National Department of Tourism and South African Tourism on bi-annual reports for the last six months of 2010/11 financial year

Committee: Tourism

Chairperson: Mr D Gumede (ANC)

Date of Meeting: 21 Mar 2011

Summary

The National Department of Tourism presented its Second Bi-Annual Report. The information contained  in the briefing document was information as at December 2010.Members were given a very comprehensive breakdown of targeted figures versus actual achieved figures on its various strategic themes and objectives. It became apparent that in some instances it would seem that the Department had performed exceptionally well but the DG explained in many instances the Department had simply set too low targets. On the flip side in some instances the Department had set targets that were over ambitious. For example a target had been set to train 250 000 people but the reality was that the Department lacked the capacity to even attempt to meet the target. It consequently had to prioritise areas of training and 14000 persons were trained. Members were also given a breakdown of the financials of the Department. As at December 2010 total expenditure sat at 72% however the figure had increased to 95% at present.

SA Tourism briefed the Committee on its Business Review 2010/11. The Committee was given a comparison of figures for 2009 and 2010 on various measurables. For example tourist arrivals for 2010 were 8 073 552 which was a growth of 1 061 687 versus 2009. It was a 15.1% increase. The domestic market was affected by the financial crisis as domestic tourism decreased by 8% in 2009 with 30million trips being undertaken compared to 33 million in 2008. The domestic tourism figures that SA Tourism had at it s disposal was only for 2009; the information for 2010 was due to be available soon and would be provided to the Committee. SA Tourism’s key initiative for 2011/12 would be to rollout the 20 experiences in 10 days campaign and the launch of phase 2 which features visitors from Angola, Brazil, China and Germany.  A breakdown of SA Tourism’s financial position was also provided. As at 31 January 2011, SA Tourism had spent R660,4m or 87% of its year to date budget of R760,0m.

Due to time constraints limited discussion took place but the Committee agreed to forward questions in writing to both the Department and SA Tourism for answering. Some of the issues raised revolved around targets, some being surpassed whereas others fell short of expectations. The impact of the World Cup and unforeseen incidents like the Dewani murder on tourism in SA was queried. Incorporating universal access for disabled persons as part of grading criteria to be met by businesses was raised. The efforts of the Department on the Expanded Public Works Programme were also queried.


Minutes

The Department of Tourism was represented by Mr Kingsley Makhubela. Director-General, Ms Nomzamo Bhengu, Chief Director: Business Performance, Strategic Partnership and Risk Management, Mr Ralph Ackerman Chief Financial Officer, Ms Bulelwa Seti ,Chief Director: Capacity Development, Ms Lerato Matlakala Acting Deputy Director General: Tourism Development, Mr Dirk van Schalkwyk, Chief Operating Officer and Mr Livhuwani Nemuthenga. Director: Performance Management.

National Department of Tourism (NDT)
Mr Makhubela noted that the briefing was on information collected up until December 2010. The current Department had inherited projects from the previous Department of Environmental Affairs and Tourism. Many of the projects were now reaching maturity. There were elements in the National Tourism Sector Strategy (NTSS) that did not lie within the Department’s purview of implementation but lied elsewhere. An example of such an element was transformation. The Department conceded that there were challenges attached to its implementation. There was a realisation that issues needed to be measured in order for implementation to take place. The NTSS was approved on 2 March 2011. The Draft Amendment Tourism Bill was destined for Parliament and would speak on issues relating to the Strategy. Within the Strategy the issue of training of trainers had arisen. Many people needed to be trained and a huge training academy was required. The Department had set itself a difficult target of training 250 000 persons when there were no training facilities to train persons. The Department had to prioritise training and decided to focus on certain areas. For example persons were trained in hotel management. The hotel group from Canada, Ritz-Carlton partnered with the Department on the training project.

While it appeared on the surface that the Tourism Enterprise Programme (TEP) had performed well, the truth of the matter was that low bases had been set hence actual results seemed much higher than the bases set. In terms of the NTSS a vacancy rate of 30% had been expected. The actual vacancy rate within the Department was 21%. The intention was to reduce it to 10%. As at December 2010 the expenditure of the Department sat at 72%. It was 95% at present. The remaining 5% that remained unspent was to be utilised when the Department moved to its new premises. By the end of the financial year which was at the end of March 2011 the Department would have spent all its funds. The development of a strategy and the implementation of it were two different matters. Some of the Department’s achievements might seem impressive but the truth be told was easily attainable targets had been set. It had to be remembered that a strategy was a hypothesis and sometimes a hypothesis needed to change if it was unattainable. Hence if implementation was impossible changes needed to be made to a strategy.   

