African Journal of Hospitality, Tourism and Leisure 2024, Vol. 13 No. 4 pp.

735-743
ISSN: 2223-814X

Internal Factors Affecting Rural Tourism SMMEs in South Africa

Abstract
Takalani RAMUKUMBA
Department of Tourism and Hospitality This study delves into the internal factors affecting tourism small and medium-sized enterprises
Management, Walter Sisulu University,
(SMMEs) in South Africa, highlighting the importance of these factors for the sustainability and
Email, tramukumba@wsu.ac.za
Corresponding Author growth of these enterprises in a rural setting. Using a quantitative approach, data was gathered
from 100 registered tourism SMMEs via an online survey and analysed with descriptive statistics
Mahlatse Victor SETHWANA and SPSS software. The findings reveal that most managers feel confident in their experience
Department of Global Tourism and and training and are comfortable handling financial statements. However, accessing finance
Hospitality, MANCOSA, remains a significant challenge due to insufficient information, lack of collateral, and high
Email, victor.sethwana@mancosa.co.za interest rates. While there is a positive attitude towards technology, financial constraints and a
Corresponding Author lack of technical skills hinder its adoption. This study contributes to the literature by providing a
detailed examination of the internal challenges faced by tourism SMMEs in a rural context, filling
a gap in understanding how these factors impact on sustainability and growth. The findings offer
practical insights for policymakers and stakeholders, emphasising the need for enhanced financial
management training, improved access to finance, and support for technology adoption to bolster
the sustainability and growth of tourism SMMEs.

Keywords Access to finance, internal factors, rural tourism, managerial competency, tourism
SMMEs.

How to cite this article: Ramukumba, T. & Sethwana, M.V. (2024). Internal Factors Affecting Rural Tourism SMMEs in South Africa.
African Journal of Hospitality, Tourism and Leisure, 13(4):735-743. DOI: https://doi.org/10.46222/ajhtl.19770720.559

Introduction
Tourism Small, Medium, and Micro-sized Enterprises (SMMEs) in rural areas are critical to the economic growth and job
creation of many regions, including South Africa (Enaifoghe & Ramsuraj, 2023). Despite their significant contributions,
tourism SMMEs face numerous internal challenges threatening their survival and growth. It is concerning that SMMEs in South
Africa have high failure rate. In first year of operation 40% of newly established businesses in the country fail (Bushe, 2019).
After two years, this failure rate rises to 60%, and in the first ten years after launch, it reaches a staggering 90%. The significance
of addressing the internal factors that contribute to SMME vulnerability is highlighted by these statistics. As stated by Naradda
et al. (2020), Istanti (2021), Khokhobaia (2019), Makhitha (2017), Reindrawati (2020), Sade et al. (2017), Shafiei & Karoubi
(2018), and Shin et al. (2020), SMMEs in the tourism industry face challenges such as inadequate knowledge, skills, and
capabilities to understand and deal with internal challenges. According to Zampoukos & Ioannides (2011) and Adel et al.
(2011), a significant threat to the survival of tourism SMMEs is the lack of knowledge about changes in the business
environment and the shortage of knowledgeable, experienced, and qualified management and staff to handle these difficulties.
Geneva (2010) goes on to say that employees of SMMEs in the tourism industry require additional professional credentials and
training. As a result, this study looks at the internal variables influencing the development and survival of rural tourism SMMEs,
which in turn affects their ability to create jobs and reduce poverty. This study aimed to examine the internal factors affecting
rural tourism SMMEs' survival and growth in South Africa and data was collected in Greater Letaba Municipality, Limpopo
province. To guide its investigation, the following research questions were formulated: What role does the lack of managerial
competencies have on the growth and survival of rural tourism SMMEs? How vital are technological capabilities and access to
technology to the growth and survival of the SMMEs? How does access to finance contribute to the success and failure of rural
tourism SMMEs?
The theoretical framework guiding this study is based on the finance gap theory and resource dependency theory. The
finance gap theory (Bolton, 1971) highlights the difficulties rural tourism SMMEs face in accessing external funding due to
knowledge and supply gaps. These businesses often rely on personal savings or informal financial support, leading to high
failure rates. The resource dependency theory (Pfeffer & Salancik, 1978) emphasizes the importance of strong relationships
with stakeholders to secure necessary resources. By understanding and managing internal resources effectively, SMMEs can
enhance their performance and reduce their dependency on external factors, which is crucial for their survival and growth.
These theoretical perspectives provide a framework for analysing how managerial competencies, technological capabilities,
and access to finance impact rural tourism SMMEs' ability to thrive and contribute to job creation and poverty alleviation.

