Exploring the potential market for informal small, medium and micro enterprise (SSME) transport operators in rural areas - a case study of the KwaMhlanga community

Abstract

Paper presented at the 28th Annual Southern African Transport Conference 6 - 9 July 2009 "Sustainable Transport", CSIR International Convention Centre, Pretoria, South Africa.

In South Africa, small businesses are an important ingredient for income generation in the rural economy. However, the ability of small businesses to grow and reach new markets is hampered by ageing infrastructures, low- and unskilled labour, lack of business knowledge and insufficient capital. Furthermore, transportation of goods in rural areas is a complex and costly business. This paper is a brief introduction to the rural economy in which small informal rural transport operates in the KwaMhlanga community. The paper focuses on informal operators who are classified as survivalist entrepreneurs, whose turnover falls well below the levels required for Value Added Tax (VAT) registration in South Africa. The characteristics of the survivalist market are low barriers to entry, highly competitive market, unskilled labour and limited capital requirements. Increasing emphasis has been placed on the development and promotion of the rural accessibility and small businesses in South Africa. Although the South African Government's Department of Trade and Industry (the dti) has initiatives to support and promote the development of Small, Medium and Micro Enterprises (SMMEs), the dti finds it difficult to gather and process information for planning purposes, such as the number of small informal business and the kind of services provided by these operators from rural areas. This could be attributed to the unwillingness of informal business operators to participate in surveys resulting in limited information being published in the public domain about the existence and operations of informal businesses in rural areas. The aim of this paper is to summarise the challenges SMMEs operating in informal sector based on field work done in and around KwaMhlanga and reasons for their existence.