Ms Bhengu undertook the next phase of the briefing and presented the Department’s Second Bi-Annual Report. The information reflected in the briefing document was information as at December 2010.

Tourism Growth
For the strategic theme people empowerment and job creation, the targeted number of full time jobs created from the Medium Term Expenditure Framework Baseline Budget was set at 9861, but the actual amount of jobs created was 6003. On tourism sector transformation, a target of 30% was set for the percentage of black majority owned tourism enterprises that were in line with the Tourism Charter. What was achieved was that a concept document for the development of a model was in place. On sustainable tourism growth and development the target was set at 5 for the number of sustainable tourism products and experiences in rural areas. To date a rural strategic framework had been developed. The target was also set at 10 (8 rural) for the number of start up enterprises to be supported, the actual figure on supported start-ups was 1270.  On sustainable tourism sector growth and development a target was set at 100 for the number of educators that were to be trained to better understand tourism. Thus far a web portal for educators was in place and seminars were conducted in all nine provinces. In addition the National Tourism Career Expo had been postponed indefinitely until further notice. The targeted number of people exposed to international and local training opportunities was set at 180. To date 233 candidates had been placed at the Ritz Carlton Hotel in Canada. On responsible tourism promotion a target was set for all nine provinces for universal accessibility awareness campaigns to be held by tourism associations. Thus far ten workshops were conducted and 3100 brochures had been distributed in six provinces. On tourism service excellence a target was set at 20% for tourist guides registered in the new system. Progress thus far was that a brochure on tourist guiding had been developed and printed.

Policy, Research, Monitoring and Evaluation
On tourism sector knowledge and policy leadership the targeted number of tourism policies or strategies developed was set at two. To date a first final draft of the NTSS with all initial inputs from stakeholders was compiled and the layout of the initial draft from consultants was revised. Various Deputy Director General bilateral meetings were co-ordinated with key tourism stakeholders wherein the amended Draft NTSS was discussed. A First Draft Implementation Plan was in place. A target was also set for a tourism regulatory instrument to be promulgated. A draft position paper on mandatory registration of tourism businesses was in place. On integrated tourism governance a number of Provincial Growth and Development Strategies (PGDSs) integrating tourism priorities were initiated and a target of nine was set. A draft analysis report on PGDS had been finalised. 

Governance
On public education, awareness and outreach a single target had been set for a tourism awareness initiative. The consequence was that a concept on the Tourism Awards was completed. A decision on when the Tourism Awards was to be held was still to be finalised. A target of 15000 hits on the NDT website per month had been set. The actual result was 75 557 hits with 3076 of them being unique visitors. The Department had set a 100% target for compliance to the Promotion of Access to Information Act. The target had been met. A target of 85% had been set for call centre requests processed as per service delivery standards. The actual figure was that 98.2% of call centre queries were processed as per service delivery standard.  On international relations and co-operation no progress had been made on tourism priorities initiatives through South-South co-operation. The challenge was that the Department was awaiting dates from the Department of International Relations and Co-operation to attend the IBSA meeting. On South-North co-operation, progress had been made as the Department was currently negotiating an agreement with China. On human capital management and development the Department had targeted its vacancies to be around 30%, the actual vacancy rate sat at 21%.The Departments targets for representativity of women, disabled persons and blacks were 50%, 2% and 75% respectively. The actual achieved figures were 54.76%, 2.04% and 83.67% respectively. On good governance the target was to receive an unqualified audit report from the Auditor General. The audit was however still in progress. The Department had managed to obtain 100% compliance with statutory tabling requirements. The targeted percentage expenditure of the Departmental MTEF budget was set at 95%. The actual expenditure only sat at 69.1%. As at December 2010 the Tourism Bill had been approved by MinMEC for publication.

Mr Ackerman continued with a brief expenditure report of the Department as at 30 December 2010. He wished to inform the Committee that the Department had only received funds for moving into its new premises in the adjusted budget. The Department would request National Treasury to roll over funds. The Department’s percentage expenditure per programme was Administration- 43%, Tourism Development- 49%, Tourism Growth- 92% and Policy, Research, Monitoring and Evaluation- 66%. The total expenditure at the time was 72%.

South African Tourism
SA Tourism briefed the Committee on its Business Review 2010/11. The delegation comprised of Ms Thandiwe January-Mclean Chief Executive Officer, Ms Roshene Singh and Mr Timothy Scholtz Chief Operating Officer.

