Tourism Summit: Integrated approach: tourism development, growth & transformation: Day 1
Chairperson: Mr D Gumede (ANC)
Date of Meeting: 27 February 2011
The Tourism Summit allowed for various stakeholders to make presentations on their contributions to grow and sustain the tourism sector. The Chairperson of the NCOP outlined that the benefits of tourism could be seen in its links to other sectors, which he outlined. The ability to travel and become a tourist was one of the best forms of freedom. There was no doubt that the successful hosting of the FIFA World Cup in 2010 had turned around the image of tourism in
The Minister of Tourism noted that the contribution of tourism to the Gross Domestic Product (GDP) of
The Department of Tourism highlighted that tourism was contributing to three strategic areas of GDP, job creation, and transformation. Tourism contributed both directly and indirectly to GDP, and both contributions were expected to rise significantly until 2015. The Department emphasised the need to grow domestic tourism and create more sustainable jobs, as well as grow the
The Department of Transport outlined the requirements of the National Land Transport Act 5 of 2009, in relation to regulation of tourist transport services. This presentation centred on the general requirements of the Act, requirements for accreditation, monitoring of accredited operators, operating licences for tourist transport vehicles, and transitional issues. It also identified the challenges, and called for establishment of a Standing Committee of experts.
The Department of Economic Development outlined the New Growth Path (NGP) recently announced which had set a target of creating five million new jobs over the next ten years. This would require greater growth, and the initiatives included a greater focus on domestic and regional markets, which would also mean that tourism could be a catalyst. Possible innovations to drive creation of jobs were outlined, together with the policy drivers, resource drivers and institutional drivers. The New Growth Path saw tourism as an important jobs driver, and targeted creation of 225 000 new job opportunities by 2015. The New Tourism Strategy was a critical mechanism. The Lekgotla priorities for tourism were set out.
The Department of Arts and Culture set out its own contribution to tourism development and growth, noting that although it would still need to be fully quantified, it was already substantial and could be improved still further by full realisation of potential in the Arts and Culture sector. Contributions included building and operating museums, memorials and community arts centres in the rural and peri-urban areas. The Department was also identifying cultural objects and heritage sites, to enable it to develop comprehensive marketing strategies for cultural tourism, which in turn would benefit the hospitality, transport, creative, textile, food and other industries. The departments of Tourism and Arts and Culture were already working together on a five-year heritage and social history tourism strategy.
The Department of Cooperative Governance and Traditional Affairs noted that tourism in local government had to be viewed in the context of many competing socio-economic priorities. This address focused on the role of and support provide by local government in tourism, how tourism could benefit the local level, and support for the draft Tourism Planning Toolkit for Local Government. This Department noted that municipalities would need to concentrate on high standard infrastructure and information, as well as a safe and secure environment with good transport. The Department urged that the unique features of the community should be used to establish a brand and attract visitors, new residents and new investment. Whilst there were some adverse effects of tourism, these could be addressed, but there was also a need for better coordination of all tourism initiatives, involving the private sector and local business. Questions were asked how far, and in what municipalities, the Clean Cities initiative had gone, and what initiatives were taken by local government to promote tourism.
The Enterprise Organisation of the Department of Trade and Industry set out the support that was offered by the Tourism Support Programme (TSP) to set up new tourism facilities, or expand existing facilities. The eligibility criteria, the types of business that were supported, the qualifying activities and assets, and key conditions linked to grant payment were set out. Questions were asked around the definition of a Level 4 Black Economic Empowerment contributor, whether any programmes were in place to assist enterprises who had failed in their first applications, whether entrepreneurs in townships were being assisted, why the three largest metros were excluded and the long registration times.
Tourism Summit: An integrated approach to tourism development, growth and transformation: Day 1
Chairperson of National Council of Provinces (NCOP) address
Mr Mninwa Mahlangu, Chairperson, National Council of Provinces, highlighted that Parliament embraced the summit and wanted it to be a pioneer for a new way of thinking. This was especially important since tourism was intrinsically linked to other sectors such as the economy, philosophy, ecology, sociology, archaeology, science, technology, leisure, culture, communications, the arts, sport, and many other areas. Only by dealing with all of these in a holistic way would the maximum benefits be derived from the tourism sector.
