An Investigation into the Effect of Small and Medium Enterprises (SMEs) on the Socio-Economic Development of Alice in Eastern Cape Province, South Africa

Abstract

Nowadays, economists’ believe that Small and Medium Enterprises (SMEs) played an important role in improving socio-economic development of a nation. Hence, for more jobs to be created, poverty to be alleviated, there is a need for the government to encourage more SMEs establishment in the country. This study investigated the effect of SMEs in the socio-economic development of Alice in terms of poverty alleviation, reduction of unemployment and crime. The objective of this study was to assess the role of SMEs in the socio-economic development of Alice. Data was collected through self-administered questionnaires and the use of random sampling. Quantitative data was analysed using descriptive and inferential statistics of Chi-square as the statistical tool. The findings of this study suggest that SMEs are not playing a substantial role in addressing the challenges related to high unemployment, crime, and poverty reduction. SMEs are neither enhancing living standards nor stimulating economic growth and development in Alice due to a number of challenges, namely lack of finance, lack of managerial skills, inadequate advice and information, and lack of training and education. The study recommended that to increase the contribution of SMEs in the socio-economic problems of Alice, it is important to have a clear policy and strategy towards the development of SMEs and would also require commitment from government, civil society and business people.

DOI: 10.5901/mjss.2014.v5n23p674