Department of Tourism 2011/1 Annual Report briefing, in presence of Minister

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Meeting Summary

Mr Marthinus Van Schalkwyk, Minister of Tourism, introduced the Department of Tourism (the Department) 2011/12 Annual Report by stating that in the first six months of 2012, South Africa had experienced excellent increases in tourism, from overseas, regional and domestic markets. Tourism accounted for more than R50 billion revenue in 2011. The Department had already planned to invest over R280 million over the next three financial years in opening new offices on the African continent to grow the African market. Internationally, South Africa’s participation in various multilateral forums served to build its tourism sector. The direct contribution of the tourism industry to Gross Domestic Product was estimated at 9%, with the indirect contribution around 30%. The Department was confident that this positive trend could be maintained. In the 2011/12 year, it had put in place the foundation to build its mandate and mission, had developed the National Tourism Sector Strategy and had strategies also for other areas, such as domestic tourism, cultural and heritage tourism, rural tourism and international relations. It had drafted and was implementing the National Minimum Standards for Responsible Tourism and National Tourism Service Excellence.

The new Director General and management team went into more specifics on the performance in 2011/12, comparing it to the previous year. The Department had improved in several respects and had achieved an unqualified audit, and was attending to matters raised by the Auditor-General, to prevent recurrence. Forensic audits were conducted into the Expanded Public Works Programme, some criminal charges had already been laid, and further forensic investigations were being conducted, at the initiative of the Director General, and although these may not necessarily throw up criminal culpability, they could isolate poor planning or other inconsistencies. There was good cooperation with the prosecutors and police. The Department had improved several internal systems, including controls, had taken back the Incentive Programme from Department of Trade and Industry (dti) but requested that Members not respond to lobbying attempts, as this could hinder the strategy. The focal areas for the Department were summarised. The budget and expenditure review were presented, noting that the Department spent the bulk of the budget on tourism growth. The highlights of each of the programmes were outlined.

Members asked questions about the vacancy rate, wasteful and fruitless expenditure, the discrepancies that were outlined for the provinces, the jobs created within the sector, the Chef’s training programme, and the cultural development strategy. Several Members made the point that this presentation did not focus enough on provincial achievements, plans or results, and stressed that this was what the NCOP Committee required. They asked about the reasons for and progress of the forensic investigations, and the Expanded Public Works Programme. Particular questions were asked, following an oversight tour to India, about the operation of the Memorandum of Understanding with India, and how in general such Memoranda were operating. They raised the problem of internal aviation costs, and asked how these could be brought down. The contribution of the hunting industry was questioned. Members also asked about the problems that Tree Top Tours were complaining of, having to tender for a product that it had essentially “owned”, whether adventure tourism was currently managed or monitored by any body, African tourism, tourism in townships, the ‘Shot Left’ Campaign, how South African Tourism was marketed, whether South Africa was competing for growing and new International Tourism markets. Members questioned why, once again, the Department appeared to have under-estimated targets, heard that this problem lay with the Tourism Enterprise Project, and how it was addressing the Auditor-General’s findings. Since not all questions were answered at the meeting, some responses were to be given in writing.

Meeting report

Department of Tourism 2011/12 Annual Report Presentation
Mr Marthinus Van Schalkwyk, Minister of Tourism, provided an overview of the tourism sector’s performance in the 2011/12 financial year, attracting over 8.3 million tourists. South Africa had “entered a golden time”. Tourism had reported excellent results for the first six months in 2012, registering yet further growth. Tourist arrivals to the country had increased by an overall 10.5% year on year, during those months. Overseas arrivals increased by nearly 17%. These statistics should be compared and understood within the context of global tourism arrival growth, which was at 5% during the first six months of 2012. The growth registered in South Africa was therefore more than double the global average. This had been strong in all regions, with particularly strong growth in the emerging markets.

He compared these statistics to figures from China and South America (see attached presentation) and said that South Africa outpaced the growth of all competitor locations in the leisure arrivals category during the last five years. Foreign direct spend had also grown faster than arrivals, with an 11% per annum growth rate, which was another important factor.

Domestic tourism statistics indicated that in the first quarter of 2012, 5.5 million domestic trips were undertaken, which contributed R5.2 billion. This was 13% more than last year’s economic contribution over the same period.

