Small business viability in the manufacturing sector within the eThekwini Municipal area.

Abstract

Small, Medium and Micro Enterprises (SMMEs) play a key role in transition and developing countries. These firms typically account for more than 90% of all firms outside the agricultural sector, constitute a major source of employment and generate significant domestic and export earnings. The aim of the research was to investigate the viability of small, micro and medium enterprises (SMMEs) in the manufacturing sector in the eThekwini municipal area. This sector is labour intensive and it has a potential to create more jobs than any other sector. The aim of the research was to understand challenges and success areas that SMMEs face in their quest to establish and run sustainable businesses. Public procurement is the process by which government departments or agencies purchase goods and services from the private sector (Lysons & Farrington, 2006). There are 8 factors that were identified and discussed in the literature review with an aim to understand what body of knowledge is understood in this field. A probability sample of 150 people was chosen drawn from an estimated 2150 SMMEs in the manufacturing sector. The questionnaire was designed with a sole purpose of sourcing valuable information from participants. There were 230 people were emailed and two business groups were sent a link in their Facebook Page for participation in the survey. A response rate of 47% was achieved; many dropped out and did not complete the survey. The participants were recruited using the municipal database of SMMEs and through the Chamber of Business in Durban SMMEs database. The main areas were business district areas in and around the city of Durban, these included Tongaat, Phoenix, KwaMashu, Pinetown, Inanda, Umlazi and Amanzimtoti as key points of focus. The findings show that many of the respondents were contributing to the employment in their SMMEs. The majority of SMMEs employed at least 5 people in their businesses and they had at least one graduate in their employment. This was crucial because there is a need for SMMEs to have skilled employees and professionals in order to ensure that they were compliant to legislation. The study also discovered that there is a lot of red tape in the process of establishing the SMMES; this led a number of them not being formally registered. It was also shown that many SMMEs were aware of government institutions that were assisting SMMEs and had at least approached them to get assistance but a number of them did not get assistance. It is recommended that a thorough study looking in detail at the government interventions should be ensued. There is a need for proper coordination of purpose in government to ensure that people access their services. The study recommends that the government should reduce the level of bureaucracy seen in long procurement procedures.