SMME growth in the Mpumalanga mining sector of South Africa

Abstract

Small and Medium Enterprises are regarded as the engine for economic growth in many countries. Similarly, South Africa is promoting the development of SMMEs through various policies. The development and support of SMMEs is also driven at provincial level; however the high unemployment rate across all provinces is an indication that this sector is not creating enough jobs. This is a risk to achieving the National Development Plan which proposes that 90% of all jobs will be created by the SMME sector by 2030. The SMME contribution to employment low because most of the SMMEs are operating as survivalist businesses. The high SMME failure rate of 75%, as well as the failure to grow suggests that there are many barriers that impede the growth of SMMEs. Despite these challenges, there are SMMEs that have managed to overcome these barriers and are achieving sustainable growth. This problem is explored in the mining industry of the Mpumalanga province in South Africa. Mining sector should be the main driver of SMME growth and employment for the province but the unemployment rate remains high at 34.2%. The qualitative research method in which 12 SMME owners were interviewed using semi-structured questionnaire investigated the barriers that are impeding SMME growth, established how other SMMEs managed to overcome these barriers, identified the growth opportunities that SMMEs pursue and recommended best practices for achieving growth in the mining industry. The results show that the barriers impeding the growth of SMMEs are Education & Training, location in relation to critical buyers, access to finance and public & private institutions. Moreover, most of the SMMEs are not growing because they pursue opportunities in less attractive non-core mining segments such as supply of mining consumables characterized by high competition and low barrier to entry. Additionally, the lack of skills, competency and financial resources influence the choice of mining segments they consider. On the contrary, SMMEs achieving sustainable growth have skills and competencies 2 relevant to their field and have access to finance which is an enabler for business expansion. It is recommended for SMMEs to enter into attractive core mining segments, acquire skills & competencies relevant to the area of work, develop market and product in order to increase revenue streams and explore other funding sources through Enterprise and Supplier Development Programmes offered by established mining companies.