Challenges faced by small medium enterprises (SMEs) in terms of growth and development: a study of Mnquma Municipality, Eastern Cape.

Abstract

South Africa continues to face challenges related to poverty, inequality, unemployment and low economic growth. One such province is the Eastern Cape Province, which ranks high in structural unemployment and low economic growth, as the economy moved to skills based employment. The provincial government of Eastern Cape decided to adopt a national strategy of decreasing unemployment and increasing growth and development through small, medium enterprises. (SMEs). Mnquma Municipality was chosen as the focus area of the study. This study explored internal and external challenges faced by owner/managers of SMEs at the Mnquma Municipality. This study was executed using a qualitative approach. The sample consisted of 20 SMEs which were derived from the Mnquma Municipal database. In depth interviews were conducted for data collection. The study was underpinned by the Core Competency theory and Resource - based view of the firm theory. Analysis tools such as Word clouds, cluster analysis and tree maps were used to derive themes coupled with the researcher’s interpretive analysis. Some of the key findings were high competition, lack of access to finance and lack of government support that threatened the sustainability of SMEs. The study further found that the critical competencies needed by the SMEs included financial management and accounting, marketing and overall business training and development competencies. The study made recommendations that local government support SMEs through funds and resources to ensure that businesses implement their strategies. It was recommended that local government invest in local business funding, training, and skills development which will result in an improved local economy. Access to technology also needs to be improved. Directions for future researchers include investigation of external factors that hinder the performance of SMEs and the measurement of development.