The Minister of Tourism and newly established Department of Tourism (the Department) delivered the Strategic Plan and budget to the Committees. It was noted that the Department had split from the Department of Environmental Affairs and Tourism, and would become financially independent in the next financial year. The Minister gave a brief update of the status of the Department of Tourism and was pleased with the 3,6 % growth it had achieved during 2009, amidst the global economic downturn and outperforming its global counterparts. The target for foreign visitors to South Africa in 2010 was 10 million and the Department was positive that it could achieve this goal. A great concern for the Department was the budget cut of approximately 10% which posed many “hard choices” and impacted on its marketing strategy. The Minister said the Department wanted to engage on the issues with the Committee to jointly establish the way forward.
The first presentation by the Department outlined the strategic themes and objectives, which were aligned with the internal Departmental processes and featured the five priority areas of Government, focussing on the creation of decent jobs and sustainable livelihoods. The second part of the presentation drew the link between the strategic framework and the actual work and outcomes within the Department. An overview of the Department’s progress and its newly set objectives, broken down in numbers, percentages and monetary amounts, were presented.
The Committee asked questions pertaining to the concept of “social tourism”, the empowerment of women and the development of the rural areas, as well as how the Department collaborated with the Department of Education on its training programmes. Because of time constraints, it was agreed that the bulk of the answers would be delivered in writing, while the Minister responded to some of the questions.
South African Tourism (SAT) delivered a presentation of the business vision for 2010 to 2015. This five year plan was set up in terms of the Tourism Act and aimed to maximise the country’s tourism potential. Mainly, the briefing set out SAT’s objectives and strategies up to date, but also indicated how it was redefined for the next period. Detailed figures were given for visitors and their countries of origin. A thorough breakdown of the budget was included and attention was given to the Brand Knowledge and Development. Three major challenges were highlighted: namely, the reduced budget allocation to SAT, safety and security of tourists and the Provincial and Local Authority Tourism Authorities. Members asked questions of clarity around incoming tourists, the budget allocations to SAT, whether support was given to women establishing tourism projects, and how much of the budget was spent on marketing in countries in Africa. The Minister commented on the allocations to the Tourism Grading Council. Members also asked about the apparent percentage declines, the definition of “tourist” and “visitor” and the establishment of an integrated marketing strategy, as also the criteria that informed the funding strategy. The Committee’s questions would be answered in writing by Monday 22 March.
Opening Remarks by Co- Chairperson
Co-Chairperson Mr F Adams apologised on behalf of the Chairperson of the Select Committee on Tourism who had to attend to urgent matters in his constituency and could not be present.
Co-Chairperson Mr D Gumede, acknowledging a Member’s complaint about the venue, said that the Committee could have avoided the difficulty if the matter had been discussed in advance, and suggested that in future discussions be held to prevent any inconvenience.
Co-Chairperson Mr Gumede noted that two of the Department’s goals were the creation of jobs and sustainable livelihoods. It was important to ensure that the Department’s strategy delivered on these goals. Other important aspects were the transformation of training, partnerships, ownership and management in the tourism industry. There must be effective linkages between responsible tourism and the growth and development of local tourism. Issues of integration and tourism priorities should determine where the money was spent, particularly where the Department assisted Provincial and Local Governments in their planning of outputs and outcomes. “Outputs” should be understood as the immediate results and “outcomes” referred to society’s expectations around increased growth and community development, as well as successful tourism.
Other issues that had to be addressed were the legacy of the FIFA 2010 World Cup, the Tourism Bill, the filling of vacancies, as well as the anticipated moratorium and its implications, given the fact that an independent Department of Tourism was soon to be established. It was expected that South Africa would receive maximum exposure during the 2010 World Cup and the immediate tasks would therefore include ensuring that host cities would be clean and safe. Although the necessary capacities and resources might not be available, it was suggested that the issue could be advocated and supported. In terms of the planning that had already been done, it had to be clarified how and where the resources should to be delivered. A clear strategy had to be adopted to address the issues. This was the purpose of the strategy workshop today, with any outstanding issues being tabled at the next meeting on Tuesday 23 March 2010.
