Internal and external factors affecting the growth of small, medium and micro enterprises in overstrand local municipality, Western Cape Province

Abstract

Background: Small, medium and micro enterprises (SMMEs) play a vital economic role in South Africa, yet high failure rates persist. Removing obstacles to growth is key. This study explored internal and external factors, plus government support perceptions, affecting SMMEs in Overstrand Municipality.

Significance: Understanding growth barriers can inform policies assisting South African SMME advancement, economic participation and unemployment reduction.

Methodology: An interpretivism, qualitative approach using semi-structured interviews was employed to capture 12 owners' experiences. Purposive sampling ensured participants met National Small Business Act criteria for SMME classification. The thematic analysis examined perspectives on motivation, skills, infrastructure, finance access and government backing.

Results: Findings revealed constrained growth due to capability shortfalls around business expertise, exacerbated by infrastructure gaps and limited external funding. Despite national SMME promotion efforts, support was considered inadequate and mismatched from entrepreneur realities. Key internal obstacles were financial illiteracy and human capital deficits, only partially mitigated via training. Externally, infrastructure deficiencies regarding utilities, premises and transport fundamentally impeded optimal development. Market reach was also curtailed by locational disadvantages.

Conclusions: Targeted skills programs demonstrate formalisation benefits, indicating that adult education and vocational training investments can empower small business owners. However, external barriers around infrastructure and finance must be confronted through upgrades, commercial hubs and alternative funding models.

Recommendations: Proposed interventions include expanding entrepreneurship courses, constructing affordable shared services infrastructure, easing access to grants, creating a digital assistance portal and requiring regular public-private dialogues to enhance policy coordination and responsiveness. Additional suggestions comprise market access assistance via funded expo participation and paid internships.