In the accommodation sector, income from tourism accommodation also rose by 14.3%, year on year in September. The Regional African tourist market, as the key growth point, contributed over 17.3% of total tourist arrivals, and more than 50 billion rand revenue in 2011. The Department was positive that its investment of over R280 million, over the next three financial years, in order to open new offices on the African continent and start a marketing campaign, would growth South Africa’s share of the African market even more. South Africa was intending to hold engagements with African counterparts specifically Lesotho, Mozambique, Swaziland and Zimbabwe.

The Minister summarised that these results were impressive and they could be ascribed to a number of factors, including the excellent partnerships between key public and private role players in the tourism sector, innovation in the products, diversifying and developing the supply side, excellent services and focused destination marketing. There were some challenges, which would be covered in the discussion.

On the international platform, the Department of Tourism (DOT or the Department) had participated in multilateral forums such as the United Nations World Tourism Organisation (UNWTO) and the G 20 Tourisms Ministers Meeting. All this worked towards building a better Africa and a better world through tourism. The President had also signed the UNWTO’s Golden Book at the World Economic Forum on Africa, to mobilise recognition and support for the tourism sector from world leaders, by demonstrating the crucial role of travel and tourism to economic growth, job creation and development.

In terms of the contribution of tourism to the gross domestic product (GDP), South Africa was in line with the global trend. Its direct contribution was around 9%, whilst the indirect was about 30%. The Department believed that the positive trend could be maintained, especially given the fact that South Africa had established a higher profile for itself both globally and in its domestic market.

The Minister said that 2011/12 had been used to put in place the “building blocks” to realise the Department’s mandate and mission. The Department had made great strides. The National Tourism Sector Strategy (NTSS) was developed. As well as having medium-terms aims, the longer term aspirations included contribution to GDP, job creation, and measuring and boosting tourism internationally and domestically. The Department also had strategies for Domestic Tourism Growth, Cultural Heritage, Rural Tourism and International Relations. It continued to strive to improve sustainability, as well as competitiveness of the South African tourism sector. It had drafted the National Minimum Standards for Responsible Tourism, as well as the National Tourism Service Excellence Requirements, both of which were being implemented. The private sector was fully on board. These strategies and frameworks were of critical importance for the development and growth of the sector, and were in line with the vision of the Department to become a catalyst for growth and development in the country. He thanked the managerial team from the Department, and all players in the tourism sector.

Mr Kingsley Makhubela, Director General, Department of Tourism, continued to outline the more detailed performance of the Department. He noted a drastic improvement in the Department during the period 2011/2012. He covered the performance overview for 2010/11 and 2011/12, outlining the targets that had been achieved and those that had been partly achieved and not achieved (see attached presentation). He explained that targets not fully achieved were due to business processes and systems that had not been clearly defined. These were being further investigated.

The report of the Auditor-General (AG) report showed improvement. There had been a forensic audit conducted and, based on that, criminal charges were laid in respect of misconduct found in the Expanded Public Works Programme (EPWP). The Department had been working closely with the prosecutors and some of these cases would soon be brought to court, as there was sufficient evidence to prosecute some of the implementers of the projects. The Department had agreed with the AG on which projects six forensic audits should be conducted, and appropriate action would be taken thereafter, including, if necessary, laying of criminal charges. There was better cooperation with the South African Police Service (SAPS) and there was a direct liaison with the Hawks.

The Department was hopeful of setting up better systems, and had already improved its controls to ensure that these matters would not recur.

The Incentive Programme had reverted back to the Department, and there would be a great deal of lobbying by people who sought to get involved in this. The Department now had better systems to deal with this Incentive programme. It had requested National Treasury for funding to help set up systems. There had been a deliberate decision by management that ‘money must follow projects and not projects follow money.’ Next year there would be a conceptualisation of projects to provide support for the tourism sector. He appealed to the Committee not to get involved, saying that Members would no doubt be lobbied, but support would be based on needs on the ground, and lobbying interfered with governance issues.

Ms Nomza Bhengu, Chief Director: Governance, Department of Tourism, explained the report of the Auditor-General. The focus areas included Human Resource Management,
Supply Chain Management, Predetermined Objectives, Financial Health and IT controls. Other matters were raised, including compliance with laws and regulations and transfer of funds. She repeated that there were investigations into the conduct of various EPWP implementers.

Action plans had been developed to improve the internal deficiencies that gave rise to the audit findings. Internal Audit now conducted an audit, on a quarterly basis, on validity, accuracy, and completeness of the reported performance against the pre-determined objectives.