Opening Remarks by the Minister of Tourism
Hon Marthinus van Schalkwyk, Minister of Tourism, said the former Department of Environmental Affairs and Tourism would be split into separate departments, taking full effect at the end of this financial year. The Department of Tourism (the Department) had done extremely well in establishing itself, and National Treasury was using this Department as a template.
Minister van Schalkwyk extended his appreciation for the number of Members attending to hear this presentation. He introduced the new Chief Executive Officer of South African Tourism (SAT), Ms Thandiwe January-McLean, who had been the South African Ambassador to Portugal until recently, and noted appreciation for the contributions of Ms Didi Moyle, the former Acting Chief Executive Office and Chief Operating Officer of SAT, who would be moving on in the next few months.
Minister van Schalkwyk said that because of time constraints, only two strategic plans would be discussed, namely the current position of the Department, and what its driving forces were. In regard to the current position, he said that the tourism industry had suffered on a national and global scale after the economic meltdown. Global growth for tourism was about -4 % the previous year, while South Africa’s tourism industry fared better and grew by 3,6 % during the same period. This was quite unexpected and surprisingly good when seen against the global economic down turn. All praise had to go to the hard work and continued focus of the Department. Even though the growth rate was less than previous performances, South Africa’s tourism industry outperformed and outpaced its direct competitors in these economic circumstances.
Minister van Schalkwyk said that it was announced that for the period January to December 2009 there had been 9, 9 million international visitors to South Africa. This was on par with the set objective of receiving 10 million international visitors in 2010. At the time when the target was set the Department was cautioned not to aim too high, but he remained positive that the Department would reach the target if it continued its hard work.
The Department had indicated its position and could now indicate where it wanted to go, by presenting the Department’s strategic plan, as well as that of SAT. Attention would now be given to the future direction and issues such as international and domestic tourism objectives.
The tourism sector plan and sector strategy had been discussed at a previous meeting, and a panel of experts under the chairpersonship of Mr Robert Gumede handed a report to him on it. The Department was busy studying this and working on a response. At the next Indaba, which would be taking place on Saturday, 8 May 2010, the Department intended to launch the report for public comment, whereafter it would be published in the Government Gazette. Many Members of Parliament would be present at the Indaba, but they were also yet to receive a formal invitation. The Department had also been working very hard on new tourism legislation, because much of the existing legislation was outdated. This would be tabled before Parliament in August or September 2010. He would keep the Committee advised.
By the end of this financial year the Department of Tourism would be a fully stand-alone and financially-independent Department, since the former Department of Environmental Affairs and Tourism would split in two. Information on the final structures and budgets for the Medium Term Expenditure Framework (METF) was readily available. Minister van Schalkwyk congratulated the senior officials of this Department on their good work to manage the process in collaboration with the National Treasury and the Department of Public Service and Administration (DPSA). As part of the two strategic plans to be presented, new targets for international visitors and domestic tourism would be proposed, but at the same time the department would welcome discussion around those points.
Minister van Schalkwyk said that the question of what drove the Department was very important. The budget of the Department, similar to other Departments, would decrease over the next three years. The Department had a budget cut of 10%, which in terms of marketing was very severe. To adjust to this cut, the Department was forced to reprioritise and consider options of closing down some operations in certain countries. When seen against countries such as Australia, whose tourism budget was double the size of South Africa’s, the budget was indeed very small. It was impossible to do everything in light of this constraint, and the Department was frequently faced with “hard choices”. It was crucial for the Department to spend its money where it would receive the best possible results. Often the Department had been asked why it did not operate in certain countries when it would make political sense to do so. The Department did not make political decisions on where to spend its marketing money, but rather made decisions that made sense from a tourism perspective. It was the Department of International Relations and Co-operations’ prerogative to achieve political objectives, while the Department of Tourism’s objective was to ensure South Africa received as many tourists as possible for the money that was spent.
The Department of Tourism: Medium-Term Strategic Framework (MTSF) presentation
Mr Dirk van Schalkwyk, Acting Director General, Department of Tourism, noted that he would present the first part of the new Department’s strategic document, whilst Mr Victor Tharage, Chief Director: Office of the Director General, Department of Tourism, would discuss the content of the deliverables within the specific areas.
