The effect of foreign owned small businesses on local small businesses in Emthanjeni Local Municipality

Abstract

In recent years there has been a major influx of foreign nationals in the Republic of South Africa (RSA) from Eastern Countries and elsewhere in Africa. These foreign nationals settle themselves in the length and breadth of the RSA, and chose to live in informal settlements in black townships and small towns. It is difficult for most of these foreign nationals to find employment in the formal economy of RSA as a result of their foreign origins, and as a consequence they have capitalised on opportunities to set up small informal businesses to meet their livelihoods needs. By virtue of their remarkable business prowess they have proven to establish reasonable successful enterprises, to the envy of RSA entrepreneurs, who functions within their chosen business sectors. This perceived success has opened them to unfair business rivalry, internecine criminality, and unwarranted violent attacks spurred on by xenophobic tendencies. This research study sought to determine whether these foreign-owned businesses have any positive or negative impact on locally-owned businesses in Emthanjeni Local Municipality. The study found that the success of foreign-owned small businesses can be ascribed to their business ingenuity, their collective buying power, and their ability to intermingle with their host community members. The study also found that these foreign-owned businesses contribute considerably to the economies of Emthanjeni's constituent towns and provide much needed employment opportunities to local residents. RSA small business entrepreneurs on the contrary do not feel the need to interact with one another and consequently cannot benefit from the collective buying of merchandise. They persist in the belief that foreignowned small businesses threaten their business enterprises and take their livelihoods away. It is recommended that this myth be dispelled through mentorship and business skills development programmes to strengthen the operations and viability of RSA small businesses in order to create pliable business relations with foreign-owned business enterprises. Furthermore, it rs important that the economic contribution made by foreign-owned small businesses be recognised by the state and local government to render the necessary support through small business support agencies, in order for the total small business sector to prosper.