Dissertation submitted in fulfilment of the requirements for the degree Master of Technology: Business Administration in Entrepreneurship in the Faculty of Business at the Cape Peninsula University of Technology 2013 / Tourism is a fast growing industry and has the potential for poverty alleviation for rural persons. Butha-Buthe, being in a rural area of Lesotho, has magnificent scenery of mountains, attractions to be visited, and adventure activities to be done. However, tourism in Butha-Buthe is under-developed, and it is very important to identify tourism’s potential in this area and explore how SMMEs could contribute in the development of tourism. Therefore the objective of this study is to examine the economic role of small, medium and micro enterprises in the development of tourism in Butha-Buthe. Challenges faced by the SMMEs include lack of resources such as poor infrastructure poor roads, transportation, and a lack of network-communication. Other challenges would be poor business skills in regards to employment and management which leads to business failure. To accomplish the study objective, questionnaires were distributed to local entrepreneurs in Butha-Buthe, local communities, local government and other stake-holders in the district. In addition, a mixed method of research was carefully and logically planned and then implemented. A survey questionnaire was used to obtain the views of the different stakeholders. The questionnaires were collected and data analysed which allowed the researcher to draw conclusions and propose a range of recommendations based on the findings, to assist in the development of tourism in Butha-Buthe. The findings revealed that there is huge potential of tourism development in Butha-Buthe through the SMME sector, but that there are still challenges faced by SMMEs in this district, despite the economic contribution they make. However, through the support of the government and private sectors these challenges should be dealt with.