Tourism Incentive Programme: Department of Tourism briefing

Meeting report

National Department of Tourism (NDT)
The NDT briefed the Committee on its Tourism Incentive Programme (TIP). The delegation responsible for the briefing comprised of Ms Morongoe Ramphele Deputy Director General: Domestic Tourism Management, Mr Thlopane Nthatisi Deputy Director: TIP and Mr Bernie Meyer Chief Director: Research, Information and Knowledge Management.

Ms Ramphele provided background information on the Tourism Incentive Programme (TIP). In 2011 the Department of Trade and Industry (DTI) had transferred a unit that had dealt with tourism incentives to the NDT. In 2012 the DTI decided to suspend its TSP; the TSP had not been transferred to the NDT. The DTI however would continue to run some of its existing programmes until 2017. The NDT approached National Treasury to fund the new TIP. The NDT decided not to follow the DTI’s approach but had its own TIP which would be aligned with the National Tourism Sector Strategy (NTSS). The NDT was however experiencing challenges in appointing a head of the new unit. The NDT had tried three times to fill the position but had been unsuccessful. The problem was that vetting processes took too long. It was also a challenge to staff the new unit.

Mr Meyer and Mr Nthatisi covered the rest of the briefing. The guiding principles of an incentive programme were elaborated upon. Incentive programmes had to be based on a clear rationale, it had to be aligned to the NDT’s mandate and strategic objectives of the NTSS, it furthermore had to offer clear and transparent guidelines and rules for applicants and the organisation and finally had to be measurable in terms of impact.   A review of the DTI’s TSP had identified lessons learnt. Some of the lessons learnt from the TSP included- the need to limit the number of objectives to one or two per programme; Programme guidelines needed to be clear and concise, the TSP guidelines had been ambiguous and as a result consultants had taken advantage and it cost the DTI huge sums of money. Hence with the TIP the use of consultants had to be avoided; Application and claim processes had to be simple and easy and; Administrative capacity should be sufficient. Even with the DTI’s capacity the TSP had run into backlogs.

The DTI had advised the NDT to adopt a phased approach towards the development of the TIP. Start off small and build up over time. It was decided to have three phases. Initially as part of phase one it was agreed to have market access programmes to facilitate access into the market. Cost was usually a barrier. It was additionally decided to provide Social Responsibility Implementation (SRI) sustainability support. There were instances where good SRI projects could not get off the ground due to lack of management capacity etc. Targeted groups for the TIP could be emerging tourism enterprises that were less than 3 years in operation and had a turnover of less than R2m. Another targeted group was established tourism enterprises who were in existence for more than 3 years. The idea was to have transformation of the sector but the underpinning objective was that eligibility and qualifying criteria had to be taken into consideration.

Members were provided with insight into the consultation process to date. There had been preliminary industry consultations with organisations like the Tourism Business Council of SA (TBCSA) and Federated Hospitality Association of SA (FEDHASA). The Minister had an industry consultation session as well. Five working groups were established- a tourism development funding forum to prevent issues like double dipping, another was development of a destination development plan framework and amongst its intentions was the enhancement of SA’s eight world heritage sites, there was also a working group for the design and development of current and future programmes as per the draft TIP, a further working group emerged to deal with disparities in tourism signage amongst provinces and finally a working group was set up to enhance SA’s ports of entry. An issue that was also identified as important was skills development.

Potential future focus areas included tailored capital investment support to address specific NTSS objectives for example resource efficiency and universal access, enhancing the visitor experience and lastly destination development.
  
Discussion
Mr G Krumbock (DA) referred to the issue of signage and said that interaction with departments that dealt with roads was needed. The Committee needed more information. What and where was the problem and what was being proposed? Was the NDT working with the Department of Transport? What were the budgets? There had to be community concerns- it was a far wider problem. The presentation from the NDT had no detail and had been vague. There was no sense of where things were coming from and where things were going. The NDT needed to provide the Committee with additional documentation that contained more detail. The presentation contained no figures and no information on budgets etc. Members had no idea how much funds had gone into the Programme. What were income and expenditure figures? The briefing had alluded to the fact that there had been problems with the TSP. However the Committee was provided with no details on the failure of the TSP. The Committee needed a 6-8 page summary of what went wrong with the TSP. Members could not be expected to engage on the current document before them. Specifics on what the NDT intended to do was needed - practical examples could be provided to the Committee. A whole new document was needed to provide more detail. The current briefing seemed to present the same programme to the Committee that was presented to the Committee three and a half years ago. At that point the Committee had felt that the programme would not work. Was it the same programme?

Ms P Adams (ANC) was heavily disappointed with the presentation. The intention of the TSP had been to assist people. The TSP was shifted from the Department of Trade and Industry to the NDT in 2012 without funding. Were there funds that had rolled over from DTI to NDT and how much funds were there? The amount was believed to be R100m. Had the funds been ring-fenced since 2012 or was it used for the establishment of workgroups.  The NDT had apparently engaged with National Treasury but members had no details on the outcome of such engagements. From the briefing it was apparent that there were a number of processes attached to the establishment of the unit and the head of the unit. It was a concern that an advertisement had been placed thrice to fill the post of head but all three attempts had been unsuccessful.  If the two officials that were part of the present NDT delegation had been transferred from the DTI to the NDT, then why were they not appointed to perform exploratory work for the unit? The impression was that nothing was done thus far.  The Committee needed concrete details on paper. The briefing as well as the expense that went along with it was a fruitless expenditure. The idea of an incentive programme was to enhance transformation. Transformation in the tourism sector was dearly lacking.  From the briefing the impression was that the NDT wished to assist established businesses. The briefing spoke about there being working groups to cover ports of entry and skills development- what was going to be done?

