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business and private sectors and civil society. In light of the failing South African economy, citizens should be encouraged to work actively to create self-employment opportunities rather than waiting for help from the government.
6.2.2 CONTRIBUTION OF SMMEs TO ECONOMIC DEVELOPMENT OF LOCAL COMMUNITIES Based on the discussions covered in this dissertation, the question of whether SMMEs contribute to economic development is obvious. There is consensus among policy-makers, economists and business experts that SMMEs are drivers of economic growth. A healthy SMME sector contributes prominently to the economy through creating more employment opportunities and economic independency, increasing exports and introducing innovation and entrepreneurship skills. The dynamic role of SMMEs in developing countries ensures that they serve as engines through which the growth objectives of developing countries can be achieved (Mahembe, 2011).
6.2.3 SKILLS DEVELOPMENT AND CAPACITY BUILDING IN THE SMME SECTOR
The lack of skills and poor financial management in the SMME sector affects their sustainability. The empirical survey with emerging SMMEs in the Nongoma Municipality has indicated that access to funding and lack of business are their greatest challenges. This mainly relates to the SMMEs in previously disadvantaged communities. These SMMEs should be encouraged to register their business activities, be supported in terms of drawing up business plans and should be directed to available financial support.
6.2.4 BUSINESS MENTORING AND SUPPORT FOR SMMEs
Business mentoring is a proven way to enable successful entrepreneurs. Therefore, in light of the sustainability of SMMEs in the Nongoma Municipality, coaching would add value to these institutions by helping emerging entrepreneurs grow and develop, thereby enhancing overall production and the profitability of the SMMEs.
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6.3.1 RECOMMENDATIONS EMANATING FROM THE LITERATURE
The section below presents recommendations emanating from the literature study.
6.3.1.1 RECOMMENDATION ONE: NEED FOR EMPOWERMENT PROGRAMMES FOR THE SMMEs
SMMEs are the main drivers of economic growth in any given state. South Africa, as a dual economic (formal and informal) country, needs to revisit its vision for economic development through SMMEs. This stems from the realisation that SMMEs continue to face daunting challenges as a result of poor access to finance, lack of education and training support. It has emerged from the literature that SMMEs in the previously disadvantaged communities do not last for longer than a period of five years in the business environment.
It is against this background that the researcher sees the need for empowerment programmes to support the SMMEs.
6.3.1.2 RECOMMENDATION TWO: NEED FOR THE REDEFINITION OF THE ROLE OF LOCAL GOVERNMENT IN SOCIAL AND ECONOMIC DEVELOPMENT
Local government, towards the third decade of democracy, is bound by a number of factors.
For instance, this government sphere is mandated to improve socio-economic opportunities for local citizens. Economic programmes such as LED are located in this sphere, however they are the unfunded mandate. For the benefits of SMMEs, it is therefore recommended that the National Government sphere and the Department of Co-operative Governance and Traditional Affairs (CoGTA) re-define the role of local government in economic development. Every possible means should be made to boost local government in its endeavours for economic prosperity at community levels.
6.3.1.3 RECOMMENDATION THREE: PUBLIC PARTICIPATION IN LOCAL ECONOMIC DEVELOPMENT STRATEGIES
Economic decentralisation implies that local communities have important roles to play in creating and sustaining economic opportunities at local levels. Boosting local economies
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therefore requires local citizens to work collectively in identifying job-rich areas and soliciting municipal support in the form of business and legal advice.
6.3.1.4 RECOMMENDATION FOUR: RELATIONSHIPS BETWEEN FINANCIAL INSTITUTIONS AND SMMEs
Chapter two of this study highlighted the challenges experienced by SMMEs in accessing finance to fund their business activities, however financial institutions are reluctant to fund such activities due to their unreliability and unsustainability. The study therefore recommends that financial institutions design special funding in the form of loans for the SMMEs and that they play a close role in the monitoring of the SMMEs so that they are able to repay these loans.
6.3.2 RECOMMENDATIONS EMANATING FROM THE EMPIRICAL SURVEY
The section below presents recommendations emanating from the empirical study. The empirical survey of the current study identified key challenges affecting economic development through SMMEs hence recommendations are provided for future studies in this field.
6.3.2.1 RECOMMENDATION FIVE: THE NEED FOR EDUCATION AND TRAINING FOR THE EMERGING ENTREPRENEURS
Low education levels have been singled out as the main obstacle affecting the development of SMMEs in the Nongoma Local Municipality. The majority, approximately 74 per cent, have primary and secondary education levels of education. None of these have been exposed to business training. As a result, they lack basic business operation skills such as the ability to write up business plans and undertake proper financial management. It is therefore recommended that municipalities expose these emerging entrepreneurs to the available training programmes.
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6.3.2.2 RECOMMEDATION SIX: THE NEED TO ENHANCE SMMEs’ ABILITY FOR ABSORBING UNEMPLOYMENT
It is indicated in the preceding sections that SMMEs are the engines for economic growth and they have the potential to absorb unemployment levels. However, due to poor planning and the lack of proper management skills of the emerging entrepreneurs, SMMEs do not extend to support wider communities in terms of employment opportunities. SMMEs are a job-rich strategy, therefore they should be encouraged to extend economic opportunities to the needy citizens.
6.3.2.3 RECOMMENDATION SEVEN: THE NEED FOR THE DEVELOPMENT OF THE FINANCIAL ASSISTANCE MODEL FOR SMMEs
A financial support model which will be sensitive to the needs of the SMMEs should be designed. This financial support model should be co-ordinated at a national level under the Department of Economic Development. In order for SMMEs to yield positive results, proper mentoring and monitoring programmes should be developed. In this way, SMMEs can contribute to economic development for local communities.