Literature review
Rogerson et al. (2022) noted that the potential of rural tourism in rural areas with potential for development through tourism
has constantly been confronted by the challenges for tourism development of SMMEs. One of the noted challenges for rural
tourism SMMEs is the lack of information and communication technologies that can boost the growth potential of these rural
tourism enterprises. It was pointed out that the development and management of a rural tourism sector that optimises socio-
economic benefits is contingent on formulating appropriate tourism policies and plans and developing adequate institutional
capacity for their implementation (Mafukata et al., 2021). Noting the challenges for tourism SMMEs in rural areas, it is
important to note that tourism is a multifaceted industry that involves a wide range of stakeholders, including government
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bodies, hospitality sectors such as food and beverage, travel operators, transport services, and retailers. Tourism operators, who
interact directly with tourists, play a crucial role and are key links in the supply chain. They help to reveal the natural, cultural,
and heritage potential of specific locations, turning them into tourist attractions (Koh & Hatten, 2002). Similarly, Komppula
(2016) highlights the importance of the tourism supply chain and entrepreneurs in enhancing the overall competitiveness of a
destination. These entrepreneurs are predominantly small and medium-sized enterprises (SMMEs). According to Mshenga &
Richardson (2013), despite their "small scale," SMEs are vital to the tourism industry, serving as its backbone, with many
tourism destinations being initiated by small enterprises (Getz & Petersen, 2005). The tourism sector is largely composed of
SMMEs, particularly in rural areas. Given their significance, the role of SMMEs in tourism is a key focus of research and policy
analysis due to their potential to alleviate poverty, boost income, and drive economic development (Mshenga & Richardson,
2013). However, despite this potential, tourism SMMEs also face numerous ongoing challenges. Compared to well-established
large corporations, SMMEs are more susceptible to market pressure, have less capital, and need more skills (Jones & Haven-
Tang, 2005). Besides the challenges relating to market pressures and lack of capital, these SMMEs also face challenges of
being part of governance structures in their communities (Mshenga & Richardson, 2013). These SMMEs are often included in
decision-making processes, and their voices are mostly unheard (Koh & Hatten, 2002). Various internal factors influence the
performance of SMMEs in the tourism sector, including managerial competencies, access to finance, and technological
capabilities. These factors will now be briefly discussed in the next section.

Managerial competencies
Lubbe (2013) emphasizes that managerial competencies have a significant influence on the performance of tourism SMMEs.
These competencies are assessed through factors such as business management experience, tourism education and training,
customer service skills, and experience in starting up tourism ventures (Lerner & Haber, 2010). In South Africa, the lack of
tourism business-related skills among many tourism owners or managers is a contributing factor to the high failure rates in the
sector (Gedye, 2004). Mokoena & Liambo (2023) also underscores the shortage of skilled tourism SMME owners or managers
in South Africa. Mahony & van Zyl (2012) identified insufficient managerial competencies and a lack of capital as key factors
leading to the failure of rural tourism SMMEs. Orford et al. (2014), supported by Kaplan (2014), warned that the lack of
education and experience by many rural tourism SMMEs owners threatens the survival of their SMMEs. OECD (2016)
advancing the ideas of Morrison & Teixeira (2014), Okpara & Kabongo (2015), Alattar et al. (2009), Shaw et al. (2012) and
those of Njobeni (2014) noted that many entrepreneurs in the tourism industry, especially those operating in rural areas, start
their businesses without managerial capabilities, lack of business planning, and strategic skills in the hope of creating
employment for themselves and others, but the lack of financial management knowledge, which is crucial in acquiring resources
and achievement of goals, lead to high failure rate of those businesses. Tushabomwe-Kazooba (2016) stated that a lack of basic
accounting knowledge, poor recordkeeping, and understanding of cash flow management contributes to high failure rates of
tourism SMMEs. Other authors, such as Rogerson (2009) and Adinolfi et al. (2018), suggested that the lack of financial
knowledge and managerial competencies has seen many SMMEs outsource these services in attempting to bridge the gap and
reduce the possibilities of failure rates by tourism SMMEs. Mosweunyane (2016) noted that ineffective marketing by tourism
SMMEs and a lack of marketing skills contribute to high failure rates, and this threatens the potential that tourism SMMEs,
especially those operating from rural areas, have in contributing to employment creation and economic development (Urban
&Naidoo, 2012).

