National Department of Tourism on its Annual Performance plan, with Minister and Deputy Minister

Meeting report

Opening remarks

The Chairperson commended the fact that all the officials from the National Department of Tourism (NDT) were present, including the Minister and Deputy Minister, and said that it was a sign that the NDT was working together.

Minister’s Overview

Ms Tokozile Xasa, Minister of Tourism, opened her overview by complimenting the achievement of South Africa in hosting the World Economic Forum (WEF) of Africa, and indicated how positively this had played in the growth of tourism throughout the years. The ranking indicators of the WEF placed South Africa number 51 globally and number one in Sub- Saharan Africa in terms of tourism growth.

Inclusive and quality growth would be one of the aspects that the NDT would be focussing on in the annual performance plan (APP) to show how tourism could have a broad based involvement with people in the industry. The  NDT Director General would outline the structure of the Department and how it would allow people to be owners and participants in the economy. The key focus area was to drive ‘radical transformation’ to achieve inclusive growth in the Department.

It would be partnering with municipalities in regard to land expansion for new investments, and was looking to help small, medium and micro enterprises (SMMEs) to play a bigger role in the industry so that they boosted the economy of the country. The Department would work closely with SMMEs to actually skill them and provide the resources to help build their enterprises so they could be a part in the tourism market as well. This was one of the goals the Department had in order to create growth and also to allow those enterprises to create job opportunities. Skills development in the workforce of the NDT was also a matter of importance, as the Department wanted to ensure that the youth were able to enter the sector as workers, or people who were starting out their own enterprises, and having well-trained individuals in the workforce of the Department would enhance competency levels.

The Minister stressed that she wanted to position tourism as a conducive environment for investment, so the NDT would be working closely with the Presidential investment initiative, the “One Stop Shop,” to allow enterprises a window of opportunity and ownership when investors came into the country.

Department of Tourism: Annual Performance Plan

Mr Victor Tharage, Director-General (DG): NDT, said that the revised national tourism sector strategy (NTSS) had five strategic pillars. These were:

• Effective marketing.
• Facilitating ease of access.
• The visitor experience.
• Destination management practices.
• Broad-based benefits.

Inclusive and quality growth cut across all five pillars in order to achieve radical economic transformation. The focus areas to drive radical economic transformation to achieve inclusive growth involved sector transformation, which entailed promoting inclusivity -- for example, the Broad-Based Black Economic Empowerment (B-BBEE) plan of action. Research and knowledge management was also required to enhance decision-making, as well as the availability of information for planning.

The tourism human resource development strategy targeted the youth and required skills development both in government and industry. Destination development included coastal and marine opportunities in order to enhance diversity offering. What was key in transforming the sector was enterprise development, which would expand participation. Responsible tourism promoted principles of sustainability and created an enabling regulatory environment for the sector, as well as policy harmonisation and integration.

There were key strategies and programmes for radical economic transformation to achieve inclusive growth, and the NTSS was the overarching framework for the Department’s plans. There was an enhanced growth strategy which planned to draw five million tourists in five years, one million being within the domestic market. The Tourism Enterprise Development Programme and the Tourism Incentive Programme were the main drivers in introducing new players or enterprises to the sector.

The Department would outline the Oceans Economy, the Marine and Coastal Tourism Programme, as well as the B-BBEE Council plan of action, which was based on the tourism B-BBEE codes of good practice, the transformation summit and the human resources development strategy. The destination enhancement programme aimed to address township and rural tourism and precinct development. The Department had done a lot around the townships, but would like it to have more sustainabiltiy and involvement in terms of the enhancement programme.

Working for Tourism and the Women in Tourism programmes were linked, and this was something that the Minister had been driving in order for these individuals get involved in the executive part of the sector, sp that they themselves could provide the same structures they had been provided when starting up.

Other key programmes were the responsible tourism programme, which included community participation and sustainability, and people-to-people relations as an engagement mechanism with people from strategic markets. These were the strategies and programmes to achieve inclusive growth in the Department.

Mr Tharage said there were 3 pillars of radical economic transformation for inclusive growth:

•  Policy.  This entailed leveling the playing field through creating an enabling policy environment. Extracting data would allow for targeted interventions to contribute towards informed policy and regulatory instruments to support economic transformation. Strengthening monitoring and evaluation mechanisms could be very effective in allowing the NDT to measure the impact of programmes in different communities, individuals and society.

