The role of SMMEs in promoting local economic development : a case study of the Matatiele Local Municipality

Abstract

South Africa continues to have issues with unemployment, poverty, inequality and slow economic growth. As the economy shifted to skills-based employment, one province significantly affected is the Eastern Cape, which faces slow economic growth. The government of this province made the decision to implement a national strategy to reduce unemployment and boost growth and development through small and medium and micro sized businesses (SMMEs). The Matatiele Local Municipality, located within this province, was selected as the study area. Small medium and micro enterprises and municipal stakeholders operating within the Matatiele Local Municipality were interviewed for this study. The methodology used to conduct this study was qualitative, in-depth interviews to gather data. Twelve participants made up the sample, which was drawn from the Matatiele Local municipality, SMMEs and Community members. The Endogenous Growth Theory, which maintains that internal rather than external forces predominantly affect economic growth, was used in this study. The study recommends that the municipality work in collaboration with the SMMEs and locals to revive business confidence. This advice could be carried out by making sure that all information pertaining to SMMEs is conveyed clearly and on time in order to prevent misunderstandings. The municipality also needs to ensure that the support it provides to SMMEs is enough to be sustainable. It is evident from the feedback from local business owners that the municipality needs to increase the budget for Local Economic Development (LED) in order to make sure that SMMEs reap the most benefits.