The Impact of SMEs on Socio-Economic Development in South Africa: A theoretical Survey

Bongani Mwale


This theoretical survey seeks to critically investigate the impact that Small and Medium Enterprises (SMEs) have had on socio-economic development in the South African (SA) context. A global perspective of the impact of SMEs is incorporated in order to have a feel of how other economies have benefited from this venture.  The survey followed a desktop literature review research design in order to gather data regarding other economies in Europe, Asia, America, Latin America and select countries in Africa. Regarding challenges currently experienced by SMEs, the survey established constrained government support and lack of universally accepted standard unit measurement of SMEs. The survey discovered several varying socioeconomic roles played by SMEs in SA and other regions alike namely, job creation, reduction in rural and urban poverty, narrowing income inequality disparity and contributing towards the nation’s Gross Domestic Product (GDP). Given the undisputable significant roles played by SMEs particularly in SA, the following recommendations have been advanced in order to strengthen SME’s roles; firstly, streamlining stringent rules and regulations which inhibit SMEs in venturing into more rewarding business opportunities. Secondly, reviewing the prohibitive terms and conditions of accessing financial aid from the government and financial institutions.  Thirdly, continuously empowering prospective entrepreneurs through tailor made capacity building initiatives.

Keywords: Entrepreneurship, SMEs, socioeconomic development, South Africa.

DOI: 10.7176/EJBM/12-20-08

Publication date:July 31st 2020


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