He highlighted that tourism involved travelling, which was one of the best forms of freedom, with the wellbeing of the entire world depending on a presupposition that people and goods could move freely around the world.
Mr Mahlangu suggested that there was a strong correlation between tourism expenditure per capita and the overall global involvement of countries. This was not only the result of the important economic contribution of the tourism industry, but also because good tourism was an indicator of confidence, and how global citizens leveraged the resources of the globe for the benefit of their own economies.
There was no doubt that the successful hosting of the FIFA World Cup in 2010 had turned around the image of tourism in
He recommended that jobs to be created in the sector must also support the poor to develop themselves after the tourists had left. This could be achieved through small scale projects in local communities. There was no doubt that tourism could be a powerful instrument of regional policy and, being locally based and available even to the most remote rural areas, it offered significant jobs and income opportunities. It would also provide the rural communities with the opportunity to benefit economically from their culture and environment, and to compensate for the absence of a manufacturing base. He urged that this
Minister of Tourism address
Hon Marthinus van Schalkwyk, Minister of Tourism, stated that the contribution of tourism to the Gross Domestic Product (GDP) had increased from just under 5% in 1994 to an estimated 7.7% in 2010.
The Minister identified five international developments in travel and tourism. Firstly, the world was now witnessing what he termed “multispeed recovery”, with different geographic markets and industry sectors responding differently to global economic conditions. This was because the 2008/09 global financial crisis changed the economic and consumer landscape. In 2010
The second development was a marked shift in geographic uptake, as the global industry came to the realisation that the value of the booming outbound traffic flows from emerging markets was at the heart of the long-term response to globally shifting markets. From a tourism perspective,
The “Sho’t Left” campaign was specifically aimed at making travelling more accessible and affordable for all South Africans. Over the last six years the Department had invested approximately R70 million in domestic marketing, including television, radio, print and outdoor advertising and events.
The third development had to do with the shift in consumer preferences since the international economic slowdown, and these preferences would continue to evolve. Price-conscious customers in traditional source markets were retiring later and travelling for shorter periods, and were also spending less and taking trips closer to home. Travellers also made their bookings later, to obtain better deals. In response to the more value-oriented mindset, various destinations were leveraging innovative travel packages and new products to attract price-conscious customers. The new consumers were also seeking more customised and authentic offerings. The demand for mass based leisure tourism was being replaced by a desire to connect emotionally with destinations, local people and local cultures.
The fourth development was that emerging technologies were presenting a variety of new opportunities and challenges. Technology would increasingly be making long haul destinations more accessible by generating new demand and providing information in innovative ways. The Minister said that the Department of Tourism (DOT or the Department) would continue to exploit the opportunities offered by the communication media, including e-marketing, e-commerce and social media, to make
The fifth development was that coordination between the aviation and tourism sectors had improved. The exponential growth in international tourist flows and global airlift meant that the travel and tourism sectors could no longer operate in silos. On a worldwide scale, governments were taking tourism seriously, and were increasingly getting involved in every step of the value chain. Due to this interconnectivity and mutual dependence, the Department was witnessing greater convergence and closer policy collaboration across the full travel and tourism fields. New cost drivers in aviation were also affecting consumer behaviour and travel patterns. These drivers included global exchange rate and currency volatility, oil prices, fuel hedging costs and costs of increased transport security.
Department of Tourism Presentation
Mr Kingsley Makhubela, Director-General, Department of Tourism, highlighted that tourism was contributing to three strategic areas of GDP, job creation, and transformation. The direct tourism contribution to GDP was expected to rise from R71 billion in 2009 to R118 billion in 2015, whilst its indirect contributions were estimated to rise from R189 billion in 2009 to R318 billion by 2015. By 2020, tourism would have created 225 000 jobs.
