Department of Tourism Annual Report 2010/11 & Preliminary Biannual Performance Report 2011/12


10 October 2011
Chairperson: Mr D Gumede (ANC)
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Meeting Summary

The National Department of Tourism briefed the Committee on its Annual Report 2010/11 and its Preliminary Performance Report 2011/12. Both briefings entailed a breakdown per programme of performance indicators, the targets set to meet those indicators and the actual performance achieved. It was evident that members would have appreciated the Minister and top management to have been present. The Committee was impressed by the Department receiving an unqualified audit report. A sore point for the Committee was the poor performance of the Expanded Public Works Programme. Out of R32 million for it, the NDT had received R12 million. The remaining R20 million had been unused. Many of the EPWP projects simply lacked infrastructure and were unsustainable. The NDT had itself initiated a forensic audit of four EPWP projects as they were identified as corrupt.

Meeting report

National Department of Tourism (NDT) Annual Report 2010/11
The NDT delegation comprised of Mr Dirk van Schalkwyk, Acting Director General and Chief Operations Officer, Mr Victor Tharage Deputy Director General: Policy, Research, Monitoring and Evaluation, Ms Aneme Malan, Deputy Director General: Tourism Growth, Ms Lerato Matlakala, Acting Deputy Director General: Tourism Development, Ms Nomzamo Bhengu, Chief Director : Business Performance and Management and Mr Ralph Ackerman, Chief Financial Officer.

Mr van Schalkwyk apologised for the absence of the Minister and the Director General as they had previous engagements which had taken them abroad. The NDT had received an unqualified audit report from the Auditor-General’s Office. Observations by the Auditor-General (AG) were that the NDT in a number of instances did not maintain appropriate control measures related to the EPWP. There was a lack of regular reporting and submission of external audit reports. Management identified the EPWP as an area that required improvement of internal controls. The Director General who was also the Accounting Officer had initiated a forensic audit investigation in respect of EPWP projects.

The NDT had spent 96.59% of its funds. There was however under expenditure of just over R40m. The budget breakdown per programme was Administration 15%, Tourism Development 27%, Tourism Growth 57% and Policy, Research, Monitoring and Evaluation 1%. The bulk of the briefing entailed a breakdown per programme of key performance indicators, the targets set to meet those indicators and the actual performance achieved.

Programme 1: Administration
The average monthly traffic target on the NDT website by external people had been set at 15000, the actual figure achieved was 296 192 hits. The number of stakeholder engagement initiatives was targetted at one, the actual achievement was five. The target of negotiated international agreements (on tourism growth, development and knowledge service) signed was set at 50%; the actual performance was lower at 25%. The percentage of vacancies or the vacancy rate target was set at 30%, the actual vacancy rate was 19% which was a positive. The percentage representation of women, disabled persons, and blacks were set at 50%, 2% and 75% respectively. The actual figures achieved were 53%, 2% and 91%. The percentage of expenditure on procurement from broad based black economic empowerment or black economic empowerment enterprises was set at 58%, actual percentage achieved was 59%.

Programme 2: Tourism Development
The number of full time equivalent jobs created from the Medium Term Expenditure Framework (MTEF) Baseline Budget target was set at 9,861, the actual jobs created was 8,090. The number of accredited training person days created from MTEF Baseline Budget target was 17,629 days, the actual figure achieved was 25,390 days. The percentage of black majority owned tourism enterprises in line with the Tourism Charter was set at 30%. Research had indicated that 22.8% of large enterprises, 21.3% of qualifying small enterprises and 17.7% of exempt micro enterprises complied with the 30% ownership target. The increase in the number of black women in executive positions and ownership of businesses in tourism, was set at 20. The Tourism Enterprise Partnership (TEP) partnership for the mentorship of women which will see women being allocated international mentors to support them in the development and implementation of their business plans had been agreed to. The mentorship launch planned for March 2011 was postponed due to clashing schedules. The number of sustainable tourism products and experiences in rural areas had been set at five. To date a draft rural tourism strategy had been developed and a memorandum of understanding between the NDT and the Department of Rural Development and Land Reform had been vetted and was ready to be signed.