•  People.  The Department could help build enterprise development and transformation by involving 30% women’s representation in the sector. Training of tour operators to stimulate domestic consumption demand and also focusing on township and rural tourism through enterprise development incubator programmes could enhance people’s potential. This would be done through skills development and initiating the Recognition of Prior Learning (RPL), and in terms of involving black women in executive positions, a black women’s executive programme would be implemented.

•  Places.  This involved the establishment of a tourism development fund and market access programme. Geographical planning and product development with a focus on township and rural tourism was needed in order expand and provide inclusive growth and radical transformation. The need for investment facilitation and utilisation of state-owned assets to leverage transformation in the industry was also vital.

Mr Tharage said that the Department felt it needed to add the NDT’s target estimates for 2026 in order for the Committee to see the growth the NTSS would have in the sector. The number of direct jobs supported by the sector would increase by 25 000 a year, and by 2026 the sector would have provided an estimate of roughly a million-plus jobs. With regard to capital investment, the Department planned to get roughly R148.7 billion in investments in order to increase enterprise growth within the sector and help job creation. In terms of the contribution to the gross domestic product (GDP), this would increase by 150% by the year 2026, and the jobs created would be roughly 300 000 around that time. The increase in tourism export earnings would increase by 200% by year 2026, as the target estimates predicted, and these were the outcome-revised NTSS targets from 2016 to 2026.

The APP aimed to improve the quality of life for South Africans through employment, reduced inequality and poverty. The plan would also contribute to the growth of an inclusive tourism economy through broad-based participation in townships, rural areas and strategic geographic centres of the economy. Women’s and youth empowerment were focal points for the Department to create opportunities for capacity development and enterprise development support. The outcome the Department also planned to achieve with this process was meaningful community participation, enhanced visitor experience, and a broadened product base with more value chain opportunities. The Department wanted the expansion of small to medium enterprises in the sector and local sourcing to reduce leakages in the tourism value chain. It sought more integrated efforts around the African tourism agenda and broadened market opportunities, including the continent and other new markets. The key policy linkages and mandate included the National Development Plan (NDP), which stipulates inclusive growth, employment creation, and a reduction of poverty and inequality. The Tourism Act, No.3 of 2014 and the Tourism White Paper of 1996, were policies the Department looked to as a guideline.

There were structural changes to support implementation of the Department’s four programmes. These were: Corporate Management (Prog 1), Tourism Research and Policy (Prog 2), Destination Development (Prog 3), and Tourism Sector Support Services (Prog 4). These programmes worked in an integrated manner in order for the objectives of the NDT to be implentented. There were 12 organisational strategic objectives which had been underlined in all four programmes, but objective number four, which was ‘to contribute to economic transformation in South Africa,’ would be taken out due to the fact that it emphasised the role of the Department and how it would spend its budget, and that was not in accordance with the APP the Department was presenting. The outcomes of the strategic goals were to achieve good corporate and cooperative governance, and also to increase the tourism sector’s contribution to inclusive economic growth.

For Corporate Management (Pro 1), there were no planned policy initiatives, whereas Tourism Research and Policy (Prog 2) initiatives were to review the NTSS and also to develop regulations for the implementation of the Tourism Act, 2014. It also aimed to position policy on the regulatory approach for the tourism-sharing economy. For Destination Deveopment (Prog 3), the NDT planned to develop a policy framework for the Working for Tourism programme, to respond effectively to impact orientation and the control environment in line with the outcomes of forensic audits. Tourism Sector Support Services (Prog 4) had no policy initiatives at the moment.

Mr Tharage referred to the strategic risks the Department had had to encounter with its plans. These included the inability to meet transformation targets, the inability to plan and implement infrastructure projects adequately, and inadequate public information on the benefits and opportunities of tourism. There was also inadequate leveraging of public and private stakeholder relations, inadequate change management, and lastly the impact of developments in the sharing economy. The NDT’s mitigation plan for these risks were to strengthen developmental communication mechanisms, formulating a policy position on the sharing economy, and establishing enterprise development support mechanisms for community-based tourism initiatives and SMMEs. When it came to infrastructure, strengthening the planning capacity would help it overcome the inability to implement projects.

