International Marketing Council of South Africa Annual Report 2010/2011

Committee: Tourism

Chairperson: Mr D Gumede

Date of Meeting: 31 Oct 2011

Summary

The International Marketing Council of SA briefed the Committee on its Annual Report 2010/2011. Unlike SA Tourism who was one of its partners, the Council was not only involved in tourism but also in various other sectors such as exports; culture and heritage; governance; people; and investment and immigration. The approach of the Council was to promote Brand SA. Its planned outcomes which were elaborated upon were brand alignment by stakeholders, increased pride and patriotism among SA, positively change perceptions about SA among target audiences, articulated and contextualised SA policy, increased economies of scale and scope and having a sustainable organisation.
The Committee was also given a breakdown of the financial performance of the IMC as at 31 March 2011. Its budgeted income was R171 513 000 whereas its actual income was R177 447 714. The additional income was partnership income derived with partners like the Department of International Relations and Cooperation (DIRCO). Total expenses amounted to R154 478 740. Interest income amounted to R1 607 775. The total surplus for the period was thus R24 576 749. 

Members asked if there were any differences between the Council and SA Tourism. They also asked about the decline in income, governance issues, the use of consultants, the attendance at board meetings, the effect of the global recession and the country’s position in the global competitiveness and brand awareness rankings.


Minutes

Opening Remarks
The Chairperson said that the International Marketing Council’s (IMC) role was to improve the country as a destination for tourism and business. Had the 2010 FIFA World Cup boosted tourism in South Africa? If not what were the reasons. The Brazil, Russia, India, China and South Africa (BRICS) agreement was a reality and the Chinese had alluded to the fact that if there was an improvement in South Africa’s efforts in promoting itself there was a sizeable amount of Chinese tourists that would visit the country. There was a likelihood that close to 800 000 tourists from China could visit. The Chairperson stated that the Committee would be interested to hear how the IMC would synergise efforts. 
On the IMC’s Annual Report, he noted that the Auditor General had concerns over its leadership. Performance reporting was considered okay. He stressed the importance of good governance and that comments made by the Auditor General were taken seriously by the Committee.

International Marketing Council of SA
The International Marketing Council of SA briefed the Committee on its Annual Report 2010/2011. Mr Miller Matola, Chief Executive Officer: International Marketing Council of South Africa (Brand SA), and Mr Esa Yacoob, Chief Executive Officer: Yacoob Tourism, who was on the board of trustees of the IMC, undertook the briefing.

Mr Yacoob initiated the briefing by stating that the IMC’s mandate was derived from the national mandate. He noted that the IMC was not only involved in tourism but also in various other sectors such as exports; culture and heritage; governance; people; and investment and immigration. The approach of the IMC was to promote Brand South Africa. Its planned outcomes were brand alignment by stakeholders, increased pride and patriotism among South Africans, positively change perceptions about the country among target audiences, articulate and contextualise South African policy, increased economies of scale and scope and having a sustainable organisation.

Mr Matola continued the briefing by noting some highlights. Brand valuation placed South Africa at 34th overall, with value of $135bn. There was improved reputation according to a March 2011 BBC Poll. It placed South Africa as the second highest in positive perceptions. Additionally the rating of South Africa’s influence in the world rose from 35% to 42%. In terms of country brand performance impacts South Africa had fallen 9 places in 2010 from position 45 in 2009 in terms of the World Economic Forum (WEF) Global Competitiveness Index. In terms of the Anholt Gfk Roper Nation Brand Index, South Africa had fallen 2 places in 2010 from position 35 in 2009.  He stated that the impacts were of all the role players in SA marketing SA internationally. The IMC also contributed towards it. Many programmes were in place but the Brand Strategy Development and Management Programme was singled out. The Programme was tasked with articulating and implementing brand positioning, Providing training and engagement with stakeholders and partners and creating structured digital platforms to align to a single brand. He proceeded to speak more to the planned outcomes that were mentioned earlier in the briefing. The Brazil, Russia, India, China and South Africa (BRICS) agreement had resulted in South Africa having a very positive reputation to countries within the agreement. Even in Africa prior to the 2010 FIFA World Cup there had been a negative perception of South Africa but after the World Cup the perception had become more positive. In co-operation with SA Tourism the IMC had office infrastructure in the UK and the US. It was also looking at having representation in China and Brazil. Members were also provided with a performance summary in terms of each of the outcomes mentioned earlier. In some instances targets were met, surpassed or not achieved. He explained that during 2010 the IMC had met with the Auditor General and had discussed the issue of performance information. The bottom line was that the IMC had to have measurable results. Hence measurable targets had to be put in place. The IMC needed more specific measures. In some instances benchmarks had to still be set.

