National Department of Tourism on its 2015/16 Annual Report, with Deputy Minister present

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Meeting Summary

Annual Reports 2015/16 

The National Department of Tourism briefed the Committee on its 2015/16 Annual Report. The Deputy Minister made a few preliminary remarks where she stated that tourism remained an integral part of growth in SA. The job creation targets for the NDT had been exceeded. On the employment of persons with disabilities the NDT had realised its 5% target. Women development was high on the agenda of the NDT and it had a programme in place for the training of women in the industry at executive level.

The Department reported 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 the 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. 

Some challenges, lessons learnt and proposed solutions in respect of Programme 2 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.

Challenges, lessons learnt and proposed solutions on Programme 3 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.  

On challenges, lessons learnt and proposed solutions for Programme 4, 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 furthermore 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. 

The Department spent 99.1% of its budget. The 0.9% that had not been spent was largely attributed to the low uptake of the incentive scheme on grading. Members were also provided with figures on expenditure as per Programme. Detail was also provided on where there were variances. The NDT had implemented cost containment measures. Human resource information was also provided to members. For example a total of 14 cases had been reported on misconduct of which 9 had been finalised and 5 were pending.

The Committee congratulated the NDT for obtaining a clean audit report. Members observed that the briefing had spoken to what had been achieved and not achieved by the NDT but no indication was given of targets that had been set. Where there was non-achievement no reasons were given as to why targets had not been met. Another observation was that where figures were given for example on the numbers of complaints received no detail was provided. Members asked what the nature of the complaints received were. Members pointed out that in many instances roads that lead to tourist attractions were in a bad state. Had the NDT engaged with relevant government departments over the matter? Intergovernmental relations did not only apply between spheres of government alone but between national government departments as well. Members urged the NDT to strengthen its relationship with municipalities on capacity building. The NDT was asked what criteria it used in selecting districts to be capacitated. In addition the NDT was asked what assistance it was giving municipalities to better market themselves. Members suggested that municipalities enter into twinning agreements amongst themselves so that they could assist one another. Members asked why chefs that had been trained went to work abroad. There was thus no benefit to SA as a country. Members felt that the NDT in the future should provide greater detail on its transformation efforts. Were the NDT’s transformation efforts making an impact? On the selling of South African cultural goods abroad the NDT was asked whether the makers of these products were actually benefitting. Members raised a concern that in most hospitality establishments in SA foreign Africans were employed and not South Africans. Without coming across as being xenophobic members noted that it was government’s primary mandate to create and seek out ways of finding employment for South Africans. Members felt that the matter needed greater attention. The NDT was asked for timeframes on the completion of the NTSS review. Members also asked why funds that had been transferred to institutions of higher learning had not been utilised fully.

Meeting report

Opening remarks by Deputy Minister of Tourism
Ms Tokozile Xasa, Deputy Minister of Tourism, noted that tourism remained an integral part of growth in SA. Domestic tourism however had to grow in order to sustain tourism. The National Department of Tourism (NDT) had maintained a clean audit for the period under review. Job creation targets for the NDT had been exceeded. On the employment of persons with disabilities, the NDT had realised its 5% target. The NDT tried its level best to build partnerships with departments and the tourism industry. Women development was high on the agenda of the NDT and it had a programme in place for the training of women in the industry at executive level. It was important for women to hold executive development positions. The Committee was informed that there was a new Broad-Based Black Economic Empowerment (BBB-EE) Council in place. Minister of Tourism Mr Derek Hanekom had required the Council to have a strategy in place by November 2016. She noted that the Tourism Incentive Programme (TIP) was a good platform for entry for Small Medium and Micro Enterprises (SMMEs). The tourist guides capacity building programme of the NDT was going well. The National Tourism Sector Strategy (NTSS) was being reviewed.

