A poverty-reduction oriented perspective to small business development in South Africa: A human capabilities approach

Abstract

Despite the South African government’s strategic policy interventions and huge investments into small business development over the past two decades, solid evidence of the transition of informal businesses to the formal sector is hard to encounter. Furthermore, the high rates of unemployment in the country point to the growing incapacity of small-scale, micro and medium enterprises (SMMEs) to address the chronic social ills of poverty, inequality and social deprivation ravaging the country. Building on mainstream literature on the government interventions designed to promote growth without equity among SMMEs and Sen’s capabilities approach, this theoretical study advances a poverty-reduction approach to entrepreneurship underpinned by a systematic integration of multiple-level conversion factors, sustainable resourcing (especially seed funding and managerial capacity development), commercialization of business activities, a strong entrepreneurial orientation and solid managerial capabilities. Such an integrated approach was deemed to strengthen the capacity of SMMEs to survive the competition from established commercialised enterprises.