SONA 2017 analysis

Tourism

17 February 2017
Chairperson: Ms B Ngcobo (ANC)
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Meeting Summary

The Committee was informed that issues relating to tourism was extrapolated from the 2017 SONA. Tourism was a multi-sectoral economic activity and hence other sectors acted as anchors, facilitators and enablers of tourism. Policy decisions could either promote or destroy tourism. Consequently various aspects of the 2017 SONA had a direct and indirect impact on tourism. Regarding the socio-economic case for tourism, tourism’s contribution to SA’s Gross Domestic Product (GDP) increased from R83.9bn in 2011 to R110.9bn in 2015. In line with goals set out in the National Development Plan (NDP), the industry created 32 186 new jobs in 2015. Mining, agriculture and tourism sectors were all mentioned in the 2017 SONA but the reality was that tourism was outperforming both mining and agriculture. The National Department of Tourism (NDT), the Department of Small Business Development (DSBD) and provinces as well as local government each had their own programmes on Small, Medium and Micro Enterprises (SMMEs). The problem was that all these interventions were disjointed. There was a need for more incubators throughout SA. The Committee was encouraged to intensify its oversight on SMME programmes.

On the oceans economy, it was suggested that the NDT should provide the Committee with feedback on the Tourism Oceans Phakisa initiative. The Marine Tourism Lab commissioned a study on marine tourism. Members should enquire as to what the outcomes of the study were. The Committee also needed to conduct continuous oversight on tourism’s oceans economy. It was also suggested that the NDT should look at tourism linkages that could be made with the Square Kilometre Array (SKA) project. These could include opportunities for adventure tourism such as star gazing. Investment promotion was mentioned in the 2017 SONA. The tourism sector could partner with investments to perhaps scale up the Expanded Public Works Programme (EPWP) as well as emphasising more on huge projects that had greater impact than smaller projects. Other interventions were the need to maximise the impact of Meetings Africa and other investment platforms as well as developing tourism investment portfolios to lobby investments from investors. The 2017 SONA highlighted the conclusion of the agreement on the National Minimum Wage and on measures to stabilise labour relations.

The Committee was encouraged to increase oversight over the implementation of the minimum wage versus the current sector determination by the Department of Labour. There was a potential for labour unrest as the sector employed more foreign nationals than South Africans. The Committee was urged to engage with both the Departments of Labour and Home Affairs over the issue on what interventions both had in the pipeline. Given the drought that various parts of SA were experiencing, the Committee in its oversight role should ensure that tourism establishments were as water wise as possible. Hotel Verde located near Cape Town International Airport was Africa’s greenest hotel and had adopted ingenious water saving strategies. The  2017 SONA highlighted the fact that tourist arrival numbers for the period January to November 2016 had increased to nine million, an increase of just over one million arrivals from 2015. In as much as tourist arrival figures increased, SA Tourism failed to meet its targets on international arrivals. Global growth was between 4%-5% but unfortunately for SA, its growth was well below this. The good news was that even though arrival figures were not what it should be, spending on the other hand increased.

The 2017 SONA also spoke about the need for radical socio-economic transformation in SA. The tourism sector itself was very much untransformed. The Committee was encouraged to conduct oversight on the implementation of the Tourism Broad-Based Black Economic Empowerment (B-BBEE) Sector Codes. Perhaps the NDT could conduct a study on the state of transformation in the sector. Other initiatives included enhancing support to tourism SMMEs and to rural and community projects. Land Reform was another issue highlighted in the 2017 SONA. Eight million hectares of arable land was transferred to black people which were only 9.8% of the 82 million hectares of arable land in SA. There were lodges and game farms was affected by land claims. However, there were success stories where communities benefitted, for example in Phinda game reserve in the KwaZulu-Natal Province. Opportunities that could be explored included ecotourism, co-management agreements and exploring the wildlife economy (wildlife auctions, canning hunting, trophy hunting etc.) The NDT needed to enhance models of community-based tourism, especially in areas affected by land claims. A new approach to developing community-based tourism was needed. Recommendations made to the Committee included that the revised Strategic Plan and Annual Performance Plan for 2017/18 of the Committee needed to take into account the 2017 SONA. In addition, that the Committee conducted oversight on all matters raised in the 2017 SONA during the 2017/18 financial year.