The tourism industry was seen as being able to absorb labour, as well as able to balance labour and technology. It was a catalyst for other sectors due to its multiplier effect. It was an infrastructure investment driver, and demanded reasonable skills requirements at entry level. It continued to generate foreign earnings.
Mr Makhubela said it was important to grow domestic tourism in order to sustain the industry and create more sustainable jobs. This would also address the geographic spread and seasonality aspects. It was also necessary to grow the
In regard to the Africa market, he noted that
He noted that tourism was also affected by the changing global landscape and he highlighted some important factors. About 40% of the global population was located in two countries (
Mr Makhubela then spoke to sector transformation. He said that there had been support for the implementation of the Tourism Charter, in order to achieve greater representivity. Government procurement procedures were seen as a lever for transformation and Small, Medium and Micro Enterprises (SMMEs) were prioritised for non-financial support. The culture of travelling was being cultivated in all South Africans.
There were enabling factors also in the sector. Structural arrangements across all spheres, including sector budget structures, were being developed, whilst policy synergies across the different spheres were being maintained. There was greater development of a tourism culture for all South Africans and greater availability of information for all stakeholders.
Statistics SA (Stats SA) Presentation
Mr Pali Lehohla, Statistician-General: Statistics South Africa, presented graphs and tables that showed patterns of domestic tourism, mode of transport used by people who were travelling and visiting, and activities undertaken during their trips. (See attached document)
Department of Transport Presentation
Mr Jits Patel, Acting Chief Director, Department of Transport, briefed the
The requirements for accreditation were set out in Regulation 33. These included whether the applicant complied with the Act, and had an acceptable record. Vehicles used must be inspected and compliant, by being registered, licensed, roadworthy and suitable for the purpose. After a date set by the Minister, both the applicant and driver must have passed tests. There must also be an acceptable maintenance programme for vehicles, and acceptable records of servicing, and further requirements were set out in respect of staff and back-up facilities, acceptable records as an operator, adequate insurance and compliance with tax issues. The applicants must also describe the proposed livery, which must be acceptable to promote the image of the tourist industry. Vehicles and premises must be open for inspection at any time.
There were also monitoring requirements over accredited operators, of both operational and technical aspects. The vehicle servicing must be checked on an ongoing basis, maintenance and repair facilities, as appropriate, should be available, including smaller operators having acceptable arrangements for maintenance and repair
Where a vehicle of an accredited operator had been certified, the Regulator would have to issue an operating licence for the vehicle, on either the same or the next day. Two originals must be issued, of which one should be kept in the vehicle and one on file. In urgent cases, operating licences must be issued electronically. Accreditation could also be cancelled, for reasons set out in section 83 of the Act, whilst additional grounds for cancellation were also set out in the regulations. The Regulator was empowered to conduct investigations, and would have to engage with the operator.
Mr Patel said that the Act provided for transitional matters. Operators could continue to use their existing permits or operating licences until accreditation was granted or refused. If accreditation was denied, the accreditation certificate of the operator, plus permits and operating licences, must be cancelled. They would also be cancelled if the operator was not accredited by the cut-off date.
Mr Patel noted that there were various challenges facing the industry. These included the need to establish the Regulator, the implementation of this and other legislation, tolls, fuel and carbon levies, as well as VAT and import duties. Road conditions and road safety were of ongoing concern. Many drivers did not have the necessary requirements for public transport operators. There was a need to establish an advisory Standing Committee of experts.
Department of Economic Development (EDD) Presentation
Mr Richard Lenin, Director General, Department of Economic Development, emphasised that the global economic downturn from late 2008 had resulted in loss of over a million jobs in South Africa, returning unemployment to its lowest levels, and leading to a tighter fiscal situation where there was a steep drop in State revenue in 2008/09, countered by the State’s commitment to a counter-cyclical strategy and rapidly increased deficit. The New Growth Path (NGP) recently announced had set a target of creating five million new jobs over the next ten years. Government was also fine-tuning macro and micro policies to support more equitable and employment-intensive growth. This would be achieved through making the economy more competitive, including the value of the currency, through increasing infrastructure, skills and wage goods, systematically encouraging more labour-intensive and green activities, with a greater focus on domestic and regional markets, and using social dialogue and solidarity as central to change.
