The factors affecting the growth of SMEs in the Polokwane municipality

Abstract

Small and medium-sized businesses are an essential component of the national economy, as they have been regarded as the sector that determines the country's economic growth rate and contributes significantly to the structure of the gross national product. Small and Medium Enterprises (SMEs) play a critical role in driving economic growth, particularly in regions like Polokwane Municipality, located in the Limpopo Province of South Africa. The study began by outlining the backdrop of SMEs in the national and global economy, emphasising their pivotal role in job creation and GDP contribution. Despite their importance, SMEs faced various challenges hindering their growth and sustainability, particularly in South Africa. The research problem addressed the stagnation and decline of SMEs in South Africa, contrasting with the growth observed in other African nations. This study aimed to fill the gap in understanding the specific impact of SMEs on the South African economy, particularly within Polokwane Municipality. Through a series of research questions, the study aimed to identify key drivers of SMEs, analyse their impact on local economic development, assess the effectiveness of support mechanisms, and explore the influence of digital technologies on SME growth. The research adopted a qualitative approach, utilising interpretivism as the paradigm to understand the phenomena within the context of the local economy. An exploratory research design was employed to delve into the complexities of SME growth in Polokwane Municipality. The population of the study comprised managers and owners of SMEs within the municipality. Through data collection and analysis, the study provided insights into the diverse landscape of SMEs in the region, highlighting their contributions to job creation, economic resilience, and cultural preservation. The findings underscored the indispensable role of SMEs in driving inclusive and sustainable development. Despite facing challenges such as financial constraints and regulatory complexities, SMEs remained vital agents of change, shaping socio-economic landscapes and fostering resilient, inclusive communities. Overall, this research contributed to a deeper understanding of the impact of SMEs on local economic development, offering valuable insights for policymakers, stakeholders, and the academic community.