The Portfolio Committee on Tourism met with the Department of Tourism on the virtual platform to receive a briefing on its Annual Performance Plan for the 2022/23 financial year. The Deputy Minister was present at the meeting. The Chairperson opened the meeting with a note on Members’ disappointment in the lack of protocol and acknowledge some of Parliament’s delegation at the recent Africa’s Travels Indaba event held in Durban. She demanded an apology from the Department, which was duly made.
During the discussion, Members enquired about the contractual agreement between the Development Bank of Southern Africa (DBSA) and the Department, the impact of the budget reduction on the Department’s mandates and programmes, the implications of the Constitutional Court’s decision on preferential procurement, the Department’s engagements with other government agencies to facilitate tourism growth, and the appointment of a permanent Chief Financial Officer in the Department.
Members asked the Department to confirm whether it took its internal audit outcomes and findings seriously and urged the Department to implement the audit findings so that it would not receive the same audit findings again.
Members expressed concern over the prolonged waiting time for the completion of the Department’s White Paper.
The Chairperson welcomed and acknowledged the presence of Deputy Minister, Mr Amos Fish Mahlalela.
The Chairperson commended the auspicious Africa’s Travels Indaba event held in Durban. She described that it was an insightful event in which 55 countries had presented, 634 exhibitors and 625 buyers were present. The interesting topics such as digital transformation, innovation and 4IR were a transfer of knowledge of which members had benefitted greatly.
The Chairperson said that the event had also compelled participants to reimagine localism and regionalism by directly talking to the people on the ground. The event showcased the importance of officialising local businesses and street vendors so that everyone could contribute to the growth of the country’s economy. The event particularly emphasised the vital role of the tourism sector to the country’s economy.
The Chairperson said that she was happy that KZN, as the host province, had economically benefitted from this event.
However, the Chairperson also mentioned disgruntlement amongst Committee Members as they were not accorded the due dignity and respect by the programme director.
Members felt unwelcome because they were not acknowledged by the programme director in the welcoming speech.
The Chairperson said that although the Minister of Tourism acknowledged the presence of herself as the Chairperson of the Portfolio Committee on Tourism, she forgot to mention the presence of the Chairperson of the NCOP Select Committee, Mr M Rayi.
She called it a serious breach of protocol.
She subsequently also raised the issue with the programme director.
She indicated that bureaucrats tended to forget that parliamentarians hold the trump card in deciding their budget in order for them to execute their responsibilities at workplaces. The Chairperson hoped that there would be an amicable solution to that and demanded an apology from the Department and the programme director to those parliamentarians. The Chairperson said that the worst part of it is that the programme director acknowledged the presence of media with passion, but such importance was not given to parliamentarians.
Remarks by the Deputy Minister
The Deputy Minister greeted Members and indicated that the Department had come before the Committee to present its Annual Performance Plan (APP) and budget for the 2022/23 financial year.
Deputy Minister Mahlalela highlighted the context under which the APP took place. The government has a constrained fiscus. There was civil unrest which took place in KwaZulu-Natal in July last year. Recently, there was a flood that badly affected KZN. And tourism is still reeling from the catastrophe brought upon by COVID-19.
Deputy Minister Mahlalela expressed the Department’s sincere apology for the lack of protocol at the Africa’s Travel Indaba event. He said that he himself had not been informed about the arrival of the Committee. The Minister herself may not have recognised Members of the Select Committee as she has not met them yet.
Deputy Minister Mahlalela highlighted that the Department derives its mandate from the Constitution. Tourism is a functional area indicated in the Constitution that operates through all three spheres of government. He emphasised responsible tourism as highlighted in the Tourism Act, 2014 as well as the White Paper 1996. He informed the Committee that the Department is still in the process of reviewing the White Paper since a lot of issues such as the fourth industrial revolution and climate change have only emerged recently and needed to be included in the new White Paper. In addition, the NDP 2030 recognised that the tourism sector is a main driver of employment and plays a critical role in the Economic Reconstruction and Recovery plan.
