Micro Enterprises In South Africa Research Articles

An Investigation into the Financial Management Practices of New Micro-enterprises in South Africa

The research investigated the financial management practices of new micro-enterprises in South Africa. The research focused on six financial management practices namely financial planning and contr...

Micro enterprises and microfinance for business women in rural areas of South Africa - a case study of Ga-Rankuwa at the interface between first and third world

The majority of South Africa’s rural population lives below the minimum living standard; basic amenities are lacking with low financial aid. This study, therefore, explores the nature of microfinance and micro enterprises in South Africa, the challenges, and sustainability. Choosing Ga-Rankuwa, a township near to Pretoria, the impact of microfinance on local business women is examined. Even at this interface between first and third world, micro business women face typical third world problems and microfinance service is still in a developing stage, while, in most cases, finance is the major problem for micro business. However, a survey shows that especially in such a situation, there is both the market potential and the infrastructure which allow for a successful implementation of microfinance, but the interface between first and third world demands for governmental help and community service as initial sparks. Once established, this interface situation promises good chances for microfinance sustainability.

The Impact Of Business Support Services To SMMEs In South Africa

Small Medium and Micro Enterprises in South Africa were operating in the era of the apartheid regime but were not given enough support and were not a priority in the government of those days. Before democratic transition, the South African government was mainly giving attention to large businesses as well as state-owned enterprises. It was only in the late 1970s and the early 1980s that the South African government realised the importance of the small enterprise sector and its contribution to the countrys economy. The democratic regime of the early 1990s gave SMMEs an opportunity to participate in the South African economy. A White Paper of 1995 introduced the strategy to promote and develop SMMEs in South Africa and to design an SMME policy framework that will focus its attention on supporting and developing SMMEs. The aim was to enable SMMEs to grow as a way of creating a balance in the economy (away from state-owned and large enterprises) As a result, different support mechanisms have been implemented to support and develop SMMEs in the country since the democratic government took over in 1994. This paper evaluates the business support programmes that have been implemented in South Africa since 1994, specifically in the Free State Province for the development and support of SMMEs. In this respect, the paper compares and evaluates the ability of the business support programmes that have been put in place to develop and support SMMEs in order to grow and become sustainable. This is done by means of a brief overview of the international business support services and an assessment of the South African SMME policy environment. The study also conducted five structured interviews with the management representative of the five different business support programmes in the Free State Province. Some of the key findings indicate that not many SMMEs are aware of business support programmes in the Free State and are even less informed as to where to access finances. At the same time, it was found that staff responsible for business support programmes appears to be incompetent, and therefore, deliver poor quality services. From this study it can be concluded that of all the programmes the government-driven initiatives to develop and support SMMEs struggle the most to become operational. The business support programmes focused on markets to some degree, but seldom made it an inherent requirement. This paper recommends that there should be monitoring and evaluation systems available to document the quality of the service delivery to SMMEs in the Province, and to train the staff of the business support programmes to deliver high-quality services to entrepreneurs. The study compared five business support programmes in the Free State with regards to developing and supporting SMMEs in the province. As a result, the value of the findings might well be considered in terms of future provincial planning documents and policy.

To Formalize or Not to Formalize? Comparisons of Microenterprise Data from Southern and East Africa

Why do firms choose to locate in the informal sector? Researchers often argue that the high cost of regulation prevents informal firms from becoming formal and productive. Our results point to a more nuanced story.Using data from surveys of microenterprises in South Africa, Namibia, Botswana, Kenya, Uganda, Tanzania, and Rwanda, we find that the labor productivity of informal firms is virtually indistinguishable from that of formal firms in East Africa, but very different in Southern Africa. We provide a theoretical model to explain this result, based on the key assumption that firms may evade taxes subject to a cost (or concealment cost) that is increasing and convex in the firm’s employment size. Consequently, the productivity distributions reflect the differences in concealment costs and the opportunity cost of formality. Greater enforcement of laws and better provision of services such as finance and electricity to formally registered firms in Southern Africa means that firms are more likely to register; those that do not are likely to be operating as “survivalist” firms. But in East Africa, weak enforcement of tax payment and no significant difference in access to services between formal and informal firms means that these variables do not explain the allocation of firms across the informal-formal divide.We conclude that in countries with weak business environments, informal firms are just as likely as formal firms to increase their productivity as they grow. Thus, interventions to increase productivity and lower the cost of formality may be helpful. But in countries with strong business environments such as those in Southern Africa, owners of informal firms are likely to be better off entering the labor market as wage labor. In the latter case, investment in education or vocational training is probably more important.

Poor Health Kills Small Business: Illness And Microenterprises In South Africa

Small businesses contribute almost 50 percent of total employment and 30 percent of gross domestic product in South Africa, but the impact of poor health and AIDS on these businesses is poorly documented. Using three waves of longitudinal data from predominantly African neighborhoods in peri-urban Durban, South Africa, this project investigates the connections between the health of the owner of a micro- and small enterprise (MSE) and the MSE's growth, survival, or exit. The results show that poor baseline health and declines in health over time are both significantly associated with subsequent business closure.