Factors influencing the performance of small, medium, and micro enterprises contracted to the electricity unit of the eThekwini Metropolitan Municipality

Abstract

Introduction: This study explored the factors that influence the performance of small, medium, and micro enterprises (SMMEs) under the Electricity Unit of the eThekwini Metropolitan Municipality in Durban, KwaZulu-Natal. Methods: A mixed-methods research design was used, and the study protocol was approved by the Durban University of Technology Research Ethics Committee (IREC Number: 177/22). The quantitative sample comprised a total of 60 SMMEs operating in the Electricity Unit of the eThekwini Metropolitan Municipality. The researcher approached 10 participants from the target quantitative sample to take part in the qualitative component of the study. Results: More than half of the SMMEs contracted to the Electricity Unit were Black-owned (51.7%), aligning with the B-BBEE policies. Motivations for SMME start-ups varied, with many transitioning from employment to entrepreneurship. Partnerships were a prevalent business structure, highlighting the importance of collaboration and complementary skills in the electricity industry. Weaknesses were identified in risk identification and management. Government incentives and comprehensive funding from various sources were identified as critical for influencing SMME performance. Beyond funding, training, mentorship, and guidance are needed to support SMMEs. Transparency in project assignments from the Electricity Unit to SMME contractors could enhance their relationship. Crime had a detrimental impact on SMMEs, underscoring the importance of security and low crime levels for business growth. Conclusion: The study concludes that the performance of SMMEs contracted to the Electricity Unit is largely dependent on the capacity and capabilities of the SMMEs themselves (individual factors), the role of the Electricity Unit, and other external factors such as government, private sector, Business Development Agencies’, and banking sector support. The SMMEs do not operate in isolation from their environment and their performance is largely centred around a distinct set of individual, policy, and structural solutions for each component of the SMME cohort to accomplish a more comprehensive and equal growth agenda.