An Analysis of Challenges obstructing Growth of SMEs in the South African Tourism Sector: A theoretical evaluation

Steven Shabangu ,Bongani Mwale

doi:10.7176/ejbm/12-22-06

Abstract

The study empirically sought to analyse challenges inhibiting the growth of Small and Medium Enterprises (SMEs) within the tourism sector in South Africa. The study employed qualitative research design following the in depth interviews in order to gather data form tourism SME owners and managers in South Africa, who formed the sample population for the study. A sample of 20 respondents was drawn using purposive sampling approach. The participants who were selected were tourism SME owners and managers of guesthouses, lodges and bed and breakfast houses, shuttle transport, art and craft curio shops and agricultural sector. The researchers has provided a perspective on the role of tourism SMEs in South Africa. The study identified the hindering challenges for tourism SMEs development and growth as lack of access to funding, inadequate or unavailable government funding, lack of entrepreneurial and management skills to operate their businesses, lack of networking connections, poor location of SME operations and stiff competition for well-established SMEs. The recommendations were made that alternative funding strategies should be used, SME owners and managers should be trained, the SMEs should join network groups and share ideas, and they should also invest in marketing and communication technologies for their products to be known to the market. Keywords: Small and Medium Enterprises, tourism, economic growth, inclusive growth DOI: 10.7176/EJBM/12-22-06 Publication date: August 31 st 2020

Highlights

Reducing inequality and unemployment and eliminating poverty are key goals of the National Development Plan (NDP) for South Africa by 2030 (Statistics South Africa, 2016)
Even though the development and growth initiatives have been on the policy agenda of government since 1994, little success has been registered for tourism Small and Medium Enterprises (SMEs) (National Development Plan 2030, 2012; National Planning Commission, 2012)
Findings on impediments and Challenges faced by Tourism SMEs This section represented the findings from the interviews that were conducted on the challenges faced by tourism SMEs in their attempts to run their businesses

Summary

Introduction

Reducing inequality and unemployment and eliminating poverty are key goals of the National Development Plan (NDP) for South Africa by 2030 (Statistics South Africa, 2016). The current economic climate of South Africa shows a substantial gap with these goals. While the incidence of unemployment rate is at 32 percent, poverty is at 67 percent (Statistics South Africa, 2018). Reports have shown that South Africa is one of the most unequal countries in the world, as shown by the Gini coefficient of 0.691 and this has not significantly changed since the new dispensation in 1994 (National Treasury Research, 2016). Acceleration of inclusive growth is crucial if South Africa is to realise significant reductions in poverty, inequality and unemployment. One of the growth strategies that South Africa could employ to achieve this is the development and growth of entrepreneurship, with special attention to SMEs in the tourism industry. Even though the development and growth initiatives have been on the policy agenda of government since 1994, little success has been registered for tourism SMEs (National Development Plan 2030, 2012; National Planning Commission, 2012)

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