A Policy Review of Rural and Township Economies in Local Economic Development in KwaZulu-Natal, South Africa
Keywords:
Rural economies, Township economies, Local Economic Development, Small and Medium Enterprises
Abstract
The South African government has shifted socioeconomic policy paradigms from focusing solely on attracting Foreign Direct Investment to Small and Medium Enterprises’ development since they promise to provide a base for the emergence of dynamic and efficient large-scale firms and, consequently, a more flexible and competitive domestic economy. The newly adopted KwaZulu-Natal Township and Rural Economies Revitalization Strategy (2022) is an application of the popular acclaim that Small and Medium Enterprises are engines of economic development. Therefore, there is a need for policies and strategies geared towards promoting local economic development that corresponds with the socioeconomic climate of host communities. The main objective of this paper was to explore the role of rural and township enterprises in implementing Local Economic Development in KwaZulu-Natal. The study utilised a systematic research approach in which data was gathered from journal articles, conference papers, reports, and all the relevant research material was managed. Findings indicate that Small and Medium Enterprises are a characteristic of successful economies. Despite the theoretical shift in economic policies, poverty, inequality, and unemployment plague South Africa. Rural and township areas are still behind urban areas in terms of structural capacity, technology, and economic development. This study highlights the need for the provincial government to revise policies specific to the host area because issues faced by rural economies are peculiar to township economies.
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References
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Matekenya, W., & Moyo, C. (2022). Innovation as a driver of SMME performance in South Africa: a quantile regression approach. African Journal of Economic and Management Studies, 13(3), 452-467.
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Mthiyane, D. B., Wissink, H., & Chiwawa, N. (2022). The impact of rural–urban migration in South Africa: A case of KwaDukuza municipality. Journal of Local Government Research and Innovation, 3, 56.
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Nkosi, S. (2022). Exploring Local Economic Development to Promote Inclusive Sustainable Development in Marginalised Areas. University of Johannesburg (South Africa).
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Phinney, J. S., Berry, J. W., Vedder, P., & Liebkind, K. (2022). In Immigrant youth in cultural transition (pp. 71-118). Routledge.
Phosho, M. H., & Gumbo, T. (2025). Exploring the socio-economic transformation in post-apartheid South Africa: Lessons from Cosmo City mixed housing development. In Development and Investment in Infrastructure in Developing Countries: A 10-Year Reflection (pp. 125-133). CRC Press.
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Pizzi, S., Del Baldo, M., Caputo, F. & Venturelli, A., (2022). Voluntary disclosure of Sustainable Development Goals in mandatory non-financial reports: The moderating role of cultural dimension. Journal of International Financial Management & Accounting, 33, 83–106. https://doi.org/10.1111/jifm.12139.
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Prakasa, Y., Sujoko, A., Aziz, N. A., & Muttaqin, A. (2022). Absorptive capacity and innovation capability: Assessing the impact on SMEs' performance in the new normal era. Jurnal Ekonomi Bisnis Dan Kewirausahaan, 11(3), 325.
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Rens, V., Iwu, C. G., Tengeh, R. K., & Esambe, E. E. (2021). SMEs, economic growth, and business incubation conundrum in South Africa. A literature appraisal. Journal of Management and Research, 8(2), 214-251.
Simiyu, T. (2022). Corporate governance effects on financial performance of top 100 Small and Medium Enterprises in Kenya (Doctoral dissertation, Strathmore University).
Small Enterprise Development Agency (2016). The Small, Medium, Micro Enterprise Sector of South Africa, 1.
Smith, H., Discetti, M., Bellucci, M. & Acuti, D., (2022). SMEs' engagement with the Sustainable Development Goals: A power perspective. Journal of Business Research, 149, 112-122.
Scheba, A., & Turok, I. N. (2020). Strengthening township economies in South Africa: The case for better regulation and policy innovation. In Urban Forum, 31(1), 77-94. Dordrecht: Springer Netherlands.
Sirdar, M. M., Fosgate, G.T., Blignaut, B., Heath, L., Lazarus, D. D., Mampane, R.L., Rikhotso, O.B., Du Plessis, B. and Gummow, B. (2024). A comparison of risk factor investigation and experts’ opinion elicitation analysis for identifying foot-and-mouth disease (FMD) high-risk areas within the FMD protection zone of South Africa (2007–2016). Preventive Veterinary Medicine, 226(106192), 1-14, doi: 10.1016/j.prevetmed.2024.106192.
Sobir, R., n.d. Micro-, Small and Medium-sized Enterprises (MSMEs) and their role in achieving the Sustainable Development Goals, United Nations Department of Economic and Social Affairs. Available at:https://sustainabledevelopment.un.org/content/documents/26073MSMEs_and_SDGs.pdf.
Solomons, D., (2024). FinScope MSME South Africa 2024: Key findings highlight urgent need for informal sector support [Online]. Viewed at: https://finmark.org.za/knowledge-hub/articles/finscope-msme-south-africa-2024-key-findings-highlight-urgent-need-for-informal-sector-support?entity=blog [Accessed 22 May 2025].
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Teng, H. S. S. (2011). Government policy and critical success factors of small businesses in Singapore. Cambridge Scholars Publishing.
Tonya, E. M., & Kagata, L. (2024). Challenges Facing Micro and Small Business Growth in Tanzania: A Case of Mbalizi Town Council. Pan-African Journal of Business Management, 8(2), 101-120.
Trade and Industrial Policy Strategies. (2021). Supporting Light and Small-Scale Manufacturing in the Townships for Inclusive Industrialisation. Available at: https://www.tips.org.za/research-archive/trade-and-industry/item/4239-supporting-light-and-small-scale-manufacturing-in-the-townships-for-inclusive-industrialisation
Tshivhase, F. (2020). Investigating the Inclusion of Township Economies in Local Economic Development Case Study: Polokwane Local Municipality. University of Johannesburg (South Africa).
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Published
2025-07-01
How to Cite
Nxumalo, L. T. M. (2025). A Policy Review of Rural and Township Economies in Local Economic Development in KwaZulu-Natal, South Africa. Journal of Economics and Behavioral Studies, 17(2(J), 40-57. https://doi.org/10.22610/jebs.v17i2(J).4547
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Research Paper
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