The role of enterprise development in the reduction of poverty: a case study of Drakenstein Municipality in the Western Cape

Abstract

Background: The core question is whether poverty can be reduced through SMME development, particularly in the Drakenstein region of the Western Cape in order to create significant job opportunities and to reduce poverty through entrepreneurship. There is therefore a need for policy measures and radical interventions through the provision of an enabling legislative environment to support small business development. Objectives: The aim of this study was to assess the current government support programmes as well as the effectiveness of programmes of the Drakenstein Municipality. The study also examined government’s support to the informal sector. It argues that local governments are strategically well placed to deal with poverty alleviation because local government is closer to the people than the other spheres of government, and was seen as pivotal in reducing poverty. Methodology: The research used a descriptive quantitative research method in order to describe the status quo as it is at present. The aim of the study is to investigate the role of enterprise development in the reduction of poverty. The research therefore made use of both primary and secondary data sources in order to obtain data regarding small business development in South Africa, and more specifically in the Drakenstein Municipal area. Descriptive statistics, which describe and summarise numeric quantitative data into meaningful information, was used on the quantitative data captured in SPSS while thematic analysis, which entails the process of data reduction by focusing on repeated words or phrases of the respondents, responses, was used to analyse qualitative data. Findings: It was found that at a macro-level, SMME’s felt that government policy is not effective to support SMME’s. The general trend among SMME’s was that they were not aware and have never used the identified government support programmes for SMME’s. Recommendations: The importance and role of enterprise development as a mechanism for poverty reduction has also been emphasized. It is clear that the environment to support SMME’s is not conducive for the growth and development of these businesses. The golden thread is that businesses in the informal sector require much more support to ensure they are able to grow. Generally, SMME’s in both sectors has the potential to grow if they are provided with the necessary support.