The role of SMMEs in poverty alleviation : the case of Richmond Local Municipality, KwaZulu-Natal.

Abstract

The Apartheid era in South Africa can be agreeably noted as a system of the past, but unfortunately its effects still find access to the South African communities to this day. It is the legacy of this era that still shackles the majority to poverty, due to the economic, political and social distortions. Thus, poverty in the Richmond local municipality was the focus of the study. The aim of the study was to discover the role that Small Medium and Micro Enterprises of this municipality play in alleviating poverty. Small Medium and Micro Enterprises are recognised across the globe as engines of economic growth, as they are key in the economic development and job creation which are critical in poverty alleviation. These types of business establishments have been the strength of economic development in South Africa, as the country is confronted with a challenge of poverty and unemployment which is reported at a high of 28.7% in the first quarter of 2018. The South African government recognises the importance of this sector of business activity, so much so that a ministry of Small Business Development was established in early 2014. This study condenses poverty that arises from economic, political and social distortions to absolute and relative poverty concepts and as a way of determining the role played by the Small Medium and Micro Enterprises in the Richmond local municipality. Moreover, Business Social Responsibility initiatives that focused on the employees, customers, environment and community were also ascertained. A quantitative data collection method was used to collect data from a sample of fifty-one (51) Small Medium and Micro Enterprises; and a complete enumeration survey was utilised. Questionnaires with closed-ended questions were used to collect data from the Small Medium and Micro Enterprises, and the response rate of the Small Medium and Micro Enterprises was 94.44%. Data was then analysed using the Statistical Package for Social Sciences version 22.0. The data was further analysed quantitatively using descriptive and inferential statistics. The results of the study largely revealed that Small Medium and Micro Enterprises play a significant role in the alleviation of poverty in the Richmond local municipality. Furthermore, the study established the age group 41 – 50 years to be the most active age group in these Small Medium and Micro Enterprises and most of the respondents have secondary education. Additionally, the results reveal that most of the Small Medium and Micro Enterprises have been in operation for over 6 years and general dealers are the leading nature of Small Medium and Micro Enterprises. Of the study recommendations, is that the Municipality works hand in hand with Small Medium and Micro Enterprises in the pursuit of alleviating poverty; Small Medium and Micro Enterprises seek alternative streams of funding and that they continue exhaustively partaking in the non-monetary dependent Business Social Responsibility initiatives.