The Chairperson encouraged members to make contributions towards the analysis rather than ask questions. The Committee appreciated the analysis done by Committee Staff. Members felt that it could be useful if the Committee could put together something on the effect of the 2017 SONA on tourism pertaining to radical socio-economic transformation and land reform. Land restitution was a complex issue and government, private sector and previously disadvantaged groups should all work together. Certainty was needed on the policy framework in order for business to flourish. The question that needed to be asked was how land restitution was going to be undertaken. Members asked that the Committee undertook a study to show the effect of investments whilst land expropriation was a possibility. What would be the net benefit to SA? It was further asked what the potential for eco-tourism in SA was and how it was affected by land expropriation.

Still on socio-economic transformation, members also felt that the Committee could make a submission on how it thought the structure of the tourism economy should be transformed. The observation was made that patterns of ownership in SA still reflected SA’s Apartheid past. Some members were of the view that there was a need to change the ownership of land in SA when it came to land reform. However, the problem that arose in SA was that recipients of redistributed land in many cases sold the land. To combat this phenomenon, members suggested that a moratorium should be placed on the sale of land unless the land was being sold back to the state. In as much as the analysis encouraged members to perform oversight over the minimum wage issue, members asked how the Committee was to work on it. Members felt that SA had drastically failed its citizens on the minimum wage issue. Restaurant workers for instance earned less than the sectoral determination wage. The Department of Labour failed to ensure compliance with sectoral wage amounts. Another point made was that foreign nationals flooded the tourism sector because SA failed to enforce its own policies and laws. How was SA going to ensure that its laws were adhered to? Members suggested that the Committee have a one day workshop on the Broad-Based Black Economic Empowerment Sector Codes as some members grappled to understand them.

Members also wanted a sense of where the tourism sector was at. How was the Committee intending to intensify its oversight? What was the National Department of Tourism doing about SMMEs? Members highlighted the problem of the lack of participation of SA’s broader society in its oceans economy. Previously disadvantaged persons were being disadvantaged by too much bureaucratic red tape. Subsistence fishermen could not make a living. The problem was that big business was connected politically especially when it came to issues of licensing. Participation was a huge problem. The Committee Research Unit was asked to conduct a study of the numbers of black people that were declined and those that were approved to participate in the oceans economy. Members felt it unlikely that the minimum wage would be implemented any time soon. The Congress of South African Trade Unions (COSATU) did not even sign the minimum wage agreement yet. It also felt that jobs in the tourism sector needed to be categorised in order for them to be reserved for South Africans. Given the drought that certain areas in SA were facing, there was a need to investigate the economic use of water by big companies. These companies seemed to be unaffected by water restrictions. To make matters worse, government even subsidised big companies when it came to water and electricity. There was a further need to investigate what the capacity of water infrastructure reservoirs in SA were.

On the issue of visas it was suggested that SA do a comparative analysis with other countries on how they dealt with the issue. Members stated that SA needed to play catch-up when it came to tourist arrivals due to the negative impact of the visa regulations. It was felt that domestic tourism should be focused on and that township and rural economies needed attention. Members pointed out that there seemed to be disconnect between the efforts of the National Department of Tourism, provinces and local government. Members were not convinced that the matter would be resolved any time soon. They felt that the National Department of Tourism needed to play a big brother role over provinces and local government. Better cooperation and coordination was needed and greater emphasis had to be placed on product development. The problem was that there was a tendency to market places first, instead of products. Provinces and local government needed to have a more hands on approach to tourism. Even though the Square Kilometre Array project was a national competency, nothing seemed to be happening in the town of Carnarvon where it was located. There was a need for local culture and products to be highlighted. Members suggested that a seminar be held on Operation Phakisa so that members could be informed on what and when things needed to be done. Even though SA had a coastline of approximately 2800km, provinces like the Northern Cape had no tourist attractions. SA needed to look at international best practises on how to promote tourism. The Committee agreed that a meeting with the Department of Home Affairs and the Department of Labour was needed to discuss the issue of the employment of foreign nationals in the tourism sector. The Committee also needed clarity over the issue of tourism statistics. Perhaps the Department of Science and Technology would be called upon to shed light over the issue of incubators. 