Briefing by the National Department of Tourism (NDT) on its 2015/16 Annual Report
The delegation comprised of amongst other Mr Victor Tharage Director General, Ms Morongoe Ramphele Deputy Director General: Domestic Tourism Management, Mr Bernard Meyer Acting 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.

Mr Victor Tharage, Director-General, explained that 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. The Committee was given a breakdown of the complaints as per province.
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 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.

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. A total of 3059 full-time equivalent (FTE) jobs had been created through the NDT’s Expanded Public Works Programme (EPWP) against a target 3008.Members were provided with figures on the provincial spread of the FTE jobs. Figures were also provided on the provincial spread and demographics on beneficiaries of training. 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 furthermore 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. 

The briefing continued on the financials of the NDT. For 2015/16 the NDT had spent 99.1% of its budget. The 0.9% that had not been spent was largely attributed to the low uptake of the incentive scheme on grading. Members were also provided with figures on expenditure as per Programme. Detail was also provided on where there were variances. The NDT had implemented cost containment measures. Human resource information was also provided to members. For example a total of 14 cases had been reported on misconduct of which 9 had been finalised and 5 were pending.

Discussion
The Chairperson said that he had observed that the presentation document had some amendments to it that had not been in the copy that had been sent to the Committee earlier. He noted that the Committee had planned to invite SA Tourism to brief the Committee on its Annual Report 2015/16 in November 2016 but SA Tourism had a board meeting scheduled for that day. Hence the Committee would only be able to invite SA Tourism at the start 2017. He pointed out that tourism’s contribution to SA’s Gross Domestic Product percentage wise was bigger than trade and industry. He felt that tourism held so much more potential for growth.

Mr Tharage apologised for the changes that had been made to the presentation and for not sending it to the Committee beforehand. 

Deputy Minister Xasa conceded that on the contribution of tourism to the economy and monitoring more work could be done. She said that at times there was a disjuncture but the NDT would nevertheless focus on it.

Mr M Rayi (ANC, Eastern Cape) congratulated the NDT on obtaining a clean audit report. He observed that the briefing had spoken to what was achieved and not achieved but that there was no indication of targets that had been set. Where there was non-achievement no reasons were given as to why targets had not been met. He pointed out that in some provinces like the Eastern Cape, Northern Cape and Limpopo there were tourist attractions but the roads that led to them were in a bad state. On intergovernmental relations he asked whether the NDT had approached the responsible departments on the issue of roads etc. Had the NDT met up with the department responsible for the maintenance of roads?
 
Mr Tharage, on the structure of the presentation, explained that the NDT had spent a great deal of time in deciding whether it should repeat the figures contained in the Annual Report 2015/16 in the presentation again. If it had repeated the figures then there would have been less information than what the Committee had presently received. The Annual Report and the presentation should be read together. The NDT heeded the point made. Members could decide which format was preferred. On intergovernmental relations, he said that mechanisms that were in place did work. Tourism was part of the broader economy of SA. It had a role to play. He confirmed that the NDT did interact with its counterparts on issues such as roads, airlift etc. He added that Ministerial Members of Executive Committees (MinMECs) functioned well. There was integration.  

Mr M Khawula (IFP, Kwa-Zulu Natal) referred to slide 25 which spoke about 31 municipalities being capacitated and that there were capacitating programmes for six districts. He noted that tourism contributed hugely to GDP and had potential at municipal level. The NDT was asked whether it should not consider strengthening relationships with municipalities. Capacitating programmes for six municipalities did not seem much. He said that tourism in most of the districts were seasonal. For example in the district of Harry Gwala the boom was during winter when there was snow, the rest of the year things were slow. What assistance were municipalities given to better market themselves? He asked on the training of chefs why after they were trained were they sent abroad to places like the USA and Dubai. It was perhaps good for the chef personally but there was no service benefit to SA. What about chefs being deployed to work in SA?  

