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Shawn Thabo Maphalla

01 October 2009

English

Township Studies Librarian Two

Dissertation

Township Studies Group

South Africa

Downloads

Website References

Business

Development assistance

Economics

Finance

Interviews

Livelihoods

Markets

Other

SMME

South Africa

Township Studies Group

Perceived Barriers Experienced by Township Small -, Micro-, and Medium Enterprise Entrepreneurs in Mamelodi

Entrepreneurship has a significant economic contribution in terms of employment, job creation and wealth creation that can be attributed to entrepreneurial enterprises (Bell, Callaghan, Demick & Scharf 2004:1). Entrepreneurial activity in the economy often takes place in the small- micro- and medium enterprise (SMME) business sector (Rwigema & Venter 2004:315). However, in the establishment of SMMEs, entrepreneurs encounter or perceive barriers that hinder the establishment, sustenance and growth of these important vehicles that are vital to the development of both society and the economy (Kunene 2008).

The focus of this research study is therefore to identify barriers and perceived barriers to entrepreneurship. The study is exploratory and specifically attempts to identify and understand the barriers perceived and experienced by entrepreneurs in the township of Mamelodi in establishing, sustaining and growing enterprises.

Mamelodi is a township outside Pretoria, was established in 1953 and has a population of close to one million people (www.saweb.co.za) Like other townships around South Africa, it is characterised by high levels of poverty and unemployment. Mamelodi is therefore considered an environment where the suggested contributions of entrepreneurship can be beneficial.

The study was done by conducting qualitative research. Structured interviews conducted with thirty SMME owners (the focus was on small and very small business owners) in Mamelodi identified barriers to SMME entrepreneurship. Non-probability, specifically purposive sampling, was used to choose the sample; data was collected using an interview schedule and recorded using notes and a digital recorder. Both thematic and constant comparison methods were applied to analyse the data collected. 

In trying to identify barriers to entrepreneurship, the study used the Nieman and Niewenhuizen (2009) model for entrepreneurial development, as well as elements identified by Kunene (2008) in the Macro Environment, the Market Environment and the Internal Environment as a framework. The following findings were made in the study:

The five frequently mentioned barriers in the interviews were: lack of access to funding, lack of training and development, lack of knowledge and information, crime and lack of business premises. There were other barriers identified within the economy, barriers posed by customers, barriers in the regulatory environment (including lack of government support), barriers with regard to lack of infrastructure and technology and barriers with regard to the negative effects left by the legacy of apartheid. Contributory to the lack of training and development - the lack of mentorship, role modelling and entrepreneurial orientation were also identified as barriers to entrepreneurship. The most frequently mentioned areas of training where the respondents felt they could benefit most, included training in areas of finance and bookkeeping, marketing and management.

With regard to entrepreneurial orientation and other findings, most of the respondents noted that they did not think that culture influenced entrepreneurship. This opinion challenges other studies that indicate that culture influenced entrepreneurship. The most frequently mentioned reasons for starting a business by the respondents are those that can be regarded as pull factors with the seeking of independence/being self-employed as the most frequently given reason. Despite all the barriers indicated, the majority of respondents are of the opinion that there is market growth potential in Mamelodi that can be explored to encourage and support entrepreneurship.

Some of the recommendations made in the study to address the abovementioned barriers include amongst others: Initiatives by financial institutions, better communication by Government with regard to offerings and assistance available to entrepreneurs, training and development opportunities (both technical and in business skills), early entrepreneurship orientation programmes, role modelling and mentorship initiatives, as well as community initiatives.

Abstract based directly on the original source

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