Access to finance
Limited access to finance is a significant barrier to the growth and survival of tourism SMMEs in South Africa (Rhodri et al.,
2011), and it is a key factor behind the low job creation and high failure rates within the sector (Orford et al., 2014; Makwara,
2019). Tourism SMMEs experience greater difficulties in accessing finance compared to larger businesses, a challenge that is
particularly common in developing countries (Sheikh, 2015), and has been observed in emerging economies such as China
(Seebaluck et al., 2015). Brouder & Eriksson (2013) point out that the small size of tourism SMMEs makes them more
susceptible to market fluctuations, leading to higher failure rates and making financial institutions hesitant to extend credit.
This lack of financial access in underdeveloped countries hinders economic growth and prosperity (Aziz et al., 2012). The
underdevelopment of tourism SMMEs, especially in rural areas, is rooted in limited access to financial resources (Rambe,
2017). Financial resources are crucial for the growth and success of tourism SMMEs (Haron et al., 2013). The 2008 financial
crisis exacerbated the difficulty for tourism SMMEs to access finance, making financial institutions more cautious (Haron et
al., 2013). This crisis made funding processes more challenging, especially in developing countries with insufficient financial
support for tourism SMMEs (Aziz et al., 2012). Newly established tourism SMMEs in South Africa have a high failure rate,
mainly due to a need for more external finance (Chili & Mabaso, 2016).
Thomas et al. (2011) notes that most tourism SMMEs rely on internal finance from friends and family, which is often
insufficient. Therefore, external finance is critical for managing cash flow challenges. Tourism SMMEs finance falls into loan
and equity finance (Chili & Mabaso, 2016). Accessing finance from banks is particularly challenging (Aziz et al., 2012). Factors
like the age and size of tourism SMMEs influence their ability to secure loans, as banks use this information for loan collateral
evaluations (Majed et al., 2010). Due to inadequate business profiles and owners ' credit histories, small tourism enterprises
must often meet financial loan credit scores (Seebaluck et al., 2015). They primarily rely on internal funding sources (Klapper
et al., 2010). Larger tourism SMMEs with more assets have better chances of securing loans due to a favourable debt ratio
(Prakash et al., 2011). However, many tourism SMMEs operate informally, and financial institutions require more transparency
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(Seebaluck et al., 2015). Collateral is often a requirement for loans, making it easier for tourism SMMEs with sufficient assets
(Nieman et al., 2008). Increased collateral requirements further disadvantage tourism SMMEs (Li, 2016). The lack of credit
history and financial statements exacerbates this issue (Okpara & Kabongo, 2015). Additionally, many tourism SMME owners
need to gain knowledge of the processes to access finance and the available financial resources (Nyahunzvi, 2014).

