A Situational Analysis of Small Businesses and Enterprises in the Townships of the Gauteng Province of South Africa

Purpose: This research sought to understand the status of Gauteng township businesses and entrepreneurship by analysing their demographics, characteristics, opportunities, culture and entrepreneurial cognition.

The problem investigated: There is a need to understand the existing dynamics of South Africa‟s township small businesses and the entrepreneurs so as to promote their growth and competitiveness. A flourishing business environment in the townships would contribute to the redistribution of wealth, employment and improving the quality of life of the township residents. The research for this paper provided the much-needed information to form a basis for the Centre for Small Business Development‟s (CSBD) strategic interventions towards improving small and micro-entrepreneurs‟ business skills and enabling them to maximise their potential globally.

Methodology/Approach: The conceptual framework for this research was in the context of providing data for writing a paper for the CSBD‟s first annual international conference. An expert researcher using his extensive knowledge and publications constructed a questionnaire, which was, modified, and the data were collected in the six districts that make up Gauteng Province, namely Sedibeng, West Rand, Tshwane, Soweto and Alexandra townships, Ekurhuleni and Metsweding. Forty questionnaires were administered to owners of businesses in each of these districts. Data capturing and analysis followed and researchers at CSBD conducted a literature review, synthesised the information and wrote this paper.

Shortcomings of study: The sample was too small for the population of close to 1, 5 million small, micro and medium enterprises (SMMEs) in Gauteng townships. The study was also not sector-specific and the findings are not area-specific either, more so for Soweto. However, this has no impact on the findings but is noted for future research. The questionnaire was also broad and general, as it was the first time this study was undertaken.

Findings: Most businesses in townships are very small, as they have fewer than 10 paid employees and a turnover of less than R1 million per annum. Most of them are formal because they are registered for value-added tax and taxes and they operate on formal premises. Most of the respondents demonstrated high entrepreneurial cognition with very accurate knowledge of business management practices and the meaning of legislative policies such as broad-based black economic empowerment (B-BEE). They were conversant with the use of banking and credit cards and they avoided personal loans and indebtedness. They also demonstrated good work ethics regarding the way they rand their businesses, respecting clients and customers and keeping records for their financial transactions daily. They were, however, unable to achieve financial flexibility to pay for medical aid, paid leave and unemployment benefits for themselves and their employees. Many said that they had not benefited from, BEE as intended by the provisions of the Department of Trade and Industry. Future research should explore how these businesses can grow and become sustainable job creators.

Areas for future study as a result of this study: The next study in the middle of next year, in preparation for the 2011 conference, will have a much larger sample, and be sector-and area-specific, even in terms of findings. It will distinguish between the various age groups of the businesses.

Abstract based directly on the original source