Ms E Masehela (ANC) asked if it was correct that the DTI was to continue with its tourism incentive programmes till 2017. What happens after 2017? The DTI had spent a great deal of funds with the use of consultants, what was to prevent the NDT from doing the same on its incentive programme.
In agreement with Ms Adams, it looked as if the NDT intended to assist already up and running businesses. What about new entrants to the sector? Why had the NDT’s vetting process taken so long- had the issue been addressed?

Mr J Vos (DA) did not wish to re-echo the sentiments of the Committee on the presentation but agreed with the comments made. The NDT clearly needed to review the implementation and methodology of SRI projects. If the intention was to deliver a high quality product outside urban areas, the TSP for rural areas had to be taken seriously.  The Committee was disappointed as it had wished to see the effect that SRI projects and the TSP had on product development in rural areas. SRI projects should create jobs and encourage skills development. The presentation lacked detail. The Committee had to be provided with figures on what funds were available for TIP projects. Members needed clear directives so as to contribute meaningfully. Personal research on projects revealed that at a village near Thaba ‘Nchu there was a project worth R3.6million. The project implementer was being investigated because the project was not functional. On the other hand a project in the Kwazulu-Natal was in fact working. This spoke to transformation and to rural tourism development. The NDT needed to do a rethink its efforts as members were disappointed on what had been presented. On signage, capacity was needed at municipal and local levels. On ports of entry further elaboration was needed on new terminals and the NDT had to elaborate on its efforts. There was a value chain that could enhance tourism. The Committee needed a report on projects that had been funded. Members had to see what was working and what was not. The issue was about obtaining value for money.

Mr A Whitfield (DA) pointed out that beneficiaries of SRI projects receive funding from the NDT and he had received a letter from one of such beneficiaries. The beneficiary stated that they had been informed by the NDT that they would no longer be funded by the NDT. The beneficiary in this instance ran a hospitality training initiative for young black South Africans. Persons were being trained and employed. The project had a 70% success rate and close to 4000 persons had been trained. This was a success story. They were currently in limbo and did not know where they stood. On youth development and training, did training in the hospitality sector create jobs?

Mr J Esterhuizen (IFP) was concerned about the sustainability of rural projects. It was hoped that the Committee would receive a more comprehensive presentation from the delegation at another time.

Mr B Joseph (EFF) understood that it was a difficult task to set up a branch or unit in the NDT. Was there an action plan? How was synergy and coordination to be attained in the setting up process? Given the concerns that the NDT had raised regarding its vetting process, what had the NDT done subsequently to fast track the vetting process.  Had the selection criteria for awarding the TIP been finalised and how would the TIP facilitate new entrants into the industry?

Ms L Makhubele-Mashele (ANC) opined that the presentation had not provided the Committee with sufficient information to engage with and it was understandable that there were frustrations with starting up a new unit. The lessons learnt from the DTI TSP should have been taken into consideration in compiling a strategy for NDT’s TIP. It was important the NDT come up with a clear concept or strategy before anything else was done and that the TIP be put on hold until a clear strategy was provided to the Committee. The point after all was that incentives were supposed to address problems in the industry. It must have been a difficult task otherwise the DTI would not have used consultants- any system was open to manipulation. The delegation needed to go back to the drawing board. What should be done was to put a process in place to address a problem. People who received incentives should meet the NDT’s criteria. There was no clear picture of where things were and where things were heading.

The Chairperson thanked the delegation and also thanked members for being honest. The problem was that the TIP was all still on paper. Information on the TIP was scant in the presentation. Surely the NDT had a concept document and it should be forwarded to the Committee. The Committee still had to consider its Budget Review Recommendations Report (BRRR) and if funding was needed for the TIP the NDT had to make its case. How could the Committee recommend more funding to be given to the TIP when the Committee did not see a tangible Programme? The Committee needed to know where the NDT wished to take SA in terms of tourism. The Committee was just as lost and blank after the briefing as it was before. The Chairperson suggested that the delegation rather not respond to the questions and comments made by members as there was no point. The NDT should rather go back to the drawing board and come back to the Committee with substantial information on the TIP. In the NDT’s strategic plan it stated that funds had been transferred from the DTI to the NDT. The Committee needed specifics.

Mr Krumbock remarked that it was necessary that the NDT had noted down the questions asked, concerns raised and comments made by members and that the document which they intended to provide to the Committee in time to come would cover all that was highlighted by members.

Mr Vos added that if a comprehensive report was to be provided to the Committee it should provide a complete overview of the funds of the TIP, where projects were located and what the status of projects were.

Mr Sibusiso Khuzwayo Committee Content Adviser Parliament noted that it was SRI projects the TIP intended to assist with and suggested that the report should not focus on SRI projects as the NDT would be briefing the Committee on it in its next meeting the following week. Perhaps the TIP issue should be separated from the SRI issue.

Mr Vos reiterated the Committee’s request on the list of projects.

Ms Masehela added that in the next briefing on the TIP the NDT should also speak about its implementation plan and timeframes that went along with it.

The Chairperson stated that the Director-General (DG) of the NDT would be asked to be present at the next briefing on the TIP.
 
Committee Minutes
Committee Minutes dated 29 August 2014 was adopted as amended. Additions and grammatical changes were effected to the Committee Minutes.

The Chairperson informed the Committee that the Committee Report on the Memorandum of Understanding between SA and Saudi Arabia had been ATCed.

Mr Vos congratulated the government of Zambia on its introduction of e-visas. He hoped that SA would follow suit. He noted that the Minister of Tourism had recently at a summit spoken favourably on e-visas.

The meeting was adjourned.