Analysis of the State of the Nation Address in respect of impact on tourism: briefing by Parliamentary Research Unit and Cape Peninsula University of Technology

Committee: Tourism

Chairperson: Mr D Gumede (ANC)

Date of Meeting: 14 Feb 2012

Summary

The Committee was briefed by the Parliamentary Research Unit and the Cape Peninsula University of Technology on their analysis of the 2012 State of the Nation Address in respect of its impact on tourism. Both briefings identified common themes emanating from the 2012 State of the Nation Address which impacted upon tourism directly or indirectly. The President identified job creation as key to the alleviation of poverty and the eradication of unemployment which incidentally had dropped from a rate of 25% to 23.9%. Initiatives such as the Job Fund, income tax incentives for manufacturing and finance for small businesses from the Industrial Development Corporation were opportunities waiting to be taken up by the tourism sector. The President also spoke about infrastructural development. The Market Demand Strategy of Transnet had been mentioned by President Zuma and an investment of R300bn would be made in capital projects. At least R100bn would be earmarked for projects at ports. Based on this huge investment the opportunity existed to promote cruise tourism. The President also spoke about the revitalisation of heritage and cultural projects. The investment would benefit the poor and the communities in those areas by creating local jobs and stimulating the influx of tourists.

Members asked about landing slots, visa constraints and the number of jobs created in the tourism sector. They also enquired about the Green Economy Accord, whether the Department of Tourism had withdrawn funds from the Expanded Public Works Programme and whether tourism was taught as a subject in schools


Minutes

Parliamentary Research Unit: A tourism perspective on the 2012 State of the Nation Address
Ms Joyce Ntuli, Committee Researcher, Parliamentary Research Unit, undertook the briefing. She initially provided the Committee with a comparison of areas that had a direct and indirect impact on tourism identified in both the State of the Nation Addresses (SONA) of both 2011 and 2012.  Areas mentioned in the 2012 SONA impacting upon tourism were:

Infrastructural development of airports, electricity, roads and rail for mining
Infrastructural development would increase accessibility to tourism attraction areas. The cost of electricity was an issue and tourism was impacted upon where load shedding took place in areas where tourists were to be found. The improvement of railroads infrastructure was to facilitate the mining industry which in turn could lead to an increase in business tourism.

Institutional and governance issues
Ensuring that intergovernmental relations were good and working was important for tourism. In order for there to be tourism growth, there needed there to be an alignment of the three spheres of government. The National Department of Tourism (NDT) also had to be accountable. Transparency, responsiveness, consultation and public participation were issues which the Committee had raised.

Refocus on heritage and cultural heritage projects
There was greater investment towards cultural and heritage tourism. It would revitalise heritage and cultural tourism. Heritage and cultural heritage sites must be kept at an acceptable tourism level. The refocus on such sites would benefit poor and rural communities.

Square Kilometre Array (SKA) radio telescope
The SKA bid was endorsed in 2003. The winner of the bid would be announced in 2012. Australia was also bidding for the SKA. Benefits emanating from the SKA were education tourism, financial investments, technological exposure and capacity building.

Implications for Parliament emanating from the 2012 SONA:
•There was a need for close monitoring of tourism linked infrastructure development through the Expanded Public Works Programme.
•There should be constant engagements with the NDT with regard to cultural tourism
•A need existed for the Committee to monitor the different programmes pioneered by the NDT to attract investors for infrastructure development in rural areas
•Parliament needed to oversee that there was alignment in the promotion of events which took place in different provinces
•Parliament also needed to oversee that the different provinces adherence to the 30-day payment period for services
•Parliament had to constantly advocate for domestic tourism marketing and development
•Parliament needed to find out how many companies in the tourism industry were recipients of the Job Creation Fund by the Industrial Development Corporation
•Parliament needed to ascertain whether intergovernmental relations for tourism growth and development was well under way

