National Department of Tourism on its 2014/15 Quarter 3 and Quarter 4 Performance Reports and 2015/16 Quarter 1 Performance Report

Meeting report

National Department of Tourism (NDT)
The National Department of Tourism (NDT) briefed the Committee on its 2014/15 Quarter 3 and Quarter 4 Performance Reports as well as on its 2015/16 Quarter 1 Performance Report. The delegation comprised of Mr Victor Tharage, Acting Director General; Mr Dirk van Schalkwyk, Chief Operating Officer; Ms Ramphele Morongoe, Deputy Director General: Domestic Tourism Management; Ms Aneme Malan, Deputy Director General: International Tourism Management; Mr Ralph Ackerman, Chief Financial Officer; and Ms Petra van Niekerk, Parliamentary Liaison Officer: Office of the Director General. Also in attendance was Ms Nurunessa Moolla, Chief of Staff: Tourism Ministry and Ms Natasha Rockman, Parliamentary Liaison Officer: Deputy Minister’s Office: Tourism.

Apologies were tendered for Minister Derek Hanekom and Deputy Minister Tokozile Xasa for not being able to attend proceedings.
 
On all the performance reports for the various quarters presented on Mr van Schalkwyk was tasked with speaking to the Administration Programme, Mr Tharage the Policy and Knowledge Services Programme, Ms Malan the International Tourism Management Programme and Ms Ramphele the Domestic Tourism Management Programme. Mr Ackerman covered budgets and financial issues of the NDT. The briefings on Quarter 3’s and Quarter 4’s performance targets overlapped with one another.

2014/15 Quarter 3 and 2014/15 Quarter 4 Performance Reports
The NDT in Quarter 3 as at the end of Decembers 2014 had spent 80% of its budget. 77.17% of its targets were achieved. 11.32% of targets were not achieved but significant work had been done. 11.51% of targets were not achieved and intervention was required. At the end of Quarter 4 the NDT performance was at 86% and 57 of its 66 targets were achieved.

Programme 1- Administration: The Programme had for the most part met or surpassed its Quarter 3 performance targets with the exception of a few. A target was set to maintain a vacancy rate of 9% for Quarter 3 but only 7.71% was achieved. In Quarter 4 the target was to maintain the vacancy rate of 8%, actual performance was 6.43%. On women representation in Quarters 3 and 4 a target was set at 50% but the actual performance for both Quarters was 53%. The target for disability for both Quarters was set at 5% but the actual figure achieved for Quarter 3 and Quarter 4 respectively was 5.2% and 5.3%. Black representation had a target in both Quarters set at 91% and it was surpassed sitting at 95%. On the implementation of the annual internal audit plan the target for Quarter 3 was set at 30%, the actual figure achieved was 21%. For Quarter 4 the target for annual plan implementation was achieved at 15%. On the implementation of the NDT’s Communication Strategy for Quarter 3 it was hoped to achieve 100% but the actual performance was 95% and for Quarter 4 actual performance was 91%.

Programme 2- Policy and Knowledge Services:  For the most part targets were achieved. Research studies were completed with the exception of the study done at the University of KwaZulu-Natal. There were serious challenges with capacity at the KwaZulu-Natal University as there was staff turnover and new persons came onto the project. The NDT also had its own capacity issues. The NDT together with the KwaZulu-Natal University was working to take the project forward and hoped to come up with a workable solution. Two National Tourism Information Gateways (NTIG) operational reports for O R Tambo International Airport (ORTIA) and Beitbridge Border Post were aimed for the Quarter. However the operational report for Beitbridge could not be completed as there were issues related to the viability of the site.
 
Programme 3-International Tourism Management: All targets were achieved with the exception of a few. The final review of the implementation of the Indaba expansion policy was not developed in Quarter 3 but was completed in Quarter 4. In addition the draft proposal for the development of SA’s position within the African Union was not developed in Quarter 3 but was done in Quarter 4.
 
Programme 4: Domestic Tourism Management: Of all the targets set in Quarter 3 four were not achieved. Three of the four related to the Tourism Incentive Programme (TIP) and one related to Expanded Public Works Programme (EPWP) targets. The EPWP target was not met due to budget cuts.  Other problems included procurement delays on bids of Social Responsibility Implementation (SRI) projects and bid collusions. These issues impacted upon Quarter 4 performance targets as well. Once again in Quarter4 three targets relating to the TIP and one relating to the EPWP could not be achieved. The incentive grant could not be accessed because targets in terms of Further Training and Education could not be achieved.