Technological capabilities
Tourism SMME use technology for a range of routine activities, such as booking customers, handling online payments,
handling phone calls, sending and receiving emails, printing, filing documents online, and carrying out transactions. However,
some SMMEs lack technological know-how and continue to rely on manual methods, such as using books for record-keeping
instead of adopting technological software, despite support from the government and organisations (Popescu, 2019). These
businesses often need more online visibility, business websites, and social media presence, making it difficult for them to
compete and grow (Dawayan & Sondoh, 2015). Financial constraints hinder tourism SMMEs' technological advancement,
causing difficulty accessing information, training, and advanced technology. These businesses often reduce investment in
technology and need help to keep up with the rapidly changing technological environment (Dakela, 2005). To succeed, tourism
SMMEs must embrace the latest technology, enabling them to operate and reach customers online 24/7. Online booking
software can sell intangible tourism products, like rooms. Commitment to technology is crucial for profitability, as neglecting
it makes businesses vulnerable and less competitive (Longenecker et al., 2012). Technology aids tourism SMMEs in accessing
financial and business development information, allowing competition with larger enterprises. ICT application enhances
business performance by storing information and facilitating communication with customers, suppliers, stakeholders, and
external funders, reducing operating expenses (Heath, 2001). However, SMMEs often need more skills to adapt to technological
changes, compounded by limited financial resources and information on available funding, which hinders their ability to
leverage technology for business development and global market competition. Internal factors, such as managerial competency,
financial management, and technological skills, are crucial for accessing funding and support.

Methodology
The study utilised a quantitative research approach and used online surveys. Through a pilot test of five professionals in the
tourism industry, it was ensured that the crafted questions were clear, concise, and unbiased. However, the questions also
avoided leading respondents to influence their answers. The online survey was distributed via email and LinkedIn, and a survey
link was provided. The study targeted tourism Small Medium micro-sized enterprises listed in the database of Limpopo
Department of Economic Development, Environment, and Tourism (LEDET), which included 125 registered SMMEs. To be
eligible for the study, an SMME needed to have been in operation for at least three years, based on Mutezo's (2013) finding
that most tourism SMMEs fail within their first two years. Consequently, 25 out of the 125 SMMEs were excluded for not
meeting this criterion. Regarding ethical considerations, all participants provided informed consent, ensuring they were fully
aware of their participation. Anonymity and confidentiality were strictly maintained, and participants was given an option to
pull out from the study at any time. The researchers guaranteed that anonymity would be preserved in the presentation and
publication of the research results.
This study was conducted at Greater Letaba Municipality (see Figure 1 below).

Figure 1: Map showing location of Greater Letaba Municipality

Source: www.greaterletabamunicipality.co.za

Greater Letaba Municipality (GLM) is one of Mopani District Municipality's local municipalities. According to the
Greater Letaba Local Municipality (GLM) Integrated Development Plan (IDP), 2019/2020, tourism is labelled a spatial
opportunity. There is a vast potential in terms of suitable resources in the municipal area. The availability of the Rain Queen
Modjadji influences tourism-related development in the area; the biggest Baobab tree in Africa is located within the
Municipality neighbouring Ga-Kgapang Township. The vast potential available in the region contributes to the enhancement
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of tourism facilities such as the selling of crafts by local people, accommodations facilities, and convention centre. In its
vicinity, the African Ivory Route that passes through Modjadjiskloof can bring unprecedented local economic growth to both
Modjadjiskloof as a town and the entire Municipality. There are also key elements that present opportunities with tangible
spatial impacts: Modjadji Nature Reserve with Encephalartos transvernosis Cycad Forestry only available in the Municipality;
vast tomato plantation of ZZ2; Modjadji waterfall; Manokwe Caves Modjadji Lodge and Nahakwe Mountain Lodge.

Results and discussion

Data collection was collected through an online survey, and their responses were recorded and analyzed using Statistical
Package for the Social Sciences (SSPS) version 28. This section presents the findings and discusses the findings of the study.

Biographical information
Table 1 below provides a biographical profile of the participants. The sample was mostly made up of owners of tourism SMMEs
(50%). Most participants held a bachelor’s degree or National Diploma as their highest qualification (46%). Most participants
had 11-20 years of experience (44%) and primarily operated guesthouse establishments (41%).

