Video: JM: PC on Tourism and SC on DTI, Economic Development, Small Business , Tourism, Labour 04 May 2020
Audio: Minister of Tourism on impact of COVID-9 pandemic to Tourism Industry & mitigating measures initiated by Department 1 Part 2 Part 3
COVID-19: Regulations and Guidelines
Disaster Management Act 57 of 2002
Schedule of Services to be phased in as per COVID-19 Risk Adjusted Strategy
President Cyril Ramaphosa: South Africa's response to Coronavirus COVID-19 pandemic
Both the Minister and Deputy Minister were present at the virtual meeting.
The Department’s presentation covered the background of COVID-19 and its impact on South Africa’s tourism sector as well as the many businesses, such as hotels, which were dependant on tourism. The presentation then briefed Members about the initiatives undertaken by the Department to mitigate the impact of COVID-19, incorporating international and regional practices and recommendations.
Members asked about the Department’s plan to assist rural and township entities in the tourism industry, the assistance plan for freelancer artists based in townships and rural areas and the beneficiaries of the R200 million reprioritised budget.
Members disagreed on the extent at which the Broad-Based Black Economic Empowerment (BBBEE) should be considered when establishing the criteria used to distribute the reprioritised funds. Some Members understood the need to enforce the BBBEE policy but also highlighted the inevitable exponential rise in unemployment, which spared no race. They felt that race should still be a criterion after 26 years of democracy. Other Members appreciated that the Minister defended BBEEE because it was not a policy that she invented. They argued that the purpose of the policy was to redress the previously disadvantaged population to realise equity; businesses that were not compliant with BBBEE could still apply.
Members made suggestions on the feasibility of a grading certificate given the scenario and municipal initiatives to help cushion negative impact and whether those initiatives could be adopted at a national level.
Members also enquired about the outcome of the engagements between South African Airways and unions; reduced booking fees for hotel guests; the administering mechanisms against capitalistic opportunists; the distribution of relief funds provincially; the administering of the R30 million donation and what would happen if the country was taken back to level five.
Opening Remarks by the Chairperson
The Chairperson welcomed everyone and asked if there were any apologies made by Members. There was a delay caused by a technical problem. He asked if there were any items to be included or excluded from the agenda. Having not received any indication, he would convene the meeting according to the agenda.
The purpose of the meeting was to receive the presentation from the Department of Tourism about the recovery plans it had taken in response to the COVID-19 pandemic.
Mr M Dangor (ANC, Gauteng) indicated that he had to leave at 5:15pm.
Co-Chairperson Mahumapelo explained that Members must unmute their microphones when they speak and mute them once they finish their speeches.
Opening Remark by the Minister
Ms Mmamoloko Kubayi-Ngubane, Minister of Tourism, gave her opening remark on the impact of COVID-19 on the tourism industry.
The tourism sector was most severely affected when borders were closed after the President’s announcement. The impact was far reaching, also severely affecting the hospitality and accommodation industries. The Department’s relief fund schemes arose out of that context and its first priority was to save people’s lives. Following the phased approach that was set by the government, government would gradually reinstate economic activities. She informed members that the decisions made by government were informed by epistemologists, experts and experience drawn from other countries.
The Minister then explained that the Department applied and received approval from National Treasury for funds, which amounted to R200 million, to be redirected and the benefit of each entity would be capped at R50 000. When the Department received the go-ahead to redirect funds, the criterion for distribution had not been finalised. The Department subsequently received a letter from Western Cape Government seeking clarity on the criteria, followed by another from Solidarity Fund. On the eve of the programme launch after having shared the information, the criteria was intentionally leaked and so media got to know the criteria on the same day as the day Department would release it. She criticised it as a breach of confidentiality for inter-governmental relations. After media published the criteria the matter was taken to court by AfriForum.
The Minister deemed that there had been a campaign to discredit the Department and herself. She did not understand why she and her policy were branded as racist. Perhaps more briefing information on BBBEE should take place in order for the public to get a better understanding of the policy. It was false that a company could not be exempted from BBBEE just because it was white-owned. There were a lot of grey areas around how people understood the BBBEE. It was important to promote the previously disadvantaged groups and women. She would not allow these people to lose their livelihoods because of COVID-19 and that was why she, in line with regulations, implemented BBBEE as a criterion.
Briefing by the Department
Mr Paul Masemola, Director-General (DG), Department of Tourism, gave a background briefing on the COVID-19 pandemic and South Africa’s response to it. Since the discovery of the first case in Wuhan, China, till South Africa (SA) discovered its own first case of COVID-19, SA government announced a nationwide lockdown on 23 March, which was originally effective from 26 March till 16 April but was later extended indefinitely.
