Where the work of others has been used, it is duly acknowledged in the text. This study investigates the impact of resource-based enterprise income on rural livelihoods in households using a resource-based rural craft enterprise (using reeds, Cyperus spp, as raw material), as a case study, the Ikhowe Craft Enterprise , located in a small town called Eshowe in the north of KwaZulu-Natal, South Africa. Although the enterprise is achieving growth, there is a concern and need to measure the future sustainability of the enterprise.
INTRODUCTION
Problem statement
However, in Towards a Framework for Rural SMME Development in South Africa, Rogerson points to the lack of clarity of the objectives of a rural SMME strategy in many countries. As Liedholm and Mead (1996) note that rural SME development is merely an alternative initiative following the failure of the formal economy to generate employment. An analysis of the impact of rural MSMEs, especially natural resource-based enterprises (NRBEs), on rural livelihoods is a critical issue, as the benefits of the entrepreneurial initiatives vary from person to person.
The structure
However, what the extent and nature of the supposed benefits are and how they are conveyed to different participants are unanswered questions that need to be adequately addressed. Furthermore, in South Africa and other parts of the world there is a tendency to assess benefits only at the cash level and neglect the bigger picture of the livelihoods of participants and their households (Ashley & Hussein 2000). This question indicates the need for further research to better understand the income from SMEs, especially from NRBEs for the rural population, since poor rural communities are often considered the most vulnerable and economically marginalized segment of the population.
LITERATURE REVIEW
- Introduction
- Natural resource-based enterprise (NRBE) concept
- Economic significance of NRBEs
- Handicrafts as a NRBE
- Constraints affecting rural SMMEs
- Common property management
- Sustainable livelihoods and NRBEs
- Research aim and objectives
It is difficult to quantify the economic contribution of the craft sector (both locally and internationally) due to the lack of complete hard data on the economic contribution (Cultural Strategy Group 1998; Rogerson & Sithole 2001; ECI Africa 2004). Based on the above argument, it is clear that the decline of common property poses a serious threat to the livelihoods of the rural poor (Karki 2001). All of the above together (assets and activities) are means for households to achieve desired outcomes, such as improving their well-being (Davis and Bezemer 2004) and some of these desires are shown under 'livelihood outcomes' in Figure 3.
THE CASE STUDY AND METHODOLOGY
- Introduction
- Study area
- Research Methods
- Case Study approach
- Sampling
- Methods of data collection
- Data analysis
- Limitations of the research
In the case of the Eshowe area, the economy has been and still is heavily dependent on the agricultural sector. The company is located next to one of the suburbs, less than a kilometer from the center of Eshowe. In this study, it was imperative to understand the conditions and interaction of variables within the participants' livelihoods, as well as the performance and business practices of Ikhowe Craft Enterprises.
A case study approach was adopted in this research as it was commissioned by the program's facilitators and donor partners. The project's impact on livelihoods is one of the three key themes of livelihoods assessment (Ashley & Hussein 2000). Therefore, the key theme of this study is SMEs based on natural resources and respondents' livelihoods.
Sub-themes included the economic impact of business and the role of non-business livelihood strategies. At the start of the research, the researcher pre-visited the site to meet key participants. Data analysis in this study was performed using two statistical software packages called SPSS and Microsoft Excel.
Second, individuals interviewed were all members of the enterprise and did not include any other household beneficiaries.
RESEARCH RESULTS
- Introduction
- An overview of Ikhowe Craft Enterprise
- Livelihood analysis of the crafters and their households
- Difficulties facing Ikhowe craft producers
- Broad economic context analysis
- Summary
The management of the enterprise emphasized that there were internal trainings for both the management and the producers. The company has achieved growth in terms of both the number of items sold and the total value of sales. The company's production levels depended on the size of the order on hand.
In 2005, Ikhowe handicraft producers experienced significant growth in terms of profit margins. For example, six of the families had their houses built with a combination of bricks (blocks), mud and stone. Mainly, many of the producers in this study area harvested cane in different wetlands.