Achievement of job targets would require greater employment intensity of growth. Employment intensity of 0,2% would require a growth rate of over 15%, whilst 0,8% would require a growth rate of 4%.
Mr Lenin outlined the possible innovations that would drive creation of jobs. These would include sustained high public investment in infrastructure with stronger local procurement, and setting targets for smallholders in agriculture, linked to restructured land reform. In the mining sector, there was a need to incentivise output growth, plus beneficiation at stage 4. There must be increased emphasis on high level services of tourism, culture, business, healthcare, and software. The green economy was seen as a major potential area for employment creation. African regional development centred on driving improved infrastructure and economic value-chains.
Mr Lenin then outlined the policy drivers. The macro-economic strategy was counter-cyclical and geared to supporting a competitive rand. A more relaxed monetary policy would address inflationary pressures through fiscal policy and targeted micro-economic strategies. The micro-economic strategy would address cost drivers and inflationary pressures across the economy, with an emphasis on steel, fertilizers, rail, ports, electricity, maize and wheat production. It was linked to skills development, including the reform of the Sector Education and Training Authorities (SETAs) and the work permit system. Reform of Broad Based Black Economic Empowerment (BBBEE) strategies would increase incentives for supporting Small and Medium Enterprises (SMEs), skills development, local procurement and employment creation. Sectoral policies included improvements in mineral licencing, speeding up water licencing and land claims, improvements in tourist visas, and dedicated Industrial Development Corporation (IDC) funding for green and agricultural projects. The Anti-Red Tape Campaign would improve the overall regulatory framework, with an initial focus on metros and secondary cities.
Mr Lenin described the resource drivers. These would be the State budgets, at national, provincial and local levels. Resources existed at State owned enterprises (SOEs) and development finance institutions (DFIs), universities and science councils and retirement funds. The domestic private sector, international investment and donor funding, as well as community-owned financial institutions such as stokvels and co-ops, must also be involved.
Institutional drivers outside the State included business and markets, which would be vital to development of jobs, investment, entrepreneurship and technology. Labour resources included skills commitments, retirement funds, union investment vehicles, wage agreements and public service delivery. Mr Lenin also stressed that there was a need to deepen dialogue at sector and workplace levels, to strengthen institutions for social dialogue at all levels, with the New Economic Development and Labour Council (Nedlac) at the apex, and to mobilise South Africans behind the vision.
The New Growth Path saw tourism as an important jobs driver being able to create employment on a large scale. It targeted creation of 225 000 new job opportunities by 2015. Its strategy was to focus on managing costs, assuring quality, upgrading infrastructure, and improving domestic and international logistics and ease of access. The New Tourism Strategy was a critical mechanism.
Mr Lenin summarised the Lekgotla priorities for tourism in the 2011/12 financial year. These were to
improve tourism infrastructure at five key sites, to develop opportunities for domestic tourism, to drive the airlift strategy for strategic markets and explore developmental pricing for these markets, to manage the overvaluation of the rand, which was crucial to tourism cost structures, and to minimise visa requirements for strategic markets. In order to achieve this there would have to be transformation of deep-rooted and complex systems. Every State agency must report on its impact on employment creation by developing information systems based on a common model, and must assess its regulations more systematically against employment, growth, emissions and equity.
Department of Arts and Culture (DAC) Presentation
Mr Vusithemba Ndima, Acting Deputy Director-General: Cultural Heritage, Department of Arts and Culture, highlighted that the DAC was making a direct contribution to tourism development and growth, by establishing, supporting and developing arts, culture and heritage programmes and entities, and by producing activities that were consumed by locals, international visitors, and international audiences. The extent of this contribution was not yet fully clear and would require scientific assessment and quantification. He said that although there was already substantial contribution, there could be more when the true potential of the sector was realised.
