SKILLS DEVELOPMENT: A KEY CHALLENGE FOR THE VIABILITY OF SMALL BUSINESSES IN EC

The negative impact of skill shortages in South Africa's small, medium, and emerging businesses sector was the focus of WSU scholar, Professor Siyabonga Mxunyelwa’s paper recently presented at a symposium in Greece.

At the 20^th Annual International Symposium on Economic Theory, Policy, and Applications held from 1-3 July in Athens, Mxunyelwa, a senior lecturer and researcher in the university’s tourism and hospitality program, presented his academic paper titled "Skills as a Conundrum in the Skills Development of Small to Medium Tourism Enterprises in the Eastern Cape”.

"Small, Medium, and Micro Enterprises (SMMEs) play a vital role in boosting the economy and creating jobs, representing over 50% of employment and 90% of all operating businesses worldwide. This is especially important for developing economies like South Africa. However, the small business sector is facing significant challenges in the marketplace,” said Mxunyelwa.

He said entrepreneurs, along with local government, play crucial roles in providing the resources necessary to create and develop business skills to run successful businesses.

However, Mxunyelwa promptly pointed out the Global Entrepreneurial Monitor (GEM) Report of 2022-2023, which indicated that South Africa still has significant progress to make before entrepreneurship can effectively contribute to economic development, technological advancement, job creation, and social cohesion.

“There are ongoing challenges within small businesses, such as financial constraints, a lack of expertise among managers, limited access to business opportunities, and a shortage of managerial skills. The shortage of managerial skills becomes a significant factor preventing these small, medium, and emerging businesses (SMTEs) from progressing and reaching new heights,” he said.

Mxunylwa utilized qualitative research methods within the study's context, while concepts were clearly explained to support the quantitative research elements.

He stated that descriptive research was appropriate for the study's objectives - an intervention that addressed complex variables such as individuals' opinions on the skill challenges encountered by small to medium enterprises.

Ultimately, Mxunyelwa’s research found that a significant percentage of managers had training and experience in General Management, totaling 58.3%. In contrast, slightly less than 50% did not have training or experience in Human Resources Management, Strategic Management, or General Management.

“Additionally, a noteworthy observation was that slightly more than 40 percent of managers or proprietors had received formal education in tourism management. These findings indicate that more training interventions are still required to address the gaps that exist in the managerial skills of the managers of these enterprises,” he said.

A significant 71.8 percent of owners and managers interviewed agreed completely with the idea that starting a business is an effort to achieve a better standard of living. Similarly, 67.1 percent of these managers and owners fully agreed that there is a need to improve their financial situations.

Additionally, 61.5 percent of respondents indicated that their motivation came from the desire to establish a business based on a unique concept. Furthermore, 58.2 percent of those surveyed believed in the importance of contributing to local economic development by creating small and medium tourism enterprises (SMTEs).

“The study findings elucidate that 48.8 percent of participants fully concurred that all measures are taken to extend the enterprise's resources to optimize business prospects in the marketplace. As such the availability of finances presents a challenge in identifying other entrepreneurial opportunities, thus fewer employment opportunities are created,” said Mxunyelwa.

In his conclusion, he stated that small enterprises tend to favor informal managerial practices over detailed planning and control procedures. Within this context, improving managerial skills is essential for driving effective management in small businesses.

He recommended a strategic vision aimed at enhancing management capabilities within Small, Micro, and Medium Tourism Enterprises (SMTEs). This involves implementing a comprehensive approach to capacity development that addresses existing challenges, ensuring the longevity and sustainability of these enterprises in the Eastern Cape.

By Thando Cezula