Several recommendations and suggestions were offered by various researchers on how to improve or address the challenges facing the SMMEs in South Africa (Chimucheka and Mandipaka 2015). It is recommended that government as well as financial institutions should provide financial opportunities to SMMEs (Mahlaka, 2014). The scholar argued that 13% of overdraft or credit applications and 10% of bank loan applications by most SMMEs were rejected in 2014. Therefore, there is the need for more financial support for the SMMEs to enable them function more effectively and efficiently.
According to National Credit Regulator (2011), nearly half percent of SMMEs in South Africa are not able to access funding from financial institutions like banks because they are not listed with the Companies and Intellectual Property Commission. Moneyweb (2013) suggests that in spite of the government measures to assist SMME sector, some of these measures are deemed as completely ineffective and that they have so far changed nothing. Friedrich and Isaacs (2010) in their study also recommended that in order to promote the effective functioning of SMMEs, the government must support them with resources such as finance.
Chimucheka and Mandipaka (2015) in their previous study recommended that in order for SMMEs to get access to funds, policymakers and SMMEs must consider the Grameen Bank- type model (GBM) which is based on the voluntary formation of small groups of underprivileged people and is meant to provide loans to those SMMEs without collateral, which is normally a hindrance to access finance by SMMEs. This model will assist in solving some of the challenges faced by SMMEs because it will allow them to work together in network in solving the challenges.
Chimucheka and Mandipaka (2015) further recommended that the government should strive hard to create enabling business environment for the SMMEs to operate through the improvement and provision of adequate infrastructure such as road networks, buildings and communication technologies. They suggested that the business environments should be established in such a way that ensures the emergence of new enterprises, allowing previous ones to grow, and the large and small enterprises to coexist by supporting one another. Aside the infrastructure provision, the scholars recommended that an effective legal and regulatory
framework should be established to promote competition through the elimination of excessive restrictive licensing requirements and allowing other international and regional financial institutions with better SMME-lending tools to enter the market. It is also suggested that SMMEs should participate in networking colloquiums where they share their testimonies on business success, challenges they are facing to sustain or grow their businesses and come upon with possible solutions.
SMMEs are required to adopt information and communication technologies in their businesses because the development of information and communication technology is central for trade facilitation in both local and international markets (Chimucheka & Mandipaka, 2015).
2.13 Chapter Summary
The chapter reviewed both the empirical and theoretical literature in relations to SMMEs in the global context but focused mostly in the South African context. It has been argued that the construction industry's performance, therefore, is largely predicated on government infrastructure spend – a figure reaching about R220 billion per year . The South African construction industry makes up around 5,5% of GDP, at least 50% of total National Capital Investment, and is anticipated to have reached an annual growth rate of 2.62% by the year 2020. It is estimated that as much as 2.25million SMMEs are operating in South Africa. Findings indicated that “SMMEs contributed 42% to the South African GDP in the first quarter of 2015, a significant increase from 34.58% in 2012, and 28% in 2005”. It was discovered that the procurement-related challenges facing SMMEs include skills and capacity shortages, access to public procurement-related information, access to work, lack of access to finance, fraud, corruption and maladministration, supplier-relationship challenges, fronting, poor quality outputs, delayed payments, lack of transformation in public procurement, market oversaturation, non-compliance, fragmentation and inconsistencies in the application of procurement laws and BEE policies, non-compliance to SCM policy and regulations, ethics and conflict of interest, inadequate monitoring and evaluation of SCM, inadequate planning and linking demand to the budget, accountability, fraud and corruption and too much decentralisation of the procurement. The chapter concluded with the discussion on how to address the challenges which confront the SMMEs in South Africa.
CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Introduction
The purpose of this study is to identify procurement challenges faced by emerging contractors in accessing business opportunities in the eThekwini metropole in the KwaZulu-Natal region. Following a review of the literature on the problem of procurement asymmetry, and challenges faced by contractors in accessing public sector procurement business opportunities, the study established that there are too many programmes, and distinctions between them are arbitrary. Therefore, further studies will be required to establish whether the procurement opportunities provided by the relevant government agencies particularly KZNDPW are intelligible to construction SMMEs as it is not yet known whether these SMMEs have the requisite technical- financial knowledge, to read and understand the support provided by government. To investigate these challenges, a survey will be conducted of construction SMME contractors operating in this target area.
This chapter discusses the research designed and methodology adopted to investigate these phenomenon. The research design is supposed to explain how the entire research will be conducted so that the research objectives can be realised. Some of the steps to be considered when designing the research design is picking some aspects like the philosophical framework. Additionally, a researcher might also need to make decisions on data collection tools and methods, data analysis as well as how the data will be analysed and interpreted as a way towards realising the research objectives (Babbie and Mouton, 2001; Cresswell, 2003).
This chapter presents the philosophical underpinning of the study as well as well as the various steps taken in the data collection process and the analysis of the collected data. The chapter presents the design, methodology and context that guides the study. Further, the chapter also describes the procedures and approaches adopted in the data collection and analysis of the data.