The Committee was also given a breakdown of the financial performance of the IMC as at 31 March 2011. Its budgeted income was R171 513 000 whereas its actual income was R177 447 714. The additional income was partnership income derived with partners like the Department of International Relations and Cooperation (DIRCO). Total expenses amounted to R154 478 740. Interest income amounted to R1 607 775. The total surplus for the period was thus R24 576 749. 
Looking ahead the IMC intended to strategically position itself within the Presidency. Additionally it planned to develop a partnership model to help drive the country’s positioning as a leading destination for business and to have greater stakeholder alignment and partnership with intergovernmental support.

Discussion
Mr G Krumbock (DA) was under the impression that SA Tourism marketed South Africa overseas. It seemed that SA Tourism had four times the budget that the IMC had. He asked for an explanation of what SA Tourism did and what the IMC did. There seemed to be an overlap of what the two organisations did. He also noted that targets for international competitiveness and brand awareness had been set. Why had South Africa slipped two and nine places respectively? What was the reason for this despite the increase in the focus on tourism? Why was South Africa lagging behind? What was being done wrong?

Mr Matola responded that the IMC did many things. SA Tourism only marketed tourism. The IMC did overall brand marketing. For example there was one logo used by organisations and government departments in marketing South Africa. He noted that there were different players in different sectors. The IMC was an overarching body that coordinated all the sectors.
On the issue of competitiveness, South Africa had gained in ranking from 54 to 50 and from 37 to 36. The data spoke for itself that there was an improvement in tourism. The ranking on culture and heritage was especially good. He noted that countries had a better perception of South Africa for business.  On areas where efforts were falling short, greater cooperation and collaboration was needed. The IMC’s campaigns had to have a bigger role. The role of the IMC was to get a more positive image of SA. He noted that the IMC brought in media from all sectors. The role of the IMC was overarching. Duplication of functions should be prevented. The IMC intended to share office space with SA Tourism and SAA overseas.

Mr Yacoob added that both SA Tourism and The Department of Trade and Industry were on the IMC’s Board in order to prevent duplication of activities.   

Ms M Njobe (COPE) understood that the marketing function of the IMC was of a general nature and covered various sectors. She referred to the Annual Report itself specifically to page 75 item 3 which was other income or partnership income and asked what puzzled her was the huge difference in income for 2010 and 2011. There was a huge decline from R29m to R4m. She also referred to page 76 to stakeholder and partner alignment and asked what the reason for the huge variance was. Reference furthermore made to item 4 which referred to the use of consultants. What were the consultants used for? Why could the work not be done by the entities themselves?
She further referred to page 12 of the Annual Report ie the Board of Trustees Attendance Register and pointed out that some of the IMC‘s staff had resigned. There were others who had bad attendance records at meetings. What was done to those persons who did not attend meetings? Had the IMC played a role in promoting the 2011 Rugby World Cup? She stated that if it did play a role what was it?

