National Tourism Sector Strategy: Department of Tourism briefing; Committee's Second Term Programme

Meeting report

Mr Kingsley Makhubela, Director-General: National Department of Tourism, referred to the comments made by Mr Michael Mabuyakhulu, Kwazulu-Natal MEC for Economic Development and Tourism, on the proposed introduction by the province of a “hospitality levy” in 2015. The National Department of Tourism was to have a discussion with the Minister of Tourism on this issue. The Minister would thereafter have to make decision over the matter.

He also referred to the meeting between Mr J Vos (DA) and the Minister over the issue of the proposed visa regulations by the Department of Home Affairs (DHA), and said that some sort of resolution was being reached. Discussions with the DHA were ongoing on how to expand in markets like China and India.

He pointed out that the National Tourism Sector Strategy was to be reviewed in 2014. The aim of the review was to identify what challenges were attached to the strategy, and how the strategy could be strengthened.

National Tourism Sector Strategy (NTSS)
The National Department of Tourism (NDT) briefed the Committee on its National Tourism Sector Strategy. The delegation from the NDT was comprised of Mr Makhubela,, Mr Victor Tharage, Deputy Director General: Policy and Knowledge Systems, Ms Morongoe Ramphele, Deputy Director General: Domestic Tourism Management, Ms Aneme Malan, Deputy Director General: International Tourism Management and Ms Petra van Niekerk, Parliamentary Liaison Officer: Office of the Director General.    Ms Shama Nathoo, Parliamentary Liaison Officer: Office of the Minister of Tourism, was also in attendance.

Mr Tharage undertook the briefing.  A brief background on the NTSS was that 37 000 comments had been received on the strategy.  Cabinet had approved the NTSS on 3 March 2011. The aim of the NTSS was to assist in making South Africa one of the top 20 tourism destinations in the world by 2020. Some of the key objectives of the NTSS were to grow the tourism sector’s absolute contribution to the economy. On visitor experience and brand, the intention was to deliver a world class visitor experience and to position SA as a globally recognised brand. Lastly, on sustainability and good governance, the aim was to promote responsible tourism practices within the sector and to ensure transformation in the sector took place.

Key targets were set for 2015 and 2020 and these included:

- tourism’s direct contribution to GDP was set at R118.4bn and R188bn respectively, for 2015 and 2020;

- visitors’ arrival numbers were to reach 12.1m by 2015 and 15m by 2020, respectively;

- by 2015 and 2020, to create 403 000 and 461 700 direct jobs;

- tourism’s domestic contribution to GDP to reach 55% in 2015 and 60% in 2020;

- the opening up of three marketing offices in Africa by 2015, and five marketing offices by 2020.

Key interventions had been introduced on the demand side and these included marketing and brand management, as well as key interventions on the supply side, such as product development and investment promotion.

The structural arrangement for implementation of the NTSS was comprised of a communicators’ forum, knowledge groups, non-governmental organisations and community-based organisations, a government forum, as well as a business forum. All these contributors fed into a NTSS delivery forum which was supported by the NDT.

The Committee was provided with a breakdown of figures relating to the performance of the NTSS. According to StatsSA figures, tourism’s direct contribution to the GDP in 2012 was R93.3bn, which was 3% of SA’s total GDP.  The direct contribution to employment stood at 617 287 jobs in 2012, which was 4.6% of total employment created.  Tourist arrivals figures obtained from SA Tourism and StatsSA showed that tourist arrivals had increased by 4.7% in 2013, compared to 2012.  Arrivals from overseas markets had also increased by 7.1% from 2012 to 2013.  Arrivals from Africa had also increased by 3.8%, comparing 2012 and 2013 figures.

On the domestic tourism side, challenges were evident and the NDT was aware that it had to intensify its efforts. Domestic tourism trips had declined from 26.3m in 2011 to 25.4m in 2012, a decrease of 3.8%.   The number of domestic travellers had also fallen from 13.9m in 2011, to 12.5m in 2012.  However, in contrast, domestic tourism’s contribution to the SA economy had increased from R100.1bn in 2011, to R105.6bn in 2012.  

Members were provided with insight into the domestic tourism performance in countries other than SA. China, for example, had a large domestic tourism market.  Compared to inbound tourism flows, which declined by 1% in 2012 with trips falling to 57m, domestic trips increased to 2.5bn.  France had recorded 202m domestic trips in 2011, a 3% increase compared to 2010, and the number was expected to grow to 209m by 2016.  In the USA, domestic tourism had grown by 3% in 2012 to exceed the 1bn trips figure for the first time ever.

