Minister Derek Hanekom made a few preliminary remarks before the Department presented it 2015/16 annual report. The Minister announced that both the National Department of Tourism (NDT) and its entity South African Tourism (SAT) had received clean audits. In August 2016 results on arrivals showed a continued trend of growth. There had been a 14% growth in arrivals compared to figures for August 2015. There had been a 23% growth in overseas arrivals. There were challenges but there were also new programmes taking off. The Tourism Incentive Programme (TIP) was taking off. The NDT was also working on an incentive programme for universal accessibility. The NDT was also trying to address issues related to the Expanded Public Works Programme (EPWP). One EPWP project that was being worked on was located at the edge of the Drakensberg. The NDT wished to place EPWP challenges behind it. EPWP projects needed to be more sustainable. The NDT was also engaged on work on destination enhancement.
The National Department of Tourism informed Members that it had achieved 84.31% of its targets. The performance on its Programmes were ie Administration – 93.75%, Policy and Knowledge Services – 94.74%, International Tourism Management – 25% and Domestic Tourism Management – 75%. Performance highlights on each of the Programmes were presented to the Committee. Some challenges relating to Programme 1 were that there had been an increase in consultancy services for the energy efficiency programme and that there was a need for realignment of the organisational structure. The NDT had commenced with the restructuring process with a view to implement it in the 2017/18 financial year. Concerning Programme 2, the challenges, lessons learnt and proposed solutions were that there was limited capacity of some of the universities to fulfil the requirements of the research partnerships that had been undertaken. To resolve the issue the NDT had taken on another university or had used collaborations. Another challenge was that there was very low uptake of the tourism grading incentives despite industry confirmations of the need for it. There were also unavoidable process delays (contract negotiations) in the implementation of large capital projects particularly around destination development and energy efficiency.
On programme 3, the following issues were identified: third party dependency had to be limited by confining the targets to what was within the NDT’s control. This was to be taken into consideration in the future. It was also decided that what was needed was a strategic reorganisation of the NDT and the review of areas of harmonisation collaboration with SAT, DIRCO, BrandSA, provinces and others. With respect to Programme 4, there were limitations in capacity by owning agencies to operate the facilities (provision of support for identification of operating or management companies). Future interventions included facilitation of targeted hospitality training for the local beneficiary communities. Another major challenge concerning EPWP projects.
The Committee congratulated the NDT for achieving a clean audit report for 2015/16. The NDT was asked whether it did skills development within its organisation. Members asked whether grievances that had been lodged would be resolved. The Auditor General of SA (AGSA) had highlighted the fact that the NDT did not do its transfer payments timeously. By when would transfer payments be made timeously? Transfer payments needed to be done timeously. The NDT was asked what mechanisms it had in place to transfer funds. Members also asked what impact cost containment measures had on service delivery. The NDT was asked about its capacity building efforts at local government level and what the impact of such training was. Did the NDT have any influence on the Department of Basic Education when it came to tourism curriculum at schools? The NDT was also asked whether there was synergy with provinces and local government. Members asked what the timeline for the completion of the NTSS Review was. The NDT was asked what the cost implications of doing capacity building at SA’s missions were. The Committee asked for information on the research studies that the NDT had done with universities. Members requested detail on forensic investigations that had been undertaken on projects but was well aware that some of the cases were sub judicae. The Committee was appreciative of the fact that the NDT highlighted challenges that it faced. Members suggested that the root causes of challenges be identified and that action plans be put in place. Members felt that the NDT needed to exercise greater oversight over SAT. Members also commended the NDT on its performance on equity and its vacancy rate. Members did however suggest in instances where targets were not met that when targets were set they had to be smart and achievable. What was the level of absorption into the job market of persons who