Abstract
M.Com. (Development Economics)
Informal enterprises are very important to South Africa’s economic growth especially in local economies. Hence, there is a need to ensure that informal enterprises grow sustainably. Previous studies on informal economy in South Africa have found that informal enterprises hardly grow and develop. Although some scholars have investigated the factors influencing growth of informal enterprises, they have not covered all possible enterprise growth constraints of informal businesses located in townships. The purpose of this research is to investigate the gaps in the literature on the constraints facing informal enterprises in Gauteng townships by investigating both the internal and external constraints.
By employing both descriptive primary research and logit and probit logistic regressions, internal and external constraints as well as their impacts are determined. The matrix analysis assesses the extent to which the owner/manager perceives the pre-determined constraints as a constraint for their enterprise’s growth. The logit and probit regressions were applied to determine the relationship between enterprise growth and internal and external constraints as perceived as a constraint by the owner/manager.
The regression analysis indicates that marital status, level of education, other training as well as duration of location (on the street) are all statistically significant at a 10 per cent level. The results from the logistics and probit regression on the perceived constraints to enterprise growth, yield statistically significant results are inadequate educational attainment level of managers and employees, lack of water supply level of employees and lack of proper roads and street lights.
The matrix analysis indicates that the five major constraints according to the respondents are lack of proper infrastructure, price of raw materials/merchandise/inputs, and competition from foreign traders, cost of transportation and a lack of savings...