The Department would have a tourism indaba to allow other govermental departments to help and assist the NDT in radical economic transformation and to see what role the other departments could play in promoting inclusive growth for the tourism sector.

Programme 1: Corporate Management

Ms Lulama Duma, Deputy Director General (DDG): Corporate Management, NDT, said that the pupose of this programme was to provide strategic leadership, support services to management and achieve good corporate governance. There were four strategic objectives which were to ensure economic, efficient and effective use of Departmental resources; enhancing the value of tourism and awareness on the opportunities it could provide; creating a regulatory environment for tourism development and growth; and lastly, to contribute to economic transformation in South Africa. There were several key programme performance indicators (PPI) in programme for the financial year 2017/18.

PPI 1:  This addressed the number of strategic documents developed. The NDT planned to get organisational performance management guidelines in the first two quarters, and present the first draft of the strategic plan and APP for 2018/19 to the Department of Planning, Monitoring and Evaluation (DPME) and the National Treasury (NT). In the third quarter, a second draft would again be presented to these departments, and in the fourth quarter submission of the plans would go for approval and presented for tabling in Parliament.

PPI 2:  This dealt with the number of public entity oversight reports prepared. Through the 2016/17 financial year, four South African Tourism (SAT) oversight reports had been prepared and in the next financial year there would be an oversight report prepared in every quarter.

PPI 3:  The annual vacancy rate targets for the 2016/17 and 2017/18 financial year were not to exceed 8%.

PPI 4:  This involved women’s representation in senior management services, as well as for people with disabilities and black representation. The annual target for the current financial year was to maintain 50% women’s representation at the senior management services level and to maintain employ 3% of people with disabilities, and mostly 95,1% of black representation.

PPI 5:  The annual target was 100% development and implementation of the Workplace Skills Plan.

PPI 6:  The percentage compliance with prescripts on management of labour relations matters required 100% compliance in the management and handling of grievances and misconduct.

PPI 7:  This involved the implementation of information communication technology (ICT) strategic plan.

PPI 8:  There needed to be three quarterly financial statements, and one annual statement, compiled and submitted to the National Treasury.

PPI 9:  100% implementation of the annual internal audit plan was required

PPI10: The goal was 100% implementation of the Department’s communication strategy.

PPI11: The Tourism Amendment Bill, to improve the governance of government tourism institutions,

PPI12: 100% procurement from B-BBEE-complaint businesses.

Programme 2: Tourism Research, Policy and International Relations

Ms Nonkqubela Silulwane, Chief Director: NDT, said that the purpose of the programme was to monitor the tourism sector performance with enabling stakeholder relations and the policy environment. There were a number of strategic objectives which were to enhance understanding and awareness of the value of tourism and its opportunities, to create an enabling legislative and regulatory environment for tourism development and growth, to provide knowledge services to inform policy planning and decision-making, and lastly to enhance regional tourism integration.

The key performance indicators targets for 2017/18 were to have two tourism policy bulletins published by the end of the financial year, and this included the proactive tracking of policy documents. Policy had been developed in relation to the negative unintended implications of developments in the sharing economy. There would be four reports developed throughout the year, including the 2016 state of tourism report, an evaluation report on the food safety programme, an evaluation report on the tourism incentive programme and the 2016/17 NTSS implementation report.  This was for a review of the framework for the 2016/17 implementation reports, drafts and data collection.

The training of youth as data capturers for collection was required. At least two data capturers per municipality were needed, and two mobile applications had to be maintained for tourist guides. The NDT was planning two initiatives for the 2017/18 year and it planned to host a tourism work stream during the 2018/19 BRICS summit. The final plan was for the hosting of a tourism workstream during South Africa’s chairpersonship of the Indian Ocean Rim Association (IORA) development. Through the first quarter, a draft of these plans or initiatives would be implemented, and in the second quarter consultation would be required on the initiatives. In the third and fourth quarters, the rolling out of the hosting implementation plan would be done.

