An Investigation Into The Specific Problems That Influence The Performance Of Smmes
...SCOPE AND METHODS OF THE STUDY
1.1 INTRODUCTION
Since 1994, South Africa has been faced with the challenges of re-integration into world markets as a global economy, while at the same time positioning itself to realize the high expectations of its general population regarding a successful transition towards a more democratic order. The small- and medium-sized enterprise (SME) sector is globally recognized as the main driving force in economic growth, job creation and social stability (Ladzani and van Vuuren 2002:154). SMMEs encompass a very broad range of firms, from established traditional family businesses employing over a hundred people (medium-sized enterprises), down to the survivalist self-employed from the poorest layers of the population (informal microenterprises). However, the upper end of the range is comparable to the SME population of developed countries. Erwin (2002), argues that, statistically a large majority of SMMEs are concentrated on the very lowest end. It is estimated that the SME sector is already contributing an estimated 35 percent to South Africa's Gross Domestic Product (GDP), and is currently absorbing more than 57 percent of people formerly employed in the private sector (Ntsika 2000:24).
Although statistics about the weight of SMMEs in the economy are frequent and popular, giving reliable and precise estimations is difficult, and thus, there is a lack of statistics about the informal sector, which considerably affects the economy. The South African Yearbook (2000:292) states that 97% of businesses in South Africa can be classified as SMMEs; therefore, it is fair to assume that they do indeed make a large contribution to employment. However, several technical difficulties arise when comparing the figures below. The definition of the concept of employment may vary, depending on whether or not it includes domestic workers, public...
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