In relevant cases, qualified engineers and quantity surveyors would be appointed to certify projects.

Mr Ralph Ackerman, Chief Financial Officer, Department of Tourism, outlined the budget and expenditure review for 2011/12 and the actual expenditure per programme. The bulk of the budget went to tourism growth. He covered the expenditure per economic classification, actual expenditure per high level item, and details of variance (see attached presentation).

Mr Dirk van Schalkwyk, Chief Operating Officer, Department of Tourism, spoke to Programme 1: Administration, outlining key performance indicators, targets and actual performance, as well as the strategic objectives.

Ms Morongoe Ramphele, Deputy Director General: Domestic Tourism Management, Department of Tourism presented on Programme 2: Tourism Development. She too outlined key performance indicators, targets and actual performances. Specific strategic objectives included
creating employment opportunities by implementing tourism projects targeted at the unemployed, contributing to skills and people development within the tourism sector, facilitating and supporting economic empowerment through product and enterprise development, and acting as a enabler and driver of transformation in the sector, as informed by the Tourism BEE Charter, the NTSS, and key stakeholder engagement through strategic events platforms.

Mr Victor Tharage, Deputy Director General: Policy and Knowledge Systems, Department of Tourism, outlined the Programme 4: Policy Research, Monitoring and Evaluation, key performance indicators, targets and actual performance. Strategic objectives for this programme includedmonitoring and evaluation of tourism sector performance, strategies and policies, creation of an enabling policy environment, improvement of intergovernmental working and coordination, knowledge management in the Tourism sector, and conducting research.

Discussion
Mr A Nyambi (Mpumalanga, ANC) said that the Committee needed to be fully informed, pointing out that this Committee was as important to Parliament as the National Assembly (NA) committees.

Vacancy Rate
Mr Nyambi said that there had been a decrease in the vacancy rate, but more could be done. The President had been clear on the issue of creating employment opportunities, in his State of Nation Address.

The Chairperson pointed out that a 10% vacancy rate meant 40 people.

Mr Makhubela replied that the vacancy rate stood at 9%. The President said that it should be at least below 12%, whilst the Department of Public Service and Administration (DPSA) called for a rate below 10%. Many departments showed vacancy rates of 23% and more, and he was not sure that many departments had vacancy rates lower than the Department of Tourism. He said that around 50% of vacancies were filled from within the Department, and this created a vicious cycle of continuing vacancies, albeit at different levels. It was understood that filling all posts would be a huge challenge, although this Department targeted trying to achieve a vacancy rate of 3%, although it had not managed to reach it yet. He added that, over the last financial year, the Department of Tourism was classed as the second best performer.

Mr Nyambi questioned if Mr Makhubela was saying that no other department had a vacancy rate lower than the Department of Tourism.

Mr Makhubela replied that the Department had a broad picture of where government stood, which was at a vacancy rate of around 23%. He had intimated that he had yet to find a Department with a rate lower than 9%. If he was told of another, he would immediately find out how it had achieved this, and implement its strategy. He had mentioned the vicious cycle around filling of posts, but said that this Department nonetheless had to advertise, which meant that it spent at least six weeks advertising, doing competency tests, holding interviews and then perhaps not even finding a suitable candidate.

Mr Nyambi pointed out that the Department of International Relations and Cooperation (DIRCO) had dropped its vacancy rate to 7%. The Department of Mineral Resources also showed significant improvements, and Department of Trade and Industry, recently showing a 20% vacancy rate, had now dropped to 8.2%.

Mr Makhubela replied that he would look at what DIRCO was doing, although he did want to point out that DIRCO had an academy and, at any given moment, had various cadets being trained, who could fill the vacancies. DIRCO’s structure, at management level, also differed, as here cadets could not be brought in. However, he was willing to learn from those who had successfully tackled he challenge. Accusations of plagiarism at management level could not be made; it was necessary to use all good ideas to constantly improve.

Mr Van Schalkwyk added that some Departments noted the vacancy rate for funded establishment only, and some posts would then be listed as unfunded to reach certain targets.

Mr Nyambi interrupted, saying that this Committee knew what it was talking about. The strategic plan was before the Committee, and this showed a challenge in recruitment, especially of people with disabilities. The Committee was not considering only what was being presented today. The Committee could see that there had been improvement, but was convinced that the Department could do better.