participated in training programmes of the NDT? The NDT was asked what the progress was on signage that was lacking on roads en-route to tourist attractions. Members felt that not much progress had been made. There needed to be greater cooperation between departments. Members recommended that an inter-ministerial committee be formed to get the total tourism product offering in ship shape. Members even suggested that a priority list be compiled of tourism sites that had to be maintained at a certain level of acceptability. A service level agreement could even be put in place. Members were concerned that not all tourist guides were benefitting from training that the NDT offered. Did the NDT have the capacity to train every tourist guide? It was felt that there was a need for an all inclusive system on tourist guides. How many tourist guides would the NDT like to capacitate? Tour operators had also complained to members that their tour operators’ licences restricted them from operating in other provinces which fell beyond the jurisdiction of their licence. It became an issue when tourists wished to travel between provinces. Members were concerned that there were far too many Social Responsibility Infrastructure (SRI) projects that were disastrous. At some SRI projects government grants were treated as income. Many of these projects were not sustainable. The same could be said of some EPWP projects. Was EPWP funds being spent optimally or should the funds rather be spent on the business end of tourism? Had the NDT considered alternatives which could also lead to jobs? Members asked what the impact of enterprise and supplier development on previously disadvantaged persons were. Members suggested that research be done to identify what the bottlenecks in domestic tourism were. The NDT was asked to provide the Committee with figures on how many black Africans were trained in the programmes offered by the NDT. The Committee looked forward to seeing the new structure of the NDT.
The Chairperson welcomed everyone and asked the Minister to address the Committee.
Opening remarks by Minister of Tourism Mr Derek Hanekom
Minister Hanekom announced that both the National Department of Tourism (NDT) and its entity South African Tourism (SAT) had received clean audits. In August 2016, results on arrivals, showed a continued trend of growth. There had been a 14% growth in arrivals compared to figures for August 2015. There had been a 23% growth in overseas arrivals. The NDT wished to align its Annual Performance Plan with its Budget. The NDT was being restructured and many things were being aligned with one another. The review of the NTSS was taking place and comments from provinces were being awaited. The revised National Tourism Sector Strategy (NTSS) would be aligned with the NDT’s Annual Performance Plan, Strategic Plan and Budget accordingly. There were challenges but there were also new programmes taking off. The Tourism Incentive Programme (TIP) was taking off. The NDT was also working on an incentive programme for universal accessibility. The NDT was also trying to address issues related to the Expanded Public Works Programme (EPWP). One EPWP project that was being worked on was located at the edge of the Drakensberg. The NDT wished to place EPWP challenges behind it. EPWP projects needed to be more sustainable. The NDT was also engaged on work on destination enhancement.
Briefing by the National Department of Tourism (NDT) on its Annual Report 2015/16
The delegation comprised of amongst other Mr Victor Tharage, Director-General, Ms Morongoe Ramphele, Deputy Director-General: Domestic Tourism Management, Ms Shamilla Chettiar, Deputy Director-General: Policy and Knowledge Systems, Ms Aneme Malan, Deputy Director-General: International Tourism Management, Mr Ralph Ackerman, Chief Financial Officer and Ms Petra van Niekerk, Parliamentary Liaison Officer. Mr Tharage undertook the briefing. The briefing kicked off with performance information. The NDT had achieved 84.31% of its targets. The performance on its Programmes were ie Administration – 93.75%, Policy and Knowledge Services – 94.74%, International Tourism Management – 25% and Domestic Tourism Management – 75%. Performance highlights on each of the Programmes were presented to the Committee.
Programme 1: Administration
The NDT had received a clean audit. It had achieved a vacancy rate of 5.75% against a stretched target of 8% and was 100% Broad-Based Black Economic Empowerment (B-BBEE) compliant on procurement. On service delivery a total of 34 complaints had been lodged with 26 finalised and 8 still being in process.
Some challenges relating to the Programme were that there had been an increase in consultancy services for the energy efficiency programme and that there was a need for realignment of the organisational structure. The NDT had commenced with the restructuring process with a view to implement it in the 2017/18 financial year.