Chapter 2 of the Tourism Act No 3 of 2014 required that the NTSS be adopted and gazetted by the Minister after a consultative process.  Previously the NTSS had been developed out of need, but now it was a legal requirement. The NDT intended to review the NTSS.  It would include an assessment of progress made, as well as a review of the current and future environment.

Discussion
Ms P Adams (ANC) congratulated the NDT on obtaining a clean audit report. If tourism was considered a primary economic sector, she asked whether there had been development taking place in the film and other related sectors. The NTSS was supposed to be reviewed annually. She asked what the specific date for it to be reviewed was.  What work was being done in rural areas and how was the issue of crime being addressed?

She said that a domestic airlift strategy played an important role in enhancing domestic tourism. Was it not possible to develop domestic travel? She pointed out that China had a national airlift strategy, hence people travelled more within China.  She agreed that comparisons between China and SA could be made, but she felt that it would be better if SA was compared to a country that had the same population figures and level of development as SA did.   Figures showed an increase in tourism trade balances from R11.2m to R26.8m. What had NDT done in order to achieve the increase?

Mr Makhubela responded that airlift was the responsibility of the Departments of Transport and Public Enterprises. The issue was about the affordability of domestic travel. The domestic market was more profitable than the international market for airlines in SA. He said that some time ago, the Airports Company of South Africa (ACSA) wished to close down OR Tambo International Airport for an apparent lack of jet fuel. Meetings had been held over the issue and it transpired that the supposed shortage in jet fuel was an artificial creation or issue.  The problem was that there was one company supplying 30% of all jet fuel. He had held a meeting with the chief executive officer of the company in question, and the issue had been resolved in two days. He remarked that there were a variety of issues around airlines. The NDT was working with the Department of Transport to fix the airlift strategy in SA. The strategy had expired some time ago.  

He stated that when the Industrial Policy Action Plan (IPAP) 2 -- the new growth path -- was finalised, the intention was to move tourism out of it.

Mr Tharage, in relation to the question on trade balances, noted that SA Tourism had to grow the number of its products and to grow the spend in SA.  If SA did not have a localised airlift strategy, then income would be lost. There was a great deal of dynamics to take into consideration.

Mr Vos stated that section 8 of the NTSS covered institutional arrangements.  Tourism was a local issue. Much of the efforts put into tourism relied upon the efforts of municipalities. However, the capacity of municipalities was a concern. Greater assistance should be provided to struggling municipalities so that they were able to leverage strategic assets in their areas.  It came down to proper marketing and getting the right people to do the job. He asked what the efforts of the NDT were to assist municipalities.

He stressed that fuel was a huge factor for airlines, and felt that SA Tourism should meet with low cost airlines. What efforts were being made by the NDT to work with domestic airlines on a domestic airlift strategy?

The Committee needed to be fully briefed on the Tourism Marketing SA (TOMSA) Levy strategy. Members needed to discuss the TOMSA Levy thoroughly in order to ascertain whether it needed to be increased. Ways should be found to channel some of the proceeds of the levy to struggling areas which needed upliftment.

He also asked what mechanisms the NDT had in place to ensure that tourism efforts by organs of state were in line with the NTSS.

According to the Financial and Fiscal Commission, investment in tourism infrastructure had dropped.

Given that a review of the NTSS was to be done shortly, he asked what the review entailed.

He noted that a study had shown that there would be a drop in the number of international tourists if the newly introduced visa regulations of DHA went ahead. Therefore, the importance of the introduction of an e-visa could not be stressed more.    

Mr Makhubela noted that the TOMSA Levy issue was a catch 22 situation, as it was a voluntary contribution. In 2013 it had generated a total of R130m. The problem was that there was no legal framework for it.  If the issue of the levy was too widely discussed, the fear was that the South African Revenue Services (SARS) might pick up on the issue and decide that the funds needed to be part of the fiscus. The SARS had the legal framework to take the funds at any time. The question was whether the compulsory taxation of the sector was really what was wanted. He had the fear that if the levy amount became too huge, it would end up as part of the fiscus. 

Ms S Xego-Sovita (ANC) was concerned about gaps that might exist between the NTSS and the National Development Plan. She was also concerned about the coordination of tourism structures across the different spheres of government. She noted that a huge portion of NDT’s budget went towards its entity, SA Tourism.