Deputy Minister Mahlalela indicated that the tourism sector faces many challenges that require cross-sectoral collaboration. Challenges such as skills development, gender and economic inclusion, the tourism’s contribution towards infrastructure and public employment are some of those issues which the sector is grappling with currently. The Department has devised its programmes accordingly and is planning to activate the sector. The Department’s approach is to use the domestic tourism market as the pillar to protect the regional tourist market.
Deputy Minister Mahlalela informed the Committee that despite the President having made an announcement of attracting 21 million tourists to South Africa; the Department has to revise this target because of the setbacks caused by COVID-19.
Deputy Minister Mahlalela informed the Committee that the Department was working with provinces through the District Development Model to expand the Department’s initiatives, programmes and products in order to create more opportunities for small towns, places, townships, and so on. Such a focus is to ensure that tourism development should ensure inclusivity.
Deputy Minister Mahlalela indicated that there are critical barriers in the country that are deterring the development of tourism. He highlighted that some of those barriers cannot be addressed by the Department on its own, but they require collaboration with other governmental departments as well as working with other spheres of government.
For instance, the issue of infrastructural access to tourist products is critical in ensuring that all the tourist places can be accessed. Currently, the bad road infrastructure in certain areas is leading to some products being unavailable to tourists. On this issue, the Department needs to work with provinces and the Department of Public Works and Infrastructure. The Department needs to convey the message that the success of the tourism sector is dependent on the work of road infrastructure as well as highlighting the important role that tourism has in the President’s COVID-19 economic recovery plan.
On other issues such as electricity and water, the Department needs to work with local government at the municipal level to ensure that there are clean water and electricity in tourist areas.
On the issue of safety for tourists, the Department was working with the South African Police Service (SAPS). Mr Mahlalela informed the Committee that the Department had signed an MoU with the SAPS National Commissioner to ensure that there is a safer environment for tourists.
Deputy Minister Mahlalela pointed out that other social factors such as the civil unrest last year badly affected tourism. In those unrest scenarios, protesters often blocked the road which made it very difficult for tourists to access their accommodation or tourist spots.
At last, Deputy Minister Mahlalela mentioned the issue of confronting climate change which will have its economic and social risks. He said that the government must be reasonable in engaging those issues and explore viable options to address those issues.
Department of Tourism APP and proposed budget allocations for 2022/23 financial year
The Department’s officials present in the meeting included the Director-General, Mr Victor Tharage, and the four Deputy Directors-General: Ms Rhulani Ngwenya, Ms Aneme Malan, Ms Shamilla Chettiar and Ms Mmaditonki Setwaba, as well as the Department’s Acting Chief Financial Officer Mr Mohit Maharaj.
The briefing covered the Department’s mandates, its key strategies to achieve inclusive growth, the Department’s key strategic outcomes and focus and its risks, its alignment to government priorities, the Department’s performance output indicators, financial information as well as the implications of the National Treasury’s budget reduction on the Department’s APP over the medium-term.
The Department’s APP programmes consist of the following areas and each programme has further sub-programmes.
Programme 1: Administration
• Strategy and system
• Human resource management and development
• Legal services
• Financial management
Programme 2: Tourism research, policy and international relations
• Research and knowledge management
• Policy planning and strategy
• South African Tourism
• International Relations and Cooperation
Programme 3: Destination development
• Tourism enhancement
• Destination planning and investment coordination
• Working for tourism
Programme 4: Tourism sector support services
• Tourism Human Resource Development
• Enterprise Development and Transformation
• Tourism Visitor Services
• Tourism Incentive Programme
The progress on the implementation of the District Development Model in the tourism sector was provided to the Committee.
Mr Maharaj informed the Committee that the Department received a budget allocation of R2.491 billion in the 2022/23 financial year. The budget allocations for each programme were provided.
It was indicated that the Working for Tourism (WfT) Expanded Public Works Programme (EPWP) budget had been reduced by about R81 million since 2020/21.
The ENE budget allocation in 2020/21 was about R363 million; it was reduced to about R281 million in 2022/23.
The budgets for 2023/24 and 2024/25 are approximately R283 million and R292 million, respectively, over the MTEF period. This budget funds both tourism skills and infrastructure development projects. The decreased budget results in a reduction in the number of work opportunities that the Department can support through the EPWP.
