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Factors hindering the growth of SMMEs in Msunduzi Municipality, KwaZulu-Natal Province.

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The SMME sector is valued for its contribution towards the development of a country in terms of employment creation, poverty alleviation, promotion of entrepreneurship activity and economic growth. In as much as SMMEs are the drivers of economic growth globally and locally, specifically in South Africa, there are challenges that prevent SMMEs from growing which often leads to business shut-down within the first two years of operation. These challenges are categorised as internal and external environmental challenges. The internal environment challenges include characteristics of entrepreneurs, management skills, technological capacities, access to markets, management of resources and poor cash management. External factors are comprised of government regulations, access to finance, high competition, high taxes, cost of production and investment in technology. This study identified both internal and external environmental factors hindering the growth of SMMEs in Msunduzi Municipality. This study used a closed-ended questionnaire to obtain an understanding of the challenges that SMMEs in Msunduzi Municipality face and address the research questions and objectives. The researcher used a disproportional-stratified sampling technique to select a sample that represented a population of 264. A total number of 155 questionnaires were distributed across different strata of the municipality. From a target population of 264, only 90 usable questionnaires were returned, a 58% response rate. All responses were coded on Statistical Package for the Social Science (SPSS) version 24. Descriptive analysis was used to analyse the demographic information and inferential statistics was used to analyse the research hypothesis. The findings of the study show that most SMMEs in Msunduzi Municipality are growing, shown by the Cronbach’s alpha = 0.789. The internal environmental factors having a latent factor of 44.15% shows that internal factors affect business growth. However, external environment factors account for a latent factor of 28.70%, meaning they do not affect business growth. Among the factors that the researcher found to impact on business growth are market share, investment in technology, high taxes and high competition. This study concludes by suggesting that SMMEs should work together to overcome their challenges and use each other’s strengths for business growth benefit.


Master of Commerce. University of KwaZulu-Natal, Pietermaritzburg, 2018