Programme 3: Destination Development

Ms Shamilla Chettiar, Deputy Director General (DDG): Policy and Knowledge Services, NDT, said that the programme was the core to facilitate through destination planning, tourism products, experience and infrastructure development. The main strategic goal of this programme was to increase the tourism sector’s contribution to inclusive economic growth. The key strategic objectives outlined in this programme were to diversify and enhance tourism offerings by increasing the number of destination enhancement initiatives implemented. Creating employment opportunities through tourism projects was very close to the NDT’s goals, and it planned on doing this by funding the Working for Tourism projects, to increase the number of full-time jobs required. The annual target for this programme was to monitor the implementation of three destination enhancement projects:

• Shangoni Gate tourism development in Kruger National Park.
• Phalaborwa Wild Activity Hub in Kruger National Park.
• National Heritage Monument Park Interpretation Centre.

Ms Chettiar said that implementation progress reports on these four destination enhancement initiatives would be crucial in terms construction progress, stakeholder meetings and site visits in every quarter of 2017/18. There would be seven Working for Tourism projects funded through the Expanded Public Works Programme (EPWP). These were:

• North West Letlamoreng Dam.
• Limpopo Phipidi Waterfall.
• Northern Cape Platfontein game farm.
• National Youth Chefs.
• Somelier Training Course.
• Youth in Hospitaity Services Training Programme.
• Food Safety Programme.

The payment for these projects would be funded based on satisfactory progress reports on the projects throughout the financial year, therefore implementation needed to be monitored. Furthermore 3 085 full-time equivalent (FTE) jobs needed to be created by the end of 2017/18. These job opportunities would be broken down throughout the four quarters.

Programme 4: Tourism Sector Support Services

Ms Morongoe Ramphele, DDG: Tourism Sector Support Services, said that the purpose of the programme was to enhance transformation of the sector and tourism services through people development, enterprise support and service excellence, in order to ensure South Africa was a competitive tourism destination. There were three strategic objectives for the programme: to accelerate the transformation of the tourism sector, to facilitate the development and growth of tourism enterprises to contribute to inclusive economic growth and job creation; and lastly, to facilitate tourism capacity-building programmes. Through these strategic objectives, the annual targets were to promote four B-BBEE initiatives, which were:

• Development of monitoring reports on the implementation of the amended tourism B-BBEE sector code. Throughout the year, surveys would be conducted by an appointed services provider to ensure implementation of the code was adhered to.
• Tourism Sector Transformation Indaba. A concept document needed to be drafted for programme development, with stakeholder consultation for the Indaba.
• Guidelines for the commercialisation of state-owned attractions. The status quo for the commercialisation of state owned attractions needed to be determined, as well as how many site visits would be conducted. Consultation with key stakeholders would be held and would then be approved.
• Establish funding mechanisms through partnerships with development finance institutions (DFIs) to support tourism sector transformation, by identifying and engaging DFIs for possible partnerships. Drafting a report for the funding mechanism would then be created for consultation with the various stakeholders.

This was a suitable approach for radical economic transformation and inclusive growth in the tourism sector, she stated.

There were ten capacity-building programmes that would be a key focus in this financial year:

• Implementation of the cultural tourism project (CTP), which would be targeting over 577 trainees.
• 300 youths enrolled in the sommelier training course.
• Training facilitated for 2 000 trainees in the Youth in Hospitality Service Training Programme.
• 4 500 learners enrolled in the food safety programme.
• Establishment of a coordinating body for tourism human resources development (THRD).
• A local government tourism induction programme, with a focus on rural areas with tourism potential,  involving approximately ten municipalities
• A National Tourism Careers Expo (NTCE) 2017 project plan was in place, and also a media launch to host this.
• Twenty black women trained at an institution of higher learning. This would be done through recruitment and selection of candidates.
• Tourist-guide skills development programmes identified and implemented for training of new entrants in adventure guiding.
• Training of 60 youths in resource efficiency assessment methodology

Estimates of National Expenditure (ENE)

Mr Ralph Ackerman, Chief Financial Officer: NDT briefed the Committee on the Departmental medium-term expenditure framework (MTEF), focusing on the 2017/18 financial year. The budget for this year was R2.1 billion, and tourism policy and planning accounted for 56.5% of the budget, involving administration, destination development and enterprise and visitor support services. Transfers and subsidies accounted for 65% (R1.3 billion), while compensation of employees was R271 million, goods and services R364 million, and capital assets came in at R112 million.