Mr van Schalkwyk said the Departmental vision and mission had been derived from the National Strategy. The vision of the Department was that it be globally celebrated as a leader in tourism excellence, and the mission was to collectively and boldly promote a responsible and sustainable tourism for the benefit of all South Africans. The values were linked to prosperity and were based on the broader South African values of Ubuntu and Batho Pele.
The strategic theme and objectives had been aligned with the internal processes in government. The first strategic theme was people empowerment and job creation to be achieved through targeting the youth, disabled, women and Small, Medium and Micro Enterprises (SMMEs), as part of the Department’s social responsibility programme, to improve levels of skill and capacity. The second objective was the tourism sector transformation through democratic representivity in the sector. Thirdly, sustainable tourism growth and development had to be spread evenly across South Africa, with the emphasis falling on rural development and the creation of a culture of domestic tourism. The fourth theme was responsible tourism promotion, which was to be achieved by ensuring responsible tourism best practices were applied, as well as tourism service excellence and competitiveness.
Other important points that were also raised in the presentation included those of good governance practices, human capital development, equitable tourism, consumer protection and quality assurance, as well as industry growth. The Department was actively improving and developing on policy and research, systems of monitoring and evaluation and also knowledge management.
The electoral mandate that the Department received from the Government had identified the five priority areas of the creation of decent jobs and sustainable livelihoods, education, health, rural development, and the fight against crime and corruption. The Department was featuring effectively in these priority areas, with the main focus on the creation of decent jobs and sustainable livelihoods within a cluster system of government.
In developing the strategic plan, the financial and human resources means had to be taken into consideration. National Treasury had approved a budget for the Department that was in a “phase-in” approach and therefore the establishment would only be fully functional within three years, by 2013/14.
The slides that followed indicated the link between the medium term strategic framework, the priorities that had been set and where the Department was contributing.
Mr Victor Tharage, Chief Director, Department of Tourism, continued to present the second part of the presentation. The strategic theme of the Department could be summed up in the objective of empowering people. The Committee had to keep in mind that the money received from National Treasury came with strings attached and the conditions could differ on certain aspects. The Department allocated certain percentages of the budget to specified objectives.
The Department was in the implementation phase. Opportunities were available for skills development, whereafter people could chose to exit. Sector transformation and the empowerment of women, especially the increase of black women in executive positions, were being addressed.
Sustainable Tourism Sector Growth and Development was also addressed in the presentation. Medium sized conferencing facilities in an “upcoming” area of tourism would hopefully encourage people to explore the surrounding areas and experience the activities and products available there. On the other side, this would give exposure and opportunity for the tourism entrepreneurs in the area. It was crucial to ensure that these initiatives functioned optimally.
Cultural heritage and its link with rural tourism had to be capitalised upon. There was an important and significant shift of focus towards the development of rural tourism. When people returned to or visited their homes in the rural areas, the information on what was happening and attractions in the local vicinity had to be visible and available to encourage people to attend and support their home village.
Edu-Tourism was worth looking into, because it ensured large revenue from the foreign nationals who came to study and live in South Africa. This strategy had to be focussed and developed. The domestic market, however, also had to be tapped into as a matter of priority. For this strategy, there were the Social Tourism Programme Initiatives. Many South Africans would travel domestically if it was affordable and therefore prices needed to be adjusted. Direct investments were important as a measure of growth in terms of the expanding sector and for supporting the start-ups.
The Department supported growth and aimed to ensure a winning strategy through percentage compliance with the “Decent Framework”. In collaboration with the Department of Labour, the Department had agreed what constituted “decent work” in the tourism sector. The level of commitment was demonstrated in a Memorandum of Understanding of 2011/12. This strategy would contribute to a percentage increase of South Africans in the tourism work force.
Responsible Tourism Promotion would make great strides if a national minimum standard for tourism were introduced in the next financial year. Tourism businesses would ideally then be certified for practicing in accordance with the framework and also be acknowledged for efforts such as participating in climate change.
The Department wanted to achieve Tourism Service Excellence and suggested that practices of registration, receiving and responding to complaints and good governance be implemented. In the time before the World Cup many people would be trained, but after the World Cup the figures would drop significantly. A “State of Tourism Report”, which had an annual thematic approach, was to be released and would form part of the Knowledge Services and Policy Leadership initiatives. Also, the Department was reviewing legislation and developing new policies which would foresee that direct support would be provided to Local Government and specific projects rolled out in the Municipalities.