See presentation attached for further information.
After the briefing, the Chairperson invited members to make inputs.
Ms L Makhubela-Mashele (ANC) enquired about the Director-General’s presentation on Programme One in which the department needs to keep up with the current unqualified audit opinion. She noted that in the previous two financial years, the Department had received unqualified audit opinions with repeatedly the same findings. Hence, she wanted to know whether those findings had been addressed.
She sought more information on the contractual agreement between the department and the Development Bank of Southern Africa (DBSA). She noted the Department had briefly mentioned the DBSA and that it was going to be an implementing agency for the Department. But the Committee is not privy to the contractual process, what DBSA does and DBSA’s competency in carrying out those programmes designated by the Department without incurring wasteful and fruitless expenditures. She asked the Department to give an indication as to when the Committee would be given more information about the MoU between the Department and DBSA.
Ms H Winkler (DA) asked the Department to explain the real impact of the 2022/23 budget reduction on its mandate.
Ms Winkler wanted to know how it would be affected by the Treasury note on the decision of the Constitutional Court on preferential procurement.
Given that budget reduction, Ms Winkler wanted to know whether the Department would still be able to implement all the interventions contained in the Economic Recovery Plan.
Ms Winkler sought more details on the collaborative projects such as infrastructure projects which the Department had entered into with other governmental departments to recover the tourism sector.
Ms Winkler wanted the department to explain why it would need another whole year to finalise its tourism policy when there have already been so many delays to conclude this process.
Ms Winkler enquired about the Department’s process for appointing a permanent Chief Financial Officer.
On the flood in KZN, Ms Winkler asked the Department if it had conducted its impact assessment on the tourism sector. If so, she wanted the department to give an indication on when those engagements took place. If not, she wanted an indication of when engagements would take place.
Mr P Moteka (EFF) asked the Department when the department will start taking its internal audit result in a more serious manner. Mr Moteka had heard from the Office of the Auditor-General that this Department often undermines the recommendations from its own Departmental internal audit team.
Mr Tharage indicated that the Department would be ready at any time to come to the Committee and provide a breakdown of the work that DBSA did and details of the contractual arrangements between the Department and DBSA. He believed that this process would assist Members to have a better understanding of the various stages of those various projects.
Mr Tharage assured the Committee that the one matter that came up twice in the AG’s audit findings was the requirement to state the local-level content which the Department had not complied. The Department subsequently implemented consequence management measures as well as included the head of the supply chain to be a signatory to ensure better accountability in the process.
Mr Tharage indicated that another audit finding that was repeatedly flagged by the AG’s Office is the slight contradiction in the two instruments which the Department should be used in the verification of the BEE status of the Department itself.
The Department is expected to submit that verification status within a month after the Department concludes its audit processes and financial statement. The BBBEE Regulation states that departments should not use their internal statements and must use the final audited version. However, when the Department received its audit report from the Auditor-General, the audit is accompanied by a specific letter requesting that the documents are not to be shared until they have been tabled. Hence, complying with the BBBEE regulation to use the final audited version becomes a bit of a challenge. The issue has remained a challenge for the Department in the past two years. The Department has raised the issue with the BBBEE Commission.
Mr Tharage assured the Committee that the issue was not a manmade issue but rather a system-wide issue. He assured the Committee that the department has a robust plan in place for tracking through its weekly meetings with its internal audit committee. Those meetings cover audit concerns to ensure that flagged issues would never repeat again.
In order to verify the identities of those people who want to do business with the state, the Department has to rely on DBSA.
Mr Tharage said that the Department has a good tracking system of those people who are or were employees of the Department. However, the Department does not have a system to verify the identities of those who were or are in the employment of other departments because of the different databases which each governmental department uses.
DBSA has its own website which the department relies on to check the credibility of those individuals who are from outside of the Department of Tourism to see whether they are on Persal or not.
Mr Tharage informed the Committee that currently there is no standardised mechanism to check who has been or formerly was in the employment of government.
Mr Tharage assured Mr Moteka and the Committee that the Department took it to its heart to implement the recommendations made by its own internal audit risk management committee. The Department undertakes those processes in the presence of the AG, the Department’s management, accounting officer and the Minister.
