The role of small, medium and micro-sized enterprises (smm's) in the socio-economic development of Buffalo City

Thirteen years in the new democratic South Africa, South Africa is still faced with socio-economic problems such as high rates of unemployment, shortage of housing, crime and HIV/Aids. Buffalo city falls within the Amathole District Municipality (ADM). ADM population is estimated at + 1, 67 million, being predominantly rural and living in low socio-economic conditions. The demographic trends of ADM population depict high poverty, illiteracy and unemployment rates, rendering them prone to high morbidity and mortality (www.amathole.gov.za, 2007). The aim of this research was to assess the role of the SMMEs in the socio-economic development of Buffalo City. This study is based on exploratory quantitative and qualitative research methodologies. Using a convenience sampling technique structured questionnaires were used to collect data amongst 28 SMMEs in Buffalo City. The findings of this study suggest that SMMEs play a vital role in the socio-economic development of Buffalo City. The SMMEs create employment and incomes; provide human capital investment in form of training programs and HIV/Aids programs; make donations to community structures; give sponsors to various sports clubs and food to the homeless. Finally SMMEs contribute towards tax revenues that in turn help reduce poverty and redistribute wealth. However, SMMEs in Buffalo City face a number of constraints, namely, lack of access to funding, lack of operating space, and high cost of property to lease and difficulty in finding trained competent staff. Further, the perceptions of the SMMEs about the adjudication of tenders was some biasness in the adjudication of tender in favour of those who were close to the public officials. There was no accountability and professionalism amongst the adjudicating officials. Finally the government was not doing enough to encourage SMME development in Buffalo City. In view of the socio-economic benefits of the SMMEs in Buffalo city, it is recommended that support programmes to the SMMEs should be enhanced. On the basis of the findings in this study, it is suggested that assistance to the SMMEs should go beyond institutional support such as Ntsika, Khula, DTI and/or SEDA but should be targeted to funding opportunities for the SMMEs. Commercial banks should be involved in ensuring that SMMEs obtain access to funding. Infrastructural facilities such as affordable business premises should be provided for the SMMEs. Affordable premises will reduce the overhead costs of the SMMEs and in turn increase the profits of these SMMEs. Increase the profits of the SMMEs will ensure the survival of the SMMEs and will in turn contribute towards the upliftment of the socio-economic status of the people who would have otherwise been unemployed, destitute and poor