Limitations on the growth of economic multipliers in the small business sector in the eastern Free State

Abstract

Maluti-a-Phofung (MAP) municipal area is currently experiencing high unemployment and poverty rates. The structural weaknesses and problems of the economy of MAP local municipality highlight the importance and urgency of Local Economic Development (LED) in MAP. This paper reports the results of a study carried out to investigate constraints in the growth of multipliers around local shopping centres in the area south of Phuthaditjhaba, Maluti-a-Phofung. The methodology involved field observations, the administration of interviews to a random sample of ten households in the vicinity of each of the eight shopping centres and another sample of five business units at each centre. The results were analyzed using Pearson's correlation in order to test three hypotheses based on business structure, location and multipliers. The findings indicate that these shopping centres are not able to meet the diverse shopping needs of the community and patronage levels are extremely low. This has serious implications for these centres in generating economic growth multipliers in the local community.