Department of Cooperative Governance and Traditional Affairs (COGTA) briefing on tourism successes and challenges in respect of job creation and sustainable livelihoods in the Local Sphere of Government ; Tourism Budget Review and Recommendation Report

Committee: Tourism

Chairperson: Mr D Gumede (ANC)

Date of Meeting: 25 Oct 2010

Summary

The Department of Cooperative Governance and Traditional Affairs explained Local Economic Development (LED) which was central to the Local Government Turnaround Strategy (LGTAS) and the Local Government Ten Point Plan. Tourism could be boosted by LED. Local economic development was funded by Municipal Infrastructure Grants (MIG). There were three different categories of infrastructure that MIG funds could be used for. The third category, that is, micro enterprises and social institutions servicing the poor (E- component) was perhaps the most relevant to tourism. The problem was that the allocation of funds was inadequate. Municipalities could hence not afford to make allocations to cover tourism. The current lack of a specific budget allocation towards the development of tourism at local government level had been raised in the national Tourism Sector Strategy. The Sector Strategy outlined several actions to address the issue.

The Committee felt that the briefing lacked statistical information. Statistical information would have been useful to make comparisons between what should be achieved and what was achieved. A quantitative analysis could have shed light on the extent challenges had been addressed and in so doing highlighted successes. The lack of budgets and capacity for tourism at local government level was discussed. It was suggested that greater cooperation between departments and spheres of government was needed to address issues.

The Committee considered its Budget Review and Recommendation Report. Members made recommendations and effected minor changes to the Report. The amended Report would be forwarded to members later in the day for final consideration.


Minutes

Department of Cooperative Governance and Traditional Affairs (COGTA)
Mr Muthotho Sigidi Deputy Director General, accompanied by Mr R Lubengo, Executive Manager, represented COGTA. Mr Sigidi explained that the White Paper on Local Government obliged local government to engage in social and economic development. Government had 12 National Priorities, and creating decent employment through inclusive growth and a responsive, accountable, effective and efficient local government system were two of these. Local economic development (LED) was central to the Local Government Turnaround Strategy (LGTAS) and the Local Government Ten Point Plan. Tourism could be boosted by LED. Local economic development was funded by Municipal Infrastructure Grants (MIG).

There were three different categories of infrastructure that MIG funds could be used for:
Firstly for basic residential infrastructure (B-component), secondly public municipal services (P-component) and thirdly micro enterprises and social institutions servicing the poor (E- component). The third category was perhaps most relevant to tourism. Five percent of total MIG funds were available for infrastructure to support LED. The question remained why tourism was not taken into account when funds were allocated. The MIG amounted to billions but it had to cover over 250 municipalities. Municipalities could hence not afford to make allocations to cover tourism. The second issue was the manner in which Integrated Development Plans (IDPs) were drafted. Community structures were consulted and a great deal of consultation took place. Top on the list of priorities for municipalities was the delivery of water, sanitation and electricity. Small amounts were allocated towards tourism. The challenge was how to place tourism high on the list of priorities of municipalities. It was difficult as the basic needs of people had to be seen to first. The Committee was given a breakdown of allocations for the E-component. A total of R1, 8bn was set aside for LED. This funding could be used for encouraging tourism which boosted LED. However the municipal allocation for this sector was insufficient. There were very few municipalities that were doing projects that support LED. This was due to the lack of participation of relevant sector departments at the early stages of IDP development. Municipalities spend MIG funds on projects that were in the municipal IDP. The Department was organising working sessions with municipalities that did not have projects that support LED. The current lack of specific budget allocation towards the development of tourism at local government level had been raised in the National Tourism Sector Strategy. The Sector Strategy outlined several actions to address the issue. It stated that there must be engagement with the South African Local Government Association (SALGA), National Treasury and COGTA to ensure that a comprehensive framework for tourism activity at local level was developed. It was encouraging that some municipalities considered tourism as offering future economic development opportunities. The capacity and enthusiasm of South African Local Government to plan for and manage tourism appeared sound even though there were a few areas of concern. Some of the concerns were: the co-ordination of tourism responsibility, the incorporation of tourism within a Local Council’s organisational structure and funding for strategic tourism issues such as strategic planning and marketing were.