Integrated Tourism Governance would be improved if the Department could manage to be at each and every strategic session, if it could be visible in terms of all Integrated Development Plan (IDP) reviews and also if it managed to keep its targets conservative, while focussing more on support.
Public Education and Awareness linked with outreach initiatives of the Department. The goal was to diversify the media platforms already in use, and to make full use of community platforms such as community radio stations. People who wanted more information or wanted to do business with the Department could register directly on the website.
In terms of international relations and cooperation, the Department wanted to have a better focus and at the same time needed to ensure that the agreements were in direct support of the national strategy. Specific issues around regional, continental and sub-regional arrangements were being considered.
The Department’s strategy on Human Capital Management and Development took notice of the dire effect of HIV and AIDS in the workplace. Employment of people with disability was currently at 2 %, but the Department aimed to push it up to 5% by 2014, or even prior to that.
The Good Governance practices of the Department included an unqualified audit, which was already standard practice. Transparency and accountability were highly regarded by the Department, while it was acknowledged that there was always room for improvement. Lastly, cooperation with Parliament was to be strengthened.
Ms M Shinn (DA) highlighted the short time available and doubted that the importance and vast scope of the workshop could be fully captured within the time left for discussion, and also still accommodate the presentation from SAT. There were many objections to the presentation and questions she wanted to raise, but she noted that she would have to leave at 12:30 to attend other engagements. She had earlier indicated that she did not believe that one morning would suffice for the two presentations. This was a new Department with many issues to discuss that could not be addressed in the time available.
Mr G Krumbock (DA) said that the most crucial issue was not the strategic direction of the Department, but the money to actually implement it. The budget cut was of concern and he thought it was significant that the Minister had compared South Africa to Australia, because the latter offered a similar package to South Africa. Both countries were long-haul destinations, but South Africa generally had more problems to overcome. Australia’s budget was the equivalent of about R1,5 billion, while South Africa’s budget was less than half of that amount. The allocated budget for SAT was less than 1% of the R74 billion that the tourism industry contributed to the South African economy. This Committee had consistently expressed the view that National Government needed to consider giving more money to the Department of Tourism. Mr Krumbock was extremely worried that when the Department spent so little to get so much, it was cutting back on its marketing efforts. He asked the Minister to expand on what the impact of the budget would be. The notion that South Africa might be losing out to its competitors, when there was so much at stake, was extremely worrisome.
Minister van Schalkwyk responded that the Department agreed with the approach that the more money was spent in the right markets, the more the return would be. It was possible for the Department to demonstrate measurably the return on marketing money through scientific analysis, since in a good market it would be possible to forecast quite accurately what the returns would be. According to the arrangement with Government and Cabinet, these Committees were not used to negotiating with National Treasury. Once the budget had been allocated, everyone committed to it and accepted responsibility for it. Nevertheless, the objective remained to increase the budget every year, as had pertained over the previous six years. The reality was that the Department and SAT suffered budget cuts. He added that the Members of Parliament had the same issue on their hands of turf battles to fight with National Treasury and processes to follow.
Ms Shinn noted that the budget of SAT had been cut by approximately R51 million, while at the same time the administration of the Department had increased by R47 million. She expressed concern that the industry, which was very dynamic and entrepreneurial led, was being bureaucratised, at the expense of marketing to people.
Ms Shinn asked for clarity on “social tourism” and also what the business plan for this was. There were supporting enterprises that had to be grown. The question was whether the Department would be making money out of “social tourism”, and should be doing so, as opposed to the private industry and the Department of Trade and Industry taking the responsibility.
Minister van Schalkwyk responded that the R47 million indicated in the presentation would not be used to “bureaucratise” the Department. He assured the Committee that he believed in a “lean” Department and that the Tourism Industry should not be over-regulated. This message had also been conveyed to the Tourism Business Council. Light regulation only would be implemented to avoid stifling the industry. The Department intended to enable and support, but not to heavily regulate the industry. He gave two practical examples to illustrate the Department’s position. Firstly, the Department was the first to agree with its industry on a Black Economic Empowerment (BEE) Charter, one of the less bureaucratic charters. The categories made it easier for the industry to achieve BEE status and the time frames were standard. Secondly, legislation would be proposed that made it compulsory for companies to register, but this would be done not to impose taxes on the industry, but to feed a database. Only R10 million of the R47 would be going to the Department, and a portion of that was to be used for new offices when the former Department had split, as well as the new posts that would need to be filled.