Table 1: Biographical profile of participants

Frequency Percentage
Business Role:
Owner 50 50%
Manager 16 16%
Locum 30 30%
Other 4 4%
Total 100 100%
Education:
Grade 12 18 18%
Bachelor’s degree/National Diploma 46 46%
Honours/B-Tech 20 20%
Masters/M-Tech 15 15%
Doctoral degree/D-Tech 1 1%
Total 100 100%
Experience:
Less than a year 1 1%
1-4 years 15 15%
5-10 years 25 25%
11-20 years 44 44%
21- above 15 15%
Total 100 100%
Type of Business:
Hotel 5 5%
B&B 16 16%
Guesthouse 41 41%
Lodge 14 14%
Resort 1 1%
Tour operator/travel agent 7 7%
Other 16 16%
Total 100 100%
Number of Employees:
Less than 5 48 48%
5-20 38 38%
21-50 12 12%
51-100 2 2%
Total 100 100%

Managerial competencies
Based on the findings in Table 2 below, most respondents (52%) strongly disagreed that management had little to no prior
experience in business management, and 46% strongly disagreed that management had limited experience in managing this
type of business. A combined 60% of respondents strongly and disagreed and disagreed regarding having lack of managerial
skills to manage their businesses. This finding could be attributed to the number of years that surveyed tourism SMMEs have
been in business with 44% having been in business for between 11 and 20 years, whist 15% have been in operation for 21 years
and above. Similarly, 25% of the SMMEs have been in operation for between 5 and 10 years. However, a small number still
indicated a lack of experience, with 9% agreeing and 3% strongly agreeing. Regarding training, 39% strongly disagreed that
management had limited training in business management, but 14% agreed that there was a lack of training. The findings
indicate a mixed perception of managerial experience and training among tourism SMMEs in the Greater Letaba Municipality.
While most respondents believe management possesses adequate experience and training, a notable portion still highlights
deficiencies. This suggests a need for continuous professional development and targeted training programs to equip managers
with the necessary skills and knowledge, ensuring better preparedness and competency in managing their businesses. These
results contradict the findings of Gedye (2004), who contested that in South Africa, only some tourism owners or managers
possess the necessary tourism business-related skills, contributing to high failure rates. Gedye’s 2004 view was further
supported by Mokoena & Liambo (2023) who highlighted a need for more skilled tourism SMME owners. Therefore, the
contradiction of this study’s results can be interpreted as enormous efforts that tourism SMMEs have taken to educate
themselves on management and training to manage their SMMEs successfully.

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Table 2. Tourism SMMEs managerial skills, experience and training

Statements Strongly Agree Agree Neutral Disagree Strongly Disagree
Lack of managerial skills is a challenge for my business 8% 17% 15% 29% 31%
The management has little to no prior experience in business management 3% 9% 13% 23% 52%
The management has little to no prior experience in managing this type of business 4% 12% 8% 30% 46%
The management has limited training in business management 4% 14% 9% 34% 39%
The management has limited training in financial management and financial planning 8% 12% 18% 25% 37%
The management has limited training and knowledge in marketing 4% 18% 19% 25% 34%
The management has limited training in bookkeeping and accounting 9% 18% 20% 24% 29%

The results relating to SMMEs' understanding and confidence in preparing and understanding financial matters of their
businesses are encouraging; see Table 3 below. In the majority, respondents expressed confidence in understanding financial
matters in their SMMEs in their ability to understand and prepare financial statements, trading budgets, cash flow forecasts,
and analyse financial statements by either strongly disagreeing or disagreeing with statements relating to lack of or limited
experience in these areas of business operations. The results indicate that 62% of respondents strongly disagreed or disagreed
that they have the necessary skills to analyse financial statements. The results reveal that 59% of respondents disagreed that
they need more skills to prepare cash flow forecasts. The results clearly show that respondents' confidence in their ability to
handle financial tasks, such as preparing financial statements and cash flow forecasts, underscores a critical gap. These results
once more reveal contradiction to the views of Rogerson (2009) and Adinolfi et al. (2018), who suggested that the lack of
financial knowledge and managerial competencies has seen many SMMEs outsource these services in attempting to bridge the
gap and reduce the possibilities of failure rates by tourism SMMEs. The results further dispute the findings of Tushabomwe-
Kazooba (2016), whose findings acknowledge that lack of basic accounting knowledge, poor recordkeeping, and understanding
of cash flow management contributes to high failure rates of tourism SMMEs.