The Chairperson asked that presenters avoid making comments about other departments, and concentrate on their own.

Mr Van Schalkwyk pointed out, in conclusion of his earlier statement, that the DPSA was working on funded establishments.

Wasteful and fruitless expenditure
Mr Nyambi raised the issue of duplication of payments and asked for more clarification on this fruitless and wasteful expenditure.

Mr Makhubela replied it was not a duplicate payment. In this instance, a delegation of the Department had been in Europe. Whilst it was there, the President, who was going to the Middle East, asked that the delegation, instead of travelling back on their return tickets, should instead accompany him to the Middle East. The Department had had to buy new tickets, and lose the return leg. This was reflected as a double-payment although it actually referred to two separate trips. This was a technicality. The AG had agreed that some matters were beyond the Department’s control.

Provinces
Mr Nyambi said that it had been mentioned that there were discrepancies in provinces but nothing was said as to which provinces were involved.

Suspensions
Mr Nyambi asked for clarification on the ‘cost of suspensions’.

Jobs Created
Ms B Abrahams (Gauteng, DA) asked how many of the 5000 jobs created were temporary, and how many were permanent.

Ms Ramphele replied that the jobs were full time equivalents. The incumbents were given accredited training. When the projects stopped, at least they had been trained and were able to move on their own, and put something on the table’.

Chef’s programme
Mr Nyambi asked for the geographical spread of the programmes, especially that for chefs.

Mr Makhubela replied that this programme received nominations from all provinces.

Ms Abrahams asked what would happen to those who had not completed the programme, as they clearly had some potential, and wondered if they would have a second chance. She asked if others would be placed permanently.

The Minister reported that this was an excellent programme. He had been impressed by the high percentage of graduates offered jobs, and it must be remembered that people could not be trained merely for the sake of it, so placements were vital. More placements would follow.

Mr Makhubela added that he wanted to contextualise this programme, as it affected the overall performance. When the Department had developed its strategy, it had a target of training 800 people, and if that was not done, the target was reflected as “not achieved”. However, the formulation of this target was incorrect, since the Department itself did not have the institutional capacity to train. It should therefore have defined the objective as identifying an institution to run the training, defining its terms of reference and criteria for the training, then monitoring the implementation. The Department had no control over whether people dropped out of the programme. A monitoring unit existed, in the Department, to look at what had been accomplished, and it had identified that the Department had not managed to met the target, and had therefore effectively penalised itself by setting the target. Furthermore the Chef’s Programme straddled two business units or branches, without a clear definition. Different roles were played by different units, and this was something that would have to be addressed in future.

Ms Ramphele noted that 75%of those who graduated had gone on to an NQF Level 4 training. The placement was mainly done within hotel groups.

Cultural Development Strategy
Ms E Van Lingen (Eastern Cape, DA) said that she was interested in the cultural development strategy. She pointed out that Community Development Trusts existed, and that the problems started when funding was paid to them.

Provincial perspective
Ms Van Lingen repeated earlier concerns of Members about the provinces’ participation. She said that she could not see that this presentation had been specifically drawn with the NCOP in mind, as there was a need to show clearly what was happening in the provinces. She questioned if this presentation differed at all from the one given to the National Assembly.

 Slide 4 merely noted that two branches had not performed, and she wanted to know which these were.

Mr K Sinclair (Northern Cape, COPE) agreed that there was a need for a more provincial approach to the presentation and the break down.

The Chairperson said this should be the last time this Committee had to request that presentations must speak to the provinces. He reminded the officials that Members represented their provinces.

The Minister replied that this was noted, and that the Department would make every effort to include the provincial dimension. There had been a specific strategy to assist the six lesser visited provinces. Some had agreed that they quite understood that they did not have the same kinds of attractions to offer as other more popular destinations, and had therefore fixed on niche products. The Northern Cape was focusing on adventure tourism, and was doing quite well. He said he was not able to comment on specific projects but he could say the Department had been convinced that there was investment into a number of projects that were bearing fruit.

Forensic Investigations
Ms Van Lingen was worried about the forensic audits. Tourism, at ground level, was a big issue, and she wondered how organisations on the ground might have become involved. She cited an example of a fund in the Eastern Cape that she had questioned, only to be told, by a “cocky official from Bisho” that the details would be found on the website. This was in 2009, and from then to now she had not managed to see any financial statements, or any projects implemented.