He assured the Committee that the Department would continue to work together with other assurance bodies in strengthening its internal controls.
Mr Tharage said that the Department is to a degree affected by the Constitutional Court’s decision on the preferential procurement regulations. The issue with the Department is that it would have had terms of reference with some independent suppliers, but it could not proceed in some of those cases because the Department has to obtain deviation authorisation from National Treasury.
For instance, the Department had wanted to procure some newspapers to advertise for its vacant positions but it eventually had to settle to advertise them on social media platforms because the advertisement is above R30 000. In the absence of the Treasury’s approval, the Department could not go ahead. The Department also tries to use existing contracts with other departments and public entities to procure services to ensure continuity.
Mr Tharage highlighted the broader fiscally constrained environment in which not only the Department found itself but the country as a whole. Further, there are emerging issues such as the recent flood that will be detrimental to the Department’s effort but the Department only has limited resources. He remarked that the flood will cost the Department a lot of money and that figure is still not available yet.
Mr Tharage informed the Committee that the appointment of the Chief Financial Officer had already taken place including the interview and vetting processes. It is currently at the stage of approval.
Mr Tharage explained why the policy review was such a prolonged lengthy process. He understood Ms Winkler’s concern on that. He indicated that the Department had initially had a document available for Parliament in the 2018/19 financial year. However, that document detailed some proposed amendments to the existing legislation. Had that document gone through the Cabinet process, then Parliament would have received the document already. But the document did not go through that process and a policy review committee was subsequently established to review that document, and other policies and consult with stakeholders.
The process of the policy review committee should have been concluded by September 2020 but they later on requested and were granted an extension till the end of January 2022. That document was forwarded to the Minister at the end of February 2022. Then the Minister still had to deliberate on the document before it is gazetted for public comments. So this whole process involves the cluster process, the Cabinet process and then the public comment process which might be taking another one to two months.
Once that process has been concluded, the Department still has to duly consider all inputs and records them as well as provide justifications as to why some comments or suggestions have not been accepted. Then the whole process with the cluster, Cabinet and the public will begin again. It is this lengthy process that has delayed the Department’s finalisation of the White Paper.
The Chairperson read out Ms P Mpushe’s (ANC) question which she had posted in the chatroom box since she was still on her way to Parliament.
She welcomed and appreciated the presentation. She asked that given the delays on the White paper on the development and promotion of Tourism which were caused by a number of reasons, what plans the Department has to fast track the review process.
In relation to District Development Model (DDM), she asked what plans the Department has to improve the current situation of the spheres of government working in silos. Particularly the case which Members recently had experienced during their oversight visit in Limpopo at Ngombe Lodge whereby the Limpopo MEC and the local government were not even aware of such a tourism project. She wanted to know how the 2022/23 APP was aligned to the DDM in all District Municipalities.
Mr Tharage indicated to Ms Mpushe and the Committee that the Limpopo Ngombe project spans a period of three to four years. It is something that should have been included in the handover report.
He informed the Committee that there would be a meeting with the provincial department on Thursday and he would take the matter up with the colleagues in the province.
He concurred with the member’s view that the issue of coordination of all spheres of government should be discussed as frequently as possible in order to close any potential gaps.
Ms Chettiar referred Member to slides 33 to 35 of the presentation where it discussed the details of the District Development Model. She assured the Committee that the Department had assigned a senior manager to be a champion for a specific district.
Also, the Department’s approach is that it draws up a tourism profile for each district and then prioritises resources to assist the development of tourist investment and tourism infrastructure in order to ensure that those projects are properly integrated into the DDM model. In areas where the Department has done a master plan, the Department wants to make sure that those initiatives will be sustainable in the next twenty-five to thirty years. The Department will also focus on those districts that have high tourist potential to ensure that the Department’s planning can be sustainable in the next 15 to 30 years.
Given the time constraint, the Chairperson suggested deferring the adoption of the draft minutes to the next meeting. The Chairperson also reminded the Committee Secretariat to schedule a session in the Committee’s programme on the DBSA report.
The meeting was adjourned.
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