Ms Morongoe Ramphele, Deputy Director-General: Domestic Tourism Management, NDT, explained that the NDT had targeted six districts. Municipalities were being targeted. The NDT was assisted in its capacity building programmes by the University of SA (UNISA). The NDT had done capacity building in other districts as well. On chefs being sent abroad she explained that in SA there was an absorption rate of 60%. There were chefs who got employment in SA and there were those who opened up their own businesses. 

Mr Tharage said that it was a huge challenge to support municipalities. If the NDT went to every municipality once a week then it needed five years to do it. It was not practical to do it. The NDT used different tools to capacitate municipalities. There was even online support. Local government conferences were also held to showcase good cases. Where there was concentration of tourism the NDT worked with provinces. The NDT was guided a great deal by provinces. Prioritisation was done.

Deputy Minister Xasa stated that in as much as there were intergovernmental relations there was a political element that needed to be considered. Prioritising tourism at provincial level needed political direction. Firm direction was needed to be given at a political level. The NDT was doing all it could to enhance tourism. On the identifying of districts and municipalities she said that programmes cut across various provinces. There were many programmes which included skills development. The NDT worked with provinces, municipalities and industry. Detail would be provided to the Committee and the information provided would go beyond the reporting period. On the training provided there was an element of accreditation on programmes of skills development. Chefs were offered jobs abroad due to the high quality of training that they had received.

Mr S Mthimunye (ANC, Mpumalanga), on transformation in the tourism sector, said that the Committee needed greater detail in the future. What was the impact that was being made in keeping with the goals of the National Development Plan? The idea was to target rural villages and townships in entering the foray of tourism. On trips that he had undertaken overseas he had seen Ndebele products being sold all over. He asked whether the actual makers of those products were benefitting.

Mr Mthimunye said that he had observed that most establishments employed foreign Africans as opposed to South Africans. He had a feeling that foreign Africans were employed by establishments because they could take advantage of the foreigners and perhaps even pay them less. Most restaurants employed Zimbabweans and Mozambicans. Without being xenophobic, he said that government’s mandate was to create and seek out ways of finding employment for South Africans. The NDT was asked to expand on its expenditures on economic classifications in terms of transfers that were made to households, non profit organisations etc.

Mr Ralph Ackerman, Chief Financial Officer, NDT, referred to page 188 of the NDT’s Annual Report and said that detail on transfers were captured. For example R200 000 had been transferred to the Federated Hospitality Association of SA (FEDHASA), R13.5m to the Tourism Enterprise Programme (TEP) and R10m to the National Heritage Project in terms of the Tourism Incentive Programme (TIP).

Mr Tharage said on employment there needed to be cooperation. What was observed in SA was observed all over the world. Foreigners were employed in the hospitality industry. There was however a need to stick to the labour framework in SA. SA was producing the skills that were needed. He felt that the Department of Labour could play a bigger role in this regard. 

Deputy Minister Xasa, on whether benefits on the sale of cultural products abroad was filtering down to those that manufactured them, said that it would get greater attention. The NDT worked on these types of issues with the Department of Arts and Culture. Operation Phakisa called for greater cooperation between departments on issues like this. On employment, she noted that in the past South Africans did not wish to work in the hospitality industry as it involved long hours etc. There was however a change in attitude in recent times. The NDT was monitoring the situation. 

The Chairperson asked the NDT in responding not to provide too much detail on successes in the interest of time. The NDT could by the end of November 2016 provide the Committee with a written report which provided much more detail. 

Deputy Minister Xasa agreed to provide the report as requested by the end of November 2016. From a political side the NDT would reflect on what the impact was of the work that it did.

The Chairperson said that perhaps members could also speak to their colleagues in the provinces over the issue of intergovernmental relations. He also encouraged members of the Committee to attend the NDT’s functions. He agreed that the issue of foreigners being employed in SA’s hospitality industry needed greater attention. South Africans needed to be trained. He referred to slide 8 which spoke about complaints that had been lodged and said that the Committee needed detail on what the complaints were about. The NDT was asked that if the review of the National Tourism Sector Strategy (NTSS) had been completed why it had not been published. If the review was done in the last financial year why was it not done? Were there timeframes for when the NTSS would be published?

