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Challenges as experienced by small, medium and micro-sized enterprises in the informal sector, KwaZulu-Natal, South Africa: the case of KwaMakhutha Township.

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The power and economic contribution that the Small, Medium, and Micro-sized Enterprises (SMMEs) sector brings to the growth and stability of South Africa can never be underestimated. Generally, this sector is the largest contributor to employment and reduction of poverty in most countries. This is in support for businesses operating in informal settlements such as KwaMakhutha Township, where the establishments of such businesses serve as the means for survival and reduction of poverty and unemployment for most individuals. However, these businesses are continuously experiencing critical challenges, which includes lack of (or rather limited) excess to finance, and the use of public resources, lack of entrepreneurial knowledge, and increasing FOB competition. This hinders the consistent establishment of small businesses in the informal sector and the economic growth contribution that can be attained from the development of such businesses. The purpose of the study is to determine the challenges as experienced by Small, Medium, and Micro-sized Enterprises in the informal sector of KwaZulu-Natal. It made use of KwaMakhutha Township as the study case. This study used a qualitative, case study approach to address the research questions and objectives. Primary data was acquired through the usage of face-to-face, semi-structured in-depth interviews. A purposive sample of eight SMMEs owners from KwaMakhutha township was recruited for the interviews. The data was analyzed using thematic analyses. The data collected revealed major findings that were in line with the research question and objectives. Lack of access to sources of funding and the use of public resources, lack of entrepreneurial education, and foreign competition were one of the predominant challenges as faced by most SMMEs in the informal sector. South Africa is still a developing country and therefore, still needs and should encourage small business establishments in both formal and mostly informal settlements. This can be done through fostering initiatives that will improve entrepreneurial knowledge in the informal sector and ease of access to the financial information that can assist entrepreneurs to get their businesses off the ground without long admin processes and unreasonable interest rates and taxes that they experience currently. Also, be given access to the use of necessary public resources. These mentioned will enable local operators in KMT to successfully compete with foreign businesses without fear of unbearable completion from foreign-owned enterprises.


Masters Degree. University of KwaZulu-Natal, Durban.