Many thanks to the officials of the Department of Small Business Development; the Ministry of Rural Development and Land Reform, both the national and provincial offices; Coops & CPPP Cooperatives and Community Private Partnerships Program DALRRD Ministry of Agriculture, Land Reform and Rural Development DHET Ministry of Higher Education and Training.
INTRODUCTION
- Background
- Problem statement
- Aim of the study
- Research questions
- Research objectives
- Motivation and significance of the study
- Study area
- Matatiele Local Municipality
- Definition of concepts
- Development
- Rural development
- Rural areas
- Small, medium and micro enterprises (SMMEs)
- Theoretical framework
- Social capital theory
- Research methodology
- Research design
- Research instrument
- Study population
- Data-collection methods
- Sampling techniques and sample size
- Data analysis
- Ethical considerations
- Structure of the thesis
Matatiele Local Municipality is located in the northern part of the Eastern Cape Province (Matatiele Local Municipality, 2016). Customers/clients of the SMMEs in the local community of Matatiele, with an emphasis on local school principals.
REVIEW OF RELATED LITERATURE
Introduction
Defining SMMEs
There are similarities in the qualitative definition of SMEs by Berisha and Pula (2015), on the one hand, and Ramadani (2011), on the other. It lies in the fact that in both cases it focuses on management that is personalized.
SMMEs in development
- SMMEs in developed countries
- SMMEs in developing countries
Germany is dominated by small and medium-sized enterprises in the service sector, which are responsible for a high level of employment (Kamange et al., 2014). About 90% of small and medium-sized enterprises in Japan contribute to economic growth and the most important sectors are manufacturing, trade and services (Goto & Negash, 2016).
Rural development: Challenges, objectives, and approaches
- Challenges in rural development
- Objectives and approaches to rural development
- The contribution of SMMEs to rural development
- Contribution of SMMEs to economic growth
- A business plan ..................................................... Error! Bookmark not defined
- Human capital (education and training)
- Access to finance
In Sub-Saharan Africa, SMEs in rural areas are considered vital tools for achieving the MDGs such as poverty alleviation and economic growth (Akugri et al., 2015). Even after starting the business, the business plan plays an important role as a management tool (Van Aardt et al., 2008).
Support for SMMEs in developed and developing countries
This support boosted the growth and sustainability of SMEs in EU countries, reducing unemployment and increasing the region's economic growth. They further encourage the development of entrepreneurship as MSMEs contribute to the economic growth of the Philippines.
Theoretical framework
- Social capital theory
- Dimensions of social capital
Putnam (2000) cites examples of bridging social capital as civil rights movements and nondenominational religious organizations. Bridging social capital refers to more distant ties of like individuals, such as casual acquaintances and friendships.
Conclusion
In general, social capital is considered an umbrella term for various types of social resources that often form the basis of economic, political and/or other forms of success for a society or group of people with similar aspirations. The most important dimensions of social capital in this regard are bonding, bridging and bridging capital.
- Introduction
- Methodology of research
- Design of the study
- Population of the study
- Instrument of research
- Methods of collecting data
- Sampling and sample size
- Analysis of data
- Research ethics
- Summary
To answer the main research question, which is “What are the contributions of SMMEs to overcoming poverty and unemployment in the local community of Matatiele?”, the researcher had to interview SMME employees and customers to understand and understand the information collected from the SMME owners. to validate. to answer this research question. To answer the research question: “What type of help is available for SMEs in the local municipality of Matatiele. the government and other sources?”, follow-up questions were asked to SMME participants and government officials for clarification. 2013) describe secondary research as a process by which a researcher uses data collected for some other reason to answer the research questions.
SOCIOECONOMIC BACKGROUND OF THE STUDY AREA
Introduction
Underlying socioeconomic factors in South Africa
- Unemployment
- Skills shortage
- Inequality
- Poverty
The slowdown in the country's economic growth also affects various sectors where people work in the country (Stats SA, 2019c). To address skills shortages, the government of South Africa has developed legislation and public policies; for example, the Skills Development Act of 1998, the National Skills Development Strategy, the National Skills Fund, . The reduction in poverty suggests that the South African government considers the challenge of poverty reduction in the country as a top priority.
Socioeconomic factors in the Eastern Cape province
The sectors responsible for the most employment in the Eastern Cape are government and public services, which employed 27.4% of the workforce. In the first quarter of 2019, these three industries combined employed more than 50% of the working population of the Eastern Cape (Stats SA, 2019b). The Community Survey (Stats SA, 2016) used the South African Multidimensional Poverty Index (SAMPI) to measure the extent of poverty in the country.
Socioeconomic conditions in the Matatiele Local Municipality
The average size of a household in the Matatiele Local Municipality is 3.9 persons, with a household needing at least R2,000 per month to stay alive (Matatiele Local Municipality, 2020). According to the Matatiele Local Municipality (2019), the average monthly income of households in the Matatiele Local Municipality is less than R2 000. There is a large number of people living in poverty in the Alfred Nzo District Municipality.
Historical background of South African SMMEs
Ntabankulu Local Municipality has the highest percentage of 89.4%, while Matatiele Local Municipality has 80.4%, which was the lowest percentage of people living in poverty in the district in 2018. Matatiele Local Municipality (2019) shows that the total of qualified employees in the formal sector in 2017 accounted for 28.4%, while semi-qualified employees 36.4%, and unskilled employees 35.2%. The democratic regime of the early 1990s gave SMEs an opportunity to participate in the South African economy.
SMMEs and socioeconomic development in South Africa
Challenges faced by SMMEs in South Africa
SMEs in South Africa are diverse in nature and content as some are self-employed informal enterprises, while others are formal, job-creating enterprises (Bhorat et al., 2018). The government should therefore step in and address the various challenges faced by SMEs in their geographical areas (Bhorat et al., 2018). According to Ranjit et al. 2011), there is a limited family business culture among South Africans due to a lack of business management training and skills.
