Tourism SMMEs are critical to the recovery of South Africa’s economy. Picture: Supplied.
Tourism SMMEs are critical to the recovery of South Africa’s economy. Picture: Supplied.

How tourism SMMEs are critical to recovery of South Africa’s economy

By Travel Reporter Time of article published Sep 11, 2020

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CEO of Jurni Dr Nomvuselelo Songelwa believes tourism SMMEs could be at the heart of the economy’s recovery following the devastating Covid-19 pandemic.

She said South Africa’s economy contracted by 51 percent in the three months through June compared to the previous quarter.

"A massive drop in GDP, as we are now experiencing, could have far-reaching consequences for business in the country, and especially for SMMEs. They have already been under strain since the beginning of lockdown in March. The contraction of the economy will undoubtedly lead to lay-offs, unemployment, declining business revenues and a decline in consumer spending," she said.

Songelwa said earlier this year, researchers at McKinsey & Company, predicted that 60 percent of SMMEs might have to close before the crisis is over. The report mentioned that tourism and hospitality were among the worst-affected sectors.

"South Africa will need targeted economic stimulation to counter the downward cycle that was already in play before the Covid lockdown and the subsequent financial fallout that the pandemic has created.

CEO of Jurni Dr Nomvuselelo Songelwa believes technology will be an essential tool for tourism SMMEs to survive the crisis and lead to the recovery of South Africa’s economy.

"According to PwC’s ‘Towards a Growing Economy’ Report, investment should be made in those industries and sub-sectors that have the most significant impact on South Africa’s economy. It highlights Tourism as the number one industry with the potential to stimulate inclusive economic growth and employment, creating the greatest multiplier effect, as one of those that should receive focus," she said.

Songelwa believes technology will be an essential tool for tourism SMMEs to survive the crisis and in turn, lead to the recovery of South Africa’s economy.

"Very often, tourism SMMEs in South Africa find themselves on the backfoot when it comes to trying to connect with potential global buyers and travellers. According to a recent McKinsey report, How South African SMEs can survive and thrive post-Covid-19, the emergence of online marketplaces and micro sales platforms could allow SMMEs to access new markets and grow their business.

"Jurni was launched precisely to help smaller tourism SMMEs connect with a global marketplace through its data hub and booking tool. Digital marketing and e-commerce offer great ways for SMMEs to reach new markets, engage customers and build brands. These technologies can help SMMEs increase connectivity and facilitate financial transactions as well as build market access and awareness and increase visibility.

"Digitalisation is not only bringing unprecedented opportunities for tourism SMMEs to access new markets, but it is also providing them with a chance to develop new tourism products and services and adopt new business models and processes. The digital economy is transforming the process of communicating with tourists in a no-touch post-Covid world. It also opens up new and highly creative ways of delivering tourism services and enhancing the visitor experience," she said.

Songelwa added that providing tourism SMMEs with both the relevant skills and the right tools for innovation will help turn around South Africa’s economy.

"SMMEs are positioned to provide job opportunities and to contribute significantly to the GDP. Globally, over 95 percent of enterprises are SMMEs, which employ 60-70 percent of the working population.

In addition, tourism is one of the world’s largest economic sectors, with the entire travel and tourism industry (direct, indirect and induced) accounting for 10.4 percent of global GDP and 313 million jobs or 9.9 percent of total employment (one in every ten jobs).

"The potential of our tourism SMMEs is genuinely unparalleled. To quote SA Tourism and the National Department of Tourism’s Recovery Strategy (2020): “The Tourism sector’s potential far exceeds previous levels, and while the crisis has been catastrophic, long-term growth potential is undiminished," said Songelwa.

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