Ms C Zikalala (IFP) congratulated the Minister on the establishment of the Department. She enquired about the relationship between South African National Parks (SANParks) and the Department, saying that they did not always seem to work in unison. More information was requested on the educators who were trained to better understand tourism, tour guides and their training, volunteers and also the foreign language training programmes and their outcomes. It was great news that women were being empowered, but she asked for examples of what the women were doing for themselves. She regretted that time did not allow for the Committee to visit these women and to see what they were doing.
Ms M Njobe (COPE) said that the presentation indicated that the Department was participating in the Extended Public Works Programme (EPWP) by creating jobs in the tourism industry. She asked for concrete examples of these jobs because she wanted to be able to identify them in her constituency area.
Ms Njobe said it was good to see that the Department was determined to entrench a culture of domestic travel among South Africans and that it placed emphasis on the prospects of rural development. The plans were mostly still theoretical, but the Committee would be keen to see the implementation.
Ms Njobe called for more information on rural areas and leisure activities, which she said should increasingly be available, especially to the disadvantaged poor, to encourage rural tourism. The strategy that provided for the training of educators to understand tourism needed to be clarified, as well as its links, if any, with the Department of Education. It was important to ensure that jobs were sustainable and therefore these educators should probably also relate to the Department of Education.
Ms X Makasi (ANC) welcomed the Department’s strategy. She said that a booklet was needed, to serve as a directory to identify the Department’s initiatives, such as women who had been empowered and trained, in the rural areas. Such a booklet could serve to assist Members, as public representatives, to monitor the processes and programmes of the Department. Constituency Offices in the rural areas, who believed that only the urban areas benefited from tourism development, would be able to see from such a booklet how the Department was assisting the rural areas. The current trend, however, continued to be that those who already had something benefited from tourism, while the disadvantaged remained poor.
Minister van Schalkwyk responded that there were two good programmes for the involvement of women. An excellent booklet was available with the detailed information on all these projects.
Ms T Tshivhase (ANC) said that the rural population continued to be extremely poor because of the negligence of the economic and tourism cluster and the abuse of products by the foreigners and those who had some wealth. Tourists generally had no regard for value. She asked for detailed information on the training programmes. Monitoring systems were very important, to ensure that the programmes and strategies in place were actually delivering results. Although FIFA and other projects were happening, many people remained poor and nothing could be shown for the work that was being done. Only time would tell if the Department’s strategy would work and actually be to the benefit of the rural poor. She suggested that medium term programmes be considered, because it was always a struggle to obtain money for long term programmes. She called upon the Department to ensure that a rural development strategy was put in place.
Ms V Bam-Mugwanya (ANC) thanked the Minister for his focussed discussion of where the Department was at the time, where it was aiming to go, as well as what drove the Department. The presentation by Mr Tharage was quite impressive. Although the Department made wonderful promises for the development of the rural areas, the Committee would have to wait and see if the Department would deliver. It had happened previously that although the Department operated numerous offices, it complained that rural tourism development was too expensive. Some Committee Members came from the Eastern Cape Province where the majority of the people lived in rural areas and they knew that, disappointingly, almost no development had been done there.
Ms Bam-Mugwanya was pleased with the emphasis that was placed on the development of rural entrepreneurs and asked for more information on it. Some financial injections had been given to rural entrepreneurs, but there had been objections because the advantaged community tended to misuse this. She was, however, in favour of financial assistance to those who qualified.
Ms Bam-Mugwanya felt that the experiential learning strategy and its curriculum were problematic, as something seemed to be juxtaposed with the tourism graduates who did not fit into the curriculum, and the certificates showed everyone had different subjects. She suggested that the matter be sorted out with the Department of Education, because the current situation rendered the graduates unemployable. Perhaps graduates could be posted abroad where training was available that the South African curriculum did not address.