The Minister replied that the investigation into some of the projects represented a small part of the total budget and of the activities. However, the Director General had initiated these investigations.

Mr Makhubela replied that the forensic audits were being done to gain an understanding of what was happening and Members should not automatically conclude that they would highlight criminal offences. They may, rather, expose planning inefficiencies or under budgeting. If there was any hint of criminal offences being committed, then action would be taken.

EPWP
Ms Van Lingen agreed that the AG’s concerns about the EPWP had to be fully discussed. She questioned how a municipal manager could be a director of a Land Distribution Objective (LDO). The manager had not thought that she would do a land search or company search and find what she had, and this was completely unforgiveable. She wanted more information on the transfer of EPWP funds as she had seen misconduct.

Mr Sinclair also asked for more clarification of the EPWP and how the funds were transferred. He asked if the money was coming from Department of Public Works (DPW) or from the Department, and how it was handled.

The Chairperson asked how the EPWP programme, and the investigations into it, had affected service delivery.

The Minister replied that he too was worried about the EPWP. The Department of Tourism could not be expected to hand over money, and not know about ownerships of the projects into which it had invested. This was a concern that Mr Makhubela had raised, shortly after his appointment. Some projects had been in the rural areas, and in some cases money had been transferred to a local trust or body, after which the Department had lost control. This was indeed where corruption took place, and it was important to establish how and where transfer of ownership took place.

Mr Makhubela added that another problem with the EPWP was related to its size and structure. The Department had tried to put systems and conditions in place. The main intention behind the EPWP was poverty alleviation. However, there had been challenges with some of the project implementers. This was why there would be a continuation of the forensic audits. In some projects, certain phases should have been completed, but had not been, and the Department needed to investigate. The money was not released to provinces, and was controlled by the Department at a national level, who worked with provincial and local government in identifying and defining some of the projects. However, those projects, once approved, needed to be owned by communities, municipalities and provincial government. It was at provincial or local government level, not with individuals, that the Department became involved. It had established better working relationships with provinces and local governments. A forthcoming conference was to streamline how the various levels worked together to deal with poverty on the ground, particularly since those at provincial level had a better understanding of what was happening in their own provinces. The national Department was not, however, intending to abdicate control of the money. Currently, the Department was also assessing the sustainability of all projects.

The Chairperson asked if the Department wished the Committee to attend the conference being planned for municipalities.

Mr Makhubela replied that it would be useful. Invitations had not yet been sent out, and he would ensure that the Committee was listed.

Mr Sinclair said that the Committee should be invited, for the sake of coordination.

The Minister noted that Mr Makhubela had visited all the projects that had been funded by the Department. Where fraud was noted, cases were opened. He again stressed that the cases opened represented a small fraction of all the projects. The Department had proactively dealt with the matter.

Events
Ms Van Lingen asked when the events mentioned in slide 40 had been held and when they would be repeated.

Training
Ms Van Lingen asked if there was any correlation between the two sets of youths that had gone through training.

Future of the Department
Ms Van Lingen said it seemed that all plans were now in place, and hopefully by this time in the following year, the Committee would see great results. She noted that much time and money had been spent on getting a strategy in place.

Budget Structure
Ms Van Lingen said that the budget structure in the provinces interested her. She noted a forthcoming conference for local government and tourism, which was essential. She had been calling, since 2009, for more to be done for tourism on the ground. Although a number of people were appointed, at high cost to company, not enough had been done, and there were several tourist spots that were no longer functioning, as there was neither the drive nor the money to run them.

MOUs
Ms Van Lingen asked for more information on the Memorandums of Understandings and reports and plans that had been alluded to, as also their outcomes.

The Minister replied there was a long list of MOUs, and these could be provided to the Committee. In most instances the MOUs functioned well. There were, however, some instances in which the Department and colleagues in other countries could do more.

Dam
Mr Sinclair asked about the stoppage of building a specific dam and asked if investigations had been done.

Ms Ramphele replied that this was one of the projects in which a forensic investigation was being carried out.

Maloof Money Cup
Mr Sinclair asked if the Maloof Money Cup (Skateboarding event in Northern Cape) was being sponsored by the Department. If so, he criticised it, saying that it was not money well spent on a worthwhile cause. Events such as this might create hype and international exposure, but did little to align with the government objectives.

Ms Ramphele replied that the Department had been involved in the skateboarding project.

Mr Sinclair asked for details, in writing, about the Department’s contribution to the Cup.