Discussion

The Chairperson said that South African Tourism (SAT) was getting a large amount money from the government, and wanted to know if the NDT was doing adequate oversight for this so that it could be accountable for its budget. In the APP document, the Department spoke about in-sourcing, and she wanted to know the extent of this and the cost of compensation for in-sourcing. She pointed out that the Department should be working hard to address the delays in some projects due to external partnerships, so that this did not happen again in the future. She wanted to know about the issues within the provinces, and what was going to happen there.

The Chairperson wanted the Department to speak more about radical economical transformation in terms of the Tourism Incentive Programme (TIP). She noted that the Department had a new look and wanted to know whether the budget would be sufficient, as there had been no study put forward that would lobby for the Committee to try and get a budget increase for the Department. She concluded by commending the Department on its good work and urged that it focus on the key strategic objectives so that by the end of the term it could have made full progress.

Ms P Adams(ANC) started by congratulating the newly-appointed Minister and Deputy Minister of the Department. She wanted clarity on the mission of the NDT, where it had referred to ‘good corporate and cooperative governance,’ as this statement was heavily weighed. She also suggested that the Department find ways in actually working with local government, instead of the issue always being addressed at the meetings, so that implementation occurred. In Programme 2, she wanted to know the reach that the Department had achieved in creating awareness in Africa as a whole. In Programme 3, she asked about the new incubator -- where would it be and how the selection process was done. How would the Department select the criteria for the green tourism enterprise? She wondered if the Department should not focus on previously disadvantaged people in this regard. Lastly she wanted the CFO to speak to her about capital assets, as the budget allocation for it was just 0.4%.

Ms L Makhubela-Mashele (ANC) had a question pertaining to the Oceans Economy, emphasising that two years ago the Department had had an initiative callled Operation Phakisa, which had been to ensure that activities were completed quickly and more efficiently. However, all she had being hearing about of late were new initiatives, and she wondered why Operation Phakisa was not being enforced with regards to the Oceans Economy, as it was a form of radical transformation itself. With regard to the incubator projects, she asked whether there was benefit in spending money on these projects, and what kind of outcome would come out of them.

The Chairperson added to the question by asking where the infrastructure for these projects was, because the Maungubwe and uKhahlamba were areas that were nearly 40km away. She asked how the infrastructure and the transportation to get to these sites would be addressed.

Mr J Vos (DA) wanted to touch on the sector codes, and said that they were much stricter than the generic codes of good practice, making it hard for the NDT, and it confused businesses when the codes differed from each other. Therefore the Committee would like all the codes to be the same in order to simplify the running of the NDT. He also mentioned international tourism, and wanted the NDT to work more closely with Department of International Relations in order to partner with the embassy of all the different countries, instead of SAT opening up branches in all these different countries and still not getting effective brand awareness for the country, because it was much cheaper to do this. Lastly, he asked how the Department was using businesses, events and exhibitions to increase the support for tourism in the country. He believed the Tourism Incentive Programme was a way to help emerging enterprises in the tourism sector, and it should focus more on township tourism.

Ms S Xego (ANC) said appreciated that 50% women’s representation in senior management services was being reinforced, but would like more to be done in future strategic considerations, to increase women’s representation above the 50% level. She wanted to know how the Department monitored SAT so that it could be held accountable for what was written down on paper. Where the NDT talked about recruiting, were its processes transparent enough for an unemployed child in the rural area to understand?

The Chairperson asked if the CFO could give a ratio between the compensation of employees and goods and services budgets.

Department’s response

Mr Tharage said the Department’s involvement in the Oceans Economy had not started at the same time as the overall Oceans Economy, so this had influenced the process that it was going through. He said that with regards to the R90 million, it was not the money allocation taken from the Tourism Incentive Programme, but an additional allocation given to the Department to enhance programmes and projects that were already in place. Most of it had been allocated to the destination development programme -- it had been spread across these areas and was not money taken from the existing budget.

Ms Ramphele said that she would answer the question of how the Department was going to support local government in the future. She said that with the restructuring of the Department, there was a directorate that would look into working specifically with local government, and had collaborated with municipalities for further participation. The Department also planned to focus on municipal forums so it could engage with them and see which ones had potential for tourism aspects. On the incubator model, it planned to assist 50 SMMEs across the value chain, and the Department was assessing having the next incubator in Phalaborwa. Regarding green tourism, the Department was being partnered by the Industrial Development Corporation (IDC), which was running the initiative, it was basically to ensure that effective energy was around tourism and focused mainly on SMMEs, and emerging black SMMEs specifically.

