African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4157

Full Length Research Paper

Job creation versus job shedding and the role of SMEs in economic development

  Mukole Kongolo
Centrum Católica, Business School, Pontificia Universidad Católica del Perú. Calle Daniel Alomía Robles 125 – 129, Los Alamos de Monterrico, Santiago de Surco, Lima 33 – Perú. 
Email: [email protected]

  •  Accepted: 02 August 2010
  •  Published: 04 September 2010

Abstract

 

SMEs have historically played an important role in contributing to economic development of many countries around the world. Naturally all businesses start as small businesses or even start out of small businesses initiated by individuals. Evidence from this study shows that SMEs represent vast portion of businesses in developing countries including South Africa. In South Africa, SMEs account for about 91% of the formal business entities, contributing to about 51 and 57% of GDP, providing almost 60% of employment. The main challenges affecting SMEs in South Africa include lack of management skills, finance, access to bank credit, access to markets, appropriate technology, low production capacity, recognition by big companies, lack of interest, long bureaucracy processes, and support for the roles that small businesses can play in economic development. This study re-assesses the role of SMEs in creating jobs, boost, enhance and support economic development in South Africa.

 

Key words: Small business, entrepreneurship, job creation, job shedding, economic development, poverty alleviation.