Meeting report

Oversight implications of SONA 2017 on the tourism sector
The analysis was presented by Dr Sibusiso Khuzwayo, Committee Content Adviser. He noted that issues relating to tourism was extrapolated from the 2017 SONA. Tourism was a multi-sectoral economic activity and hence other sectors acted as anchors, facilitators and enablers of tourism. Policy decisions could either promote or destroy tourism. Consequently, various aspects of the 2017 SONA had a direct and indirect impact on tourism. Regarding the socio-economic case for tourism, tourism’s contribution to SA’s Gross Domestic Product (GDP) increased from R83.9bn in 2011 to R110.9bn in 2015. In line with goals set out in the National Development Plan (NDP), the industry created 32 186 new jobs in 2015. Mining, agriculture and tourism sectors were all mentioned in the 2017 SONA but the reality was that tourism was outperforming both mining and agriculture. The National Department of Tourism (NDT), the Department of Small Business Development (DSBD) and provinces as well as local government each had their own programmes on Small, Medium and Micro Enterprises (SMMEs). The problem was that all these interventions were disjointed. There was a need for more incubators throughout SA. The Committee was encouraged to intensify its oversight on SMME programmes.

On the oceans economy, it was suggested that the NDT should provide the Committee with feedback on the Tourism Oceans Phakisa initiative. The Marine Tourism Lab commissioned a study on marine tourism. Members should enquire as to what the outcomes of the study were. The Committee needed to also conduct continuous oversight on tourism’s ocean’s economy. It was also suggested that the NDT should look at tourism linkages that could be made with the Square Kilometre Array (SKA) project. These could include opportunities for adventure tourism such as star gazing. Investment promotion was mentioned in the 2017 SONA. The tourism sector could partner with investments to perhaps scale up the Expanded Public Works Programme (EPWP), as well as emphasising more on huge projects that had greater impact than smaller projects. Other interventions were the need to maximise the impact of Meetings Africa and other investment platforms as well as developing tourism investment portfolios to lobby investments from investors. The 2017 SONA highlighted the conclusion of the agreement on the National Minimum Wage and on measures to stabilise labour relations.

The Committee was encouraged to increase oversight over the implementation of the minimum wage versus the current sector determination by the Department of Labour. There was a potential for labour unrest as the sector employed more foreign nationals than South Africans. The Committee was urged to engage with both the Departments of Labour and Home Affairs over the issue on what interventions both had in the pipeline. Given the drought that various parts of SA were experiencing, the Committee in its oversight role should ensure that tourism establishments were as water wise as possible. Hotel Verde located near Cape Town International Airport was Africa’s greenest hotel and had adopted ingenious water saving strategies. The  2017 SONA highlighted the fact that tourist arrival numbers for the period January to November 2016 increased to nine million, an increase of just over one million arrivals from 2015. In as much as tourist arrival figures increased, SA Tourism failed to meet its targets on international arrivals. Global growth was between 4%-5% but unfortunately for SA its growth was well below this. The good news was that even though arrival figures were not what it should be, spending on the other hand increased. The 2017 SONA also spoke about the need radical socio-economic transformation in SA. The tourism sector itself was very much untransformed. The Committee was encouraged to conduct oversight on the implementation of the Tourism Broad-Based Black Economic Empowerment (B-BBEE) Sector Codes. Perhaps the NDT could conduct a study on the state of transformation in the sector.