In terms of lockdown level four, the DG described that the services that were allowed for tourism, such as accommodation, would continue to provide services only for quarantine and provide services for essential workers. Restaurants were allowed to do deliveries but no sit-ins or take away purchases were allowed. Movements between provincial borders were still not allowed.
The DG then briefed Members on the estimated impact of COVID-19 on South Africa. It would result in the decline of 290 to 440 million international tourist arrivals, which is equivalent to five to seven years lost in the number of tourist arrivals. This could amount in the decline of 300 to 450 US billion dollars in tourism export. The current estimate was calculated based on the information available; with more information surfacing, he was certain that figures would become much higher.
The Department, in collaboration with TBCSA and all its member associations and IFC, carried out a preliminary Tourism Industry Survey with the aim to quantify the extent of COVID-19 and its effectiveness of support and what types of assistance was still required. This survey would be conducted three more times over the next 12 months. The survey was in the form of an email questionnaire and reached out to approximately 400 SMMEs in the Department’s databases. The preliminary findings of the survey were then presented to the Committee.
The findings from the survey showed that most businesses were favoured to reduce wages rather than furlough or redundancies. In the accommodation sector, which was significantly affected, many business owners offered the option to ask their guests to postpone instead of giving them refunds. However, it was a grave concern for this sector as most guests preferred refunds. In March 2020, 83% of firms reported that their revenues decreased by more than 50%, compared to those of 2019 where 34% of the firms reported that their revenues had dropped 100%.
Firms implemented temporary measures such as temporary closure, booking deferrals instead of cancellations as well as significant downscaling.
Prior to the talk on COVID-19, the Minister had engaged with tourism stakeholders to discuss the impact of the pandemic as well as the possible responses. Stakeholders included product owners and the tourism association. As a result of these engagements, four intervention methods were agreed on: Tourism Relief Fund, UIF, quarantine sites and budget reprioritisation. The understanding from the meeting was that industry needed to adapt. Other ministerial engagements included meetings engaged with Small Business Community, Restaurants Association of South Africa, TBCSA, SAA and unions. These meetings and engagements were an ongoing process which the Department was still undertaking.
The Department currently had received 12 174 online applications but 7 185 were incomplete applications. Provincially, among the completed ones, the Western Cape completed 1 361 applications, Gauteng submitted 1 239, KwaZulu-Natal 735, North West 178, Limpopo 357, Northern Cape 157, Free State 197, Mpumalanga 272 and Eastern Cape 493.
In order for the Department to fast-track the relief for workers in the tourism sector, it signed an agreement with Department of Labour (DoL), which appointed the TBCSA to facilitate the UIF applications. To date, 793 business applications had been received and 51 employees applied for themselves. The total number of workers of the travel and tourism as well as hospitality workers applied for UIF were 28 513.
The Department, with the assistance of the Department of Health (DoH), produced a list of accommodation facilities that could be used as quarantine sites. It also helped facilitate private sector to obtain DTIC exemption to discuss pricing for purpose of standard rates, for use of these facilities across the industry. Not many service providers wanted to turn their premises into a quarantine site.
Budget prioritisation was also covered by the Minister. The current reprioritisation aimed at supporting the efforts to fight the pandemic. This was based on the understanding that limited marketing and promotional activities could take place in the current environment and most activities would be planning-related with no activation.
The DG emphasised two points for the risk-adjusted approach. First it was the level of risk in terms of disease spread and the readiness of the health system. By delaying the peak, the government was buying time to get the health system to a ready state. The second element was how industries should respond to that. The difference between levels one, two and three needed to be clearer. However, the absolute priority was to save lives.
The understanding was that this was going to be a stagnated approach. The movements would be starting off with largely domestic travels, then the country would open up to take regional movements and finally open internationally. The Department did not know if everything would be back to normal by December – what it can only do now was to speculate and make contingency plans.
Mr Masemola then summarised three categories of international engagements with the African Union (AU), UNWTO and G20.
Regarding the AU, the Bureau of the Subcommittee on Tourism resolved to establish of COVID-19 Fund, which SA has obliged. This was the highlight of the mitigation strategy from the AU discussion.
With regards to UNWTO, the DG said that depended on each country’s financial ability to address these challenges as each country’s response could not be the same. UNWTO had identified three key areas: managing the crisis and mitigating the impact, providing stimulus and accelerating recovery as well as preparing for the future.
For G20, the proposition was similar to those of UNWTO. The DG anticipated that greater alignment in the relief strategies would emerge with time and the key was on working with other government departments and inter-governmental organisations.
