Factors that affect the financial self-reliance of informal Small Medium and Micro Enterprises in Mankweng Area, Limpopo Province, South Africa

Abstract

Given the critical role that SMMEs play in South Africa’s economy, understanding the motivating factors of starting a business venture, factors that facilitate and constrain their financial self-reliance is vital for sustaining and minimizing dependence on external government and private sector support in these enterprises. This study is grounded in the Resource-Based Entrepreneurship Theory (RBET), which suggests that entrepreneurs can generate sustainable value by strategically leveraging both internal and external resources. These resources may include individual skills, family support, and social networks, all of which contribute to entrepreneurial success. This mini-dissertation investigated factors that affect the financial self-reliance of informal small, medium and micro enterprises (SMMEs) in Mankweng area, Limpopo Province, South Africa. The purpose of the study was to determine factors that facilitate the financial self-reliance of the selected informal SMMEs in the area, examined the factors that constrain their financial self-reliance and assess their economic contribution to the local economy. This research adopted an interpretivist research philosophy, utilising a cross-sectional qualitative research design, with data collected through semi-structured interviews from SMMEs within the Mankweng area. Key findings revealed that most SMME owners are driven by economic necessity and local demand. They sustain their businesses by leveraging skills, community support, and low operating costs, resulting in strong customer loyalty. However, challenges such as lack of formal registration, limited access to credit, and poor awareness of government support hinder their growth and ability to scale. Despite these barriers, informal SMMEs make significant economic and social contributions especially to the economies within which they operate. While many informal SMMEs in the Mankweng area demonstrate elements of financial self-reliance through local support and resourcefulness, they remain constrained by systemic challenges that limit their full financial independence. This research recommends simplifying registration, improving access to support services, and tailoring government policies to better support rural and peri-urban micro-enterprises, thereby enhancing their sustainability and impact on local development.