Minister of tourism Patricia De Lille has lashed out at the government agency managing a R1.2bn fund initiated to bolster black-owned tourism enterprises, saying it is “painfully slow” in disbursing monies. She has vowed to review a service-level agreement with the agency.
The Tourism Equity Fund was launched in January 2021 to fast-track the participation of black-owned businesses in the tourism industry and rescue distressed ones. The sector was heavily battered by the Covid pandemic. It is a partnership between De Lille's department and the Small Enterprise Finance Agency (Sefa), which falls under the department of small business development.
Speaking at a media briefing on the economic impact of tourism, De Lille said: “It's been a big disappointment. The concept was approved by cabinet in August last year. To illustrate how slow Sefa is, we are now in August again; only 15 [companies] have been approved.”
She said the agreement with Sefa will be reviewed. “I think we can get our own sector committee together that has experience in the sector because I want to recapitalise the Tourism Equity Fund, and I need to justify why I need more money in next year's budget based on how we have spent the [existing] funds.”
The fund is not without controversy. In 2021, it was the subject of a fierce legal battle when pressure group AfriForum and labour union Solidarity successfully challenged then minister of tourism Mmamoloko Kubayi's decision that only businesses with 51% black ownership were eligible for funding. The criteria set out in the tourism sector code is 30% black ownership.
The matter was settled out of court a year ago. About 80% of the money is set aside for existing companies in the sector while the rest is for new entrants.
“After the settlement, I said to Sefa that we need to move fast and disburse this money,” De Lille told Business Times. “People are waiting. And then in February this year, when I checked, they'd only approved five [applications], of which one was cancelled. I said to them, I'm now threatening to cancel the service-level agreement. You are just too slow.
“I wanted the money to have been spent by the end of March; we are now in August. I want to recapitalise the fund but I can’t because of the slow progress.”
De Lille said tourism remained a vital sector in South Africa, essential for economic growth and job creation, and the country must intensify its efforts to align with global and regional growth trends.
While the global tourism market is on the path to recovery, “domestically, we have recovered already, we need to do more to see regional growth all over. Our investments must be strategic. We must invest in marketing, infrastructure, and we must make sure that we maximise the potential of the sector ... we need to make sure that we grow at a faster pace.”
She said her department was also addressing the fragmentation of marketing in South Africa because the private sector, public sector, provinces and cities are doing their own marketing. The government spent about R1bn marketing the country as a tourism destination while the private sector spent about R30bn.
“It's very fragmented. We will be implementing a new global marketing campaign across all markets. But we also want to make sure that for the 80% of the budget that we put into marketing we get value for money; so that we start using digital technology, artificial intelligence to do marketing. T aking all those many ads and continuing to do what we've done over the past 20 years ... is very expensive.”
The industry employed 1.46-million people in 2023 and is expected to end the year with nearly 1.7-million jobs. By 2030, the sector is projected to grow to 2.23-million jobs
In 2023, there were 8.5-million international arrivals in South Africa, up 48.9% from the 5.7-million in 2022. The visitors spent R95bn.
Between January and May this year, there were 3.8-million international arrivals, up by 9.7% compared to 2023. For the first quarter of this year, total spending from foreign travellers into South Africa was R25.7bn. About 72% of visitors were from other African countries.
“The majority of our arrivals as tourists in this country come from Africa, and we must have a clear bias towards Africa also,” De Lille said.
It is estimated that visitor arrivals will reach 10.7-million by the end of the year.
The tourism sector contributes more to GDP than transport, mining and agriculture.
The industry employed 1.46-million people in 2023 and is expected to end the year with nearly 1.7-million jobs. By 2030, the sector is projected to grow to 2.23-million jobs.
A report by a UN-appointed tourism panel of experts highlighted ongoing economic and geopolitical challenges across the world, leading to tourists being more likely to seek value for money and travel closer to home due to economic pressures, De Lille said.
“These findings guide us and place the imperative on us to make it easier for people to choose South Africa as a destination through a seamless visa regime, improved air access and putting together innovative and affordable travel packages.”
South Africa has visa waivers for 132 countries, with more to be added.
De Lille said another area of focus is business travel. South Africa has improved its global ranking as a business event destination, moving up five spots in the 2023 International Congress and Convention Association (ICCA) global ranking report.
“We remain the number one meeting and conference destination in Africa and the Middle East, according to the 2023 ICCA ranking report.”
Last year, the country hosted 98 international and regional association meetings, with a total estimated economic impact of just over R2bn.
For the 2023/24 financial year, through South African Tourism’s National Convention Bureau, the country submitted 95 bids for international business events to be hosted here. Of those, it won 19 of the bids submitted, which have a combined economic contribution of R84.1m and attract over 3,000 international and regional delegates.
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