Ms January-Mclean noted that tourist arrivals for 2010 were 8 073 552 million which was a growth of 1 061 687 million versus 2009. It was a 15.1% increase. The domestic market was affected by the financial crisis as domestic tourism decreased by 8% in 2009 with 30million trips being undertaken compared to 33 million in 2008.South Africa maintained a similar level of awareness in 2010 as was reported for 2009 however the country’s  performance dipped slightly on positivity and short-term consideration in 2010, compared to 2009.

SA Tourism’s key initiative for 2011/12 would be to rollout the 20 experiences in 10 days campaign and the launch of phase 2 which featured visitors from Angola, Brazil, China and Germany.

Ms Singh undertook the briefing. The vision, mission and mandate of SA Tourism were touched on. She continued where Ms January-Mclean left off by stating that SA continued to outperform global tourism growth which was 6.7% in 2010 whilst tourist arrivals to SA grew by 15.1%.While there was growth from all markets in 2010, long haul markets grew the fastest at 21%. She elaborated on performance versus targets on foreign visitor arrivals for 2010/11. The 2010 target of 4.2% was exceeded as foreign visitor arrivals grew by 14.7%. As was earlier stated by the CEO, South Africa maintained a similar level of awareness in 2010 as was reported for 2009, South Africa performed very well in the period immediately after the World Cup, but then moderated down back to pre-World Cup levels by November 2010. South Africa’s performance declined slightly across all the brand knowledge attributes in 2010 as compared to 2009; however the country’s performance was better for the month of August 2010 primarily due to the FIFA World Cup. In terms of knowledge of the SA Brand compared to 2009, the country’s ranking improved in India and Italy, whereas it declined in three of its core markets i.e. Netherlands, Germany and the USA. On global online performance in terms of website and call centre traffic there was an overall increase from 2009 to 2010 figures. On business tourism performance the number of visitors at Meetings Africa grew by 21% from 1755 in 2010 to 2131 in 2011.The number of registered exhibiting companies had increased by 39% in 2011. The domestic tourism figures that SA Tourism had at it s disposal was only for 2009, the information for 2010 was due to be available soon and would be provided to the Committee. Ms Singh provided a brief recap of the Tourism Grading Council of SA’s strategies which had been presented to the Committee at a previous meeting. She did provide detail on achievements in relation to those strategies. In October 2010 implementation of new grading criteria commenced. SA Tourism was working closely with the NDT to ensure that government departments only used graded establishments. A very strict service provider agreement had been signed with all assessors and was effective from October 2010. A new grading fee had also been introduced on the 1 October 2010. A new information technology system called the Quality in Tourism system had been implemented.

A breakdown of SA Tourism’s financial position was also provided. As at 31 January 2011, SA Tourism had spent R660,4m or 87% of its year to date budget of R760,0m. Although most of SA Tourism’s 16 business units and 10 country offices managed to spend 100% of their approved 2010/11 budgets, SA Tourism was expected to have a net surplus of approximately R15m for the 2010/11 financial year because the opening of a Luanda office had been delayed, at the London Office certain expenditure had been delayed, there had been savings on overheads at the China Office and lastly the strong rand had resulted in foreign exchange savings.

Discussion
Mr L Khorai (ANC) was concerned that there were certain targets which the Department had not met. The Committee had been under the impression that all targets would be achievable.

Mr Makhubela replied that the Department’s expenditure was 95%. There was a shortfall of 5%. The expenditure should have been 100%. Hence strictly speaking the Department had not performed. It had challenges and it was trying to deal with them. The Department had an Internal Audit Unit and it was functioning. The Unit had performed a high risk assessment. He referred to the ambitious plans of the Department to train 250 000 persons and stated that the Department had bitten off more than what it could swallow. Only 14000 persons had been trained. The Department lacked the institutional capacity to train 250 000 persons. It had prioritised which persons it needed to train first. Frontline people were trained first in order to promote service excellence.

Mr G Krumbock (DA) referred to page 15 of the SA Tourism document and remarked that it was once again the recurring issue of what the definition of a tourist was and what was considered foreign visitor arrivals. He asked whether it was correct that a tourist was someone who stayed in SA one night or more. What was the reason for the receding figures to be found on page 22? He asked how tourist arrivals compared before and after the 2010 FIFA World Cup. Was there a residual increase in tourism after the World Cup? He asked the Department about conference facilities to be built and asked if eight was initiated, and eleven was in the planning and implementation stage, what the benefit to SA was. Was a cost-benefit analysis conducted? The target on start up businesses was 10 however actual figures were 270 which surpassed the target by far. How were start up businesses supported? Did start ups receive grants or loans?

