The contribution of small, medium and micro enterprises to rural development in the Matatiele local municipality, South Africa

Abstract

This study emphasises the importance of small, medium and micro enterprises (SMMEs) to national economies all over the world, as they contribute to the creation of jobs, growing the economy, and reducing poverty. This study shows that after 1994, South African SMMEs have been the main tool to achieve poverty alleviation and eradication, and to improve income generation and employment creation, which are some of the challenges encountered in rural areas. In developed countries, SMMEs are innovative and they export their products to other countries and grow because of better access to markets in and outside their own countries. The study used a qualitative approach with the purpose of understanding whether SMMEs contribute to rural development. Primary and secondary data were collected. Semi-structured interviews through the triangulation of individual, focus group, and telephonic interviews were conducted with 91 participants, who were divided into SMME owners, SMME employees, SMME clients, officials that provide support to SMMEs, and a member of the Matatiele Business Chamber. The researcher developed different interview schedules to collect data from various participants who were identified purposefully and through snowball sampling as they were able to provide relevant and in-depth information suitable to address the research questions. The findings indicated that SMMEs are facing various socioeconomic challenges such as lack of funds to start and sustain their businesses, lack of knowledge about government and other business financing institutions that support SMMEs, lack of business management skills, lack of markets, and poor infrastructure, which, among others, hinder their growth. The government pays limited attention to assisting SMMEs with being innovative and to export their goods to other countries, which results in the high failure rate of SMMEs in South Africa. For SMMEs to be successful, the study recommends that the following dimensions of the social capital, namely bonding, bridging, and linking social capital be strengthened in these organisations and that solid principles of running a business be implemented.