Programme 2: Policy and Knowledge Services
New regulations for tourist guides had been developed. The draft review of the NTSS was completed but not published for comments due to extensive consultations with affected and interested stakeholders. However a subsequent decision had been taken to revisit the draft review. An enterprise and supplier development programme to accelerate Small Medium and Micro Enterprises’ (SMMEs) empowerment in the tourism sector was developed. The focus was on procurement facilitation through a portal. Some challenges, lessons learnt and proposed solutions were that there was limited capacity of some of the universities to fulfil the requirements of the research partnerships that had been undertaken. To resolve the issue the NDT had taken on another university or used collaborations. Another challenge was that there was very low uptake of the tourism grading incentives despite industry confirmations of the need for it. There were also unavoidable process delays (contract negotiations) in the implementation of large capital projects particularly around destination development and energy efficiency.
Programme 3: International Tourism Management
The chefs trainers’ skilling workshop/training had been confirmed with French partners, with the confirmed dates of actual training falling outside the reporting period starting 18 April 2016. There was also a capacity building programme for South African missions abroad that had been implemented in the form of training provided to 37 officials to be posted abroad on the request of the Department of International Relations and Cooperation (DIRCO). An important thing to note was that the overall international tourism strategy was under review. Challenges, lessons learnt and proposed solutions were that third party dependency had to be limited by confining the targets to what was within the NDT’s control. This was to be taken into consideration in the future. It was also decided that what was needed was a strategic reorganisation of the NDT and the review of areas of harmonisation collaboration with SAT, DIRCO, BrandSA, provinces and others.
Programme 4: Domestic Tourism Management
A Tourism Month outreach had been held in Limpopo Province with the tag line, “one billion tourists-one billion opportunities”. A National Tourism Careers Expo had been held in the Free State and had been attended by 461 educators, 7384 learners and 42 exhibitors. On transformation. a total of 101 rural enterprises had been supported for development against a target of 100 in partnership with the Tourism Enterprise Partnership (TEP) across 31 municipalities. The areas of support were mentorship, access to information, market access, training and quality assurance. On challenges, lessons learnt and proposed solutions a major challenge was on EPWP projects. There were limitations in capacity by owning agencies to operate the facilities (provision of support for identification of operating or management companies). Future interventions included facilitation of targeted hospitality training for the local beneficiary communities. The NDT also ensured that provinces were involved in the sustainability mechanisms. Projects were also not reaching completion on time and within budget. The NDT had sourced technical support from the Government Technical Advice Centre to provide technical support for planning and implementation for the finalisation of the projects. There was suspected improper conduct on the part of project implementers as found in the outcomes of the forensic audit. The NDT had opened criminal cases against implementers with the South African Police Services (SAPS). Disciplinary action had been taken against officials whose duty it had been to ensure effective management of the implementers.
Mr Ackerman spoke to the financials of the NDT. For 2015/16 the NDT had spent 99.1% of its budget. Members were also provided with figures on expenditure as per Programme. Of note was that R117 000 had been spent on an individual who had been suspended. The individual had been suspected of wrongdoing and the suspension was precautionary. The process on it had been fast tracked. Detail was also provided on where there were variances.
Closing remarks by Minister of Tourism Mr Derek Hanekom
Minister Hanekom said that guiding regulations still had to be gazetted and a policy review was also underway. Issues pertaining to registrations of guides were also being dealt with. There was also a policy re-evaluation of grading in the pipeline. Policy proposals would be released in the near future. Skills development was being done at all levels of the NDT and a chief director overseeing it would be appointed in the near future. On the serious challenge regarding projects like the EPWP and SRI going wrong he said the some of the main problems were that they were not sustainable and that they had irregularities. The NDT should perhaps consider looking towards enhancing community based businesses. The idea was for communities to take responsibility of projects and to enter into partnerships. The NDT did its best to offer support so that there was a reasonable chance of sustainability of the businesses.