The issue of low cost airlines fell within the domain of the Departments of Public Enterprises and Transport. How did the NDT work with these Departments?

The NTSS was silent on disasters, and the impact that they could have on tourism arrivals. She made reference to the recent outbreak of the Ebola virus in certain parts of Africa, and asked how it could impact upon tourist arrivals.

She concluded by stating that monitoring and evaluation was needed with regards to the NTSS.

Mr Makhubela emphasised that a strong domestic strategy was needed. The Ebola outbreak was unfortunate and had had unintended consequences. Many tourists were of the opinion that Africa was one country, and that what affected one country affected the whole continent. 

He pointed out that inter-departmental coordination was a huge problem.  Even inter-committee coordination was a problem.  Coordination between the different spheres of government was important. The NDT invited provinces to its planning sessions, and the NDT was also invited to the provinces’ planning sessions.  Local government had unfortunately not invited the NDT to its planning sessions as yet. The NDT did have an opportunity to sit down with local government every two years at the Local Government Forum. Many of the challenges that existed were political.

Mr Tharage explained that the management of crises relevant to tourism was in terms of the National Tourism Management Framework. The role of the NDT in times of crisis -- for example, when there were floods -- was to check on who was in that area in the tourism industry at that point in time. The NDT tried to provide a level of coordination at a time of crisis.

The NDT had a monitoring and evaluation unit to check on its strategies, as well as other sector strategies.

Mr J Esterhuizen (IFP) was also concerned about the impact that the visa regulations by the Department of Home Affairs could have upon tourism. He felt that municipalities had a major role to play in promoting tourism. He spoke about Durban using sports to promote tourism. It had generated R170m.

He was not convinced that the NDT could make an impact upon airlines, as the airlines themselves determined ticket prices.

He spoke to domestic tourism’s figures for 2012, as outlined in the briefing document on page 14.  If 72.3% of visitors were visiting friends and family, and 6.7% of visitors were on holiday, what type of visitors did the remaining 21% comprise of?

The safety and security of tourists was highlighted as a concern.

The NDT should have joint meetings with other departments, like Arts and Culture, over issues on tourism.

Mr Makhubela, on the issue of safety and security, explained that the NDT did not form part of the security cluster of departments. The NDT had, however, been asked to participate in discussions on crime and what could be done about it.

Ms L Makhubela-Mashele (ANC) stressed that transformation in the tourism sector was a concern. The NTSS was good to have, but there needed to be a way to channel the growth towards those who had been previously disadvantaged in the past. What tools had the NDT put in place to see to it that transformation took place?

She asked how the NDT intended to unlock economic tourism development in municipalities. What plans did the NDT have to ensure economic development in municipalities took place?

Mr Tharage noted that the NDT had an incentive scheme which was still to be implemented.  A plan had been designed by the Tourism Broad-Based Black Economic Empowerment (BBBEE) Charter Council. The idea was to have a database of suppliers across the value chain of tourism. A great deal of work had been done by the Tourism Enterprise Partnership as well. The NDT was encouraged by what the new BBBEE codes took into consideration. It allowed for downstream beneficiation.   

Mr S Bekwa (ANC) asked what the NDT was doing about the budget structure of provinces.  Affordability of tourism products was one of the issues which the NTSS aimed to look at. What was the NDT doing to ensure the affordability of tourism products?

The Chairperson referring to the TOMSA Levy issue, and noted that the NDT needed to inform the Committee about what developments had taken place. She commented that even though the NTSS had been launched before the Tourism Act, in its review it was now going to be strengthened.

She asked whether tourism fell under Strategic Infrastructure Projects (SIPS) infrastructure development.

With regards to the NDT’s domestic tourism plans, what was being done to promote rural tourism? It was especially important, given that a great deal of SA was rural.

Was the NDT able to assist or monitor the level of skills on tourism at the municipal level?  In what areas had direct employment been created?

Mr Makhubela noted that training for bureaucrats and politicians had been provided at the University of Pretoria. The NDT hoped to see the impact of such training. He noted that some local governments were responding.

Ms Malan explained that direct employment related to the tourism satellite account. The account was a national account. The tourism parts were taken out. She emphasised that it was a fairly technical process.   A distinction was made between tourism characteristic products such as accommodation, and tourism connected products, which were retail and trade related. The NDT received data for the tourism satellite account from StatsSA.