Table 3. Tourism SMMEs managerial skills to undertake financial functions.

Statements Strongly Agree Agree Neutral Disagree Strongly Disagree
The management of the business lack necessary skills to analyse financial statements 31% 31% 16% 14% 8%
The management of the business lack necessary skills to prepare cash flow forecasts 28% 31% 12% 19% 10%
The management of the business has limited skills to prepare trading budgets 28% 28% 15% 19% 10%
The management of the business has limited skills to prepare financial statements 21% 24% 18% 23% 14%

Table 4 shows the results of an ANOVA test was conducted to see if there were any statistically significant differences between
managerial competencies and the necessary skills to undertake the financial functions of the SMME. The Levene statistic for
homogeneity of variances was 2.137 (df = 2, 97) with a p-value of 0.124, indicating equal variances across groups. The Welch
statistic was 1.376 (df1 = 2, df2 = 36.875) with a p-value of 0.265, suggesting no significant difference in means. The ANOVA
results showed a between-groups sum of squares of 3.315 (df = 2), a mean square of 1.658, an F-value of 1.091, and a p-value
of 0.340, indicating no significant differences in means. Tukey HSD multiple comparisons also revealed no significant
differences among the groups (more complex, easier, and stayed the same), with all p-values exceeding 0.05. Thus, the results
suggest that managerial competency does not significantly impact the necessary skills to undertake the financial functions of
the tourism SMMEs. A further ANOVA test was conducted to see if any statistically significant differences existed between
managerial competencies and the successful running of the SMME in the previous year of operation.

Table 4: ANOVA test for managerial competencies and skills to undertake financial statements
Tests of Homogeneity of Variances
Levene Statistic df1 df2 Sig.
The extent to which the management/owner of Based on Mean 2,137 2 97 0,124
the business has the necessary skills to Based on Median 1,878 2 97 0,158
undertake the financial functions. Based on the Median and with adjusted df 1,878 2 0,158
Based on trimmed mean 2,070 2 97 0,132
ANOVA
The extent to which the management/owner of the business has the necessary skills to undertake the financial functions.
Sum of Squares df Mean Square F Sig.
Between Groups 3,315 2 1,658 0.563 0,9525
Within Groups 147,347 97 1,519 0.042 0,158
Total 150,662 99
Dependent Variable:
Tukey HSD
95% Confidence Interval
(I) Running a successful SMME in the previous year Mean Difference (I-J) Std. Error Sig. Lower Bound Upper Bound
More difficult Easier -0,30296 0,36701 0,688 -1,1765 0,5706
Stayed the same 0,27740 0,28362 0,592 -0,3977 0,9525
Easier More difficult 0,30296 0,36701 0,688 -0,5706 1,1765
Stayed the same 0,58036 0,40343 0,325 -0,3799 1,5406
Stayed the same More difficult -0,27740 0,28362 0,592 -0,9525 0,3977
Easier -0,58036 0,40343 0,325 -1,5406 0,3799

