Government and manufacturing SMME partnerships to create jobs in South Africa

Abstract

South Africa has one of the highest unemployment rates, currently at 29 percent. This is the highest it has been since 2003 and it is nowhere close to reaching the National Development Plan (NDP) goal of reducing unemployment to 14 percent by 2020. Literature suggests that the development of the Small Medium and Micro Enterprise (SMME) sector leads to economic development and in turn sustainable job creation, particularly in developing economies. Consequently, the South African Government has sought to develop policies and establish institutions as well as a ministry to support SMME development. This is to ensure that job creation is prioritised to achieve their NDP goals of eradicating poverty and reducing inequality. Literature shows that the primary source of employment comes from SMMEs as they contribute 60 percent of the jobs in the economy. Delving deeper, literature also suggests that the manufacturing sector stands out as one of the largest job creators amongst other sectors, and with the appropriate support it could help absorb a large portion of the unemployed labour force. The development of SMMEs in South Africa is slower than in other developing countries, while our failure rate of SMMEs is very high. Research has mostly endeavoured to find reasons for SMME failure by looking at the challenges that SMMEs face. However, more recent research shows that the problem may also lie within the interventions that the Government has set up to support SMMEs. The purpose of this study is to investigate the shortcomings of the current Government interventions in place to support SMMEs in the manufacturing sector, and the challenges that SMMEs face which might cause their failure. This study finds that the main challenge faced by the Government is lacking a streamlined solution to help SMMEs p their obstacles. The main challenges for SMMEs are not having access to financial aid, poor infrastructure, an inadequately educated workforce, inefficient government bureaucracy and limited access to the market. This study concludes that it is appropriate for the Government to seek viable partnerships to assist SMMEs, particularly in the manufacturing sector, to create sustainable jobs successfully.