Mr Ackerman stated that at the end of the financial year 2014/15 the NDT had spent 98.4% of its budget. The Committee was also provided with expenditure figures as per programme and economic classification.

2015/16 Quarter 1 Performance Report
Mr Ackerman provided insight into the budget and expenditure review as at 30 June 2015. The total budget sat at R1.8bn and expenditure was R603m, hence 33.5% of the budget was spent. Members were provided with a breakdown of expenditure as per economic classification. On Quarter 1 performance the NDT achieved 78.95% or 45 of its 57 targets.  Targets not achieved where significant work was done were 14.04% or 8 out of 57 targets. On targets not achieved where an intervention was required the figure was 7.02% or 4 out of 57 targets. Most of the targets were achieved.

Programme 1-Administration: Members were given a comprehensive breakdown of targets set and achieved for the Quarter. There were those instances where there were variances in targets set and what was actually achieved. A target for vacancy rate was set at 11% but the actual vacancy rate for Quarter 1 was 5.8%. The target set for women in senior management service positions was 49%, the actual figure achieved was 48%. The review and implementation of the NDT Cabinet and Cluster protocol was a target achieved in Quarter 1 pending Acting Director General approval. This had since been approved. The NDT managed to achieve a 95% implementation of Quarter 1 requirements of the annual implementation plan of its communication strategy when it had hoped to achieve 100%. The Committee was assured that the implementation of the NDT’s communication strategy would be finalised in the current financial year.

Programme 2-Policy and Knowledge Services:  A general target was set for the review of the NTSS. On the NTSS the Quarter 4 target of consultation on the travel and tourism environmental scan was not conducted and the drafting of the strategy not commenced.
On universal access actual performance was that stakeholder awareness had taken place in Limpopo, Northwest and Gauteng Provinces. On the NTIG a resource and enhancement plan for ORTIA and King Shaka International Airport (KSIA) was developed and the intention was to have a plan for Cape Town International Airport in the near future as well.

Programme 3-International Tourism Management: With the aim of supporting South African missions on developing tourism a target was to have a capacity building schedule agreed upon after consultations with the Department of International Relations and Cooperation (DIRCO), SA Tourism and the private sector. Unfortunately the schedule could not be agreed upon but the NDT nevertheless continued its training efforts. On skills development opportunities by way of bilateral, the target was set to finalise details of FET chef trainers’ skilling workshop by French counterparts. However the details of the skilling workshop could not be finalised given that the draft scope was bigger than what was envisaged. A target was also set to hold two SA tourism trade seminars. One was held within the Quarter and the second could only be held in the Quarter 2 during July 2015.
 
Programme 4-Domestic Tourism Management:  Provincial coordination of the countrywide Tourism Month Programme was done. It would take place in Limpopo Province and be held in September 2015. The intention was to support 100 rural enterprises for development and the target for the Quarter was to do 100 development needs assessments. However only 59 could be completed. On the Tourism Human Resource Development Strategy review the Quarterly target was to do an environmental scan on sector skills. The environmental scan on sector skills could not be done, however the skills audit and Strategy review was in place. The Quarterly target was set to contract the three World Heritage Sites ie Cradle of Humankind, Vredefort Dome and the iSimangaliso Wetland Park for the provision of funding for the development of tourism interpretation signage.  Draft Memorandums of Agreement for the Cradle of Humankind and the iSimangaliso Wetland Park were developed and vetted by the NDT’s Legal Unit. The NDT was currently working on bringing the Vredefort Dome up to speed.

Discussion
Mr G Krumbock (DA) appreciated that the NDT always provided high quality presentations and the current presentations were no exception. The Reports received were detailed enough. There were however problems in tourism with Minister Hanekom himself conceding that there were challenges. Some of the challenges were the unintended consequences of the visa regulations. The Committee needed feedback on what the actual state of affairs was. Numerical data on what was happening in the tourism industry was needed. Was information available on the impact that the visa regulations had on the tourism industry? Another concern was the steady decline in SA’s currency. The Rand was at a record low and its decline was continuing. This occurrence did not bode well for SA Tourism as it made much of its marketing payments abroad in US dollars. It impacted upon SA Tourism’s ability to buy advertising space. He asked what the impact on SA Tourism was and how they attempted to make their budget stretch.

