Factors influencing operational performance for SMMEs in the textile and clothing manufacturing sector in the eThekwini district

Abstract

Small, medium and micro enterprises (SMMEs) play a pivotal role in the economy of a country through job creation, development and dealing with the issue of unemployment, all of which affect the government and its citizens. Therefore, it is important that SMMEs operate efficiently and run their businesses effectively in order to grow within their respective sectors.

The low rate of success amongst SMMEs in South Africa (SA) over the years indicates that there are factors hindering the efforts of the country’s SMMEs from operating efficiently (Turton and Herrington 2012: 48). One of the factors is poor operational performance which is frequently quoted as a leading cause of failure amongst SMMEs within the manufacturing sector (Urban and Naidoo 2012: 146). Furthermore, the Economic Development and Growth in eThekwini (EDGE) (2013: 37-38) reveals that SMMEs within the textile and clothing manufacturing sector in the eThekwini district generally do not innovate and suffer from a lack of access to financial services.

The study population was 94 small and micro enterprises (SMEs) in the textile and clothing manufacturing sector in the eThekwini district. The researcher could not find a data on medium enterprises as prospective participants in the study and obtained only 80 SMEs. A quantitative approach was used in the context of a census study. The study was descriptive and conclusive in nature.

The results of the study indicate that SMEs apply innovative processes in their businesses and work at a favourable physical environment within eThekwini district. However, SMEs do not have sufficient access to government financial incentive schemes (GFIS) which could be a factor inhibiting their growth and development. Furthermore, despite the fact that many of the SMEs in the study agreed that assistance from government schemes can enhance their operational performance, almost half of them were not aware of relevant schemes. Therefore, it is important that the government, that is, the Department of Trade and Industry (dti) and Small Enterprise Development Agency (seda) and other relevant government agencies, reach out to as many of these SMEs as possible. This is an opportunity for the SA government to improve their efforts to create more jobs for SA citizens.