Ms Singh replied that Mr Krumbock was correct that a tourist was someone who stayed one night or more. She conceded that the figures referred to on page 22 were in fact declining and that it was concerning. It was however receiving attention.

Mr Krumbock asked whether the Dewani murder case had caused the decline in figures.

Ms Singh stated that the Dewani incident had happened in November 2010 and that public sector strikes had taken place in September and October 2010. All these factors contributed towards the decline.

Mr van Schalkwyk added that the Department did not provide loans or subsidies to start ups. Training for start ups was provided by the Department of Trade and Industry via the TEP.

Ms Matlakala stated that an audit on EPWP payments would be done this year. In 2012 and 2013 impact studies, value for money and cost-benefit analysis would be done.

Ms C Zikalala (IFP) told the Department that she was often asked by the public how they could apply for educators’ posts in tourism. Did the Department grant bursaries? She also asked the Department to expand on its wellness plan.
She addressed SA Tourism and asked whether there was any cheating by owners and management over grading. What did SA Tourism do to prevent cheating on grades?

Ms Seti replied that the Department did have bursaries. At present there were 25 applicants for bursaries and the total amount of bursaries was R137 850. A Bursary Committee was in place. There were tourism and hospitality bursaries.  

Mr Makhubela added that every department had to have an employment wellness centre. The idea was to support employees who had problems. Social workers were employed to assist workers. Organisations like the South African Police Services (SAPS) for example had huge employment wellness centres given that SAPS members worked under stressful circumstances. The Centre was located in the Human Resources Directorate of the Department.

Ms January-Mclean stated that there were new grading criteria. It made business sense to comply with grading.

Ms J Terblanche referred to universal accessibility especially for disabled persons and stated that she had recently read an article which spoke about requirements that should be in place. What was the Department doing about it?

Ms January-Mclean noted that the new grading criteria made provision for universal access as well.

Mr Makhubela added that there was a Ministry within the Presidency which dealt with disability. There was no legislative framework to deal with disability. Disability should be catered for. Disability was a challenge in society in general. It would have helped if there was a legislative framework for disability.

Ms J Manganye (ANC) asked what was done to prevent the duplication of grading plaques. What was the Department doing to encourage businesses to get graded? How information on grading was made accessible to persons in rural areas?

Ms Singh replied that SA Tourism tried its best to engage as best as it could. It was difficult to control businesses given that SA had a free market economy.

Ms M Njobe (COPE) asked for clarification over the financials of the Department regarding drawings versus expenditure. She also referred to the minimal expenditures on many of the items as reflected in the expenditures per directorates, when it was so close to the end of the Department’s financial year. How were they going to spend the remainder of allocated funds by the end of the financial year? She asked for greater detail on what was being done on the Expanded Public Works Programme (EPWP). Why was expenditure on the EPWP below 50% in Programme 2?

Mr Ackerman explained that drawings were done at the beginning of each financial year. The Department had to provide National Treasury with a breakdown of expenditure plans for the year. National Treasury allocated an amount for each month. This was what drawings were. He conceded that some of the sub programmes were under spending up until December 2010.Spending had however picked up for the last three months after December 2010. The Department’s spending was now sitting at 95%.

Mr Makhubela referred to the EPWP and stated that there were governance issues. Once the governance issues were resolved and systems were in place funds could be released for implementation. It was fortunate that up until now there were not major problems associated with the EPWP. Projects had thus far been implemented well. The Internal Audit Unit scoped risks in various units. There was an Audit Committee which was allowed to interact with the Minister. The Research Unit of the Department was allocated R5m. Many academics especially from universities did pro bono work for the Department. A committee comprising of academics would evaluate the material of the Department.

The Chairperson asked when the Committee could expect the Tourism Bill.

Mr van Schalkwyk replied that the Bill would be referred to Parliament in the third quarter of 2011. There was an action plan to deal with the Department’s vacancy rate. Posts had been advertised in January and February, the closing date for applications was March, interviews would be held in April and the successful individuals would start work in May 2011.

The Chairperson stated that time constraints limited further interaction and members would in writing forward any further questions to the Department and SA Tourism.

The Department and SA Tourism were excused from the meeting.

Announcement
The Chairperson informed the Committee that Members were required to participate in a parliamentary radio programme hosted by a wide variety of radio stations. Members would be required to answer questions posed by the broader public on tourism issues.

The Committee agreed on which Members would appear on which radio stations depending on the languages they were able to converse in.

The meeting was adjourned.