Ms P Adams (ANC) congratulated the NDT on its clean audit. On slide 42, which spoke about the number of employees per occupational band, she asked whether skills development were provided on tourism. On slide 40, which spoke about cases in relation to employees, she asked by when grievances would be resolved. The Auditor General of SA (AGSA) had pointed out that the NDT’s transfer payments were not made timeously. By when would transfer of payments be made timeously? What mechanisms will be put in place to monitor transferred funds?
Ms Adams asked what impact the cost containment measures had on service delivery. She queried about the capacity building efforts at local government level and what the impact of such training was. Further, she asked whether NDT had any influence on the Department of Basic Education when it came to its tourism curriculum at schools. What was the synergy between the NDT with provinces and local government? What was the timeline for the completion of the NTSS Review? What were the cost implications when embarking on capacity building at SA’s Missions abroad? Lastly, the NDT was asked to provide the Committee with information on the research studies that had been done.
Mr Tharage explained that staff training did take place even at low levels. On the timing of transfers he noted that each individual transfer was different. SAT’s transfer was done upfront. Transfers to universities were different as their academic year started in January. There were detailed negotiations in terms of contracts when it came to transfers.
Minister Hanekom noted that the NDT had done a skills audit assisted by the Human Sciences Research Council (HSRC). It was about designing a strategy based on needs.
Ms Malan, on the impact of tourism on Gross Domestic Product (GDP) and economic growth, explained that Statistics SA had published a Tourism Satellite Account. Its figures were mainly on tourism’s contribution to GDP and on job creation. Tourism contributed 4.5% to job creation in SA. Tourism was considered a good job creator and stimulated economic growth.
Minister Hanekom said that cost containment measures did impact on some places within the NDT. He noted that it was unlikely that the NDT would be getting a budget increase. The notion of a Tourism Development Fund was considered to be a good possibility. Players like the Industrial Development Corporation (IDC) needed to be brought on board.
Mr Ackerman said that cost containment measures had a huge negative impact. It did not affect the NDT to deliver on service delivery but did inconvenience officials.
Ms Ramphele, on the impact of skills development and capacity building, said that capacity building at local government level was face to face. Everyone at that level was engaged ie officials, businesses and traditional leaders etc. The NDT did engage to find out what type of capacity was needed. She added that the NDT had engaged with the Department of Basic Education.
Ms Chettia, on the review of the NTSS, said that it was currently with the provinces. Responses from provinces would be submitted by the end of October 2016. Thereafter it would go to cabinet in November 2016. The final document would be gazetted for public comment by March 2017. Work was already done to roll out projects that were set out in the revised NTSS. She assured Members that research done by universities would be made available to the Committee.
Ms Malan explained that capacity building for the year under review had been done at the offices of the Department of International Relations and Cooperation (DIRCO). The cost was not too great. In previous years capacity building had been done at missions. The costs were mainly related to travelling costs.
Mr R Cebekhulu (IFP) noted that during the Committee’s oversight visit to Mpumalanga a forensic investigation had been initiated on a project in that province. When would the Committee be able to see the report of such investigation? He asked for detail on which staff members had been implicated and who were the implementers who were involved. Money spent on the project had apparently not achieved the results what it was supposed to. The Committee had also on oversight witnessed disputes that had taken place between beneficiaries at Mangwazi. He noted that there was a building at Mangwazi that was being used by an individual. Was there a contract between the NDT and the person using the building?
Mr Tharage said that detail would be provided when the NDT again appeared before the Committee on the 11 November 2016. No names would be mentioned as cases were pending.
Ms Ramphele noted that on Mangwazi work was being done.
Ms S Xego (ANC) also congratulated the NDT on its clean audit. She also appreciated the fact that the briefing had highlighted challenges encountered by the NDT. She suggested that the NDT look at the root causes of the challenges and come up with plans to address them. She noted that Minister Hanekom had confirmed that there was follow ups on EPWP and Social Responsibility Implementation (SRI) projects. She proposed that the process be short circuited. She fully understood that certain matters might be sub judicae when it came to forensic investigations but nevertheless updates would be appreciated by the Committee. She emphasised that the NDT needed to provide greater oversight over SAT. She also felt that the impact of skills development and capacity building programmes needed to be felt. The NDT was asked to do its transfers timeously. She noted that businesses from the Eastern Cape Province had fared well at the Lilizela Awards.