Mr P Zulu (ANC) said that if it was not for the FIFA World Cup taking place in South Africa in 2010, he doubted that the pressing issues of pollution and safety and security would have been addressed in the rural villages. Perhaps one million of the 10 million expected visitors to South Africa might be interested to visit the rural areas. However, the concerns were raised that, firstly, the roads were in horrific conditions and, secondly, that criminals would target the visitors in the rural areas as the security there was not visible.
South African Tourism (SAT) Business Vision 2010/11 - 2014/15
Ms Thandiwe January-McLean, Chief Executive Officer, SAT, thanked the Department for the support so far given to her. She noted that this was a very exciting and challenging time for the South African tourism industry, with a growth of 3,6% in tourist numbers, while international tourism faced a downturn because of the economic meltdown. She said that SAT was set to harness all the attention South Africa would receive because of the 2010 Soccer World Cup, but had also moved beyond 2010 in its strategic plan. Due to the time constraints it would not be possible to run through the portfolio review processes and the overview of the market trends, which provided a researched basis for the destination choices. Nevertheless, the information was readily available and would be discussed at the next opportunity.
While traditional markets were being strengthened, emerging markets such as Brazil and China were also investigated. SAT’s work on the African continent continued to grow, with the possibility of opening offices in Angola and Nigeria. The growth in numbers from African countries was very impressive. Budget cuts impacted greatly on the industry as well as SAT and had to be taken into consideration in the strategic plan, leading to difficult choices at times. She assured the Committee that SAT remained committed to the agenda of creating jobs and economic growth. Domestic travel and collaboration with Provincial and Local Authorities remained key to the future of tourism in the country. Cultural tourism created numerous opportunities for the domestic agenda. SAT would continue to depend on the board and the Department for partnership and strategic guidance.
Ms Roshene Singh, Chief Marketing Officer, SAT, presented SAT’s five year plan, which had been set up in accordance with the Tourism Act. She noted corrections to the document: Slide 6 should read “Total Tourism Spend” instead of “Total foreign direct spend”, and on Slide 10 the 2010 calendar year target should be “4,2 % increase over 2009 actual” instead of the indicated “2,6 % increase..”.
The aim was to maximise the tourism potential of South Africa to the benefit of all citizens. She noted that the bulk of the tourists were domestic and from the rest of the African continent. The African market and particularly that of Angola, was of great value and not to be underestimated. The Americas and Europe was also important, but second in line. Every three years the portfolio revenue would determine which markets were identified as players. Money constraints imposed difficult and limited choices to marketing options.
The brand was highlighted as an important issue. It was crucial that South Africa developed a trustworthy brand that would also be known for its value for money. The unique and authentic experience of South Africa had to be marketed to easily convince tourists to choose South Africa as a destination above its main competitors of India and Brazil. An internal strategy had to be developed to energise and empower the tourism industry. Digital marketing was the primary source that tourists used to plan their travel, and SAT could boast that it was at the cutting edge in this field.
Future revenue targets had been set against the baseline target of 2009. The total tourism spend (domestic and international) in 2009 was R109,2 billion and SAT was working towards achieving an additional R69 billion revenue by 2015, estimating a total tourism spend of R169 billion. SAT’s targets were set against its objectives within a three-year cycle.
SAT recognised that the tourism sector was an essential contributor to the creation of decent work and job opportunities, and aligned itself with the Department of Tourism’s targets for Tourism development. Through activities such as domestic and international marketing, tourism investment promotion, tourism product diversification and also tourism enterprise development, SAT would increase its contribution to the Gross Domestic Product from an estimate of R52,38 billion in 2009, to R65,72 billion in 2015. The number of jobs supported by the sector would increase to 640 000 in 2015. In 2015 the international arrivals were expected to increase to over 12 million, and the domestic tourists to 16 million. Per tourist, R8 100 was spent in 2008, but this would be increased to R11 600 in 2015.
Each year from 2007 to 2009, the high-level objective of total arrivals to South Africa had been exceeded. SAT was positive that this trend would continue. The average spend per tourist inside South Africa, as well as land tourists, also exceeded targets by 3,8 % and indicated the significant contribution that land markets were making to South Africa’s tourism industry. In 2009, the global average of most of the Brand Knowledge metrics improved, with the exception of a drop for ‘Welcoming People’ and ‘Safety and Security’. The objective was to ensure that South Africa was the most preferred Tourism Brand by 2014. Both the awareness and positive attitudes had improved, but there had been declines on information provision, and those who were likely to visit in the next 18 months, due to the slowdown in global travel. Nevertheless, SAT aimed to be the Best Tourism Organisation by end-2010.
