Enterprise partnerships: Tourism Enterprise Programme & Tourism Business Council briefings

Committee: Tourism

Chairperson: Mr D Gumede (ANC)

Date of Meeting: 16 Aug 2010

Summary

The Tourism Enterprise Programme (TEP) and Tourism Business Council of South Africa (TBCSA) briefed the Committee on enterprise partnerships in respect of job creation and sustainable livelihoods. The presentations highlighted the role of public and private sectors in increasing the tourism industry and highlighted how government could facilitate additional growth. The Tourism Enterprise Programme noted that its main strategy was to support the growth of small businesses by offering limited financial assistance, assisting skills development, and entering partnerships with the public and private sectors, which were detailed in the presentation. There was a shift to using rural clusters to enhance the tourist experience with stories on humankind and the struggle, as well as offering traditional tourist activities. TEP had facilitated almost R5 million worth of transactions and the employment of 12 000 individuals.

The TBCSA noted that it acted as an umbrella organisation and voice for the private sector in the travel and tourism industries. It comprised of fee-paying members. TBCSA had introduced a levy to add more funding for the marketing of South African Tourism, had created a scorecard for black economic empowerment. Challenges facing the industry included safety concerns, infrastructure support and land claims.

Members agreed that a national strategy on tourism was needed, and it was also necessary for the industry to become more visible and to use public and community partnerships. Members asked about the frictions around land redistribution and development, questioned the gender equity on the TEP Board, wondered why TEP was concentrating on non-traditional activities, and wondered what the cost was of the project, and if value for money was achieved. Members asked about the criteria for taking Small, Micro and Medium Enterprises into the programme, what their financial contribution was and whether there were significant failures. They enquired as to the funding of TEP, and asked about future plans for expansion of small businesses, as well as the amounts contributed to small businesses to attend the tourism indabas. Members asked TBCSA to expand on challenges, and questioned whether the definition of “tourist” was correctly applied to those who entered South Africa only for one day to shop. They were interested in the financing of the proposed Tourism Bank, cautioning that it should not fall into the same difficulties as the Land Bank, asked whether the levy was included in the budgeting of the Department of Tourism, and asked whether tourism surpassed even the mining industry in growth. Members were interested how beadwork and other similar small businesses would be incorporated into tourism, what was being done about career guidance, and how many of the 34 million jobs created globally in tourism had pertained to South Africans. 


Minutes

Enterprise partnerships in respect of job creation and sustainable livelihoods:
Tourism Enterprise Programme (TEP) briefing
Mr Siva Pillay, Chief Executive Officer, Tourism Enterprise Programme, introduced the strategy, partnerships and achievements of that Programme (TEP). The strategy of TEP was to support the growth of small businesses through offering limited financial assistance, assisting skills development, and partnerships with the public and private sectors. Mr Pillay highlighted the shift to rural clusters to enhance the tourist experience with the humankind story, struggle story, and heritage sites as well as the traditional tourist activities. The partnerships of TEP included cost-sharing financial partnerships at provincial and municipal level, project implementation partnerships with municipalities and tourism authorities, and corporate partnerships with businesses such as Standard Bank. Mr Pillay also detailed examples of these partnerships. The achievements of TEP included nearly R5 million worth of transactions facilitated, and the employment of 12 000 individuals.

Tourism Business Council of South Africa (TBCSA) Briefing
Ms Mmatšatši Marobe, Chief Executive Officer, Tourism Business Council of South Africa, defined the role of the TBCSA as an umbrella organisation for the private sector in the travel and tourism industries. TBCSA comprised of fee-paying members who authorised TBCSA to be the voice of the private sector in their industry. TBCSA created the TOMSA Levy, which added additional funding for the marketing of South African Tourism. TBCSA had also created the Tourism Black Economic Empowerment (BEE) Scorecard, which transformed the industry into an inclusive one. Ms Marobe also highlighted the challenges facing the tourism industry in the private sector, saying that these included safety concerns, infrastructure support and land claims. 