Tourism in districts
Mr Sinclair saidhe remained concerned with and sceptical about the effectiveness of districts and local municipalities running their own tourism activities.At the end of the day, tourism needed to start where people lived. A structure was needed to engage people within a specific area, on what they considered of importance in that part of the country. In his own constituency, there was an unfortunate reality that municipality tourism officials seldom engaged with the people, and there was no spin-off, such as building of roads going through certain areas.

Mr Tharage replied that, in terms of the municipalities, there had been some work done in KwaZuluNatal, North West, Eastern Cape and Free State. The Department had realised that work in the municipalities was not always sustainable, and that not all municipalities wanted to wait their turn. Clearly, the Department could not help all municipalities at once. The point of the upcoming conference was to bring all the people in the municipalities to a common understanding and capacity. Those municipalities who had done well would be asked to demonstrate what they had done. The Department had also developed a comprehensive tool kit that would tackle tourism planning, visitor satisfaction, infrastructure, auditing, economic impact, management and tourist safety, amongst others. A long-term and comprehensive approach was being taken.

The Chairperson said there was a need to see alignment between the provinces and local government.

The Minister replied that tourism was one of the sectors that had historically been a concurrent power, and this had created problems. If it had been an exclusively national power, it would have been easier to deal with many of the issues raised. Many municipalities, whenever faced with budgetary constraints, simply cut the tourism budget, and this was clearly wrong. Now, there was an effort to get all the colleagues, at various levels, on board.

Strategic partners
Mr Sinclair wanted to know who were the ‘strategic partners in tourism’ alluded to in the presentation, pointing out that they had been allocated R20 million.

Mr Makhubela replied that the partner was the Tourism Enterprise Partnership (TEP). It had indeed been given R20 million, but had also paid in another R20 million. The project was funded on a equal share basis.

Consultants
Mr Nyambi expressed concern at the number of consultants being used, and asked if new consultants were also appointed in the financial year.

Mr Sinclair said that large amounts were spent on consultants, but two amounts stood out - R2.3 million and R2.32 million – on which he wanted more clarity.

The Minister replied that Mr Makhubela had done a great job on cutting down on the number of consultants formerly used. The first “wave” of consultants had been called in to assist senior positions, such as the Director General and Minister. Currently, they tended to be called in to assist at levels of Chief Director and below. This pointed to a serious lack of the required skills and capacity at that level of government. That level was in fact where much of the practical work would be done. The consultants did not “consult” in the strict sense, but were instead starting to do the work that these middle level officials were supposed to be doing. Mr Makhubela had taken a hard line that this was in fact double-paying, and he had got rid of consultants, and forced the officials to do the work themselves.

Mr Makhubela confirmed that in this financial year there were no new consultants to the Department of Tourism, although there were consultants within the South African State Information Technology Agency (SITA), whom the Department was compelled to use, and they were reflected as consultants in the Department. Nobody could change the fact that IT services in government were supplied by SITA, although, owing to its lack of capacity, there was debate as to whether they should continue to be used. New consultants would be used on the EPWP projects, under a differently-structured agreement. In the past, the implementing agencies had been allowed to appoint their own auditors, but the Department had realised that this was problematic, and was now appointing auditors itself, from the province, since the Department could not conduct audits itself. The auditors would also perform independent evaluations on the implementation of the programmes, and they would be reflected as “consultants” on this work. Other consultants might include civil engineers who needed to certify certain structures being built, to avoid the Department being sued should any structures be sub-standard. The Department could not have these roles filled ‘in house’. It was impossible to insist that no consultants ever be used, but he wanted to stress that although they were assisting in some areas, there was not a situation where consultants were running the Department. Management was performing the essential functions.

Mr Van Schalkwyk said that when the new Department of Tourism was established it had requested DPSA to establish an IT unit at the Department, but this was not approved, since SITA was apparently to do the work.

Suspension
One member asked about the suspension of an employee.

Mr Van Schalkwyk replied that one person was suspended for an attempted attack on a female employee. The disciplinary process had taken longer than the 30 days, but the matter had now been finalised.

India MOU
Mr Sinclair said that when the Committee visited India, questions had been raised in relation to an MOU apparently signed between South Africa and India, which was not functioning properly.

The Chairperson added that there had been calls from India to implement the MOU.