The budget and expenditure for 2008 to 2011 were presented. A breakdown of the total R795 509 million budget for 2010/11 indicated that 90 % of the budget would be spent on marketing.
Ms Singh noted that the three major challenges faced by SAT were the reduced budget allocation, safety and security of tourists, and also the Provincial- and Local Authority Tourism Authorities. A reduction in the budget had been made, despite SAT’s consistent delivery of its objectives and impeccable record of financial management. As a result, SAT would significantly have to reduce its targets around Gross Domestic Product (GDP) contribution and job creation, as well as close some operations. A perceived lack of Safety and security were the two biggest deterrents of tourists, and cooperation with Government and stakeholders to curb this phenomenon was crucial. South Africa needed to tap into the domestic market for tourists and encourage people to travel domestically. Provincial Tourisms Authorities had to play their part in promoting tourism within the country and the continent of Africa rather than internationally. The focus had to fall on product packaging and experiences.
The road ahead for the Tourism Grading Council of South Africa (TGCSA) from 2011 – 2014 was directed towards the establishment of a recognisable and credible, globally bench-marked system of quality assurance for accommodation and reliable experiences for visitors making their choice of establishment. More people had to be graded, to establish a database from which Government could then use the graded establishments, which would be better for businesses.
Mr Adams appealed to Members to keep their questions short and to the point. He noted that the Department could respond in writing and nothing prevented the parties from engaging on the issues at another opportunity.
Ms Tokozile Xasa, Deputy Minister of Tourism, confirmed that the Department would respond to the questions in writing by Monday, 22 March 2010, which would give the Committee ample time to peruse the responses and prepare for the discussions on the budget which would take place on the Tuesday.
Minister van Schalkwyk wanted to briefly respond to two questions, noting that one was of a philosophical nature, whilst the other related to the Department’s approach to the budget.
Ms Bam-Mugwanya commented on the note that Government would only use graded establishments. She asked if it would mean that Government would not support the projects where women established tourism projects.
Minister van Schalkwyk said that one entity that might have escaped the discussion was that of the Tourism Grading Council (TGC). It was very important for the improvement of standards in the industry. It was his opinion that the TGC had not been treated fairly in terms of funding. The R3 million it had received previously was far too little to perform its enormous task, and therefore the allocation would now be increased to R18 million. Discussions with National Treasury had to be taken up to ensure that the TGC would be properly empowered. Another initiative that had to be taken forward was the fast tracking of a Convention Bureau for the country. Treasury had to be convinced that it would deliver a good return on money and should therefore consider co-funding the proposed Bureau.
Ms Njobe asked how much of SAT’s marketing budget would be spent on marketing in countries in Africa and Asia.
Minister van Schalkwyk responded that SAT had an instruction from the Department that Africa was a priority. It had not been a priority in the past, but only an ad hoc initiative. Africa was now a priority not because of political considerations, but only because it made absolute good marketing and business sense to also expand the marketing campaign into Africa. Hopefully in the next year the picture would become more clear.
Mr Zulu referred to slide 10 in the presentation, noting that the total arrivals in South Africa had decreased between 2008 and 2009, and asked why there was this difference.
Ms Didi Moyle, Chief Operating Officer, SAT, responded that the percentages had been dropping as the numbers rose, because the base was increasing. South Africa had experienced growth while the global tourism industry declined by 6% in 2008, and by 4 % in 2009. Any growth experienced in 2010 would therefore actually be off a negative base. It would take approximately another three or four years to reach the same growth levels of 2007, given the slow global recovery.
Ms Shinn asked for clarity on how much money the Department actually gave to SAT, because conflicting amounts of R631,7 million and R601 million were given in different instances. She also asked for a definition on the term “land tourists” and asked if it would include a foreign visitor who did not spend a night, and only came for shopping or work-seeking purposes.
