Business friendliness of Gert Sibande Local Municipalities towards SMMEs.

Abstract

The small, medium and micro sized enterprises sector is a critical part of the economy, which require to be exploited to maximum. The sector plays a significant role in local governments, because of the contribution to the local economic development. SMMEs make up about 90% of formal businesses, provide about 60% of employment to the labour force, and contributes roughly 34% to the Gross Domestic Product of South Africa. The sustainability of SMMEs, however, relies exclusively on the business environment to which the SMMEs are initiated. The support by local governments in the creation of a business friendly environment for SMMEs is, therefore, essential. The study aimed at exploring the business environment of Gert Sibande local municipalities and its contribution to the sustainability and growth of the SMME sector. A qualitative approach (interviews) was employed among the participants (four local municipalities) for data collection and the results revealed that the municipalities had limited trading space for SMMEs but had built strong relations, mainly with various government departments and commercial banks, to improve the access to financial services for SMMEs. The study also found that municipalities did not provide SMMEs with basic service incentives, such as free water or electricity to stimulate entry into the sector. Findings from the theme of community interest on the SMME sector suggested that some municipalities have comprehensive plans to proactively address unemployment. Road networks were found to be generally dominant amongst the other transport modes in the respective municipalities. The study also found that municipalities have a great deal of responsibilities in the development of comprehensive, sustainable and applicable strategies to repress the challenges confronting the SMME sector. In pursuit of a business friendly environment for SMMEs, it is essential for the national government to empower municipalities with sufficient capital and necessary resources.