Joseph. N Lekunze, Penelope N O Moloi
Abstract
Despite establishing the economic importance of SMEs to the township economy, the inability of small businesses to grow into medium or large businesses, coupled with their high failure rate is cause for concern. The study seeks to answer the question “Why growth eludes Small and Medium Enterprises (SMEs) in a South African Township? The study took a qualitative approach and conducted interviews with business owners using a semi-structured interview guide. Purposive and convenient sampling processes were followed and 14 participants were interviewed after saturation was reached at 12. Using the summation approach. findings revealed that 57% of the participants studied beyond grade 12 while 71% of the participants were employed before starting a business, compared to 7% of the business owners who were self-employed from the onset. This finding was further confirmed with 86% of participants deliberately venturing into entrepreneurship as a career compared to 14% as a necessity or unemployment. This study has found that though the internal and external environment can be a hindrance to SME growth in townships, explanations from business owners are that individual business owners’ vision for growth plays a significant role in the stagnation and failure rate of an SME. Given that SMEs are the main drivers for economic development, financial and non-financial support from government institutions were found to be an important determinant for ensuring growth in the SME sector which in turn may address issues of business growth, unemployment, and poverty.