Cape Peninsula University of Technology: An independent analysis of the 2012 State of the Nation Address relating to tourism
Dr Reedwaan Ismail, Head of Department: Strategic Projects and Initiatives, Cape Peninsula University of Technology, undertook the presentation. He provided the Committee with an overview of the State of the Nation Address 2012. President Zuma pointed out that job creation was key to eliminating poverty. The Job Fund began operating in June 2011 with R1bn being set aside for job creation. Dr Ismail stated that the Committee, as part of its oversight function, could request the NDT to conduct a survey to produce statistics on the number of jobs that were created since 2011 pertaining to the tourism industry as well as determining the number of tourism related businesses which have applied and received funding. The President also mentioned that under section 12(i) of the Income Tax Act, R20bn of incentives was made available to support new manufacturing projects. Here existed another opportunity for communities to apply for funding to manufacture clothing, memorabilia, arts and crafts ,footwear and leather items for consumption by tourists. It was an ideal opportunity for job creation. The President also mentioned the Green Economy Accord in his SONA. The tourism industry should come aboard and develop a framework policy on how it envisaged giving effect to the objectives of the Green Economy Accord. The President also mentioned that the unemployment rate had come down from 25% to 23.9% which was attributed to a number of new jobs that had been created. R10bn had been set aside by the Industrial Development Corporation for job creation. The NDT should encourage tourism businesses to apply for such funding with the aim of creating more jobs. Education was mentioned more than ten different places in the 2012 SONA. Dr Ismail proposed that not only should SA invest in producing more teachers for mathematics, science and African languages but that tourism education at schools should be promoted. The Tourism and Events Department at the Cape Peninsula University of Technology had a 100% success rate of placing students undertaking their in service training in the tourism and events industry.

President Zuma also announced that a number of heritage projects would be initiated to promote social cohesion. Dr Ismail proposed the construction of a museum as a heritage project on the Cape Flats where the heritage of its people could be showcased to tourists who undertook the cultural tour of the Cape Flats. In the 2011 SONA overview, the President mentioned that more resources should be directed towards small businesses by merging Khula, the SA Micro Finance Apex Fund and the IDC’s small business funding.

Dr Ismail was pleased to note that the 2012 SONA highlighted that progress was being made in amalgamating small business institutions into a new entity which would be launched in 2012. President Zuma also spoke about a massive infrastructure drive which could only bode well for tourism infrastructure development which he had called for on the Cape Flats in his 2011 SONA overview. The Market Demand Strategy of Transnet had been mentioned by President Zuma and an investment of R300bn would be made in capital projects. At least R100bn would be earmarked for projects at ports. The opportunity existed to promote cruise tourism as cruise liners could dock at Cape Town Harbour as soon as the necessary infrastructure was developed. The potential for new jobs down the tourism value chain was there. Dr Ismail had in his 2011 SONA overview suggested that the Committee should lobby structures as the African Union, the New Partnership for Africa’s Development, the Pan African Parliament and the Southern African Development Community to market SA on the African continent. President Zuma mentioned the Presidential Infrastructure Championing Initiative which was the North – South Road and Rail corridor which could be used by tourism marketers to promote Africa as destination rather than only SA. It would create a sense of value in the mind of the tourist. The President also alluded to the enormous potential along the West Coast of SA and the need to improve infrastructure to unlock its full potential. Another potential boost for tourism in SA was the President’s announcement that SA would be hosting the Africa Cup of Nations in 2013.

Discussion
Ms M Njobe (COPE) directed several questions at Ms Ntuli. Firstly, she asked how many of the 365 000 jobs referred to in her presentation were created within tourism. Secondly, she asked in what areas the improved landing slots were and what improvements had been made. It looked as if it meant that more research was required. Thirdly, she noted that it was very difficult to obtain information on the effectiveness of the EPWP in the area of tourism. Reference was made to an earlier briefing to the Committee where members had been informed that funds had been withdrawn from the EPWP as the NDT had found it difficult to monitor the spending of funds in the EPWP. If the NDT was contributing towards the EPWP it was concerning.

The Chairperson was not to sure whether the question relating to the EPWP could be answered by Ms Ntuli. It was after all a NDT issue in that it lacked control over its funds.

Ms Ntuli responded that it was difficult to put an exact figure on the number of jobs that were created within tourism and if research was done it was difficult to access such research information. There were independent companies that did such research. Unfortunately the NDT did not capture statistics on jobs in the tourism sector.  The NDT used the term “full time equivalent jobs in tourism”. The question that came up was how long did these jobs last. They were neither full time nor temporary jobs. It was difficult.

Ms Ntuli further stated that perhaps there was a misunderstanding of what she was trying to say. What she was trying to say was that the EPWP had to create jobs in tourism projects. National Treasury had withdrawn R22m from the EPWP. The hope was that the EPWP would pick up its work and success rate so as to meet its targets. There were EPWP projects in place but they were not necessarily successful or working.

Mr S Farrow (DA) stated that he had in passing run into a member of the top management of the Southern Africa Tourism Services Association (SATSA) and the individual had told him that the Japanese, Indian and Chinese tourism markets were huge.  He asked why SA was not taking advantage of this. He had been informed that the biggest hindrance was visa processing. If SA could have visa waivers during the 2010 FIFA World Cup why could it not have it now?  The 2011 SONA had raised the issue of more flexible visa requirements. What work had been done to address the issue?  SA could lose potential tourists as a result of visa constraints.  SA needed a system to properly handle 200 000 – 300 000 visas.