Programme 3: Tourism Growth
The number of South Africans as a percentage of the total workforce in the tourism sector was to have a baseline and framework in place. Actual performance was that a concept document had been developed. The target for the number of educators trained to better understand tourism was set at 100, the actual figure achieved was 805. The target for the number of people exposed to international and local training opportunities was set at 180, the actual figure was 242. The number of tourism graduates placed for experiential learning target was set at 50, the actual figure sat at 300. The percentage of tourism graduates placed for experiential learning employed had a target set at 5%, the actual percentage employed was 39%. The target for the number of school leavers who register for tourism qualifications at higher learning institutions was set at 200, the actual figure was much higher at 7,557. Tourism establishments adopting and implementing universal accessibility minimum requirements was to have a target of having minimum requirements in place. This unfortunately was not achieved. The percentage of tourist guides registered in the new system had a target of 20%; the actual percentage was a bit higher at 25.3%.

Programme 4: Policy, Research, Monitoring and Evaluation
This was the newest programme of the NDT. The number of impact evaluation reports for tourism sector initiatives, including major events, had a target of one which was achieved. The target set was to have a draft Annual State of Tourism Report for 2009/10. Thus far a proposal for the state of tourism was developed and data sourcing had commenced. A target had been set for a framework to be approved for the percentage compliance with sector monitoring and evaluation. A draft monitoring and evaluation framework for the National Tourism Sector Strategy (NTSS) had been developed. The NDT had intended for tourism related policies/strategies/legislation to be finalised. A draft bill had been approved by MinMEC and the Minister for Cabinet. State Law Adviser comments had been received. The number of tourism policies/strategies achieved had been met. The target set and those achieved was two. The target for the number of district and local municipalities supported to develop tourism plans, strategies and programmes was three. The NDT had for efficiency purpose, clustered the districts per province. All districts in three provinces (Limpopo, Eastern Cape and Free State) were supported to use the Local Government Tourism toolkit and draft NTSS implications.

The NDT staff complement was 310 persons. Workforce representativity at the end of 2010/11 financial year was Africans-83%, Coloureds-6%, Indians-3% and Whites-8%. Africans at senior management level sat at 64%, women at senior management level sat at 53%. Disabled persons made up 2% of the NDT’s workforce. The staff turnover rate sat at 9%.

The Chairperson highlighted issues which he felt to be of importance. The current budget of the Department was considered a concern. More could be done if there were not funding constraints. He was glad that on human capital management and development, the NDT was surpassing its targets but the question was whether targets were being surpassed at local government level as well. Other issues included whether transformation was taking place as it should and whether grading criteria for establishments were being implemented. The comments made by the Auditor-General on the Annual Report should also be heeded. The delay in payments by the NDT to the Auditor-General’s Office and to the State Information Technology Agency (SITA) was also undesirable. The late payment was a management weakness. The use of graded establishments by government departments for accommodation purposes was another issue which needed to be looked at. It should be an audit requirement for departments to use graded establishments.

Mr van Schalkwyk stated that the NDT noted the issues raised by the Chairperson. He was surprised by the Chairperson’s statement that the NDT had delayed payment to auditors and SITA. Payments were made within thirty days. It was a compliance requirement.

Ms C Zikalala (IFP) was disappointed that the top structures of the NDT, such as the Minister, Deputy Minister, the Director-General and the Deputy Director-General, had been unable to attend the meeting. She accepted their apologies but nevertheless felt that that they did not consider the work of the Committee to be that important. How was the Committee expected to do oversight when those that should be accountable were not present?

She asked if the NDT had evaluated the National Tourism Career Expos and asked how it intended to use lessons learnt from these. Referring to the briefing, she asked how true it was that the number of black women in executive positions and ownership of businesses had increased. The statement was vague and she wanted examples. Comment was also made about the NDT’s attempts to create sustainable tourism products and experiences in rural areas. She wished that the Committee could have done oversight in the areas of work referred to by the NDT in its Annual Report. The reality was that the Committee could not visit all those places and hence had to take the word of the NDT that work was being done.

Mr van Schalkwyk stated that it was difficult for the NDT to accurately determine the number of executive positions held by black women in the tourism industry. The NDT requested the information from businesses but it was up to them to furnish it. About tourism products in rural areas, a target had been set but the inherent challenges were a crosscutting issue. The Department of Rural Development did have a rural development strategy.