Mr Ackerman said that for the 2016/17 year, capital assets in Programme 4 (Tourisim Sector Support Services) had had an allocation of R95 million, and for 2017/18 it was R1 million. The reason for this was that the tourism incentive programmes had been classified as capital assets. Due to this, the goods and services budget had gone up from R21 million to R113 million in this financial year, meaning that the budget allocation had been redirected to the same programme -- it was just the classifications of the different projects that had led to the confusion. With the regards to the ratio of budgets for the compensation of employees (12,7%) and goods and services (17%), this was a ratio of 1:2. 

Ms Chettiar referred to the question on the Oceans Economy, and said the Department had started working on this only last year and since then the NDT had been detailing the projects that would be implemented within this financial year, such as Operation Phakisa, tourism infrastructure and cruise tourism, which was part of that programme, and institutions that supported the Oceans Economy were also involved. The Department had done a lot of research in order to figure out how it could benefit from coastal and marine tourism and the partners it worked with, like the Department of Environmental Affairs had looked into matters like safety in shark diving and other activities. However, once this had been finalised by the Cabinet, the NDT could complile a full report for the Committee to review.

In regard to the social responsibilty implementation (SRI) programme and the work of the NDT, it was vital to build infrastructure and skills development in the township communities. Regarding air access, the Department had a good relationship with the Department of Transport, and the air lift strategy was written in consultation with the NDT, so it was hands-on with the strategy.

The sector codes that the Department used were consulted with the tourism sector stakeholders, and the only reason why the NDT had its own codes was to due to the fact that the Department’s projects and initiatives had way surpassed the generic codes that were used. Also, the tourism sector had its own specific set up, therefore the sector codes had been created.

Ms Duma said that the disability employment rate target was 3%. Members would be happy to know the Department had exceeded this and that the actual rate the NDT was sitting on was 4.6%. The women’s participation of 50% was based on the annual targets the NDT planned to achieve, but overall the Department’s women’s participation was 55%.

Mr Tharage added that through the executive management committee, which was attended by the Minister, the Deputy Minister and the DDGs, he was the only male, meaning that women’s participation was working in the Department.

The other aspect he wanted to elaborate on was the sector codes. In 2009, the tourism industry had told the Department to use the sector codes, and the Department had wanted to know what the problem with the generic codes was. This had been where the confusion with the codes had come from. The biggest challenge that the Department needed to face was to involve communities in the projects and initiatives that it had, but it was working on getting closer to the communities to get them involved.

The number of chief directorates was still the same, but they had moved around programmes so no one had lost a job. The Department did not have provincial offices, as this was too costly. It had a number of agreements for engagement with African countries, for example, the Democratic Republic of Congo (DRC) and Seychelles, and was negotiating agreements with Namibia and Zambia so that it could create awareness for brand South Africa.

Ms Ramphele said, in regard to the skills development for people who did not have access to resources, that the NDT had training facilities and it advertised them. It recruited graduates from universities, but everyone had to give their curriculum vitae, and the Department worked with municipalities in order to help people who were disadvantaged to also have access to these programmes and initiatives. A career exposition was also staged annually in order for the youth to know what the tourism sector was about.

The Minister said that the Department really wanted to enhance their oversight of SAT so it could stick to its mandate. Another issue with the oversight was that the Department was just giving SAT a budget, but was not looking its employment, and this was one of the factors the NDT needed to look into so that the SAT could carry out their tasks. The NDT would also focus more on municipalities which have potential for tourism, as not all municipalities were equipped for tourism, but those that were viable would be contacted. The money that was given to SAT also included an allocation for the SMMEs to enhance their participation in the tourism sector. She added that progress with Oceans Economy was not moving fast enough, but a document would be presented to Cabinet and once feedback was received, it would kick start the process.

Mr Vos said air travel was an element that the Department should focus on. It was becoming more expensive because there were three taxes included in a single fare. A debate regarding air fares was needed, in order to get them reduced more affordable levels. He would like to see a report on an air fares strategy.

The Chairperson said she hoped the Committee could make it to the Tourism Indaba.

The meeting was adjourned.