South Africa’s tourism sector is showing renewed momentum, with international arrivals and tourism’s contribution to the economy continuing to grow. But for that growth to translate into broader economic benefits, small businesses need access to the working capital required to deliver on tourism opportunities.
Source: Supplied | Tourism SMEs like the Khaltsha Cycles bike shop need capital to succeed. Image credit: South African Tourism
Between January and June 2026, South Africa welcomed 5,584,473 international tourists, a 12.3% increase on the same period last year. Tourism also directly supported almost 954,000 jobs and contributed 4.9% of GDP in 2024.
For Andrew Maren, founder and CEO of ProfitShare Partners, the headline figures do not tell the full story of how tourism’s economic value is distributed.
"Those figures show the scale of the recovery, although they cannot tell us how widely the value created by tourism is moving through the economy," explains Maren. "A visitor’s experience is delivered by far more than airlines, hotel groups, major attractions, and large tour operators.
"It relies on transport operators, food producers, laundry services, maintenance contractors, tour guides, event suppliers, security providers, and many other businesses working behind the scenes. Much of this work can be performed by locally rooted SMEs, often in communities where tourism offers a direct route into the formal economy."
Tourism demand creates a cash-flow challenge
Before an SME can service a new contract, whether securing a group transport booking, a hospitality supply agreement, or conference logistics, it must reserve vehicles, confirm staff availability and place orders with suppliers. This can create significant liquidity pressure before the first customer pays.
"Tourism carries a timing pressure that distinguishes it from many other sectors," Maren points out. "A booking date cannot be postponed until the supplier’s cash flow improves. Conferences take place on fixed dates, tour groups arrive according to set itineraries, festival calendars cannot be shifted easily, and seasonal demand moves on quickly. When an SME cannot mobilise at the required moment, the opportunity may disappear rather than wait."
This structural friction can help explain why strong visitor arrivals can coexist with stagnant SME growth. Demand may be increasing, but contracts can continue to flow to larger businesses with the balance-sheet capacity to absorb delayed payment terms and upfront costs.
Market access alone is not enough
While the Department of Tourism’s 2025–2030 Strategic Plan focuses on broadening participation in the sector, market access alone cannot bridge the funding gap faced by smaller businesses.
"In my experience, the problem is often misdiagnosed as a lack of capability," says Maren. "The SME may understand the customer, know the destination, have the required people, and be able to deliver a distinctive service. Its constraint may simply be the period between committing to the work and receiving payment. Working capital should therefore be treated as part of tourism development rather than a separate financial conversation."
Maren emphasises that alternative funding models must also look beyond traditional asset-backed requirements.
"Funding assessments need to move closer to the opportunity itself. A tourism SME may not have a large asset base or a long borrowing history, but it may have verified work from a credible buyer, sound margins, reliable suppliers, and a practical delivery plan. At ProfitShare Partners, we structure funding around verified purchase orders, contracts, and invoices to help viable SMEs execute confirmed work without forcing them to carry the full timing gap alone."
The need for better access to working capital also extends beyond individual funding decisions, with procurement practices playing a role in determining how much financial pressure smaller suppliers face.
Procurement also has a role to play
Public-sector buyers and corporate tourism operators can help reduce the financial strain on smaller suppliers by improving procurement visibility and payment practices.
"Inclusive procurement loses much of its value when smaller suppliers receive work but are expected to absorb long payment cycles without support. Better visibility of procurement pipelines, clearer contract terms, realistic mobilisation periods, and disciplined payment practices can reduce the strain before outside funding is required."
Making tourism growth more inclusive
As South Africa reflects on its travel economy during Tourism Month, the recovery needs to be matched by greater financial inclusion across the tourism value chain.
"Tourism Month allows South Africa to celebrate a sector that is growing again, but it should also prompt us to ask who is positioned to benefit from that growth," Maren concludes. "Tourism growth becomes inclusive when SMEs are invited into the value chain and have the financial means to deliver once the work reaches them."
