EFFECT OF URBAN INFRASTRUCTURE ON DENSITY OF NEW FIRMS IN SOUTH AFRICA

Research Problem: Entrepreneurial growth across South African municipalities remains spatially uneven, with significant disparities linked to variations in urban infrastructure. Despite policy efforts to stimulate local economic development, limited empirical research has examined how specific infrastructural components—such as public transport access, water and sanitation reliability, and broadband connectivity—shape new firm formation. Understanding these relationships is essential for addressing persistent gaps in municipal-level entrepreneurship. Methods/Theory: Anchored in Endogenous Growth Theory, this study employs a cross-sectional explanatory research design to analyse the influence of urban infrastructure on entrepreneurial density. Multiple linear regression was applied to municipal-level data from 156 municipalities, using secondary data sourced from CoGTA, PRASA, ICASA, and CIPC. This approach enabled the assessment of how different infrastructure indicators collectively and individually affect new firm density. Results: The findings indicate that public transport access and broadband coverage exert statistically significant positive effects on new firm density, demonstrating their catalytic role in enabling entrepreneurial activity. While water and sanitation reliability also shows a positive relationship with new firm formation, its effect is not statistically significant. These results affirm Endogenous Growth Theory by highlighting infrastructure as a critical driver of local economic dynamism. Conclusion: Urban infrastructure plays a foundational yet uneven role in shaping entrepreneurial outcomes across South African municipalities. Transport access and digital connectivity are particularly influential in fostering new firm formation, while basic utility reliability, though important, requires further strengthening to produce measurable economic impact. Key Contribution to Knowledge: This study contributes to urban and entrepreneurial development scholarship by providing empirical evidence on the differentiated impacts of infrastructure components on firm creation in South Africa. It highlights how infrastructural disparities reinforce spatial inequality in entrepreneurial opportunities. Recommendation: The study recommends strengthening integrated public transport networks, accelerating the rollout of fibre broadband, and improving the reliability of water and sanitation services to build more inclusive entrepreneurial ecosystems. Policymakers should position infrastructure investment as a strategic economic intervention to stimulate local innovation, reduce unemployment, and narrow urban inequality.