Rural entrepreneurship and its implications on local economic development: a case of Mogalakwena Local Municipality, Waterburg District, Limpopo Province

Abstract

Rural entrepreneurship is a relatively young sector in the entrepreneurship field, but it has emerged as one of the most important tools for rural economic growth in developing nations like South Africa. A majority of poor people live in the rural areas and face the challenges of extreme poverty levels, high unemployment rates, appalling socio-economic conditions, and inequalities. Therefore, rural entrepreneurship is regarded as a vital tool for accelerating Local Economic Development (LED) and improvement of the quality of life of the rural people and their communities. Rural entrepreneurship stimulates economic development by improving economic conditions, creating employment, reducing poverty and improving the overall standard of living of the rural populace. Theoretically, there is clear consensus that rural entrepreneurship has the potential to reduce poverty, unemployment, economic inequalities and low income as well as value creation and improving standards of life in rural areas through the creation of new enterprises. Entrepreneurial activities stimulate the local economy and create employment opportunities through the creation of new enterprises in the rural areas. Thus, entrepreneurship development is seen as one of the important components of LED and the development agenda in most developing countries. However, entrepreneurial success is dependent on various factors, internal or external, such as the need for achievement, locus of control and desire for personal control of business, human capital, infrastructure, training, communication network, financial support, business environment, economic climate, competitiveness, risk-taking propensity, confidence, and regulatory environment. These factors may determine or influence the success of enterprises, thereby hampering LED efforts in a particular locality. Literature further reiterates the importance of rural entrepreneurship development towards accelerating economic development of local communities in the developing countries. Entrepreneurship development is regarded as a driving force of local economic growth and development in the developing countries. Many developing countries are faced with numerous socio-economic challenges of extreme poverty levels, high unemployment rates, stagnant economic growth and poor living conditions. Entrepreneurship development has become an important policy agenda and priority for employment creation, poverty reduction and economic growth and development of communities in many developing countries. Thus, many developing countries have turned their focus on entrepreneurship development as an important mechanism and driver of economic development with expectations of addressing these challenges. Despite such efforts, entrepreneurship development in developing countries faces challenges such as financial, human, management, lack of access to markets, lack of capacity, lack of infrastructure and appropriate regulations. These challenges affect and undermine the potential of entrepreneurship to stimulate LED and address challenges affecting many developing countries. The role of local government in creating an enabling environment for entrepreneurial activities and LED to thrive is widely acknowledged in most developing countries. Local governments in developing countries have become important vehicles for the promotion and implementation of LED and the creation of enabling environment for entrepreneurial activities to take place. LED in these developing countries is driven mainly by globalisation and decentralisation as an important strategy to local development. Globalisation and decentralisation play an important role in reconfiguring of planning approaches to local and regional development in developing countries. The observations above are also prevalent in South Africa, where entrepreneurship development is one of the national development policy imperatives. However, South Africa has a low entrepreneurial rate compared to other developing countries because of various factors including those highlighted above. Lack of entrepreneurial spirit or culture is increasing highly in the country. Entrepreneurship development and LED practice in South Africa is shaped by overwhelming policies and legislations, which seek to support and encourage entrepreneurship and LED. These regulatory frameworks are aimed at creating conducive and enabling environment for LED and entrepreneurial activities to take place. Local governments have a constitutional obligation to promote social and economic development as well as improving the overall standard of living of local communities within the municipal area. In the process, municipalities must work collectively with local people and local stakeholders to develop their communities. LED has been adopted as one of the strategies to local growth and development of communities in South Africa. Despite LED efforts, the country continues to grapple with societal challenges of poverty, unemployment, inequality and stagnant growth of the economy. Currently, municipalities are plagued with various challenges and are in a dire state that threatens the ability to fulfil their constitutional and developmental mandate of promoting social and economic development. The aim of this study was to investigate rural entrepreneurship and its implications towards LED in the Mogalakwena Local Municipality, Limpopo Province. To achieve this aim, the study adopted descriptive, positivist case study design, and used the concurrent mixed methods approach to achieve the aim and objectives of the study. The study sampled 54 rural entrepreneurs around three Service Delivery Areas (SDAs) of Mokopane, Mapela and Bakenberg in Mogalakwena Local Municipality as well as key informants from Small Enterprise Development Agency, Local Economic Development Agency (LEDA) and Municipal LED Unit. A semi-structured questionnaire was used to solicit data from rural entrepreneurs whereas an interview schedule was used to solicit data from key informants. The study findings affirm that rural entrepreneurship plays a significant role towards LED through poverty alleviation, employment creation, economic opportunities, income generation, value or wealth creation, migration and overall improvement of the standard of living of local communities in Mogalakwena Local Municipality. Rural entrepreneurship is seen as one of the stimulators of economic activities in rural areas within the municipality. Despite the affirmation, the study found that rural entrepreneurs are faced with persistent challenges such as lack of access to finance and markets, lack of skills or capacity, stiff regulations and completion, crime, lack of infrastructure, lack of support by the municipality and poor participation or integration in LED. These challenges inhibit entrepreneurial activities to take place, thereby threatening the survival and success of rural enterprises. Therefore, the study recommends measures such as creation of an enabling regulatory environment, financial support models for entrepreneurs, skills development and training, recognition and integration of rural entrepreneurs in LED fora and promotion of entrepreneurship culture to maximize the potential of rural entrepreneurship in Mogalakwena Local Municipality. Additionally, future research is also important to tap into the niche area of rural entrepreneurship.