Discussion
The Chairperson agreed with Ms Marobe’s statement that a national strategy on tourism was needed. He explained that the first stage of this strategy had been the establishment of a government tourism department, while the second stage aimed to increase communications between public and private sectors as well as between government, provinces, and municipalities. He also agreed that a national strategy on entrepreneurship development was needed, particularly in regard to access to financial resources. Another issue for tourism was the simplification of government regulations. The Chairperson highlighted the need for visibility of the industry as a growing economic player and referred to a proposed seminar at Parliamentary level, which would hopefully occur during September. Public and community partnerships needed to be utilised, although he recognised that in disadvantaged areas, such as Limpopo and Northern Cape, there were issues with infrastructure and facilitation.

Ms T Tshivhase (ANC) asked about the friction between traditional leaders and municipalities over land redistribution and its development, and wondered whether there was a solution.

Mr Pillay responded that TBCSA and not TEP had referred to this issue. However, he could state that TEP did have a few community-based successful projects in Mpumalanga and Eastern Cape.

Ms Marobe responded that the friction over land existed in KwaZulu Natal and Limpopo in particular. The main issue was lack of understanding, for the friction was caused by competing ideas of how to use the land. In Pondoland there were tensions between using the game reserve as a nature reserve, and for mining.
 
Ms Tshivhase asked why there were only three women on the TEP Board, as opposed to ten men.

Mr Pillay responded that the board had noted that there were too few women on the board and was planning a new look for the board. However, he noted that of the five managers in the organisation, he was the only male. He introduced Ms Lisa-Ann Hosking, General Manager: Operations, TEP.

Mr G Krumbock (DA) asked TEP why it was concentrating on non-traditional activities when the market wanted and enjoyed traditional tourist activities such as Table Mountain, game drives, and the wine route.

Mr Pillay replied that the aim was to build on traditional activities, not replace them. He commented that tourists were now looking for more than sight-seeing and wanted an emotional connection to the country.

Mr Krumbock asked for comparative figures for TEP’s income was compared to. He asked what it cost to receive the revenue worth R498 195 912, 81 and the 12 000 new jobs. He wondered if it would not have been better if the project had not been funded, and the money had rather been left in the hands of taxpayers. He wondered whether there was value for money and if the project was worth what had been spent.

Mr Pillay explained that the board had initiated an evaluation on TEP, which was to be presented in November, on the success and returns of TEP. The Committee could benefit from this report once it was compiled.

Mr Krumbock also asked what the criteria were for accepting Small, Micro and Medium Enterprises (SMMEs) into the programme, and what their financial contribution to the programme was. He also enquired what the failure rate was, and whether TEP would simply walk away from failures.

Ms Hosking answered that small businesses had to fulfil a range of criteria before they would be accepted into the programme, including that they must be a registered legal business. The small businesses would then be rated on size and training, to enable TEP to assist with the necessary training or mentorship. TEP also checked that the business had the capacity to grow with additional assistance. Currently, SMMEs did not pay for their training but contributed 50%, with the additional funding coming from the Business Development Fund. Over the past two years most businesses had grown in turnover, and there had been no failures at a high level.

Mr Krumbock asked how the funding of TEP was split between the government and the business trust.

Mr Pillay replied that currently cost-sharing was split at roughly 50% between the government and the Business Trust, but it had dropped by about 30% per annum over the last three years. The first budget was R86 million and the current budget was R41 million, so TEP required more private sector funding to support more businesses. Over the next two years, he hoped that SMMEs would start paying, as all training was currently free.

Mr Krumbock asked TBCSA to expand on the challenges mentioned, particularly the tax issue, the status of the talks with the government, and detail on the airlift and air access.

Mr Krumbock noted that the statistic of increases in tourists from one million to ten million per year was often quoted as indicative of the success of South African tourism. However, this statistic was measured by a definition that only required a person to spend one night in South Africa in order to be called “a tourist”. He noted that 75% of the influx of ten million people to South Africa came from neighbouring states, and they were entering South Africa for economic reasons. He wondered if they could correctly be defined as tourists, and asked whether the growth of tourism statistics were credible.

The Chairperson responded that Limpopo was currently building a shopping complex for tourists from neighbouring African countries. This was definitely defined as tourism in Limpopo.

Ms Marobe said that the African tourists need to be included in the tourism industry to a greater extent.

Mr Krumbock asked how the proposed Tourism Bank would be financed.