The Minister replied this was an example of a case where more could be done. There had been quite a turn over of Ministers in India, which had affected relations. The Department had met recently with the new Minister and there was a renewal in commitment to a proper functioning MOU. The Indian market was an important market. One of the results of the MOU was that the Indian National Travel Agents Association would hold its conference in Durban, in February 2013, which would bring quite a bit of money.

Internal Aviation Costs
Mr Sinclair said the cost of internal aviation remained one of the biggest challenges against growing the domestic tourism industry. He queried what could be done to bring down these costs, which would be necessary if there was truly a drive to grow the sector.

The Minister replied that the cost of aviation had come down dramatically, since Cabinet adopted the Airlift Strategy in 2006, at both an international and domestic level, because of more competition. However, there were exceptions on some routes, including Kimberley, Mangaung and Mthatha. There was a need for more competition to drive down prices. The Department of Transport was responsible for the allocation of landing slots. The Department had always encouraged more airlines. 

Mr Tharage added that the routes lost by the closure of 1Time were to be picked up by Mango. There was ‘space and room’, but what had not been seen was the investment into airlift traffic.

Hunting Industry
Mr Sinclair asked for more information on the hunting industry.

The Minister said that the hunting industry felt it did not fit everywhere, and had, in the past, said that the Departments of Agriculture and Environmental Affairs did not take it seriously. The Department of Tourism had invited the hunting sector to an upcoming stakeholder meeting, as there was a huge tourism dimension to hunting. It crossed into several sectors, and the Department was trying to help this industry build its tourism profile.

Regions
Mr Sinclair said that the reality was SADC would be one of the biggest feeders to South Africa’s tourism. He wondered if then more should not be done, from government’s perspective.

The Minister replied that he had recently hosted the Nigerian Minister, and would host the Mozambican Minister in the following week. It was correct to say that Africa was a major market. The Department would be spending R280 million on ‘beefing up’ the African operation. Disposable income in Africa was growing fast, despite the poverty on the Continent. The initial pull was mostly shopping, but after the initial shopping trip, people came back to see the sights. Both the land and air African markets were key. The air market showed a dramatic increase over the last few years. South African Airways had opened up to new destinations, and there were other African airways flying more often to South Africa. Kenya Airways and Ethiopian Airlines had increased their flights, as well as Middle Eastern airlines. However, there were some issues of safety with other African continent airlines. Two airlines that were doing well were beginning to give SAA a run for its money, which was a good thing, as there was a need for more competition on the continent, and to force SAA to improve.

Intellectual Property
Ms Van Lingen was concerned about tourism and the intellectual property of specific products. In the Eastern Cape, Tree Top Tours apparently needed to tender, to run its own specific product.

The Minister replied that he had visited a TreeTop Project where that concern was raised. He was not sure that intellectual property was the problem, but government could not become involved in that. Tree Top had to seek legal advice on the matter. Tree Top alleged it was being made to tender for something to which it already held the rights, but this was an open tender process, so the questions to be considered included what had been invested over the years, and whether the process was fair and open. The Department was ensuring that proper discussions were being held.

Adventure Tourism
Ms Van Lingen said she did not recall the presentation speaking to the safety issues of adventure tourism, and she wondered if the Department, or another body, was regulating adventure sports.

The Minister replied that there was no one regulating the industry. This had been raised with the Department. South Africa had been privileged not to have had any serious accidents. No one was taking responsibility for anyone else as every operator was self regulating, although somebody did indeed need to take responsibility for the various forms of adventure sports. On the other hand, government should avoid over-regulating and becoming involved in issues that did not fall within its purview. Self-regulation was proposed as the alternative; government would initiate the process and provide seed funding for the industry to set up a body and assist the industry to start self-regulating. The first meeting was to be in December in Port Elizabeth. Stakeholders must agree on a framework for regulation, as he did not think government had the capacity to start regulating on this sub-sector.

African tourism
Mr B Mnguni (Free State, ANC) said that the Continent was sitting on wealth but did not use it. Tourism was one of the sectors where proper action could generate much employment. He asked what the Department had done to consider the issues, and if there were any MOUs.

Tourism in townships
Mr Mnguni said that during a recent visit to Soweto he had heard from business owners there tourists visited Soweto during the day, but did not stay over. He asked if the Department promoted the message that these places were safe, and dispelled misperceptions that they were not.