Mr Sigidi illustrated his comments with an overview of the Vhembe District Municipality in Limpopo Province which contained five local municipalities. The challenge was a lack of investment to promote marketing strategies in the five municipalities. All five municipalities except for Vhembe District Municipality did not have tourism officials hence there were no personnel to co-ordinate the tourism function. The District Municipality had one tourism officer to co-ordinate tourism projects and programmes for the entire district municipality. Capacity at local municipal level to support the tourism industry was non existent. One of the infrastructure problems was that roads to tourist attractions were in a bad condition. Some successes were that the Council had approved the Vhembe District Tourism Strategy earlier in 2010. Vhembe had also been declared a Biosphere Reserve by the United Nations Educational Scientific and Cultural Organisation (UNESCO) in 2009. An Annual Tourism Youth Competition was held which helped to unearth young persons in tourism.

The Department had decided to take action to support municipalities regarding tourism. It would assist municipalities that had not incorporated tourism comprehensively into their IDPs and to inform municipalities what sustainable tourism entailed and how it could be incorporated into their development plans and other strategic plans. It would also conduct inter-departmental workshops with municipalities to inform them about the National Tourism Sector Strategy. However, there were critical success factors for tourism at local level. For municipalities to be able to deliver on tourism targets, effective tourism planning and capacity building in was needed. The provision of tourism support services (for example, human capital development) at local level was important. The Department would be engaging in different tourism strategies at municipalities throughout SA and would even second tourism officials to assist with this.

Mr Lubengo added that the Department had been aware that the Committee had held a strategic planning session in July. COGTA would support the Tourism Department in implementation of the National Tourism Sector Strategy. 

Discussion
The Chairperson pointed out that tourism was dependent on many things. Cooperation was needed. SALGA and even traditional leaders should come onboard to boost tourism at local level.

Mr G Krumbock (DA) stated he was a bit underwhelmed by the briefing. Tourism was most akin to the private sector. He was surprised that the briefing lacked statistics and figures. A more quantitative briefing would have been appreciated. A comparison could have been made between what should be happening and what was actually happening. Explanations could have been given for variances if any. Local government had serious challenges and funding for tourism was inadequate. A more businesslike quantitative analysis would have been more useful. He referred to the Vhembe case study and asked what tangible differences had been made. How many new jobs had been created, how much income had been generated and what were the increased contributions to the South African Revenue Service (SARS)?
Reference was made to the fact that roads in the Vhembe area were in a poor state. Would it be worth the expenditure to fix the roads? Would the roads be used much in getting to tourist attractions? If not, fixing the roads could possibly be a misallocation of funds. District municipalities need to be compared with each other. Before and after comparisons should be made to get a sense of what the effects were.
Different cities or towns should also be compared. For example Nelspruit was a well prepared host city during the 2010 FIFA World Cup. On the other hand Pietermaritzburg was a disaster; its central business district was filthy. What if the municipality was not succeeding anyway on basic services and delivery? What was the point on spending funds on tourism? The environment needed to be supportive of tourism efforts.

The Chairperson added that the problem was perhaps there was a leadership vacuum.

Mr Lubengo responded that local government had been assessed hence the implementation of the LGTAS. The answer lay somewhat with leadership and coordination. The newly formed COGTA Department created a single window of coordination. It was thus difficult to touch on what each stakeholder was doing in municipalities. The comments and concerns of the Committee were taken onboard. In the future, tangible information would be used to illustrate what was happening. He said it was also difficult to state exactly what was happening on the Expanded Public Works Programme but the Department would be moving forward.

The Chairperson noted that there should be minimum service levels that municipalities had to meet. Failure by municipalities to meet these levels allowed the Department to step in. If capacity was lacking, the Department needed to be aware of it.

