Mechanisms of mitigating impediments to locally owned small-scale enterprises'growth

Abstract

Local owned small-scale enterprises play a vital role in fostering economic growth, job creation and community development. The success and vitality of small-scale enterprises are recognized as important elements in measuring an economy’s progress and future development. The objective of the study was to ascertain the mitigating mechanisms for resolving the impediments of locally owned small-scale enterprises’ growth in Lesotho. This study used primary data from the target population of locally owned small-scale entrepreneurs operating in various sectors across the Maseru town and Roma. 54 participants were drawn from local small-scale entrepreneurs. From the 54 sample size, 40 was quantitative and used stratified and simple random sampling then the remaining 14 was qualitative and used purposive and snowballing sampling. The data was analyzed through the use of Statistical Package for Social Sciences (SPSS) software, which generated the findings in the form of graphs and descriptive statistics. The study used two theoretical frameworks; which are entrepreneurship ecosystem and the theory of resource based view. These theories are the Interactive Theory and the Social Exchange Theory. The research findings revealed that Basotho’s businesses are characterized by several key challenges which hamper their growth. The study identified impediments such as financial impediments, which saw many local small-scale businesses not growing due to lack of capital. It was discovered that securing funding for business operations, expansion or unexpected expenses was difficult for small- scale enterprises, especially because they lacked a solid credit history or valuable collateral. Market challenge was another setback as businesses often competed with each other and had limited budget for marketing and advertising and the efforts made others spread their goods in different points of sales across the town. However, most of the respondents did not consider advertising and using social media to attract new market. Lack of business literacy was another impediment found to hamper with the growth of local businesses. Many businesses struggled to invest in and adopt new technologies that can improve efficiency, productivity and customer experience. Poor infrastructural developments which included insufficient storage and warehousing facilities and lack of electricity, water supply and seasonal times can limit the operations of small-scale businesses and increase operational costs thus running them into deficit. Many respondents pointed out that bureaucratic impediment saw the government of Lesotho playing a minimal intervention in boosting the locally owned small-scale businesses. However, the study also found that some small scale enterprises have developed coping strategies to overcome these impediments. Among others, it was discovered that some businesses formed partnerships with other businesses and also with accessing government support through relevant ministries. Furthermore, it was discovered that the businesses have developed a range of coping strategies, including the use of financial support in the form of workshops and seminars; collaborations and bulk-buying and participation in government programs. The findings of this research further highlighted the importance of supporting the development of locally owned small-scale enterprises in Lesotho. In order to do so, it is essential to provide these businesses with the resources and support they need to overcome the challenges they face. v In addition, this research also examined the effect of government intervention on mitigating growth impediments faced by locally-owned small-scale enterprises in Lesotho. The findings illustrated that government programs and initiatives can provide some support to small-scale enterprises but the overall impact is limited because of government-business relationships. Most respondents pointed out that Lesotho laws are not sufficiently stretched to accommodate the nature of their businesses.