Mr Ndima noted that the DAC, through its agencies, had the arduous task of identifying cultural objects and heritage sites. This would then lead to the DAC developing comprehensive marketing strategies for cultural tourism to the cultural objects and heritage sites. Cultural tourism extended opportunities also to the hospitality, transport, creative, textile, food and other industries. There was a need to identify previously marginalised sites located in the urban, peri-urban and rural areas. These would lead to newly packaged tourism routes passing through rural towns and villages.
Mr Ndima noted that DAC already had, and continued to build museums, memorials and community arts centres in the rural and peri-urban areas. Each museum should carve a niche for itself, and curators and tour guides should hold seminars to share ideas. DAC would continue to nourish the soul of the nation, and use arts, culture and heritage for nation building, national reconciliation and social cohesion. The DAC and the Department of Tourism were working together in mainstreaming culture in tourism activities. The two departments were also working together to develop a five-year heritage and social history tourism strategy, which would produce a comprehensive plan for synergies between culture and tourism.
Department of Cooperative Governance and Traditional Affairs (COGTA) Presentation
Mr Ricardo Hansby, Deputy Director-General: Economic Development, COGTA, indicated that the core business of local government was the delivery of services to communities. Tourism development at local level had to be viewed in the context of many competing socio-economic priorities, and this development and marketing at local level should be based on and highlight the comparative and competitive advantages of the local regions.
Local government had also a significant impact on the natural and cultural resources in and around tourism destination. This extended through provision of municipal roads, lighting, water and sewerage, public transport systems, signs, and, at times, airports and ports. Local government would also provide visitor information and funding of regional and local tourism organisations. It would operate attractions such as museums, art galleries, sports stadiums, convention centres, parks and gardens, events, tours, and other amenities. It was also important to ensure that tour operators, travel agencies, hotels, restaurants and others were licensed and offering services.
Municipalities, in order to succeed in promoting tourism, would have to ensure that core infrastructure in their areas was of high standard and could support a vibrant tourism industry. There should be enabling environments, concentrating on safety, security and availability of transport. There must also be an effective and efficient supply of tourist information, to extract maximum value from visitors.
The mechanisms through which the information was supplied were equally important. COGTA had therefore supported the draft Tourism Planning Toolkit for Local Government that was launched by the Minister of Tourism and Environmental Affairs at the Local Government Indaba on Tourism in January 2009. This was making an important contribution to increasing competence in tourism planning at local level. It was assisting local authorities in their strategic and financial planning, helping to ensure the appropriate investment in infrastructure and services for tourism, assisting with the development of community tourism plans, and providing research and management systems to help with the collection of tourism data, preparation of strategic tourism plans and assessment of their effectiveness.
Mr Hansby outlined the benefits of tourism at local level. These included economic benefits from visitor spending, which supported employment and creation of outlets and services that the local population on its own could not support. He noted that tourism could help to revitalise small municipalities and create a sense of local identity and pride. Tourism events would give residents and visitors the opportunity to celebrate and experience unique features of the community, and would also promote the brand and experience to attract new investment and more residents.
Mr Hansby noted that while tourism brought a number of economic benefits, such as an increase in the activities of the sector, it could also have significant and adverse impacts on local residents and communities, and on the biophysical environment. For instance, devolved responsibility for basic services, as well as lack of resources, community acceptance and the need for good governance placed pressure on councils. A major challenge was the low level of coordination and integration between national, provincial, district and local tourism initiatives.
Mr Hansby said that a number of things needed to be done to address this. There was a need to coordinate efforts for funding assistance for tourism projects, infrastructure, training, and capacity building. There should be better alignment between cities and provinces when developing and implementing tourism strategies that would identify priority areas for tourism development. A comprehensive framework for tourism activity at local level must be developed, using the Integrated Development Plans, and distinctive high-level implementation plans must also be developed between COGTA and Department of Tourism, with consultation from stakeholders in all three spheres. COGTA was already exploring business ventures with the private sector at local level, which could include large-scale tourism projects
Department of Trade and Industry (dti) Presentation
Ms Tsepiso Makgothi, Acting Deputy Director-General: The Enterprise Organisation, Department of Trade and Industry, introduced the Tourism Support Programme (TSP), noting that it formed part of the Enterprise Investment Programme (EIP) and focused on tourism investment.