The Minister replied that perceptions about safety was one aspect, but another was that many guest houses were not graded. The Department of Trade and Industry Incentives Programme, that would be transferred to the Department of Tourism, had done an analysis showing that disproportionate amounts of money were spent on the accommodation sector, whilst others were still needing support. The Department, although it had not finally committed itself, was looking into the possibility of subsiding the accommodation into the grading system, which would immediately allow the establishments access to South African Tourism’s website, where they could market themselves better. Other areas of tourism, such as scuba diving, had not been considered for financial support in the past. Clearly, there was a need to reprioritise.

Shot Left Campaign
The Chairperson asked what progress had been made from the ‘shot left’ campaign as this had been widely successful. She asked for more information on domestic tourism.

Mr Makhubela replied that there was a major focus on domestic tourism, and the provinces and South African Tourism had come up with a detailed strategy to market domestic tourism. This plan sought to sustain the market, rather than using once-off activities.

Marketing of South Africa
The Chairperson asked if the marketing messages were aligned.

Tourism Projects funded
The Chairperson asked for the provincial spread on the tourism projects funded.

Growth
The Chairperson asked how the growth experienced in the sector assisted the Department in establishing tourism centres, and whether the growth rates had been used to facilitate transformation in the industry.

Mr Tharage replied that the Minister had appointed a Council to investigate what strategies could be put in place. There had been a framework, which culminated in specific codes. These codes of good practice then were used when considering “small enterprises” who were expected to comply with only four of the seven elements. However, the challenge was what four elements to use. The Department of Trade and Industry had now revised the codes, and they were published for public comment. The tourism industry had not been immune from these challenges, as micro enterprises generally fell into the level 8 to level 3 categories.

Mr Makhubela added that South Africa was building a comprehensive strategy to sustain growth. The Department and DIRCO were looking at different regions in the world, such as the East African region, and wanted to work with one country in the region while reaching out to other countries. The hope was to bring new numbers for inbound tourism.

International Tourism
The Chairperson asked about the Department’s exposure to the emerging international tourism markets.

Incentive Programme
The Chairperson asked if the Department had dealt with the shortcomings of the Incentive scheme and if there were processes planned to deal with the problems that may arise.

Programme one
The Chairperson asked for the rationale behind the 56% expenditure procurement from the BEE enterprises, and asked about compliance with the new Preferential Procurement Policy.

Mr Van Schalkwyk replied that the Department was still dependent on the old Black Economic Empowerment structure, which contained no guiding figures. The Department had started on a low base, but had raised the bar. In this financial year, it fell under the Amendment Act, which now referred to levels one to eight. The Department would make sure it only utilised companies who were certified within the new Act, at levels one to eight.

Tourism Development and set targets
The Chairperson said he was not comfortable with the idea behind tourism development. Each year, the Department seemed to under-estimate its own targets, and exceed them, yet in the next it would again underestimate. He thought that the targets needed to be raised.

Mr Makhubela replied that it was correct that the Department should be careful of ‘under-targeting’, but it had re-thought the matters, and some could not be over-achieved because of the way they were constructed, whilst others could be exceeded through efforts, and where the Department had realised, after planning, that it could achieve more, it actively set out to do this. He suggested that the Department should not be constrained to meet specifics.

The Chairperson wanted to put it more simply. If, in one year, a target was set at 300, and 422 was accomplished, then it should not be set, for the next year, at 350 because the Department already knew it could achieve more. Instead, it should be set, in the second year, at no lower than 422, or perhaps even 450.

Mr Makhubela replied that this had been a structural problem within the TEP, the project to which the Chairperson was referring. The Department’s role was not to do matters and fix structural problems for the TEP. However, it would help to set better targets, as it would work with TEP to define targets and time frames that were better structured, then monitor the implementation

Skilling
The Chairperson asked how wide the ‘skilling for entrepreneurship’ was within the industry, and how this Department linked to other entities, such as Department of Trade and Industry, who focused on entrepreneurs.

Ms Ramphele replied that there had been incentives surrounding table attendance, customer services, front house, occupational health and health and safety. These were implemented in all the provinces. Recruitment was not done by the Department, but was done by the provinces.

Audit
The Chairperson commended the Department for getting an unqualified audit, but urged it to attend to and correct the matters raised by the Auditor General.

The Minister replied that he was satisfied with the general level of financial management. Department of Tourism had consistently achieved an unqualified audit. However, that should not be seen as a special achievement, but merely what was expected.

The meeting was adjourned.

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