Mr van Schalkwyk responded that currency fluctuations were a huge challenge. The NDT had discussed the issue with SA Tourism. Over the past five years a total of R300m had been lost on the marketing budget. Meetings with National Treasury had taken place on how better to deal with the issue. Currency fluctuations had a major impact on marketing attempts abroad.  National Treasury had given its approval that funds could be transferred upfront abroad for marketing purposes. Currency was not only a problem for the NDT and SA Tourism but for SA as a whole. The NDT was attempting to deal with the issue at a high level. 

Mr Tharage, on currency losses, said that SA Tourism approached markets as hubs. There needed to be an overall South African government policy on currency fluctuations. The issue did not only affect the NDT.

Ms A Matshobeni (EFF) wished to know what the state of tourism was currently, and what the NDT was doing to reduce barriers of entry into the tourism sector.

Ms E Masehela (ANC) wished to confirm that Further Training and Education (FTE) projects were not done to the full extent and as a result incentives could not be accessed. Was the NDT supporting municipalities in dealing with FTEs? None of the targets outlined in the presentations had any baselines. She asked that the 5% vacancy rate of the NDT be translated into an actual figure. She emphasised that a comprehensive investigation was needed looking into the unintended consequences of the visa regulations. StatsSA had said that tourism figures were decreasing since 2011. The visa regulations only came into effect in June 2015. Was it really the visa regulations that were causing the decline or were there also other factors?

Mr Tharage responded that tourism had not been on the decline since 2011. A number of factors could cause a decline. There was a notable decline in tourism in April 2015. The decline could have been attributed to the attacks on foreigners. Travellers from the Southern African Development Community (SADC) region had especially decreased. The NDT had noted the decline in figures. In 2014 the decline in figures was due to the Ebola scare. To market SA one had to consider the product to be sold, its appeal and whether money could be made to sell the product. An executive process was underway to deal with the impact of currency fluctuations. 

Mr van Schalkwyk explained that at 5% vacancy rate, the figure stood at 25 posts out of a total of 500 of NDT posts. Filling a post could take a long time.

Ms Ramphele, on how the NDT could assist municipalities to access grants, said it was the Department of Public Works (DPW) who aligned targets with budgets on FTE projects. The NDT had met with the DPW and the conclusion was reached that municipalities were producing jobs that were needed.

Mr J Vos (DA) highlighted certain issues which he felt was of great importance to tourism. The first was affordability of tourism. Domestic tourism was far too expensive to the ordinary South African. The second issue was geographic spread and the third issue was the lack of transformation in the tourism industry. Certain indicators showed a relationship between the NDT, provincial sites and heritage sites. Part of the problem was that the NDT did not have control of facilities like parks and heritage sites. The NDT needed to build bridges between itself and other government departments regarding these facilities. The NDT needed to convince other departments to open up national parks and other sites free on key holidays like World Heritage Day. The issue of accessibility needed to be dealt with. Another concern was that visitor information centres often fell under local government. Municipalities did not have the ability to manage the visitor information centres. The NDT needed to set a framework in relation to the functioning of a visitor information centre. These centres needed to be modern and relevant. Some municipalities were forced to close centres due to shortages in funding. Standards should be set on how they should be run.

On the impact of the visa regulations there was apparently an inter-ministerial committee looking into the issue. The Tourism Business Council of SA (TBCSA) had commissioned Mr Grant Thornton to do a study on the impact of the visa regulations. The study had shown that SA had lost 66 000 tourists.  Total tourism revenue lost amounted to R2.9bn. Hence the inter-ministerial committee was set up to deal with the unintended consequences of the visa regulations. He asked Ms Moolla to find out which ministers sit on the committee, when the committee convened and when the outcomes of its meetings were to be made known.

Social Responsibility Infrastructure (SRI) projects were doing badly. Some of them were dismal failures. For example in the Eastern Cape the Buffalo Municipality made a loss of R18m paid upfront to a contractor. The Committee had in the past expressed concerns over SRI projects. It was unacceptable to throw good money on bad projects. There were however some SRI projects that were good. He also asked how far the process was on the appointment of a Director General for the NDT. He understood that the post had been advertised. He felt that Mr Tharage was doing a good job as Acting Director General. Much had been said about the training of tour guides. Did the training provided fit in with legislation in place? The NDT from its figures had 100% compliance on dealing with complaints. What was it measured against and what were the expectations from the Tourism Complaints Office? He additionally asked what the NDT’s objectives were on the Tourism Grading Council of SA (TGCSA). How close were figures on grading to reaching targets? He asked that the Committee be provided with detail on the Tourism Month celebrations that were to take place in the Limpopo Province.

