A critical analysis of current approaches to SMME development and support within the eThekwini Municipal Area.

Abstract

Small, Medium and Micro Enterprises (SMMEs) are considered to be the engines of growth of any economy. In the light of recent economic events and the recession that is surging rapidly across the globe, more and more attention is being focused on SMME development and support. Whilst there are a number of organisations (both public and private) which provide support to SMMEs within the eThekwini Municipality Area (EMA), the overall impacts of these initiatives on SMME growth and development is minimal and there is a dearth of studies that critically examine business support services for SMMEs which the public and private sectors provided. One of the major reasons for this minimal impact is the lack of communication and coordination between various service providers which often results in fragmentation and duplication of services. This study analyses the support measures offered to SMMEs not only from the perspective of the SMMEs themselves but also examines the perspectives of service providers from both the public and private sectors. This study is also placed within a multi-disciplinary conceptual framework which includes the political economy approach, neoliberalism, the public-private-sector debate and empowerment theories with specific reference to the South African context. This study is unique in that it analyses SMME development and support within the EMA from various perspectives within a single study. The objectives of this study were to investigate the awareness and experiences of SMMEs with regards to their support and development and also to critically examine the attitudes and perceptions of service providers (both public and private) towards SMME development and support. In addition, this study sought to assess the capacity of both the private and public sectors to provide effective support and development to SMMEs. An additional objective of this study was to determine the value placed on support measures by determining SMMEs’ willingness to pay for services provided, but more importantly to determine the attitudes of the public and private sectors towards the payment for services offered. Both qualitative and quantitative methods were adopted. In terms of the latter, quantitative surveys were conducted with 250 SMMEs who attended various fairs and conferences held across the EMA. Semi-structured interviews (qualitative approach) were conducted with representatives from the private and public sectors that provide support or services to the SMMEs in the EMA. In this regard, 53 representatives from the public sector and 50 from the private sector were interviewed. The analysis was undertaken thematically and, where relevant, findings pertaining to the different stakeholders interviewed were compared and discussed. Some of the key findings indicate that SMME respondents were more aware of local government and the services they provide than any other tier of government. Furthermore, SMME respondents within the study did not fully grasp the concept of Business Development Services (BDS) and the associated benefits for their business. SMMEs rely heavily on government to provide services free of charge. The main finding is that private sector service providers are better qualified, positioned and trained to provide BDS than the public sector whose main roles should be that of regulator, facilitator and promoter. Whilst government has been a strong proponent of SMME development and support since 1994, this study presents a strong case for the increased role of the private sector. In addition, this study also motivates that local government through their Municipalities can play a significant role in SMME development and support in partnership with the private sector.