The contributions of Small and Medium Enterprises towards poverty reduction in Mankweng Township (Zone1), Limpopo Province

Abstract

The study aimed to investigate the contributions of Small and Medium Enterprises (SMEs) in Mankweng Township (Zone 1), Limpopo Province. Poverty is the greatest challenge in the 21st century in developed and developing countries. Various countries including South Africa employed SMEs as tactics to attempt to lower the poverty rate. SMEs, which significantly reduce poverty levels, create jobs, and accelerate economic growth, are the focus of South Africa's current efforts. Thus, SMEs are regarded as drivers of development in local communities. However, SMEs are confronted with various challenges and obstacles. These challenges continue to undermine the ability of SMEs to reduce poverty in countries all over the world. The study was grounded in the Entrepreneurship Theory and Human Capital Theory. The research utilised a mixed methods approach to gain a thorough insight into how SMEs contribute to reducing poverty. Purposive sampling was used to gather the necessary information for the research. Semi-structured questionnaires were utilised to gather quantitative data from the SME owners in Mankweng Township (Zone 1). Moreover, the Local Economic Development (LED) manager at Polokwane Local Municipality was collected through semi-structured interviews. The research involved 61 participants selected from the desired sample group provided relevant information on the contributions of SMEs towards poverty reduction and strategies on how to improve the effectiveness of SMEs. The research utilised Microsoft Word for thematic analysis of qualitative data and correlational analysis for analysing quantitative data. The research findings revealed that SMEs in Mankweng Township (Zone 1) significantly contribute to various aspects of the local economy, including economic development, investment, skill-building, and empowerment. However, SMEs in Mankweng Township (Zone 1) face many challenges, including limited access to funds, power outages, restricted market access, lack of technology, supplier shortage, and insufficient training and education. This study finds that SMEs in Mankweng Township (Zone 1) underperform due to the above-mentioned challenges. Therefore, the study recommends strategies to address funding gaps, techniques to improve lacking marketing abilities, offering leadership training for SMEs, fostering entrepreneurial skills, handling power outage issues, and improving training and education opportunities. By adopting the recommendations provided, SMEs can actively reduce poverty in South Africa townships. Through job creation, skills development, community participation, and ethical business practices, SMEs can become powerful agents of change, supporting LED and improving the quality of life for people and communities facing poverty. SMEs have the potential to have a significant impact on poverty reduction in South Africa townships