Ms Ramphele conceded that there were quite a few SRI projects that had failed. The way the programme was being run was being reviewed. Payment was at present only made where delivery had taken place. The NDT did have projects that it was working on with SANParks. The intention was for South Africans to visit tourism sites and parks. There was a week in September when SANParks and provincial parks were open free to the public. She emphasised that tourist information centres needed to be responsive to the needs of tourists. She provided the Committee with details of the activities to be held in Tourism Month. The media launch for Tourism Month would be on the 16 August 2015 and the next morning, 17 August 2015, a live television broadcast on Morning Live on SABC 2. On 3 September 2015 there Minister Hanekom would host a business lunch.

Ms Moolla responded that the Economic and Security Cluster would look into the impact of the visa regulations. It would not only look at the impact on tourism but other sectors as well. Deputy President Cyril Ramaphosa would chair the inter-ministerial committee and they would be meeting soon. The Minister of Home Affairs Mr Malusi Gigaba and Minister Hanekom were on the same page.

Mr Tharage conceded that there needed to be a better understanding on the roles of the Complaints Officer and of the Registrar of Tourist Guides. At times there was confusion about the roles. The NDT would bring the two Offices to the Committee for a briefing on their roles. The internal capacity of SRI project management was being strengthened. The issue needed to be discussed with the DPW. A framework was in place that needed to be adhered to. The projects were designed to be implemented in a certain way. On some SRI projects things were going well. Where there were problems, forensic investigations were done and some matters had been reported to the South African Police Services (SAPS). There were also internal matters to sort out. The reality was that Expanded Public Works Programme projects and SRI projects brought along much needed jobs. The NDT felt that the TGCSA was necessary but could be strengthened. Monitoring and evaluation of the TGCSA had to take place. The NDT needed to assist municipalities on tourism and in order to be able to help needed a complete picture of what was in the municipality. What were the attractions and products on offer in the municipality? The support that the municipality needed also had to be determined. Provinces also needed to be drawn in.

The Chairperson asked Ms Moolla to speak to the process of appointing the NDT’s Director General. She asked why the Tourism Incentive Programme (TIP) was moved from Programme 4 to Programme 2. She asked about the total of R78m that should have been covered in the 2014/15 Quarter 3. The amount had been referred to National Treasury. What the NDT was doing to prepare the industry around the Broad-Based Black Economic Empowerment (BBBEE) Codes. When would the National Tourism Sector Strategy’s (NTSS’s) review be completed? What was the NDT doing to prevent repeating the mistakes of the past in relation to Expanded Public Works Programme (EPWP) and SRI projects? Was it correct that the NDT was sending professionals to the University of Pretoria to beef up tourism in municipalities? She asked Ms Moolla to comment on what the task team was doing about the Rand/dollar fluctuations.

Ms Moolla responded that interviews for the post of Director-General of the NDT had taken place on the 20 July 2015. Since then no Cabinet meetings had taken place as Parliament was in recess for a while. The matter had since been referred to the Department of Public Service and Administration (DPSA) and was on its way to Cabinet. The process was now out of the NDT’s hands.

Mr van Schalkwyk referred to the R78m and said that the surrendered funds to National Treasury had been dealt with in the adjustment budget. The funds had been deducted from the NDT’s baseline budget.

Mr Tharage responded that the tourism industry was aware of the BBBEE Codes. The tourism industry had requested the NDT to brief them on the Codes that the Department of Trade and Industry (DTI) had published. The NDT could not do so as the Codes were in the hands of the DTI. The DTI could brief the industry. He explained that on the BBBEE Codes there was a consultative process throughout SA. Extensive discussions had taken place and a document was compiled. The document had first gone to the Minister of Tourism and thereafter it was referred to the Minister of DTI. The document was no longer with Tourism and was in the hands of the DTI. The Minister of DTI had published the document. The public should engage with the document and interact with the DTI. There would be a process issue that would be compromised if the NDT became involved at this stage.
  
He noted the comment on the R78m figure and said that the NDT would try to not let it happen again. The NDT intended to conclude the NTSS review by Quarter 3 2015/16. The environmental scan allowed the NDT to obtain different perspectives. Inputs from the Committee would be welcomed. On the vacancy rate of 5%, it was roughly just under 30 posts that needed to be filled from a total of 520 posts.

The meeting was adjourned.