Growth Scenarios for Economic Development of Small Business in the Republic of South Africa

By Venter, P. F. | Academy of Entrepreneurship Journal, Fall 1995 | Go to article overview

Growth Scenarios for Economic Development of Small Business in the Republic of South Africa


Venter, P. F., Academy of Entrepreneurship Journal


INTRODUCTION

Urban development and transportation of goods and services are directly related to the extent of economic development. The Business Economic plan should address the development potential of the different economic activities and make predictions for future growth. This implies that the objectives of the Business Economic Research Plan are:

To place Business Economic development in perspective;

To interpret the growth potential of the different Business Economic sectors;

To generate inputs as required for land-use and transport planning; and,

To address important development aspects, growth potential and development guidelines.

The research was based on the information and planning parameters available during the study period. Utmost care has been taken to access the most relevant up-to-date information. The information used in the analysis of the Business Economic status of the study area was obtained from various sources. A list of these sources is provided in the references.

RESULTS OF THE STUDY

The time frame adopted for the Business Economic and Urban Structure Plan was seventeen years, stretching from 1993 to the year 2010. The ages of potential members of the labor force in the Vaal Triangle and Northern Free State average between 15 and 64 years. It represents 66,6% of the total population in the study area. Table 1 displays a breakdown of the population labor force.

Compared with the national average of 66.1%, it is clear that the study area compares favorably in this respect. Of these, 458,161 are economically active and represent the labor supply of the study area. The term economically active in this instance refers to all workers in the study area, whether employers, employees, self-employed or unemployed, and commuters residing in the area (Central Statistical Services, 1993).

Estimates show that unemployment in the study area is 149,335 (13.5%) of the total population (see Table 1) or 32.6% of the economically active population. According to Table 1, the labor supply can be categorized as follows:

Employed in the formal economy of study area:     44.8%
Employed in informal activities of study area:    12.2%
Employed outside the study area:                  10.4%
Unemployed:                                       32.5%

The Vaal Triangle and Northern Free State has a specialized economy which is dominated by a few large industrial enterprises employing 38% of the active labor force A more diversified Business Economic base would reduce the study area's dependence on the strong influence of the chemical, iron, steel and related industries and would spread the risk over a broader economic base. The lack of economic development in these areas is a major constraining factor, for large markets exist without supportive economic development (Development Bank of Southern Africa, 1991).

There are 7,313 formal businesses in the study area with a total employment of 205,401 (Table 2). Most of these employment opportunities (77,726) are created by industrial enterprises representing 92% of all the formal businesses in the study area (Vanderbijlpark Town Council, 1993). The second largest demand for employment is created by the wholesale and retail trade sector. This sector offers 45,330 employment opportunities and it represents 46.7% of the businesses in the study area. Together these two sectors are responsible for more than 59% of all the formal job opportunities by almost 56% of the enterprises.

FUNCTIONAL SPECIALISATION

The functional specialisation in the study area refers to those urban functions and economic activities in which a particular urban area specialises. In terms of all urban functions in the Vaal Triangle and Northern Free State, each urban area provides for the lower order needs of its inhabitants but also specialises in the provision of a particular higher order function, such as specific services, business economic activities, recreation or accommodation (Vaal Triangle Regional Services Council, 1993).

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