Ms Bhengu stated that the NDT did evidence based reporting. The NDT had to provide evidence on what was reported on. The claims made by the NDT could be verified.

Mr Tharage added that the NDT did take the oversight work of the Committee seriously. Whatever the NDT presented to the Committee was true.

Ms M Njobe (COPE) congratulated the NDT on its unqualified Audit Report. She stated that the Expanded Public Works Programme (EPWP) was supposed to be the main job creator. It was thus disturbing that the NDT had not spent all its EPWP funds. Why were funds returned to National Treasury. She asked if it was a good idea in the first place for the NDT to have had a huge EPWP budget when it could not handle the implementation on its own. Perhaps the unused EPWP funds should have been directed elsewhere instead of being returned to National Treasury? She asked why not much was achieved regarding international agreements in Africa. What were the constraints in relation to Africa? The BRICS Agreement however had been concluded between Brazil, Russia, India, China and SA. Was there a particular strategy for Africa as well? She referred to international visits undertaken by the Minister and other officials of the Department and asked if those visits helped in bringing more visitors to SA.

Mr van Schalkwyk stated that the EPWP was an incentive programme. National Treasury never gave funds to the NDT. The funding was outlined in the budget vote. He felt that the NDT could not simply jump in head first into a project. When a project was approved, the NDT should be able to manage it. The old EPWP encountered problems with sustainability. The NDT wanted sustainability and hence had to change its policies.

On international agreements there was one with Zimbabwe. It was supposed to have been signed at an Indaba held in May 2010 but the Zimbabwean Cabinet at that time had not approved the agreement. An agreement with Saudi Arabia had been in the pipeline for three to four years. He noted that the BRICS Agreement was likely to be signed on the 17 October 2011 when the next meeting was scheduled to take place. President Zuma had also requested that an international relations strategy be developed.

Mr Tharage stated that the Chinese market was growing when traditional markets were slowing down or only growing slowly. In terms of the benefit of international visits, at present an agreement was concluded between China and SA which allowed for direct flights between Chinese and SA destinations. Another example was Norway had stated that SA needed to do more in terms of promoting itself in Norway. Norwegians tend to spend huge amounts of money in SA. He noted that there were concerted efforts to conclude agreements in the African region. For example, work was being done with Namibians on cross- border tour guiding.

Mr L Khorai (ANC) congratulated the NDT on its unqualified Audit Report. He also asked why the NDT had sent EPWP funds back to National Treasury. He also asked how far the NDT was with its forensic audit.

Ms Matlakala pointed out that EPWP funds could only be used for EPWP projects. If funds were not used, these had to be sent back to National Treasury. The funds could not be used elsewhere. She added that incentive funding was performance linked. Funds were only received if targets were met. Out of R32 million the NDT had received R12 million. The remaining R20 million had been returned to National Treasury.

Ms J Terblanche (DA) was concerned about the EPWP. There were more than four projects and they were spread across various provinces. Some of the projects were not functioning and others lacked infrastructure. Consequently why were only four projects being forensically investigated? She asked if the issue of universal access could not be included in grading as it would enable the monitoring of graded establishments which complied with the requirement.
Mr van Schalkwyk noted that on reviewing the EPWP, four projects were identified as being corrupt. A forensic audit had been conducted and thus far one matter had been handed over to the South African Police Service. Of the remaining three projects, the forensic audit was 95% complete. Some procedural issues had been identified. The funding which had been allocated to the four projects had been for development. Funding to those projects had consequently been stopped.

Mr van Schalkwyk stated that universal access was developed as part of a code of good practice. There was no legislation in place to ensure adherence to the requirement of universal access. The issue of universal access was taken on by the industry.

The Chairperson stated that the Committee was proud of the work done by the NDT. The EPWP was however a sore point. There needed to be accountability on the EPWP. In some instances heads of departments at provincial level were stumbling blocks. The NDT should inform the Committee if this was also where it encountered problems.

Mr van Schalkwyk responded that the NDT did not have problems with heads of departments in provinces. The NDT did not transfer funds to provincial departments.

Ms Njobe asked who actually initiated the EPWP projects in tourism.

Ms Matlakala stated that projects were initiated by provinces.

