Examining the role of local economic development (LED) on employment creation through Small, Medium and Micro-Enterprises (SMMEs) in South Africa

Abstract

Local Economic Development (LED) has acquired universal support as a locality-based approach to solve socio-economic challenges including poverty, rampant unemployment and injustice. International agencies argues that governments through LED directorate have utilized Small, Medium and Micro-enterprises (SMMEs) as a tool to boost local economies and to achieve sustainable economic growth that brings more economic opportunities, benefits and quality of life to every community member. Despite the implementation of LED in municipalities, unemployment and poverty remain major barriers to and threats to South African economic development. Moreover, it raises questions as to whether does municipalities have enough resources to implement LED projects including SMMEs as major employment creators in the City. Therefore, the inability of LED as municipal policy to stimulate economic activities led to the collapse of some SMMEs. This paper is a desktop study, which reviewed existing literature, policy documents and South African statistical data to assess how LED initiatives have influenced employment through SMMEs. It explores the effectiveness of various LED frameworks, including government support programs, financial agencies, capacity building initiatives and regulatory reforms. The findings indicate that LED initiatives have made significant strides in fostering SMMEs growth and employment; however, there are still gaps that needs to be addressed. This paper recommends a policy framework aimed at supporting SMMEs to create more sustainable employment opportunities. By leveraging the full potential of SMMEs, South Africa can make significant progress in reducing poverty and unemployment