The ANOVA analysis revealed no significant association between the success of running an SMME and managerial
competencies. The p-values for the variances' homogeneity tests ranged from 0.034 to 0.042, indicating some evidence of
heterogeneity. The Tukey HSD multiple comparisons also showed no significant differences in managerial experience, skills,
and training across different performance categories, with all p-values exceeding 0.05. ANOVA results yielded an F-value of
0.563 with a p-value of 0.501, suggesting no significant relationship between the challenges faced by tourism SMMEs and
managerial competencies. These results suggest no significant relationship between the successful operation of tourism SMMEs
and managerial competency. Other factors may be more influential in determining the success and challenges of these
enterprises.
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Access to finance
Access to finance is a major internal factor influencing the growth and survival of tourism SMMEs in GLM. The findings of
the study revealed that 71% of respondents think that obtaining financing is a major obstacle to the growth and survival of
small and medium-sized tourism businesses. These findings corroborate previous research by Rhodri et al. (2011) and Aziz et
al. (2012), which claimed that financial institutions are hesitant to finance SMMEs and that a lack of financing severely impedes
the growth and survival of tourism related SMMEs in South Africa. These results further affirm the findings of Rambe (2017),
who noted that the underdevelopment of tourism SMMEs, especially those in rural areas, is rooted in limited access to financial
resources. The study results about financial issues reveal that tourism SMMEs need more information to secure external finance
as reflected in Table 5 below. The results indicate that 53% of the combined respondents strongly agree that the need for more
information about external financing is challenging. The highest agreement amongst the respondents (77%) was on high interest
rates, which made it difficult for SMMEs to secure finance. The results further reveal that 60% of respondents noted difficulties
related to insufficient collateral to access funding for their SMMEs. Poor-quality business information is another concern,
affecting 62% of the respondents. The absence of experienced management is seen as a challenge by 45% of the respondents.
At the same time, opinions on the effect of business age on financing access are more mixed, with 37% in agreement and 38%
remaining neutral. The study's results about challenges in accessing funding are consistent with those of Aziz et al. (2012), who
noted that accessing finance from banks is particularly challenging. These results also conform to earlier findings by Majed et
al. (2010), who claimed that factors like the age and size of tourism SMMEs influence their ability to secure loans, as banks
use this information for loan collateral evaluations. Due to inadequate business profiles and owners ' credit histories, small
tourism enterprises must often meet financial loan credit scores (Seebaluck et al., 2015). The results further align with those of
Nieman et al. (2008), whose arguments were that collateral is often a requirement for loans, making it easier for tourism SMMEs
with sufficient assets to access funding. These results also concur with Okpara & Kabongo's (2015) findings, which noted that
increased collateral requirements further disadvantage tourism SMMEs, and the lack of credit history and financial statements
exacerbate this issue (Li, 2016).

Table 5. Tourism SMMEs and accessing finance

Statements Strongly Agree Agree Neutral Disagree Strongly Disagree
Lack of information about external finance is a challenge for tourism SMMEs 29% 24% 24% 14% 9%
Tourism SMMEs face difficulties due to lack of collateral for accessing finance 29% 31% 27% 9% 4%
The lack of awareness about available funding poses a challenge for tourism SMMEs 31% 32% 24% 8% 5%
Poor quality business information hinders tourism SMMEs access to finance 23% 39% 24% 8% 6%
The absence of experienced/skilled management creates obstacles for tourism SMMEs to secure funding 15% 30% 25% 16% 14%
High interests rate on loans creates difficulties for tourism SMMEs in accessing finance 44% 33% 15% 6% 2%
The age of the business affects the ability of tourism SMMEs to access finance 17% 21% 36% 16% 10%
Poor credit scoring is a hinderance for tourism SMMEs seeking financing 19% 27% 34% 11% 9%

The Chi-square analysis was conducted to examine the association between the length of time a company has been in operation
and the significant challenge faced by finance to the business's survival, see Table 6 below.

Table 6: Association between length of time company been in operation and finance as significant challenge to the business's survival
Finance poses a significant challenge to the survival
of your business
Yes No Total
Length of time company been in operation <3 years Count 5 0 5
Expected Count 3,6 1,5 5,0
Residual 1,5 -1,5
3-5 years Count 10 0 10
Expected Count 7,1 2,9 10,0
Residual 2,9 -2,9
6-9 years Count 16 6 22
Expected Count 15,6 6,4 22,0
Residual 0,4 -0,4
10-15 years Count 14 8 22
Expected Count 15,6 6,4 22,0
Residual -1,6 1,6
>15 years Count 26 15 41
Expected Count 29,1 11,9 41,0
Residual -3,1 3,1
Total Count 71 29 100
Expected Count 71,0 29,0 100,0
Chi-Square Tests
Asymptotic significance
Value df (2-sided)
Pearson Chi-Square 7,884a 4 0,096
Likelihood Ratio 11,957 4 0,018
Linear-by-Linear Association 6,151 1 0,013
N of Valid Cases 100
a. 3 cells (30,0%) have an expected count of less than 5. The minimum expected count is 1,45.

