Document: uThungulu DM: SMME Business Support Services Strategy and Policy

Background

Small businesses have a major role to play in the South African economy in terms of employment creation, income generation and output growth. They are often the vehicle by which the people with the lowest incomes gain access to economic opportunities and thereby redressing the economic challenges. Business support facilities that service SMMEs have increased the sustainability of SMMEs throughout the country. These facilities include among others business information kiosks, service centres, hives, clusters and incubators.

Purpose of the study

The importance of SMMEs for economic development and job creation has been clearly acknowledged in several development strategies and plans at national and provincial level. Despite the significance of the achievements of SMMEs in the economy, there have been few detailed research studies on their structures, dynamics and opportunities.

It has been identified that SMMEs in uThungulu make a disproportionately small contribution to the local economy due to the presence of large manufacturers and exporters. Government support has been focused on large investments, with only modest assistance offered to support SMMEs in uThungulu, especially in the rural and underdeveloped areas. Existing private and non-governmental support has been fragmented and uncoordinated. This has created a problem of “missing middle” between local based raw/bulk material producers and local retailers, with many local SMMEs becoming unsustainable. This gap is currently filled by national and international suppliers. 

The purpose of the study is therefore to develop a strategic plan to support sustainable SMME development in uThungulu district through an integrated system of business support facilities, thus encouraging economic and employment growth and development throughout the district, especially the rural areas.

Objectives of the study

The major objectives of the project include the following:

• To increase local and district government support for SMME development in uThungulu;
• To achieve a greater contribution by SMMEs in local and district economies; and
• The creation of job opportunities to reduce unemployment and poverty.