Mr Matola replied that the reason for the variance in the budget was that for 2010 there was an increased budget to market SA for the 2010 FIFA World Cup. For 2011 the budget came back to its normal allocation. The IMC had prudent financial management and control and was a sustainable organisation. The budget covered administrative expenses which were broken down.
The consultants being referred to were actually agencies that were used. They ranged from marketing, advertising and public relations agencies. No consultants were really used in the offices of the IMC. The Review Board of the IMC had rationalised the use of the number of agencies. Fewer agencies should be used. On the FIFA 2010 Soccer World Cup, Brand SA with other partners was involved. On the 2011 Rugby World Cup there was partnerships with Lead SA, the South African Rugby Union and the Department of Sports and Recreation. In New Zealand the IMC had developed the EKHAYA concept for the Department of Sport and Recreation. The IMC had done the overall coordination of the pavilion in New Zealand. During the Rugby World Cup a global network programme where expatriates from South Africa could keep up to date with happenings online was initiated. The programme was strong in the US and the UK. During the Rugby World Cup 250 people from New Zealand and Australia had registered to the network programme. Those individuals registering on the network also contributed to marketing SA.

Mr Yacoob noted that where a board member missed three meetings the Chairperson of the Board had to make a recommendation to replace the person involved. Membership to the Board was however voluntary. There had to be a balance of individuals who sat on the Board. There could be celebrities like Danny Jordaan and Lukas Radebe as well as persons who were good on finances. The Chairperson would make a decision to replace persons in consultation with the President.

Mr Matola stated that Board members often changed as individuals changed jobs. Some Board members had been director generals of departments and sometimes they even changed jobs. There was a combination of factors that had to be taken into consideration.

The Chairperson referred to page 9 of the Annual Report and stated that the challenges in South Africa like safety and security, exchange rate volatility and safety of water and electricity supply was concerning. He was aware the IMC could not directly impact upon these issues but asked what it could do to create awareness and advocacy on these issues that stakeholders were not aware of. He stated that if investors were under the impression that SA had a free floating exchange rate and volatility came along unexpectedly what awareness programmes were in place.

Mr Matola stated that the challenges referred to by the Chairperson needed to be understood. It could be the perception by the media. The IMC tracked the media. The challenges were being dealt with. Firstly he noted that quarterly reports were being provided to policymakers over these issues. Secondly issues were communicated to stakeholders. The IMC’s researchers did an analysis and communicated findings to departments. The third part was that the IMC supported departments like the Department of Education on ways of providing quality of education. The IMC also engaged with the Department of Economic Development on competitiveness.
 
Ms Njobe asked how the global recession was affecting the IMC’s efforts in branding SA in tourism. The IMC had targets and it looked as if the recession was not abating.

On the impact of the global recession, Mr Matola stated that there was a shift in south-south relations. The Brazil, Russia, India, China and South Africa (BRICS) agreement was also in place. He noted that traditional source markets for tourism to South Africa were depressed at the moment. India and China had good growth markets. There was furthermore a focus on regional and domestic tourism. The issue was how the IMC could diversify its portfolio. A step in the right direction was to work with and support SA Tourism.

Mr Yacoob added that Brand SA changed the perception of tourism internationally. The recession was perhaps not abating but tourist numbers did not decrease but increased. The perception internationally was that SA was expensive. Brand SA however showed that tourists got value for money when they visited SA. To BRIC countries SA was an affordable destination. The European market was still a bit difficult. In SA there was a 12% and in Gauteng there was a 32% growth in business tourism. There was a huge change in the market. He stated that as a businessman in the tourist industry he witnessed the change on a daily basis.

The Chairperson stated that the Committee would increasingly look at governance issues. He noted that more work was expected to be done in the East where the wealth was. It was evident from the IMC’s Annual Report that the organisation was aware of government’s priorities. At the end of the day it was about economic growth, jobs and entrepreneurship. The IMC had its problems but it had been responded to. The idea was to prevent problems.

Mr Matola and Mr Yacoob were thanked for the briefing and were excused from the meeting.

The Committee had intended to deal with and adopt outstanding minutes but due to time constraints it was decided to postpone it until another time. 

The meeting was adjourned.