Ms Ramphele, on the issue of SIPS, said that the NDT coordinated with provinces and the Presidential Infrastructure Coordinating Committee (PICC). The NDT had referred 16 projects to the PICC. Only three of the projects had been accepted.  SIP 4 was specific to tourism, and based in the North West Province.

On assistance to municipalities, she said there was informal capacity building and information sharing. Municipalities had to be conscious of businesses that were involved in tourism.  There were 27 district municipalities in rural areas.  SIP 3 dealt with road construction on the West Coast which would benefit tourism.

The NDT had a Rural Tourism and Cultural Heritage Strategy. She said the NDT was aligning itself with district municipalities. The NDT’s Social Responsibility Implementation (SRI) projects were rural-based. Of the eight heritage sites, six were in rural areas.

Mr Makhubela said that a great deal of talk was about cruise tourism. There was a company offering cruises along the coast of Africa from, say, Durban to Bazoruto.  It was not a South African company, and in 2009 it had made R350m. SA should not be promoting such cruises. There was no benefit to our local economy. There was not even a tax income.

Ms E Masehela (ANC) asked how many bureaucrats had been trained by universities. People employed in the tourism industry relied a great deal on tips. A structure was needed for salaries in the industry.

Mr Tharage said that policy makers and officials from local government had been trained at the University of Pretoria. Fifty-three policy makers and 52 officials had been trained across 61 municipalities from all provinces.

Mr Makhubela said that the issue of salaries was difficult. Salaries tended to vary. Entry level employees at Sun City received R9 000 per month. However, Sun City wished to review its salary scale as they were not making as much profit as they used to.  The Chief Executive Officer of Sun City had alluded to the fact that a R20m subsidy had to be used.  It was difficult for the NDT to prescribe employment practices. 

Mr Esterhuizen believed that most of the tourists that came to SA were repeat visitors.  With the internet available, was it not cheaper to market SA on the web than the R1.2bn spent by SA Tourism?

Mr Makhubela responded that SA Tourism would be able to provide figures on repeat visitors to SA. Social media like Facebook, Twitter and Google did play a role in advertising. Television and radio still played a crucial role.  He felt that R1.2bn was not a huge sum when one looked at the marketing budgets of other countries.  The United States of America was setting up a tourism entity and the marketing costs would run into the hundreds of millions. The fact was that tourism was under-funded, but the best thing to do was to utilise resources more efficiently.

Committee’s Second Term Draft Programme
Mr Vos stated that according to the Committee Programme, the Tourism Grading Council of SA (TGCSA) was supposed to have briefed the Committee in the present meeting, and not the NDT. Why had there been a swop of briefings, which meant that the TGCSA briefing was now scheduled for 29 August 2014. He had other commitments on that day, and would not be present at the TGCSA briefing. He would have liked to be present when the TGCSA briefed the Committee. He asked the Committee staff to stick to the Programme which Members had agreed upon, as logistical arrangements needed to be made beforehand.

Mr Jerry Boltina, Committee Secretary, explained that the NDT was not able to brief the Committee on 29 August, as there was a Ministerial Member of the Executive Committee (MinMEC) meeting which NDT officials had to attend.  A swap had therefore been made with the TGCSA. The TGCSA briefing would take place on 29 August.

Mr Vos responded that it was vital that the NDT be present when the TGCSA briefed the Committee. Some issues had to be addressed to the NDT.

The Chairperson said that perhaps provision could be made by the NDT to make one of its deputy directors available to attend the TGCSA briefing session.

Mr Sibusiso Khuzwayo Committee Content Advisor, pointed out that the TGCSA was attached to SA Tourism.  If so required, SA Tourism officials could be requested to attend the TGCSA briefing. Furthermore, there were officials from the NDT who oversaw the TGCSA, and such officials could be asked to make themselves available for the briefing.

The Chairperson agreed that the NDT official or officials who oversaw the TGCSA would be asked to attend the meeting.

Mr Esterhuizen stated that he would also not be able to attend the TGCSA briefing now scheduled for 29 August. It seemed to be an important meeting which he did not wish to miss.  He suggested that perhaps the TGCSA briefing should be moved to another date so that he could be present for the meeting.

Mr Vos supported the suggestion made by Mr Esterhuizen.

The Chairperson responded that the TGCSA had already been informed about the meeting date 29 August.

Ms Makhubele-Mashele agreed that NDT officials needed to be present at the TGCSA briefing.

The Committee Second Term Draft Programme was adopted unamended.

Committee Minutes
The minutes of the meeting of 1 August 2014 were adopted unamended.

The meeting was adjourned.