Ms M Njobe (COPE) agreed with the points raised by members. A statistical comparison would have elucidated successes and challenges better. What came out of the briefing was that the budget and capacity needed addressing. The discussion of budgets in tourism was a recurring issue. Tourism depended on partnerships with the private sector as well - especially the capacity of the private sector was depended on. The Committee wished to promote domestic tourism. The bulk of tourism funding was used to market SA internationally. The question was how the Committee expected the Department of Tourism to fit in with the Department of COGTA. Perhaps discussions on intergovernmental structures were what were needed. The issue of capacity was important. There were perhaps areas that had tourist attractions but access to those attractions was a problem. The municipality in the area lacked capacity to develop the infrastructure. The solution was perhaps to capacitate municipalities themselves. The private sector could also be requested to assist.

Mr Sigidi responded that budgetary issues tend to prevail. On the issue of capacity building the Committee through the Department of Tourism should consider seconding officials to municipalities to work on tourism plans. It could be a step in the right direction. He agreed that public-private partnerships were important in tourism. He did not in any way consider himself an expert on tourism issues. In future, he would brief the Committee with something more tangible. He wished the Committee to participate in the Green Paper process for the single window of coordination.

The Chairperson suggested that COGTA interact with organisations like the Federated Hospitality Association of Southern Africa (FEDHASA), the Tourism Business Council, the Chamber of Commerce and the Chamber of Industries in sharing perspectives. Interactions with different groups at different levels were needed to maximise benefits. Transformation within the industry was however a problem. The Committee would await the arrival of the Green Paper. Members would be glad to make contributions.

The Chairperson raised the matter of crafts and arts in SA. In major metropolitans like Cape Town and Durban, crafts from other African countries were plentiful. SA had its own crafts in areas like Venda. All that was needed was exposure. Local government, provinces and traditional leaders should play a role in promoting local indigenous arts and crafts. The problem was partly because SA had three spheres of government. Often disputes occurred between the spheres of government about in whose terrain matters fell. Greater communication was needed.

Mr Sigidi stated that he could not agree more with the comments made by members. Statistical comparisons in the briefing were perhaps an oversight on the part of the Department. He agreed that in the next interaction with the Committee, statistical comparisons would be provided. Comparisons between provinces and municipalities would be provided.

He stated that there was no coordination between national government and municipalities. Funds were provided to municipalities at the end of March. At that point financial dumping took place. Participation should take place at the planning stages of municipalities in order for funds to be allocated properly. The consequence of the financial dumping was that municipalities used the funds for other purposes. COGTA was drafting a Green Paper on Cooperative Governance. The efforts of national departments at local government level were looked at. Another concern was that there was over regulation at municipal level. Implementation was made extremely difficult. A review of the Municipal Systems Act would set minimum requirements for section 57 managers. Interaction with the Department of Tourism would take place.

Budgetary Review and Recommendation Report (BRRR)
The Chairperson placed the Report before the Committee for consideration and proceeded to take members through it. He asked whether members were satisfied with the Department of Tourism’s mandate versus its performance. Did the Recommendations section contain all the concerns which members had raised?

Mr Krumbock observed that the Report was well balanced and well written.

The Committee suggested minor spelling and grammatical changes.

The Chairperson referred to the paragraph on “Conclusions and Recommendations” and felt that the two topics should be separated.

The Committee agreed to the suggestion.

Ms V Bam-Mugwanya (ANC) recommended that the issues discussed in the meeting with COGTA needed to be mentioned in the Report.

Mr Krumbock did not disagree with the recommendation but stated that the Committee should include something more holistic. The Report contained a section on the Committee’s observations. The lack of capacity at local government level for tourism promotion should be stated. It should also state that greater budgets were needed for the Department of Tourism and for SA Tourism specifically.

Ms Bam-Mugwanya stated that the need to emphasise cooperation between the different spheres of government should be included.

Ms Njobe remarked that intergovernmental coordination was also important. She asked that the recommendations be itemised as it appeared too wordy.

The Chairperson agreed that recommendations should be sharp and short. The issue of domestic tourism should be included in the recommendations.

Mr Krumbock suggested that the drafters of the Report should incorporate the inputs made by members. Once completed the Committee would consider the Report as amended.

The Committee Secretary pointed out that the Report had to be completed that day.

The Committee agreed that the amended Report would be forwarded to members by 3pm for final approval.

The meeting was adjourned.