Mr Farrow was aware that there were implications attached to landing slots. Landing slots were allocated from one country to another country and from one airline to another airline. This was where SA was lacking. It had to open up its skies, especially to Africa which was a huge untapped market.  He felt that the Committee should call on the Airports Company SA (ACSA) to address issues.
On the issue of jobs, he pointed out that if one knew how many tourists came to SA then one could calculate how many jobs were created. He understood that for every tourist 2.5 jobs were created.
He asked what the concept of a Green Economy was that was mentioned in the presentation by CPUT.

Ms Ntuli replied that she had requested information from the Department of Home Affairs on how many visa waivers had been done for the past year. Due to the short period between the SONA 2012 and the meeting at hand the information had not yet been received.

Dr Ismail provided an explanation of the Green Economy Accord. It was an agreement that had been signed between stakeholders at COP17. Homes would be fitted with solar panels to provide power to geysers. In the same way hotels and bed and breakfasts in the tourism sector should also come on board and use solar power.

Mr L Khorai (ANC) said that the two presentations were very informative and that it allowed the Committee to take issues further for discussion with the Minister and the NDT.

Ms C Zikalala (IFP) shared Mr Khorai’s sentiments. She suggested that the Committee should perhaps set aside a meeting for the NDT to come and speak to the Committee on the EPWP and what it did. The point was made that numerous complaints had been received that Khula Enterprise Finance Limited was not doing its job in assisting people with finance.  She wished for Khula Enterprise Finance Limited to address the Committee on what was exactly needed to obtain finance from them.
She addressed Dr Ismail on whether tourism was actually being taught in schools and if it was what percentage of schools were offering classes on them and at what grades.
In Mexico tourism contributed greatly towards the income of Mexico. How much did tourism contribute towards the economy of SA?

Dr Ismail stated that he did not have figures on hand regarding the offering of tourism as a subject at schools and advised the Committee to request this information from the Departments of Basic Education.  He noted that when students who had done tourism as a subject at school enrolled at CPUT to do tourism studies and they were assessed it was another story altogether in that they did not seem to be that clued up on tourism. There were a number of tourism institutions which offered tourism studies up until doctoral level. It would be a positive step to get all tourism institutions together and to share ideas, new experiences etc. An indaba would be a perfect platform to achieve this. The Committee could rest assured that higher education institutions would come to the party.
He reiterated that the CPUT had a memorandum of understanding (MOU) with the NDT. The CPUT had a fully fledged tourism department. Research on tourism was being done. Independent companies also did research. The CPUT undertook projects, did the research, published the results and thereafter received funding from the NDT. Hence a MOU with the NDT would be helpful in that when research was published it would be a benefit to the NDT and the tourism sector. 

Ms J Maluleke (ANC) referred to Dr Ismail’s proposal in his presentation that every student that left school after matric should have an appreciation for tourism but stated that the problem she had was that there was a lack of public participation.

Mr Farrow asked how many jobs were created per tourist visiting SA.

Dr Ismail stated that for every 16 tourists there was one job created.

Ms Njobe was glad that there was a MOU between the CPUT and the NDT. Were there MOUs with other departments as well? She noted that departments had to use institutions of higher learning to do research.

Dr Ismail stated MOUs were signed with institutions the world over. There was collaboration on research as well as student and staff exchange programmes which broadened the horizons of the individuals concerned. The experience gained was also indispensable. MOUs benefitted both parties to the MOU.

Ms Ntuli concurred with Dr Ismail in that for every 16 tourists, 1 job was created. It however depended on the tourist spread. Figures on tourists were not consistent. It was difficult in that there were not exact figures on the numbers of tourists and what their spending was.

The Chairperson referred to the BRICS Agreement between Brazil, Russia, India, China and SA and asked was it not possible to organise sports events between the countries to the agreement. It could boost tourism.

Dr Ismail stated that it was indeed an opportunity which should be looked into. If SA could host a World Cup then it was surely possible for it to host any event. SA had to invite tourism sports bodies to the country. There were other spin offs from a sports event as well. There needs to be accommodation, transport etc for participants and staff. After a sports event players often brought their families back to the host country. 

The Chairperson referred to tourism being taught at school and stated that it could be done in a phased in approach. Tourism taught at school could form part of life orientation. The NDT needed to sit with the Department of Education. Education was part of the New Growth Path.

Dr Ismail pointed out that the idea of tourism as a subject at school had may spin offs.  Teachers were needed; textbooks needed to be written and printed hence the potential for jobs were huge.

The Chairperson concluded by stating that a tourism summit would be held in 2013. More universities and academics would be involved.

Committee Minutes
The Committee adopted minutes dated the 7 February 2012 as amended.

The meeting was adjourned