Co-Chairperson Mahumapelo was no longer able to chair the virtual meeting due to bad reception; the Members asked Mr Rayi to take over as Acting Chairperson.
The Acting Chairperson allocated three minutes to each Member who had questions to ask the Department concerning the presentation.
Ms B Mathevula (EFF, Limpopo) asked in the Microsoft Team Chat Room what plan the Department had put in place to assist rural and township entities operating in the tourism industry, as the relief schemes did not cover them.
Ms M Gomba (ANC) commended the presentation given by the Department, saying it was detailed and informative. She also commended the Minister’s spirit and determination to defend the BBEEE – ensuring that those who were the most vulnerable would be assisted.
Mr P Moteka (EFF) asked the Minister and the Department about criteria for relief schemes; he criticised anti-transformation and racist organisations. Which types of businesses would be the beneficiaries of the R200 million that was reprioritised within the Department and what criteria is used to identify those businesses? Will the Department go to village townships in order for the relief funds to be accessible to them? He asked about the Department’s plans for assisting artists who were DJ, dancers – who usually performed at events in townships. Since these artists were self-employed, the COVID-19 pandemic impacted them most, financially.
Mr Moteka also enquired about the resolutions of the meeting that took place between South African Airways (SAA) and unions. He hoped that people would not lose their jobs.
Concerning rates, taxes and rental fees for tenants affected by the national lockdown, who were accommodated by hotels, he asked if the Department had been engaging with landlords to cancel or reduce rentals.
Mr H Gumbi (DA) needed clarity on whether a restaurant would qualify for a relief scheme if it was operating on hotel premises while owned by a different owner.
Mr Gumbi enquired about the administering procedures for the relief fund and the composition of the expert panel since it had been noted that some opportunists see crises as an opportunity to amass profits. What method is the Department employing to ensure equal distribution of funds amongst provinces? Some provinces may have more tourism sector employees and thus should get a bigger share of the funds. The BBBEE policy should be used as a criterion to distribute relief fund. What compelled the Minister to use BBBEE to justify the way in which fund is distributed in Section 10?
He disagreed with the Minister that the publication of the government document was a leak and a breach of confidentiality because it was bound to be published anyway.
Because his time was up, the Acting Chairperson stopped Mr Gumbi’s question session.
Ms S Xego (ANC) appreciated the presentation and then commented on the criterion in which there was a grading certificate which had to be produced. Was it wise to include that as criterion given that most people who would not have had sufficient time to get those documents certified before the lockdown started?
She expressed her appreciation for the R30 Million donated by the private sector and asked if the fund had been transferred and, if not, who was responsible for transferring and administering it.
Ms Xego congratulated the Minister on the court case. She commented on the expert panel, saying that all provinces must benefit and specifics must be indicated in order for the fund to be given to vulnerable groups.
The Acting Chairperson reiterated that he was going to be strict on the time allocated to Members given the limited time for this virtual meeting, but encouraged Members to use other platforms to ask the Department questions.
Ms S Boshoff (DA, Mpumalanga) commented on the severe impact of COVID-19 felt by South Africans. She did not think that race should still be a criterion after 26 years of democracy. According to the set criteria, many people would not benefit but these businesses had employees who were of colour. In light of that, the Minister could revise the criteria for the greater benefits of the country and those people that these businesses employed.
Mr K Mmoiemang (ANC, Northern Cape) commended the Minister for defending the BBBEE policy and agreed that it should be the basis of distribute. He asked for more clarity more clarity on the government’s payment to hotels that were designated as quarantine sites. One challenge that was raised in the meeting with the Department of Public Works and Infrastructure was the agreement that those hotels wanted to be paid upfront irrespective of the occupancy rate. He also asked about the measures in place for rural tourism.
Mr T Brauteseth (DA, KZN) understood the need to enforce the BBBEE policy but also highlighted the inevitable exponential rise in unemployment, which spared no race. The Minister should bear in mind the disappointment and frustration that people would have when they hear that they would be losing their jobs because of a government policy.
Mr E Landsman (ANC, North West) congratulated the Minister and the Department – asked them to keep up the good work in defending the BBBEE policy.
Mr G Krumbock (DA) commented on the BBBEE policy. What the Department left out was the numbers involved as a consequence of the policy. Members should imagine a situation where a small business such as a BnB which was BEE compliant and one that was owned by marital property which was not. Under the policy, the first business would qualify but the second one would not. However, both businesses could possibly hire the same number of employees and most of them would probably be black. As the government stated that the purpose of the BBBEE policy is to look after the most vulnerable and the poorest, exactly how many employees will be affected by virtue of the requirements? This would illustrate the impact of the policy.
