An exploration of small business mortality : a Lesotho perspective.
The informal sector, a sector which is formed by small businesses, plays the pivotal role in Southern African countries’ economic development and has predominately acted as a source of entrepreneurship essential to economic restructuring. It also acts as a social buffer for mitigation of the imbalances created by falling growth in the formal sector. Currently the sector appears the most viable alternative for employment creation to formal sector. The research notes that the economic crisis has exacerbated unemployment and poverty in Southern Africa in general, and Lesotho in particular. Low rate of labour absorption in the formal sector has meant that informal sector provides the best opportunity for unemployment reduction and poverty eradication. Further, it offers alternative employment and a source of income supplementation to formal sector workers as the formal sector is now not able to generate adequate employment opportunities. Factors contributing to failure of small businesses include lack of management skills/practices, marketing, financial, poor coordination and networking especially formation of partnerships, lack of knowledge of succession and strategic planning, poor access to credit and other problems such as lack of support from the government, and high tax rates. The infrastructure is inefficient and directly and indirectly hinders development and employment. Many small business owners are entrepreneurial but lack support both financially and institutionally. Measures are outlined to improve access to finance, formation of partnerships through buying syndicates, and access to relevant training. A vacuum exists in developing policies so governmental support to small businesses is also important in economic development. Recommendations are made on the restructuring of educational curricular through the National Curriculum Development Centre (NCDC) so as to address the environmental needs and also those of small business owners in the country. The key conclusion is that because small businesses are the breeding ground for new and emerging entrepreneurs, they have a major role in job creation for the expanding labour force in Lesotho. Lesotho government, relevant private agencies and chambers of commerce are urged to assist specifically the developing small businesses in Lesotho.