Barriers to the growth of small, micro and medium-sized business enterprises in the Vaal Triangle region of South Africa

Abstract

The purpose of the study was to identify and quantify factors that are responsible for the high rate of failure in newly established SMMEs in the Vaal Triangle region of Gauteng Province in South Africa. The study was based on a stratified random sample of size N = 303. Stratified random sampling was used for collecting data by using a structured, pre-tested and validated questionnaire of study. Statistical analyses were performed by using descriptive methods such as frequency tables, cross-tab analyses and factor analysis. The study found that 21% of businesses were not viable financially. The study also showed that viability in small and medium-sized enterprises in the Vaal Triangle area was adversely influenced by difficulty in securing loans, lack of training opportunities, and shortage of entrepreneurial skills. The study showed that the growth of newly established businesses was hampered due to difficulty in securing credit on favourable terms from micro lending institutions and the lack of training opportunities on entrepreneurial activities.

Keywords:

• entrepreneurial skills
• factor analysis
• microfinance
• SMMEs
• Vaal Triangle

JEL classification:

• E30
• L26