Ms L Makhubela-Mashele (ANC) welcomed the presentation. She asked the Minister and the Director-General if, in addition to the money of R50 000 set aside to assist businesses, the Department was aware of the municipalities such as eThekwini had indicated that they would cut rates and taxes for small tourism enterprises, as a strategy to cushion the negative impact. Are there any strategies at the national level?
Ms Makhubela-Mashele appreciated that the Minister defended BBEEE because it was not a policy that the Minister invented. The purpose of the policy was to redress the previously disadvantaged population to realise equity. She reminded Members that people needed to understand that even for those that were not compliant with BBBEE could still apply.
Mr K Sithole (IFP) asked the Department what would happen if the country went back to level five. He then commented on the assistance of township and rural artists.
Mr Sithole asked what had been mentioned in the propositions of the AU, UNWTO and G20. He wanted to know how many companies registered at UIF are going to benefit from Department of Labour.
The Minister responded to why she called the publication of the government document a leak. When one writes something to a colleague and the colleague releases the content to the public without one’s approval, it is a breach of confidentiality. It is immoral and is damaging for inter-governmental relation.
Concerning athletes and freelance artists, she said that it was not within the Department’s jurisdiction to intervene; the matter fell under the Department of Arts and Culture. Nevertheless, she reminded Members that the Minister of Arts and Culture was addressing the matter on how freelancers would be assisted by government. Even though not enough funds were available in government, that department would have to reprioritise budgets in order to meet the demand.
On the question about SAA, the Minister indicated that there was a meeting with Minister Gordhan in which she was present. Minister Gordhan issued a statement on the latest development and he would be in a better space to advise Members.
On rates and taxes, the Minister said that the Department held continuous discussions with sector and municipalities and had indicated their wish to see municipal support for residents. However, some municipalities had challenges and were not in a position to render municipal services if they gave residents a break; exploring options were still underway.
Regarding landlords and restaurant businesses that were most severely affected, the Minister said that most restaurant businesses were advised to utilise insurance policy as a cushion to mitigate loss because most insurance policies had a clause that if one could not access the facility, they could claim insurance. Although the Department was going to intervene continuously, she indicated that national department could only advise as if the situation was based on the contractual relation between restaurant owners and their landlords. The Department could not dictate what landlords should do.
The Minister informed the Committee that the R30 million fund was paid to hotels and it did not come through government. The whole process was facilitated by TBCSA.
The Minister explained that since grading constituted one of the criteria, it was why there was a procedure that asked people to specify if they had been graded or in the process of being graded.
The Minister said that there would be equitable distribution of share among provinces. She asked Members to be mindful that this Department also represented tourism in rural areas and in small holdings. Currently, the Department received more applications than what it could afford to pay. So far there had been about 11 000 companies eligible and each had to be paid for R50 000. The Department considered the practical option for certified copies and asked applicants to upload copies if they did not have certified copies.
The Minister commented on Members’ division on using BBBEE policy as a criterion for distributing the relief fund. She responded to Ms Boshoff’s remark about “26 years down the line” and asked why people were not transformed after 26 years. The government used race as a criterion for distribution because South Africa remained the most unequal society. The country had had 300 years of discrimination and inequality, and the effects of this could not be changed in just 26 years. People who stayed in remote areas and were born in poverty needed the most help. Members should be asking why, after 26 years, people were still questioning the government’s BBBEE policy and that still reluctant to accept and embrace it. She clarified that using BBBEE as criteria did not mean that if you were a white person you would not qualify for the benefits.
The Minister found the “white businesses must be considered because most employees were black people” remark most derogatory. It was shocking that at this day and age a Member of Parliament could still express such sentiment with the insinuation that black people were only good to be employees – to be used as bargaining chips for white employers.
The Minister asked members to be mindful of the limited resource at the Department’s disposal to address the COVID-19 pandemic.
With regards to the proposal to bring artists to tourism, the Minister responded that it was not possible because the current measure in place was designed to address the challenges that arose out of COVID-19.
The Minister reiterated her confidence that even if the court case went to the Constitutional Court for her using BBBEE as criteria, the Department would win it.
Due to time constraint, the adoption of minutes was postponed.
The meeting was adjourned.
Mahumapelo, Mr S
Boshoff, Ms SH
Brauteseth, Mr TJ
Dangor, Mr M
Gomba, Ms MM
Krumbock, Mr GR
Kubayi-Ngubane, Ms M
Landsman, Mr ER
Mahlalela, Mr AF
Makhubela-Mashele, Ms LS
Mathevula, Ms B
Mmoiemang, Mr MK
Moteka, Mr PG
Rayi, Mr M
Sithole, Mr KP
Xego, Ms ST
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