CHAPTER 1: NATURE AND SCOPE OF THE STUDY.
Rustenburg is situated in the Southern region of the North West Province, most of the economic activity happens in this part of the province. The province recorded an economic growth rate of 4.9% in 2004/05 compared with 4.5% in 2003/04. The largest contributors to the GDP of the province in 2004 were the mining and quarrying industries (24.9%), finance, real estate and business services (13.6%) and the general government services sector (12.1%). Of the 3,374,200 people living in the North West, 65% live in the rural areas (Mid-Year Population Estimates, 2006). The official unemployment rate is 31.8% (Labour Force Survey, March 2006) Rustenburg is the economic hub of the Northwest Province. Because of the platinum mines it has attracted migrant workers from as far afield as the neighbouring SADEC countries. Statistics South Africa census of 1996 to 2006 indicates an average annual growth of 1.6%.However, the population was estimated to be in the vicinity of 457,9876 with a population density of 56.11 in 2006.(Global Insight, 2007). If one takes into account the current .development in South Africa’s economy, it is evident that Rustenburg, like other developing economic locations, is still reeling from the previous economic turmoil, thus aggravating employment statistics which are already at alarming proportions.
While the majority of people are employed in the mining sector, the retail sector provides employment for the majority of woman who had found themselves marginalized by the mining sector. However, the development of this sector in the Rustenburg area is highly dominated by big businesses owned by whites, Indians and foreigners such as Nigerians, Malaysians, Egyptians and Ethiopians involved in small scale business as hawkers. It raises a serious concern about the participation of the previously marginalized population sectors of South African population especially black people residing within the local community. Various pieces of government legislation such Broad Based Black Economic Empowerment (2003), The Employment Equity Act, the Affirmative Actions Act, Skills Development Act and Competitions Act seems to have had little effect on the growth of small businesses and generally on the development of black people and the eradication of poverty.
2. Problem Statement
The accomplishment of political freedom has improved the need to focus more attention on social challenges. Since the inception of democratic government 1994, Antonites (2003:150) reports that certain vital economic and social challenges, such as unemployment, poverty, and inequality, as well as policies and practices that excluded the majority from participating in the mainstream economy, remain unresolved. The development of small businesses is seen as a solution to the ever- increasing unemployment. However, the failure to sustain the growth of these entities sheds some doubts on whether the implementation of government legislation of BBBEE Act (Act 53 of 2003) has had any impact on the growth of such businesses. It is for this reason that this study on the impact of broad based black economic empowerment on the growth of small businesses in the Rustenburg Local Municipality has been undertaken
The problem statement is, therefore, worded as follows:
‘The impact of Broad Based Black Economic Empowerment on small business development (SMME’s) in the Rustenburg Local Municipality area’
3. Nature of the problem
The Rustenburg local municipality had to deal with the ever increasing problems of providing proper service delivery to its communities. However, the problem has been aggravated by higher number of people who came from various parts of the country to look for employment. The government approach to redress economic disparity created by the apartheid regime was translated into various strategies which did not do enough to alleviate the high levels of...
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