedness and failure to employ these attributes in running an SMEs, or any other business for that matter.
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Finally, public sector demand for goods and services from SMEs does not extend sufficiently to township businesses; however, this limitation is not unique to South Africa. Other countries, including members of BRICS and SADC, demonstrate the same discrepancy on the supply side, where the provision of goods and services is inadequate. For example, Cavite province in the Philippines also experiences poor goods and service delivery (Mendoza et al., 2013). Indian locations also show a lack of integrated development between well-developed and poorly developed areas (Parida and Madheswaran, 2023). In Zambia, similar inconsistencies in goods and service delivery are prevalent (Miti, Hapompwe and Karim, 2023). The are two opposing potential implications for this limitation. First, it hampers the ability for SMEs to participate in providing such goods and services that could possibly be demanded by the public sector. This has a direct impact on the ability of the SMEs to grow.
Second, it provides an opportunity for the government to redirect its demand and in the process help create new areas of economic activity for SMEs. For these activities to be effective, the government should assist the SMEs with setting up and implementing standards to ensure that the relevant quality goods and services are provided.
The situation is very different in developed countries. In Sweden, for example, Brozović, Jansson and Boers (2023) demonstrate the way strategic flexibility is applied to nurture SMEs. Other European Union countries (such as Belgium, Germany, Netherlands and Portugal) distribute goods and services more rationally compared to BRICS and SADC countries. The research also benefitted from previous research that has suggested a number of interventions related to key SMEs challenges, in order to advance business growth. These include:
• Government should intensify information sharing as part of the effort to reach SMEs.
• SME owners and managers should learn business and management skills.
• SMEs should keep financial records.
• SMEs should diversify their product offering.
• SMEs should establish a credit system to monitor debt sales and collections.
• SMEs should attract and keep good employees.
• SMEs should take out insurance against crime.
• SMEs should understand their trading location by conducting thorough research on: market (size, competitors, demand); access to transport; municipal by-laws.
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• SMEs should participate in seminars and exhibitions on information technology.
The vast majority of unemployed people in South Africa live in townships and rural areas, as indicated by several authors (Mkhize, Mthembu and Napier, 2023; Schenck et al., 2023). This raises the question as to whether and how business growth in townships has supported employment creation. But there is doubt that SMEs in South African townships create jobs to a significant level (Enaifoghe and Vezi-Magigaba, 2023; Maliwichi, Manenzhe-Ramarope and Strydom, 2023; Ziyane, Arogundade and Osei-Assibey, 2023). Ultimately, the government need to reduce unemployment to cyclical levels, that is, unemployment levels related to changes in business cycles. To date, government interventions have included providing financial and non-financial support to township businesses.
This study showed that all national economic strategies developed since 1994 in South Africa included an element of developing the township economies (Rogerson, 2010;
2013; Plagerson, 2023; Scheba and Turok, 2020). Similarly, the South African government has established specific institutions to implement direct lending programmes and to provide non-lending support services or grants. The finding of this study on this matter is that there has been limited success in developing sustainable township SMEs, and interventions and initiatives by the South African government have not fully targeted townships and rural areas.