Developmental Constraints among Start-up Textile Enterprises

Abstract

The purpose of the study was to identify and quantify factors that affect the development and growth of the textile industry of the City of Tshwane. Data was collected from a stratified random sample of 250 operators of small, micro and medium-sized enterprises (SMMEs) conducting business in the textile industry of the City of Tshwane. The instrument used to collect data was a structured, pre-tested and validated questionnaire of study consisting of a large number of socioeconomic indicators of viability in the textile industry. Face validity was used for ensuring validity. The Cronbach Alpha test was used for ensuring reliability and internal consistency. Viability of textile businesses operating in and around the City of Tshwane was assessed by assessing profitability. The study found that 75.60% of textile businesses were viable, whereas 24.40% of them were not viable. About 98% of businesses paid tax to SARS regularly. About 26% of entrepreneurs had received training from the South African National Department of Trade and Industry (DTI) or the Small Enterprise Development Agency (SEDA) at least once in the past. About 75% of businesses had applied for loans at least once in the past. About 27% of businesses had defaulted on loan repayments in the past. Results obtained from cross-tab analyses showed that the viability of textile businesses was significantly associated with the ability of business operators to make profit, ability to secure loan needed for business, ability to order merchandise in bulk on credit, access to foreign textile products, ability to sustain loan repayment, ability to secure loan from commercial banks, ability to secure loan from micro lenders, lengthy duration of business operation, ability to secure valid trade license, registration of textile business for VAT, South African nationality, and the ability of business operators to conduct business with partners, in a decreasing order of strength. Results obtained from binary logistic regression analysis showed that the viability of textile businesses was significantly influenced by 3 predictor variables. These predictor variables were: ability to make profit, ability to secure loan needed for business operation, and ability to order merchandise in bulk on credit, in a decreasing order of strength.