The role of Local Economic Development in developing small medium enterprises: a case of Solomondale Community in the Limpopo Province

Abstract

Government's New Growth Path is targeting five million (5 000 000) new jobs by 2020 and also aims to reduce the unemployment rate by 2030 by creating eleven million (11 000 000) new jobs. South Africa needs over forty-nine thousand (49,000) Small and Medium Enterprises (SMEs), growing at a rate of twenty percent (20%) per annum, to create eleven million (11 000 000) jobs by 2030 to meet the National Development Plan (NDP) target. The local economic development is providing capital to previously disadvantaged South Africans to encourage start-ups and grow existing businesses through grants and incentive programmes. The study evaluated the contribution of local economic development in developing SMEs in local communities. A total of twenty-three (23) in-depth interviews were conducted with respondents aged between eighteen to fifty-five (18-55) years. Snowball sampling was used to select respondents from Solomondale community in the Limpopo Province, South Africa. Thematic content analysis was used to analyse the data. The author adopted the Sustainable Livelihood Approach (SLA), which postulates that, for livelihood to be sustainable in the case of SMEs, it has to comprise of five elements, namely: human, physical, social, financial and natural assets. Regardless of the incentives provided by the government, the research identified challenges faced by SMEs. These include; lack of proper skills to maintain sustainability and growth of the businesses, competition by foreign markets of which most of the businesses are not registered, and the lack of complete assets outlined by the SLA. It is imperative to understand the Strengths, Weaknesses, Opportunities and Threats (SWOT) of small medium enterprises in local communities to provide business management skills. Most xenophobic attacks in local communities' result from fear of losing control over local economies and the lack of job opportunities as had been happening in South Africa recently. It is trusted that findings in this study will contribute to the development of coherent strategies to support local economies to meet the NDP target