Factors that affect the growth of manufacturing businesses within eThekwini Municipality.

Abstract

The manufacturing industry of eThekwini municipality has been the most important aspect of economic development and job creation. This sector currently contributes 22% of gross domestic product to the local economy, with finance and transport being the other major sectors. The growth in manufacturing has averaged about 1% per annum over the past 10 years which has contributed to jobless growth of eThekwini. Whilst policy makers have realized the importance of the manufacturing industry, the important sub-sectors within the manufacturing industry are proving to be uncompetitive in a more open economy as they are faced with numerous growth challenges. The rationale of this study was to investigate the factors that affect the growth of manufacturing businesses that operates within the eThekwini municipality. Despite the contributions of the manufacturing businesses to the local economy, this sector has never been given due attention as past studies of business performance had been biased towards larger businesses. For the purposes of this study, the questionnaire used was aimed at respondents who own manufacturing businesses within the area. Questions were distributed electronically via QuestionPro to 100 respondents and 76 respondents accessed the questionnaire with 44 respondents who completed the survey which gave the completion rate of 44%. The results from the respondents indicated that access to finance or credit, business skills, technology and globalisation were the factors that negatively affects the growth of the manufacturing businesses. The results also indicate that the unpredictable business environment, the regulatory environment and other economic factors such as inflation also affect the growth of the manufacturing businesses. The quantitative results supported by the literature review confirm that these factors affect development and growth of businesses especially small manufacturing businesses. Recommendations is also made on the actions to be undertaken to address factors affecting manufacturing businesses.