Mr Krumbock asked that TBCSA give more information on the skills challenges identified, and the role of the Tourism and Hospitality Sector Education and Training Authority (THETA).

Mr Krumbock asked if the TOMSA levy was part of the budgeting of the Department of Tourism. He wondered if it would not be preferable for TBCSA to spend it themselves rather than giving it to the Department. He pointed out that in any event TBCSA met every quarter with the Department to discuss targets and view goals.

Ms Marobe replied that the TOMSA Levy was not given directly to government but was given to South African Tourism. The levies were collected on a monthly basis and there was no way to accurately predict the amounts. She stated that she had not seen any trends that the government has reduced the tourism budget due to the TOMSA Levy, but rather that the opposite has happened and the levy had been used for long-term strategic projects.

Ms M Njobe (COPE) asked TEP whether there were future plans for expansion in small businesses from the current figure of 3 500.

Mr Pillay replied that TEP thought that this figure would double over the next few years.

Ns Njobe referred to Slide 12 of the presentation, which stated that TEP contributed R9 000 per SMME for them to attend indabas. She calculated that TEP would thus spend over R1 million on each indaba. She asked what percentage of TEP’s annual budget this represented.

Mr Pillay replied that the contribution related to accommodation, transport, meals, and a stand, and that the Tourism Authority was also assisting. He pointed out that the indaba was a solid and sustainable platform, where these businesses were promoted as clusters.

Ns Njobe referred to Slide 15 of the presentation, which referred to databases of SMMEs in each province. She asked if it would be possible to give Members access to these databases, so that they could visit these businesses and verify these success stories.

Mr Pillay responded that he could ask TEP’s provincial manager to contact Ms Njobe to provide information from the database, and to arrange a visit to these businesses.

Ms Njobe asked TBCSA for verification of the statement that tourism surpassed other industries. She wondered if this included mining. She stated that the prioritisation of tourism as an industry has been raised many times by this Committee, but that a bigger budget was needed.

Ms Marobe replied that tourism was the fastest growing industry globally, and that it surpassed mining in South Africa.

Ms Njobe asked how the Tourism Bank would work, and how practical it would be. She wondered if it would be similar to the Land Bank, cautioning that the situation with Land Bank had highlighted the dangers of bureaucracy.

Ms Marobe described the proposed Tourism Bank as similar to the Tourism Bank in Rwanda. However, this Bank would have to focus on criteria different from those of a regular bank, as a regular bank was not geared to the erratic nature of tourism. The idea of the Tourism Bank came from the SMMEs.

Ms X Makasi (ANC) asked TBCSA how it could impact on disadvantaged communities with small businesses, for example in bead work. She also wondered if disadvantaged communities could be incorporated into tourism by relating oral traditions.

Mr Pillay replied that beaders were seen as part of the arts and crafts sector and not tourism. However, performers and crafters in the areas of specific clusters were included in the tourist experience. TEP had also secured a partnership for some of the best crafters and beaders to sell their work at a stall at airports.

Ms Marobe commented that TBCSA had included crafters as part of the tourist package. Their products were showcased at airports, guest houses and lodges in rural areas. One of the difficulties was that regular supplies were needed.

Ms J Maluleke (ANC) asked TBCSA how many of the 34 million jobs that had been created through travel and tourism globally were created in South Africa, for South Africans.

Ms Marobe did not have the accurate figures to hand but referred to her PowerPoint presentation where the numbers did appear. However, she said that there was now tourist activity in areas where there had been no other economic activity. She cited Limpopo as an example, where the gates to the Kruger Park had encouraged growth in lodges, crafting, and employment for guides. The economy in Limpopo now relied on the Kruger Park and tourism.

Ms Maluleke asked in which provinces there had been successful career guidance.

Ms Marobe said that TBCSA started career guidance at the National Tourism Careers Expo in Durban in 2008. This was a pilot study, and it would rotate every three years to a different city. The aim was to cultivate tourism culture and education among the youth. Children were bussed from other areas to visit Durban’s Expo. The TBCSA also targeted institutions that were teaching tourism at a higher level. TBCSA went into partnership with the School of Tourism in Johannesburg, the University of Pretoria, the Hotel School in Cape Town, and the University of Port Elizabeth.

The meeting was adjourned.