None of the manufacturers were taught the importance of managing resources on the business side for the sake of continued profits. Moreover, one of the producers considered her income too small to cover her needs. Furthermore, the lack of business skills emerged as one of the biggest problems for producers.
The combination of livelihood strategies to meet all needs was the key characteristic of the case study households.
DISCUSSION
- Introduction
- Sustainability of the business
- NRBE income and livelihoods impact
- The role of other adopted livelihood activities in the case study
- Difficulties facing Ikhowe craft women
If the project facilitator is removed from this company, it will endanger the sustainability of the company. In the South African context, access to education appears as one of the critical determinants of success or failure of rural small and medium enterprises, and many rural entrepreneurs have limited formal education (Rogerson 2001). The success of the trading process is marked by the significant increase in the number of goods sold and the increase in proceeds between 2003 and 2005 (see Table 2).
In this context, craft income, for example, constitutes one third of household income sources. Moreover, some households are large, so such subsidies on their own may not help much. This is typical of the male wage earners in the context of the Ikhowe respondents as they are often away from home.
Agriculture is one of the most important activities practiced by most rural people (Ashely and LaFranchi 1997 and Ros-Tonen and Wietsum 2003). Despite the importance of crops for livelihoods, they are prone to various limitations such as. For example, Ikhowe manufacturers fail to understand the concept of cost and pricing of products within their business.
For example, at the time of the field visits, it was noticed that many of these orphans did not receive grants, even those who were supposed to be recipients.
CONCLUSION
Introduction
Revisiting the aim and objectives of this research
The challenge for the company is to transfer the most important skills such as marketing to the management. The question then is how to start introducing difficult technical and business skills such as marketing, pricing and market research to rural people with very little or no vocational training. The experiences in other parts of the world such as the Philippines, Mexico and Argentina show how SMMVs can make use of universities and academic institutions for SMME support.
This support can include the fundamentals of a successful small business, such as capacity building and marketing skills (Levitsky 1996). To determine the contribution that artisanal income makes to the livelihood of the participants at their household level, especially to basic human needs such as food affordability;. It serves as a good example to many rural NRBEs across South Africa and in other international countries such as Asia.
These poor women have managed to earn an income to improve the welfare of their families, and the money has effectively contributed to household expenses for things such as food. The findings in the case study suggest that these rural NRBE initiatives are not able to eradicate poverty completely, especially those related to resources such as reeds or grass. Ikhowe artisan women are prone to difficulties or vulnerabilities related to both the business and their households.
In terms of household-related vulnerabilities, some of the women interviewed and their households have little or no access to basic services such as electricity and public transport.
Suggestions for further studies
However, these other issues are public service delivery issues and Ikhowe Craft Enterprise may not have the capacity to provide solutions to these issues, specifically electricity and access issues.
Business related recommendations
However, the issue of transportation can be remedied when the company establishes the means to afford its own transportation for product collection from the producers' homes. It is recommended that external support or procurement of external services from experts be considered to likely remedy such deficiencies. This step can be valuable for the introduction to information and communication technology, the use of computers and marketing processes to improve management competence.
It is recommended that some of the basic business skills which would be sufficient for their level of education be imparted to them. This will thus provide both the management and producers with a suitable platform to be ready to run the business once the intervention is over. During the interviews, most of the respondents were free to mention problems they encounter in the company, which they could not mention in their meetings.
It was evident that the level of communication between producers and between producers and management is very low. Therefore, it is recommended to improve the level of communication and cooperation between management and producers, as well as between the producers themselves, as well as to establish regular reporting methods. This will help transparency, improve information sharing for growth and improve cooperation between all stakeholders.
Livelihood related recommendations
5 Do you provide your members with adequate training, for example, how to handle financial matters, how markets work and initiate new designs. 17 Do you experience competition in terms of prices, product uniqueness, design and quality with other domestic manufacturers. 28 During the dry season, do you help producers access raw materials elsewhere.
I agree. 1.8 Apart from your craft skills; where else do you think you need skills to improve your life aspirations.
