The future growth potential of township SMMEs: An African perspective

Abstract

Purpose of the study: While small, medium and micro enterprises (SMMEs) in townships play a key role in economic growth and job creation in the South African economy and the rest of Africa, few benefits accrue to these businesses, as they experience many challenges which may make them unsustainable. A significant gapexists in relation to knowledge about informal businesses in township areas, and ways in which to support theseenterprises to stimulate economic growth. The purpose of this study was to examine the perceived futurepotential of township SMMEs from an African perspective, with specific reference to the South African situation.Design/methodology/approach:The study followed an exploratory and descriptive research design, with self-administered questionnaires being used to collect data from various township SMMEs across South Africa.Findings:The findings indicate future potential for township SMMEs, based on their ability to grow, overcomechallenges and sustain their businesses, however, this may be dependent in each instance on the type of business as well as its focus.Recommendations/value:It emerged from the study that township SMMEs face a number of major challenges,including high rates of unemployment (which may influence consumer buying behaviour), along with a lack of finance, training, infrastructure and skills. These challenges may have an impact on the potential success andsurvival of such enterprises. The findings of the current study may be extrapolated to the rest of Africa, as thereare many similarities in the way business is conducted across the continent.Managerial implications: In addressing the challenges facing township SMMEs, continued initiatives should be undertaken to promote increased entrepreneurial and productive activities.