SARChI Working Paper Series No. 2015-003

The viability of African Entrepreneurial activities in the Tourism sector: A case of Tshwane Municipality, Gauteng Province

Byamukama John Berchmans, Mammo Muchie & Worku Zeleke

This paper seeks to identify and quantify the socio-economic factors that adversely affect the viability of African entrepreneurial activities in the tourism sector in the Gauteng Province of South Africa. Both quantitative and qualitative data was gathered from a sample size of n=311 African entrepreneurs working in the tourism industry in Gauteng Province. Variables on which data was gathered are as follows: business networks with other tourist operators, degree of competition, geographical location, duration of operation, degree of entrepreneurial skills that are helpful for tourism, category of business, category of entrepreneurial skills, average number of visitors per month, profit made in 2012, size of business, capital, market share, business networks, financial collaterals, level of education, and degree of support from Government agencies. Data analysis was performed by using methods such as cross-tab analysis, log-linear analysis and factor analysis. The study was designed in order to test the veracity of assertions made by Marshall (1923), Arrow (1962), Romer (1986) and Porter (1990) popularly known as the (MARS Model) in which it is argued that competition among tourism operators leads to greater innovation and growth in the industry. Additional data was gathered by conducting in-depth interviews with 4 key officials who were responsible for tourism activities at the South African Chamber of Commerce and Industry.
Results obtained from log-linear analysis showed that there was a statistically significant association between degree of competition from rival operators and financial viability, thereby corroborating the assertions made in MAR theories and by Porter (1990). Results obtained from factor analysis showed that the viability of African entrepreneurs in the tourism industry of Gauteng Province was significantly and adversely affected by the degree of competition from rival operators, poor networking ability, lack of entrepreneurial skills, low capital, and geographical location. The study found that African entrepreneurs in the tourism industry of Gauteng Province lagged behind their white counterparts significantly in terms of networking ability, capital and entrepreneurial skills. The study found that 82% of the 311 black entrepreneurs who took part in the study lacked suitable skills due to their poor and irrelevant academic and vocational background, and that 59% of entrepreneurs had received little or no assistance in terms of mentoring or training opportunities by South African Government agencies.

Key words: Tourism, African entrepreneurs, Gauteng Province, Competition, Log-linear analysis, Factor analysis.