Minister Hanekom replied that there were more entries from and more awards to previously disadvantaged persons at the Lilizela Awards.
Mr Ackerman stated that NDT’s largest transfer payment was to SAT. The NDT did have agreements in place with entities and organisations that it did transfer payments to. National Treasury approval was needed to do a transfer payment.
Ms Ramphele stated that the NDT’s Tourism Human Resource Development Strategy would be released by the Human Sciences Research Council (HSRC).
Ms E Masehela (ANC) congratulated the NDT on its clean audit. She noted that the NDT was doing well on equity as well as on its vacancy rate. In many instances where targets were not met she suggested that going forward the targets set by the NDT needed to be smart and achievable. Targets needed to be properly structured. She asked what the level of absorption in the job market of persons that the NDT trained was. She noted that one of the complaints received related to fraud. What types of fraud was it and how far was it from being resolved? The NDT was asked how far its work on signage was.
Minister Hanekom on the chefs training programme said that not all the trainees were absorbed but that the absorption rate was high.
Mr G Krumbock (DA) noted that statistics showed that many tourist guides were being capacitated. However there were many tourist guides who did not get the benefit of this as they were not employed by provinces or local government. The NDT was asked how it saw the programme of capacitating going forward in relation to guides that worked for Community Tourism Organisations (CTOs) and Non Government Organisations (NGOs). Did the NDT have the capacity to train every guide? Tourist guides were the first point of contact for tourists and therefore had to impress visitors. One possibility was that all guides wear a single uniform that was easily identifiable. There was a need for an all inclusive system. How many tourist guides would the NDT like to capacitate? On page 17 it was stated that SRI projects were not operating optimally. He personally felt that some of the SRI projects were disasters. When the Committee had done oversight in the North West and Mpumalanga Provinces it had witnessed some horrifying projects. Some of these projects treated government grants as income. Many of the projects were not sustainable. There were damaged and burnt out buildings etc. This was the pattern all over even at a place just outside East London. Slide 28 spoke about 3059 jobs that had been created by the EPWP. He felt the critical thing on the EPWP was about sustainability. Was EPWP money being spent optimally or should the funds rather be spent on the business end of tourism. Had the NDT considered alternatives that the funds could be spent on which could also lead to jobs. He was well aware that road signage fell within the domain of the Department of Transport and not NDT but said that nothing had changed. He recommended an inter-ministerial committee that would get the total tourism product offering in ship shape. Minister Hanekom was asked whether he met with his colleagues in cabinet to discuss issues. Many tourist attractions were in a bad state and better integration was needed.
Minister Hanekom, on guiding, pointed out that all evidence showed that the yields were high. He stated that at present training was done on an adhoc basis. A large comprehensive training programme and a policy shift on guiding was perhaps needed. The issue was about what type of guiding environment wished to be created. The intention was also not to over regulate guiding. It had to be remembered that there were also different levels of guiding. There were expert guides who had tertiary qualifications and then there were for example lower level guides like beach walk guides. All these considerations would feed into the legislative reform when the Tourism Act was to be amended. Policy discussions were already taking place. Transport licenses were only valid in provinces where they were issued. On an inter-ministerial committee he stated that he did speak to his counterparts on an adhoc basis. Amongst others, the Department of Arts and Culture had worked with the NDT on the John Dube Site. The challenge was that when it came to working together there were so many players. He noted that the National Heritage Monument in Tshwane was owned by the Tshwane Municipality yet the NDT, the Department of Arts and Culture and the Lottery Council had poured funds into it. It was not only about building capacity between national, provincial and local government but it was also about interaction. On road signage he did have a bilateral scheduled with the Department of Transport. An agreement was needed given that tourism and local economic development was affected. He conceded that there were some SRI projects that were disastrous but it was not all. The challenge was when handing over the project conditionalities had to be set. The owner could be a community trust or a traditional leader. It was about public employment that would lead to inclusive growth in tourism. An example was given of the NDT’s efforts on blue flag beaches. The project had already employed 200 people and could be expanded to employ more persons as the NDT had a partner on board with capacity.