National Department of Tourism Preliminary Biannual Performance Report 2011/12
The Committee was given a breakdown of performance figures as at 30 September 2011. As with the earlier briefing format, programme performance indicators, the targets to meet those indicators and actual progress was shown. Mr van Schalkwyk noted that the performance figures for each Programme would be presented by the Deputy Director General in charge of that programme. Total expenditure for the NDT for the period at 30 September 2011 was 45%.

Programme 1: Administration
Mr van Schalkwyk said there was 100% compliance with provisions of government’s performance and risk management prescripts. The targeted vacancy for the NDT was 10%. At the end of the second quarter the vacancy rate sat at 14%. The implementation of the Workplace Skills Plan for the period sat at 31%, the target obviously being 100%. The targeted representation of women, disabled persons and blacks were 50%, 2% and 82% respectively. The progress made was 53%, 2.3% and 85% respectively. The progress in the development and implementation of a tourism international relations strategy was that policy and strategic documents had been collected and submitted. Furthermore, two out of three (67%) scheduled engagements were attended to.

The NDT had also managed to achieve 100% compliance on regulatory requirements. The targeted percentage of expenditure on procurement from BBBEE and BEE enterprises was 59%. The percentage progress for the period was 56%.

Programme 2: Tourism Development
Ms Matlakala noted the targeted number of full time equivalent jobs sat at 5,270. A total of 1,908 full time equivalent jobs had been created. The breakdown was 1,017 during the first quarter and 891 during the second quarter. The number of unemployed youth and graduates trained as chefs and placed for experiential learning was 767, the target being 800. The targeted number of tourism projects funded through EPWP funding was 45; the actual number of projects funded was 65. The target for small rural enterprises supported was 530, and the actual figure achieved for the period was 357. The target for enterprises supported to grow was 25 of which five were rural. Progress made was that 55 enterprises were coached of which 21 were rural. The targeted number of businesses supported with market access was 170, 166 enterprises had thus far been supported.

Programme 3: Tourism Growth
Ms Malan said a target of 70 had been set for the recruitment, training and placement of unemployed matriculants and tourism graduates. A total of 150 had been recruited and placed. Nine tourism educator programmes had been targeted for the provinces. Progress was that educator needs had been obtained. Consultations were held with the Federated Hospitality Association of South Africa (FEDHASA) and working groups. Educators’ seminars had also been conducted in eight provinces. A National Tourism Careers Expo 2011 had been successfully held and more than 15,000 learners had attended. A number of higher education institutions had been engaged to provide professional training for scarce and critical skills for tourism. The NDT had developed a discussion document and memorandum of understanding and negotiations with institutions of higher education were ongoing. On universal access, the target was to have a universal access action plan finalised with an annual action plan. Progress was that consultations with stakeholders had taken place and that six workshops had been successfully hosted in KZN, Limpopo and Mpumalanga Provinces.

Programme 4: Policy, Research, Monitoring and Evaluation
Mr Tharage noted a target had been set for a frequency of the state of tourism report. Progress was that a Draft 2009/10 State of Tourism Report had been finalised and a proposal to update the state of tourism had been developed. The finalisation of a Monitoring and Evaluation Framework for the NTSS had been set as a target. The progress was that an NTSS delivery mechanism incorporating the Monitoring and Evaluation Framework had been approved. Stakeholder consultation with working groups and MinMEC had also taken place. The NDT had set a target of having quarterly progress reports on tourism indicators for Presidential Outcomes, based on Presidential timeframes. Progress was that draft progress reports for Outcomes 4, 7 and 11 had been compiled as per requests. Fifteen district municipalities were targeted to be influenced to align their tourism initiatives with the NTSS. Progress to date was that 14 district municipalities were workshopped in three provinces to influence alignment with tourism initiatives with the NTSS.
Workforce representativity figures as at 30 September 2011 practically remained unchanged compared to the figures presented earlier in the Annual Report 2010/11. The only noticeable change was that the staff turnover rate had reduced from 9% to 2.8%. 

The Chairperson stated that due to time constraints members would have to forward questions in writing to the NDT as there was no time to engage in discussion. He would only allow members to briefly ask questions of clarification.

Ms Terblanche wished to know under Programme 2 where enterprises that had been supported to grow by the NDT were located. A total of 55 had been supported even though the target had only been 25.

Mr van Schalkwyk agreed to forward the information requested by Ms Terblanche to the Committee.

The meeting was adjourned.

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