Journal of Small Business and Entrepreneurship Development

Impact of Small Businesses Owned By Immigrant Entrepreneurs on the Local Community of Brits
Prof. Ajay K Garg, Mr. Nelson Phayane

Abstract
There are three main theories that explore the rate of entrepreneurialism amongst immigrants: the middleman minority, the ethnic market niche and the ethnic enclave economy. The literature reveals that immigrant entrepreneurs tend to target markets that are abandoned or neglected by local entrepreneurs and large chain stores. As a result, immigrant entrepreneurs often occupy business premises that would otherwise have been left vacant, thus providing the owners of the premises with a return on their asset. However, there are few studies that have considered the extent to which immigrants contribute to the local economy of Brits in particular and South Africa in general. The objective of this study was to assess the impact of small businesses owned by immigrant entrepreneurs on the local community of Brits. This impact was analysed using three variables namely employment creation, revenue to the municipality and investment in real estate. The study drew parallels between what is deemed as Foreign Direct Investment (FDI) by multinational enterprises, and the actions of immigrant entrepreneurs in establishing their businesses in a host country as micro FDI. However, there are other characteristics that are associated with immigrant entrepreneurship that are not synonymous with multinational cooperatives, such as contribution to the informal economy and unregulated business practices. A questionnaire was distributed to 70 small business owned by immigrant entrepreneurs in Brits on two separate occasions and received 37 completed questionnaires were received back from respondents. Key findings revealed that, on average, three people are employed by a SMME business owned by an immigrant entrepreneur in the Brits area. 97% of immigrant entrepreneurs rent the business premises that they occupy from private individuals. The municipality is paid rates and taxes for services rendered. 61% of immigrant entrepreneurs don’t have operating business licences. The study concludes that, at a municipal level, immigrant entrepreneurs can be classified as providing a form of ‘micro’ FDI, and contributes positively to the local economy which feeds to the South African economy.

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