Other initiatives included enhancing support to tourism SMMEs and to rural and community projects. Land Reform was another issue highlighted in the 2017 SONA. Eight million hectares of arable land was transferred to black people which were only 9.8% of the 82 million hectares of arable land in SA. There were lodges and game farms that was affected by land claims. However, there were success stories where communities benefitted, for example in the Phinda game reserve in the KwaZulu-Natal Province. Opportunities that could be explored included ecotourism, co-management agreements and exploring the wildlife economy (wildlife auctions, canning hunting, trophy hunting etc.) The NDT needed to enhance models of community-based tourism, especially in areas affected by land claims. A new approach to developing community-based tourism was needed. Recommendations made to the Committee included that the revised Strategic Plan and Annual Performance Plan for 2017/18 of the Committee needed to take into account the 2017 SONA. In addition that the Committee conducts oversight on all matters raised in the 2017 SONA during the 2017/18 financial year.
 
Discussion
The Chairperson encouraged members to make contributions to the analysis rather than ask questions.

Mr G Krumbock (DA) appreciated the analysis that was done but said that the Committee should not disagree about the facts. He however felt that it could be useful if the Committee could put together something on the effect of the 2017 SONA on tourism pertaining to radical economic transformation and land reform. The analysis touched on land restitution and it also mentioned efforts at iSimangaliso. Government, private sector and previously disadvantaged groups all had to work together. Certainty was needed on the policy framework in order for business to flourish. SA had the best resorts in the world and had great wildlife heritage. He noted that the points made on eco-tourism in the analysis were valid. He felt that canned hunting had to be eradicated. He said that there were people who had large tracks of land and together with local people could open up game farms. The question that needed to be asked was how land restitution was going to be undertaken. The tourism industry was affected by many things. He asked whether a study could be done to show the effect of investments whilst land expropriation was a possibility. What was the net benefit to SA? He asked what the potential for eco-tourism in SA was and how it was affected by land expropriation where possible.

Mr Joyce Ntuli Committee Researcher responded that what Mr Krumbock was requesting was a commissioned research. The Committee unfortunately lacked the resources to do it. Researchers in parliament were only allowed to do desktop research.

Mr Krumbock understood Ms Ntuli’s point and suggested that the Committee could request the information from tourism bodies, interest groups and stakeholders who already done the research. Contact with these individuals could be made telephonically or by email. The costs would be negligible.

Ms L Makhubele- Mashele (ANC) noted that the analysis spoke about the oversight role of the Committee on the minimum wage issue. How was the Committee going to work on the issue? She felt that SA had dismally failed its citizens on the minimum wage issue. Restaurant workers for instance earned less than the sectoral determination wage. They mostly worked for tips. She felt that the Department of Labour failed to ensure compliance with sectoral wage amounts. On critical skills, the issue was about how visas and permits were issued. SA had skills that could be used in the sector. The main reason why foreign nationals were working in the tourism sector was because SA failed to enforce its own policies and laws. How was SA going to ensure that its laws were adhered to? She suggested that the Committee received a one day workshop on the Broad-Based Black Economic Empowerment (B-BBEE) Sector Codes. The 2017 SONA alluded to the fact that more regulations on the Codes were going to be released. She personally was grappling to understand them. She was also struggling to get an idea on where the National Department of Tourism (NDT) was in its efforts. All that she saw on oversight visits were projects that traumatised her. Some of the projects were inherited by the NDT. She wanted a sense of where the tourism sector was at. How was the Committee intending to intensify oversight? What was the NDT doing about Small, Medium and Micro Enterprises (SMMEs)? The Department of Small Business Development (DSBD) was in its infancy even though it was doing much work on SMMEs.

