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SMMES in South Africa: Understanding the Constraints on Growth and Performance

Author

Listed:
  • Haroon Bhorat
  • Zaakhir Asmal
  • Kezia Lilenstein
  • Kirsten van der Zee

    (University of Cape Town
    Director)

Abstract

Small, Medium and Micro Enterprises (SMMEs) have been identified as a key component to advancing inclusive growth and development in South Africa. This paper serves to present a snapshot of the current profile of SMMEs in South Africa as well as the key inhibitors of growth for SMMEs. We provide a comparative perspective of the role of SMMEs and entrepreneurship in South Africa, then profile the current landscape of SMMEs in South Africa, evaluating the characteristics of SMMEs across three dimensions: firm, owner and employee characteristics. Following this, we distinguish between formal and informal SMMEs in order to highlight the unique nature of informality in South Africa. This paper also evaluates the endogenous and exogenous impediments to growth faced by South African SMMEs. Endogenous challenges are internal to the firm while exogenous challenges are external to the firm. In summarising these findings, we present the major challenges inhibiting the growth of SMMEs in South Africa, taking into account firm heterogeneity in terms of both firm size and informality status.

Suggested Citation

  • Haroon Bhorat & Zaakhir Asmal & Kezia Lilenstein & Kirsten van der Zee, 2018. "SMMES in South Africa: Understanding the Constraints on Growth and Performance," Working Papers 201802, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:201802
    as

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    References listed on IDEAS

    as
    1. H. Bhorat & J. Hodge, 1999. "Decomposing Shifts in Labour Demand in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 67(3), pages 155-168, September.
    2. Haroon Bhorat & Natasha Mayet, 2012. "Employment Outcomes and Returns to Earnings in Post-Apartheid South Africa," Working Papers 12152, University of Cape Town, Development Policy Research Unit.
    3. Haroon Bhorat, 2004. "Labour Market Challenges In The Post‐Apartheid South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(5), pages 940-977, December.
    4. Rulof Burger & Ingrid Woolard, 2005. "The State of the Labour Market in South Africa after the First Decade of Democracy," SALDRU/CSSR Working Papers 133, Southern Africa Labour and Development Research Unit, University of Cape Town.
    5. Meghana Ayyagari & Thorsten Beck & Asli Demirguc-Kunt, 2007. "Small and Medium Enterprises Across the Globe," Small Business Economics, Springer, vol. 29(4), pages 415-434, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jutta Franz & Elizabeth Ninan Dulvy & Carmel Marock, 2022. "Engagement of Micro and Small Enterprises in Workplace-based Learning in South Africa," World Bank Publications - Reports 37706, The World Bank Group.
    2. Stella Bvuma & Carl Marnewick, 2020. "Sustainable Livelihoods of Township Small, Medium and Micro Enterprises towards Growth and Development," Sustainability, MDPI, vol. 12(8), pages 1-17, April.
    3. Jean Damascene Mvunabandi & Bomi Nomala & Lawrence Gadzikwa, 2024. "Marketing mix Framework as a Tool to Enhance Women’s Business Viability in Limpopo-South Africa," International Review of Management and Marketing, Econjournals, vol. 14(1), pages 11-19, January.
    4. Zaakhir Asmal & Haroon Bhorat & Alexia Lochmann & Lisa Martin & Kishan Shah, 2024. "Supply-Side Economics of a Good Type: Supporting and Expanding South Africa’s Informal Economy," Working Papers 202403, University of Cape Town, Development Policy Research Unit.
    5. Enwereji Prince Chukwuneme, 2022. "Impact of Covid-19 on SMMEs and the future sustainability measures: a systematic review," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 13(2), pages 111-131, December.
    6. Juan-Pierré Bruwer & Lindiwe Mabesele & Timeeka Brown & Courtney Charles & Ingrid Coulter & Edlin Williams & Nadine Witbooi, 2021. "The Feasibility of Plastic Bag Usage for Newly Established South African Small, Medium and Micro Enterprises Amidst Increases in Sin tax: An Online Desktop Study," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(4), pages 175-190, August.
    7. Nhamo Mashavira & Sevias Guvuriro & Crispen Chipunza, 2022. "Driving SMEs’ Performance in South Africa: Investigating the Role of Performance Appraisal Practices and Managerial Competencies," JRFM, MDPI, vol. 15(7), pages 1-18, June.
    8. Juan-Pierré BRUWER & Mariaan LOMBARD & Yolandé SMIT & Ankit KATRODIA, 2019. "The Influence of Excise Taxation Levied on Product Sales on the Financial Sustainability of South African Tobacco-and-Alcohol-Selling Small, Medium and Micro Enterprise," Expert Journal of Business and Management, Sprint Investify, vol. 7(1), pages 100-106.
    9. John Kiplangat Cheruiyot BA DipEd MSc MBA, 2024. "The Resilience of Micro and Small Enterprises in Kenya from a Strategic Perspective: A Systematic Literature Review," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3s), pages 3197-3218, August.
    10. Tadios Munodawafa & Micheline Naude & Krishna K. Govender, 2024. "Assuring the Sustainability and Growth of Small and Medium-Sized Manufacturing Enterprises in Botswana: An Exploratory Study," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 253-266, July.

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    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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