Support available to SMMEs in South Africa
The National Empowerment Fund (NEF) was established under the NEF Act 105 of 1998 to provide financial and non-financial support to SMEs. The South African government recognizes that the apartheid government excluded black people from participating in the country's economic development. The high rates of unemployment, poverty and inequality in the country can be remedied by promoting the creation of SMEs.
Conclusion
A number of South African legislative acts demonstrate South Africa's promise to develop a supportive environment in which SMEs can thrive (Ayandibu & Houghton, 2017). This should be achieved through various forms of support provided by the state to small and medium-sized enterprises, so that they can contribute to the socio-economic development of the country. Through these institutions and various pieces of legislation, the South African government supports the development of small and medium-sized enterprises so that they can contribute to the socio-economic development and growth of the country.
DATA ANALYSIS AND INTERPRETATION
Introduction
Types of SMMEs in the Matatiele Local Municipality
- Categories and size of SMMEs
- Business planning and objectives
The main reason behind the selection of these categories of SMEs was that they were dominant in the rural areas of Matatiele Local Municipality. Among the SME owners who had business plans, some plans lacked a vision and mission. Three SMME owners who participated in the study explained that they paid service providers to develop a business plan for them.
The contribution of SMMEs to socioeconomic development
- Economic growth and innovation
- Economic growth
- Innovation
- Employment creation
- Poverty alleviation
The Eastern Cape Province is the poorest province in the country in terms of GDP per capita (Kavese, 2020). SMEs in South Africa contribute approximately 80% of employment opportunities in the economy (Bruwer & Coetzee, 2016). The study found that SMEs in Matatiele Local Municipality participated in the National School Feeding Program (NSNP).
Challenges faced by SMMEs
- Lack of funds and information about SMME support
- Lack of technical and business management skills
- Inadequate basic infrastructure
The SMME owners who participated in this survey emphasized that they struggled to get money to start or expand their businesses. 2014) confirm that SME owners were forced to self-finance or seek support from their families to start their business due to a lack of knowledge about where and how to obtain financial support. Most of the SMME owners who participated in this survey indicated that they had no training in business management skills, such as strategic and business planning skills, as well as marketing and financial management skills.
Assistance from the government and other sources
- Financial support available to SMMEs
- Non-financial support available to SMMEs
The following section discusses the financial and non-financial forms of assistance available to MSMEs in the Matatiele Local Municipality. Non-financial support for SMEs is seen as support given to SMEs in the form of training, advice, information, and technical and. Traditional authorities in the Matatiele Local Municipality also provide non-financial support to MSMEs who approach them seeking support.
The role played by the social capital theory
- The role of bonding social capital
- The role of bridging social capital
- The role of linking social capital
The social capital theory focuses on resources embedded in relationships between and among social actors (Griffin-El, 2015; Engbers et al., 2017). This proves that the linking of social capital in the Matatiele Local Municipality is applied for the development and growth of the SMEs. The connection of social capital also manifested itself in the relationship with the Matatiele Local Municipality as the municipality has a budget to support SMEs.
Summary
The challenges faced by MSMEs in the Matatiele Local Municipality were identified, and most participants confirmed that the challenges they faced hindered the survival and growth of their businesses. Furthermore, endogenous (such as access to resources) and exogenous (economic and political factors) obstacles hinder the establishment and growth of SMEs in South Africa. Bonding social capital was used to interpret relationships at the level of the individual SME.
SUMMARY, FINDINGS, AND RECOMMENDATIONS
Summary
In Chapter 5, the collected data were presented, analyzed and interpreted to arrive at the findings of the study. In addition, the chapter applied social capital theory to interpret the data to determine the role SMEs play in socio-economic development in the local municipality of Matatiele. Specific attention was paid to the contribution of the concepts of bonding, bridging and linking social capital to understanding the situation.
The findings of the study
- Findings related to the types of SMMEs
- Findings related to the role of SMMEs in socioeconomic development
- Findings related to challenges facing SMMEs
The Eastern Cape is the country's poorest province in terms of GDP per capita. The study further revealed that SMMEs in the local community of Matatiele participated in the NSNP. The SMEs in the study area lacked information about financial support from the government and other financiers.
Recommendations
- Recommendations regarding SMME business skills development
- Recommendations to improve the ability of SMMEs to access and use support
- Recommendations to enhance bonding, bridging, and linking social capital
- Recommendations for further research
In particular, efforts should be made to introduce these remote SMEs to the Internet world and help them develop the required skills. Coordinating the efforts of different institutions providing support will also facilitate the exchange of information on the effectiveness of support provided to SMEs. Developing these listening skills should be part of capacity building programs aimed at SMEs.
Conclusion
The causes and impact of business failure among small and medium enterprises in South Africa. Rising to the challenge: small, micro and medium enterprises (SMMEs) and socio-economic development in South Africa. The role of small and medium enterprises in the implementation of local economic development in South Africa.
Awareness of government-facilitated sources of financing among owners/managers of small and medium enterprises in South Africa. Community-based planning and local government: opportunities and challenges in rural communities – the Koukamma experience.
Letter of Permission from the National Department of Rural
Letter of Permission from the Department of Small Business
Letter of Permission from the Matatiele Local Municipality
Ethical Clearance
Informed Consent Form: English
Informed Consent Form: Sesotho
Questionnaire for Small, Micro and Medium Enterprise (SMME)
Questionnaire for SMME Employees in the Matatiele Local
Questionnaire for SMME Customers in the Matatiele Local
Questionnaire for Officials
Questionnaire for Matatiele Business Chamber
Editor Certification
