An impact assessment of micro enterprises on the livelihoods of low income households in Khayelitsha
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Date
2015
Authors
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Publisher
University of the Western Cape
Abstract
Livelihoods are essential for poverty alleviation. A poor person’s life cannot be transformed at all if the person has no means of earning a substantial income to sustain daily living. In today’s world many people rely on human capital for livelihoods. This is usually in the form of skills or educational qualifications that permit an individual to find employment. However, not every person is able to get meaningful employment which can generate an income to allow the person to live above the poverty lines. Generating an income from employment is not a livelihoods strategy that is available to many South Africans as the country has high unemployment rates and an economy that is performing poorly. In addition the overspill of institutionalised inequality from the apartheid era has many South Africans living in poverty. The South African government is promoting Small Micro and Medium Scale Enterprises (SMMEs) as a key strategy for job creation, economic growth for poverty alleviation and a reduction in inequalities. Many poor people in urban areas adopt micro enterprises as a livelihoods strategy. The research assessed the impact of micro enterprises on the livelihoods of low income households in Khayelitsha. The objectives of the research were; (a) to determine the impact that micro enterprises have on the livelihoods of low income households; (b) to ascertain how low income households identify micro enterprises as a livelihoods strategy; (c) to identify how household assets were allocated to livelihoods strategies; (d) to determine how low income households operate micro enterprises; and (e) to identify challenges faced by low income households in earning a livelihood through micro enterprises. A qualitative research design was used for the study because the aims of the research were to get an insight as to how people’s lives had transformed by adopting micro enterprises as a livelihoods strategy. To this end, in-depth interviews and observation data collection methods were employed. A study sample of 22 participants was drawn using non-probability sampling. Grounded theory was used for data analysis. Coded data was entered into an Excel spreadsheet which was used to generate graphs and tables. The findings indicate that micro enterprises as a livelihoods strategy have a positive impact on the livelihoods of many households in Khayelitsha. The impact is more significant because many households who engage in micro enterprises do not have other options for livelihoods strategies. Furthermore, many households reported to be better off operating a micro enterprise rather than being employed. Some households reported dissatisfaction with micro enterprises because they could not determine beforehand how much income would be generated making it difficult to plan monthly household expenditure. None the less micro enterprises enabled households to provide shelter, food, education for children and family members, health care and provision of household furniture. The results also indicate that for many micro enterprise owners the lack of financial capital was the biggest challenge because it prevented capital investment. High competition was also a challenge that a few owners were not able to overcome. On the whole the study concluded that micro enterprises are a good livelihoods strategy for the poor and could keep many South Africans above the poverty line.
Description
Magister Economicae - MEcon
Keywords
Khayelitsha, Poverty alleviation, Sustainability, Informal sector, Livelihoods strategies, Low income households