Mr van Schalkwyk replied that unfortunately the Department did not have time, in this meeting, to present its budget. He referred Members to document 3 in the pack they had received. SAT would receive R631 million for 2010/11, R672 million for 2011/12 and R705 million for 2012/13 from the Department. For marketing, the amount would be R465 million, and for financial assistance and normal operations it would be R151 million. There was a difference in the budget presentations because of the revenue SAT generated itself. On slide 3, it was indicated that the Department received its budget from National Treasury, and that this budget included the allocations for SAT. R47 million additional money was received for year 1. Of this, R10 million related to general increases in capacity for the establishment of the new Department, and compensation for the employment adjustments in July and January. R3,2 million was for SAT’s salary adjustments, and the new EPWP, and 65% of this money had to be spent on job creation. He indicated that in the past the Department, based on performance, had received R32 million, R41 million and R47 million, as earmarked funding, from National Treasury, with certain conditions attached.
Mr K Sinclair (Northern Cape) raised the issue of the promotion of various marketing entities in South Africa. There was a request for one integrated strategy, but in reality the National, Provincial, District and Local level each had their own branding exercise. He asked what could be done to establish one integrated marketing strategy for the country.
Minister van Schalkwyk responded that recently Cabinet had taken a decision to re-align the brand. In practice, it had happened that a Province marketed itself at an international exhibition and did not make any reference to the fact that it was a Province within South Africa. It cost the taxpayer a great deal of money for SAT to participate in international exhibitions. The Minister was convinced that the money could be used better. A discussion with the National Council of Provinces (NCOP) on the matter would encourage a solution towards an integrated approach.
Mr B Mnguni (ANC, Free State) asked if the number of tourists coming into the country included visitors who had homes or owned holiday houses in South Africa.
Minister van Schalkwyk responded that the Department used the international definition of “tourist”. A visitor who came to his/her holiday home, or for shopping, and stayed for one night, would be considered as a tourist. If the person did not stay for one night, he/she would only be considered as a “visitor”.
Ms Moyle added to this point. She referred Members to page 5 of the Portfolio Review document, where the estimated breakdown of the difference between African visitors and tourists were presented. From Botswana, 56 % were tourists. She said it was necessary to avoid making generalisations about the behaviour of land tourists. Many people who came across the borders were traders and spent a vast amount of money in South Africa, which would in turn create jobs for South Africans in agricultural production, shopping centres and manufacturing. Although this was a critical market for SAT, these contributions had never been captured accurately. However, no one who came into the country to look for work would be counted as a tourist.
Mr Mnguni asked what criteria informed the funding strategy, because although it was on the agenda to develop underdeveloped rural areas such as the Free State and the Eastern Cape, it happened in practice that the more developed areas such as Gauteng, the Western Cape and KwaZulu/Natal received the most funding.
Minister van Schalkwyk responded that the issues had to be raised with the Provinces and the Municipalities. It was not the Department’s responsibility to establish a local tourism office, but that of each Municipality under which it fell. The Constitution determined that Tourism, as well as tourist guides, were concurrent powers. This meant that Provincial Governments had to take certain responsibilities. The Department provided an enabling framework within which the provinces had to operate, with the provinces doing the implementation themselves. Some provinces did an excellent job, whilst others did very little. The Minister assured the Committee that the Department did not spend more money in the developed Provinces. In fact the spending was quite equally spread. It might be the case that the Provincial budgets differed in size. The Department could provide a detailed breakdown of where it spent its money. He confirmed that officials would be prepared to discuss any matters further, and that written responses would be ready by the following Monday.
Co-Chairperson Mr Adams noted that the NCOP Members would not be present the following week, as they would be visiting the provinces. He suggested that the Committees find time to convene with the Department in a two day session to complete the discussions. Tourism was an integral part of the country and had huge potential to contribute significantly to the GDP of the country.
Mr Krumbock asked if the Department had made any progress in distributing all the information, presentations and documentations from the Summit on Tourism, Sport and Mega Events as promised by Dr Foster. Some time had passed and he wanted to know if he could expect the requested information soon.
Mr van Schalkwyk committed to have it ready by Monday for presentation to the Committees.
Co-Chairperson Adams suggested that this be presented to the Select Committee in a full-day session, and noted that the Portfolio Committee would receive this presentation on the following Tuesday.
The meeting was adjourned.
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