The chi-square tests were conducted to determine if the observed associations were statistically significant. The Pearson chi-
square test yielded a value of 7.884 with 4 degrees of freedom, resulting in a p-value of 0.096. Although the p-value is more
significant than 0.05 (usually considered the threshold for statistical significance), the likelihood ratio test and the linear-by-
linear association test produced p-values of 0.018 and 0.013, respectively, indicating a statistically significant association
between the variables. It is worth noting that for 3 cells (30% of the cells), the expected count was less than 5, with a minimum
expected count of 1.45. This violates one of the assumptions of the chi-square test, which is that all expected counts should be
at least 5. However, given the sample size and the overall pattern of associations, the chi-square test results can still be
considered reliable. The analysis suggests that the length of time a tourism business has been in operation is associated with
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the extent to which finance poses a significant challenge to the survival of the business. Further research and analysis could
explore the underlying factors contributing to this association and provide insights for addressing these challenges.

Technological capabilities
Technological advancements, such as online booking systems, digital marketing, and electronic payment systems, can
significantly improve their business performance. The results of the study reveal that 87% of respondents strongly agreed and
agreed that online booking and reservation systems enhance SMMEs' performance, while 88% of the respondents believed that
digital marketing would have a similar effect. The study results further indicate that 81% of the respondents strongly agreed
and agreed that electronic payment systems benefit their SMMEs. Challenges faced by tourism SMMEs in GLM to adopting
technology include financial constraints, with 59% of respondents agreeing and agreeing that lack of funds is a significant
obstacle. These results align with those of Popescu (2019), who asserts that lack of access to technological infrastructure makes
SMMEs unable to grow and be competitive.

Table 7. Technological challenges for tourism SMMEs

Statements Strongly Agree Agree Neutral Disagree Strongly Disagree
Technological advancements such as online booking and reservation systems will improve the performance of my 59% 28% 8% 3% 2%
business
Technological advancements such as digital marketing and SEO will improve the performance of my business 54% 34% 9% 1% 2%
Technological advancements such as electronic payment system will improve the performance of my business 51% 30% 10% 7% 2%
Lack of financial resources prevents the technological advancements of my business 28% 31% 14% 12% 15%
Lack of awareness on technology is preventing the technological advancements of my business 20% 21% 24% 16% 19%
Lack of skills/expertise on usage of technology is preventing the technological advancements of my business 20% 29% 14% 20% 17%

Limitations, concluding remarks, and recommendations

The study’s 100 sample size of tourism SMMEs was relatively small compared to the total number of SMMEs in the area since
some of the SMMEs need to be registered in the LEDET database. The focus of the study was only on formally registered
SMMEs, leaving out those that, despite having the characteristics of SMMEs, were not officially registered. This may imply
that this study's results may only partially represent some SMMEs, as it missed informal SMMEs. The findings of the study
revealed managerial competencies, skills, and training as critical internal factors for the success of tourism SMMEs. The study
further revealed that access to funding and technological advancements are crucial for the survival of tourism SMMEs. Given
the magnitude of the high failure rates of SMMEs in South Africa, this study recommends that there is a need for ongoing
training and development on financial management skills concerning preparing budgets and managing cash flow. The study
further recommends education on available funding opportunities for SMMEs, including those specifically for tourism SMMEs.
In this regard, tourism SMME owners should set time aside to explore various funding options, including government grants
and private funding. Finally, the study recommends that tourism SMMEs invest in technology such as online booking systems
and digital marketing to improve their business operations and enhance their chances of their SMMEs survival. In conclusion,
the survival of tourism SMMEs in the Greater Letaba Municipality will boost the chances of employment creation and poverty
reduction in this rural community. To ensure tourism SMMEs' stability and survival, owners of these SMMEs have a critical
role to play in ensuring their survival. However, they must also ensure that all the business functions are handled. This calls for
owners of these SMMEs to invest in training, enhance financial skills, and explore different funding options.

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