She outlined that the TSP offered an investment grant of up to 30% of qualifying investment costs in furniture, equipment, vehicles, land and buildings. It was capped at a maximum of R30 million, calculated in relation to the qualifying investment costs. The grant for investment projects of less than R5 million would be 30% of the qualifying investment costs, payable over a period of three years. For investment projects between R5 million and R30 million, the grant would be between 15% and 30% of qualifying investment costs, calculated on a regressive scale, and payable over a period of two years. For investment projects exceeding R30 million, a 15% grant was available, payable over a period of two years.
Ms Makgothi said the TSP targeted the establishment of new tourism facilities, or expansion of existing facilities. Both local and foreign owned projects could apply, but applicants must have entities registered in South Africa, in the form of companies, close corporations, co-operatives, or community trusts. Projects that had not taken their investment assets into commercial operations were also considered.
The TSP set out eligibility criteria. The wages being paid must be in line with the hospitality sector wages determined by the Department of Labour, and the entrepreneurs must achieve Level 4 BBBEE contributor status, in line with the Tourism Code. Suppliers must also be located outside the big metros of Cape Town, eThekwini and Johannesburg, with the exception of marginalized areas in metros.
She set out the services that could qualify. These included accommodation services dedicated to tourists (including hotels, lodges, resort accommodation, guest houses, bed & breakfasts, backpacker facilities, and self catering accommodation). Any passenger transport services, including road, rail and water, must be dedicated to tourists and must be registered in South Africa. Tour operators, cultural services dedicated to tourists (such as privately-owned museums) and recreation services dedicated to tourists, would also qualify.
Ms Makgothi then described the qualifying assets, which could include furniture, fittings and equipment, owned land and buildings, at cost value, leases on land and buildings, and commercial vehicles.
There were conditions attached to the TSP grants. The operators should achieve 70% of their projected investment and 70% of projected turnover. They should also maintain 100% of stipulated employment levels, whilst paying wages in line with hospitality sector rates, and must also achieve and maintain BBBEE level 4 contributor status
Q: A delegate asked if the Clean Cities initiative had started already in eThekwini Municipality, and how far the roll-out had gone in the rest of the country.
A: Mr Hansby replied that the Department was busy with a few municipalities. A bigger budget was needed to roll out the initiatives on a larger scale. He was not sure about the implementation at eThekwini Municipality.
Q: A delegate asked what initiatives had taken place by local government to promote tourism.
A: Mr Hansby stated that COGTA was trying hard to find ways of doing that, without holding too many discussions, and so far had succeeded by engaging with the business sectors of municipalities, to identify the opportunities available so that sustainable jobs could be created. He emphasised, however, that municipalities should promote their own local areas, and should also deliver services that would attract tourism.
Department of Trade and Industry
Q: Clarity was sought on what a Level 4 contributor was.
A: Ms Makgothi said a Level 4 contributor would be a businesses with a turnover less than R4 million.
Q: The Enterprise Investment Programme was asked what it was doing to assist organisations in the townships.
A: Ms Makgothi explained that many townships projects would qualify for the programme, and that several projects in the townships had been supported.
Q: A delegate asked whether anything would be done to assist those who applications were not approved to improve, so that they could apply again.
A: Ms Makgothi said if the dti focused only on those SMEs whose applications had not succeeded, it would not be fulfilling its mandate and would miss the opportunity to assist others.
Q: A delegate asked why the three big metros of Cape Town, Johannesburg and Durban, as well as Section 21 companies, were excluded from the TSP.
A: Ms Makgothi explained that the dti had discovered that 60% of tourism suppliers were based in these three metros, but it was felt that the work needed to be spread to other areas, especially marginalised municipalities, in order to stimulate interest and growth in this sector.
Q: A delegate noted that SMEs were complaining that registration at the Companies and Intellectual Property Registration Office was taking an inordinately long time to complete.
A: Ms Makgothi said her unit could not address CIPRO activities, but there was another unit at dti that dealt with these matters.
The first day of the Summit was adjourned.
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