Mr Krumbock on tourist attractions asked if a priority list could be compiled of places that had to be maintained at a certain level of acceptability. There could even be a service level agreement in place.
Minister Hanekom replied that this was a good suggestion.
Mr Tharage said that on the EPWP it was a balancing act to fulfil its objectives and to see a benefit. Work was being done. The NDT and the Department of Transport were working together.
Ms Chettiar conceded that the NDT had recognised that tourism guide training needed policy analysis. It also needed trend analysis and benchmarking. Most of the work currently was on compliance and enforcement. Training of guides was taking place. The intention was to scale up capacity building programmes. Areas that guides would be trained in included business, skills, confidence building, ability to do presentations etc. The NDT worked with the Culture, Arts, Tourism, Hospitality & Sport Sector Education and Training Authority (CATHSSETA). The NDT needed to engage with the guiding fraternity as well. The NDT was aware of challenges and best practises.
Mr T Rawula (EFF) referred to slide 14 which spoke to enterprise and supplier development and asked what the impact was in relation to previously disadvantaged persons were. What was the percentage of participation of black people? On slide 17 reference was made to research that had been done at universities. What were the findings of the research that had been completed? Were universities capacitated to do tourism research? He was interested in local economic development. Research needed to be done on where the bottlenecks on domestic tourism were. If there were 206 tourism grading applications as set out on slide 16 he asked how many of these were from previously disadvantaged persons. Slide 28 showed that there were 207 persons that had undergone chefs training. He assumed that all the trained persons were young persons. What were the racial demographics of the 207 persons that were trained? Were they black Africans?
Minister Hanekom responded that most of the training targeted black and previously disadvantaged persons. Most were young black people. The challenge had been put to the Charter Council. A report would be available by the end of November 2016. Entry into the sector needed to be facilitated in order for them to become successful businesses. He said that perhaps the NDT needed to compile a list of black enterprises /businesses.
Ms Ramphele said on enterprise development the majority of the businesses were to be found in Mpumalanga and the Eastern Cape. 67 out of the 101 businesses were from previously disadvantaged backgrounds. The chefs training were mainly for black youths. Those that were sent abroad were also mainly black.
Ms Chettiar on the Tourism Incentive Programme (TIP) said that figures across provinces would be provided to the Committee. The NDT tried to popularise the Programme but businesses did not always understand the rules of the Programme. On capacities of universities the NDT worked with universities to ensure that there was credible research. The idea was also to build tourism research capacities at universities. It had to be borne in mind that universities and their faculties had their own specialised areas where they did research on. She said that on transformation the NDT portal had looked at 1000 businesses. The number would be increased.
Minister Hanekom, on the four research studies, said that he would ensure that the NDT would be more proactive to have it circulated to members.
The Chairperson was glad that the numbers of arrivals had increased. The NDT was asked how it felt about its efforts on job creation. She pointed out that the NDT official overseeing the SAT was not such a senior person. Greater importance should be given to overseeing SAT. On funding she asked whether it would not help if tourism was fully linked to programmes like Operation Phakisa. She noted that the NDT needed a strategy to deal with skills that was needed. She also felt that tourism, arts and culture and environmental affairs were sectors that could work together. She looked forward to see the new restructured NDT. She pointed out that at Pilanesberg tour operators complained that their activities were restricted to their jurisdictions as their licenses were not valid in other provinces. It was an issue which needed to be addressed.
Mr Tharage said that legislative requirements restricted where an operator could work. Issues of licensing were being addressed. It was work in progress.
The meeting was adjourned.
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