Mr T Rahawula (EFF) noted that there was a bigger problem of participation of broader society in the oceans economy, other than that it was concentrated mainly in Cape Town and Durban. He stressed that previously disadvantaged people were being disadvantaged by too much bureaucratic red tape. Subsistence fishermen could not make a living. The problem was that big business was connected politically especially on the issue of licensing. In Port Elizabeth from Port St John to Jeffreys Bay, a white company had exclusive fishing rights. Participation was a huge problem. He asked the Committee Researcher to conduct a study of the numbers of black people that were declined and those that were approved to participate in the oceans economy. He said that it was unlikely that the minimum wage would be implemented any time soon. The Congress of South African Trade Unions (COSATU) did not sign the minimum wage agreement yet. He felt that jobs needed in the tourism sector had to be categorised and hence to be reserved for South Africans. It was unfortunate that there were even foreign nationals who were tour guides in SA. Heritage should be confined to South Africans. On the effects of drought on tourism, there was a need to investigate the economic use of water by big companies. They seemed not to be affected by water restrictions. Government subsidised big companies when it came to water and electricity and these companies wasted a great deal. There was a further need to investigate what the capacity of water infrastructure reservoirs in SA were. It was the responsibility of the state to ensure that they were maintained. On tourist arrivals SA needed to do a comparative analysis on how other countries dealt with visas. The 2017 SONA spoke about socio-economic transformation. The Committee should make a submission on how it thought the structure of the tourism economy should be transformed. He noted that patterns of ownership still reflected SA’s Apartheid past. There was also a need to change the ownership of land in SA when it came to land reform. Even though 8.9% or 11% as the figure now stood of land in SA was redistributed, the problem was that recipients sold the land. He said that there should be a moratorium placed on the sale of the land unless it was sold back to the state. He felt that the state should nationalise game farms. 

Mr J Vos (DA) noted that when one looked at figures from 2013 to 2016 then it seemed as if SA had a shortfall of 600 000 tourist arrivals. SA needed to play catch up due to the negative impact of the visa regulations. He felt that the focus should rather be on the domestic market. Township and rural economies needed to be focussed on. The 2017 SONA was quiet on what needed to be done in the rural setting. He stressed that there was disconnect between what the NDT, provinces and local government was doing. The NDT should play a big brother role over provinces and local government. He stated that Minister of Tourism Mr Derek Hanekom should deal with the matter of improving coordination and cooperation head on. There were however instances where there were duplication of activities. He reiterated that townships and rural areas should be focussed on. Greater emphasis should be placed on product development. The tendency was to market places first instead of products.

Ms P Adams (ANC) said that she listened to a radio broadcast where persons said that the Constitution of SA was developed not for the country but rather for its people. She agreed with the statement made. She noted that the 2017 SONA made her realise that government departments could not work in silos. There was a need to reach out to local government. Schedule 4 of the Constitution listed concurrent functions. She stated that national leadership only looked at concurrency. Provinces and municipalities needed to have a more hands on approach to tourism. She pointed out that the Square Kilometre Array project was a national competency but yet nothing was happening in the town of Carnarvon where it was located. Promotion of local culture and products was not highlighted enough. Carnarvon was rich in history and culture. She suggested that a seminar be held on Operation Phakisa so that members could become informed on what and when things needed to be done. The briefing spoke about SA having a 2800km coastline. Yet there were no tourist attractions in the Northern Cape. Provinces like the Western Cape had aquamarine activities like abalone farms etc. She would like to see similar activities happening in the Northern Cape and even in the Eastern Cape. All efforts were focussed on highlighting accommodation and tourist guides. SA needed to look at what other countries were doing.

The Chairperson agreed that there was a “disjointment” between the NDT, provinces and local government.  She was not sure whether the matter would be corrected any time soon. There was a need for the Committee to be educated on the minimum wage issue. The Committee also needed to have a meeting with the Department of Home Affairs and the Department of Labour to discuss the issue of the employment of foreign nationals in the tourism sector. The Broad-Based Black Economic Empowerment (B-BBEE) Charter Council would be invited to address the Committee as well. She informed members that the Department of Science and Technology had a department that solely dealt with incubators. Perhaps the Department of Science and Technology could brief the Committee. She stated that the Committee needed greater clarity on the issue of statistics. Tourism was after all globally contested. The Committee additionally should get the views of the private sector as well. 


Committee Minutes
Minutes dated 1 February 2017 was adopted without any amendments.

The meeting was adjourned.
 

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