Mr Tharage said that the NTSS had a timeframe for 2020. The review was done to extend the timeframe beyond 2020. Cognisance had to be taken of the tourism environment as it was at present. By the end of the current financial year the review should be done.

Mr B Nthebe (ANC, North West) noted that the NDT in the North West Province brought about the rejuvenation and upgrade of the Manyane Mafikeng. Was progress being made? It was however far away from completion. Municipalities did have tourism directorates but that they needed to be assisted. Municipalities did not use their competitiveness. Each municipality had their own unique tourism attractions. He pointed out that it was not the first time that the issue of economic migration had been highlighted. In the USA most of the workers in the hospitality industry were from Latin America. In Germany the workers were Polish. In order to stimulate growth unemployment needed to be absorbed. Something needed to be done.

Deputy Minister Xasa, on the role of the NDT in provinces and municipalities, said it all depended on the resources that were available. The NDT could not reach every municipality or district. The NDT had to prioritise. In previous years the NDT had capacitated other districts than the ones mentioned in the current year under review.

Mr Tharage clarified that the Manyane Project was in progress.  The intention had been to include a conference centre but then it was realised that there was one in the town which was nearby. The Project should be done in 2017. The issue was about methodology.

Mr J Londt (DA, Western Cape) stated that if SA Tourism was to brief the Committee on its annual report only in 2017 it would be best for the NDT to also be in attendance. He pointed out that on local tourism many municipalities had twinning agreements with municipalities abroad. Why could twinning not be done internally in SA between municipalities?  He asked why had funds transferred to institutions of higher learning not been utilised fully. What happened to the funds? 

Mr V Magwebu (DA, Eastern Cape) also commended the NDT on obtaining a clean audit. He agreed that the Committee needed greater detail on the complaints that were received. Only having figures did not help. Members needed to know the nature of the complaints in order to try to do something about it. The NDT had also apparently referred 11 complaints to other government departments. The Committee needed to know to which departments and what the nature of the complaints were. He said that the training of 81 tourism practitioners did not say much. Where was the narrative? More detail was needed. On capacity building in districts, what criteria were used to select districts? The Eastern Cape had not been selected.
 
Minister Xasa reiterated that in previous years other districts than those mentioned at present had been capacitated. She said that in the Eastern Cape not much was being done on tourism and it was time that colleagues in the provinces started to prioritise tourism.

Ms Ramphele on capacity building noted that there was the Maluti Drakensberg Route Project that traversed the Free State, Eastern Cape and Kwa-Zulu Natal Provinces. The NDT’s was also biased towards the rural nodes and aligned its work with that of other government departments.  

Mr Tharage explained that the NDT’s complaint officer was somewhat of an independent person. The complaints received pertained to conduct and practises within the sector itself. Some of the complaints were about accommodation, services and immigration. For example one complaint had been about a South African person who had bought a travel package to go abroad and it later turned out to be possibly a scam. He stressed that in some instances it was difficult to give details. The complaints officer referred the complaint to whom the complaint was about. Both sides of the story had to be heard. If the matter was not resolved then it was referred to relevant authorities to deal with it. Immigration issues were for instance referred to the Department of Home Affairs. The complaints officer did not have teeth and as such could not impose penalties. Matters could be referred to ombudsman and to consumer regulatory authorities.

The Chairperson noted that the Committee had oversight over nine other departments beside the NDT. Intergovernmental relations did not only apply to spheres of government but national departments as well.

Committee Minutes
Committee Minutes dated the 12 and 26 October 2016 was adopted unamended.

Comment on International Study Tour to Cuba
The Chairperson noted that the Joint Committees on Economic Development and Trade and International Relations had agreed to it.

The meeting was adjourned.

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