By: Anna Majavu
A massive 85% of SMMEs in the Eastern Cape’s Raymond Mhlaba Municipality have cited crime and unsafe trading environments as major problem facing their businesses. SMMEs in the area “need the government to create a safe trading environment”. They further highlighted that the unsafe trading environment pushed customers away to other locations to spend their money, wrote Dr Ellen Chenesai Rungani, senior lecturer in finance at the University of Fort Hare, and Shaquille Ward, co-authors of a new research study into the Impact of Government Policy on Entrepreneurial Activities in Raymond Mhlaba municipality.
The area, which covers Alice, Hogsback, Adelaide, Fort Beaufort, and several other small towns, has an unemployment rate of 45.88%. The 30 SMMEs interviewed said the high crime rate in the municipality left them “in constant fear of not knowing when they will be victims of robbery as such they fear for their lives and fear losing their inventory which they would have bought in bulk”. The SMMEs said the high crime rate made it impossible to operate from their homes. But they also could not rent secure property because commercial rental costs were too high.
They proposed instead that the government should set up SMME business development hubs where they could rent safe and affordable business premises. The respondents said another problem was a lack of funding. The co-authors recommended that the government set up a special SMME fund to finance small businesses “because the big banks in South Africa are not keen to help SMMEs”. Another solution proposed was that the government should fund all small businesses for the first year that they operated.
The SMMEs interviewed also said they were so cash-strapped that they could not always afford data and the government must negotiate with the major cellular network providers to reduce data costs because, without it, they were unable to grow their businesses. They added that the Department of Small Business Development should not run generalised SMME training programmes without first assessing the needs of SMMEs in the Raymond Mhlaba area. These enterprises were more interested in training that would help them grow their businesses during tough times. “Some of the SMMEs were of the view that training for the sake of training is only wasting SMME’s time and does not add to them becoming effective,” the study found.
The study also found that despite the National Development Plan 2030’s target for SMMEs to supply 90% of South Africa’s jobs, “the real reality is that 56% of jobs are provided by big businesses and government”. “This shows government policy focuses more on creating a conducive environment for large corporates leaving SMMEs vulnerable to competing with larger cooperates under the same rules/regulations,” Chenesai Rungani and Ward wrote.
