Department of Tourism Quarter 1 2023/24 performance; with Deputy Minister

Meeting report

Department of Tourism first quarter report 2023/24

The Chairperson said the Department of Tourism (DT) presentation was a progress report covering some of the things already reported in the Committee. Progress had been recorded in some programmes that were lagging behind.

Mr Fish Mahlalela, Deputy Minister of Tourism, said the report detailed what had been achieved, not achieved, and what would be done to correct matters. During the first quarter, 41 out of 50 (82%) targets had been achieved, while its expenditure was sitting at 31%, which was above the norm due to the amount of transfers done in the first quarter.

Ms Rhulani Ngwenya, Deputy Director-General (DDG): Corporate Management, DT, took the Members through targets partially achieved on programme one. 98% had been achieved on the payment of all compliant invoices paid within 30 days. The shortfall was due to a delay in processing the payment on invoices received by the Department. As a corrective measure, the chief financial officer (CFO) had been reviewing the standard operating procedures (SOPs) and systems of internal control within supply chain management (SCM). Corrective action would be implemented against employees who had contributed towards the non-achievement of targets.

At the end of the 1st quarter, 31.94% procurement spending from women-owned businesses was achieved. The target of 40% was not met due to slow implementation of projects. As a corrective measure, the Department would fast-track the implementation of projects, and prioritise women-owned businesses.

Women's representation at the senior management service (SMS) level was maintained at 47.7%, against a target of 50%. Two female SMS members terminated their services in the second quarter. There were nine vacant SMS positions (five directors and four chief directors), and seven positions were ring-fenced as equity positions to achieve the 50% female representation.

70% of workplace skills plan (WSP) quarter one targets were achieved. Two skills programmes were facilitated, as well as two leadership programmes. Two of the four skills programmes were outstanding. This was due to a poor response by service providers during the procurement processes on the mentorship course -- the SCM procurement process had been concluded, but the dates allocated by the National School of Government (NSG) were outside the second quarter. Corrective measures would include improved planning and the conclusion of procurement for training interventions a quarter in advance.

Ms Anemé Malan, DDG: Tourism Research, Policy and International Relations, briefed the Committee on the highlights of Programme Two. Five monitoring and evaluation reports were developed for the assessment of the state of publicly-owned tourist attractions; evaluation of the departmental incubation approach; evaluation of the Tourism Grading Council of SA (TGCSA) accommodation grading programme; and for the bi-annual monitoring of the performance of the tourism sector. Data collection for the bi-annual monitoring of the performance of the tourism sector had commenced, and a progress report on the data collected was available.

The monitoring of capacity-building programmes was undertaken and a monitoring report was developed. The development of the national tourism statistics plan commenced with the development of the draft terms of reference. Two information and knowledge systems have been implemented. The pilot plans for the tourism skills and employment portal and tourist guide information system were drafted. The deliverables were achieved through various consultations and engagements with stakeholders responsible for the project. System demonstration and testing were done on the systems, which assisted in developing the pilot plans which would be used for the testing and deployment phase of the system before going live.

The quarterly report on the participation of South Africa in the United Nations World Tourism Organisation (UNWTO) structures for the implementation of the programme of work was developed. Regarding "Sharing of Best Practices" workshop, research had been conducted to inform the concept document, including the theme and topics for discussion. Outreach programmes with the diplomatic community were implemented. Stakeholder consultations on the two outreach programmes with the diplomatic community in prioritised countries, to be hosted in China and Kenya respectively, were conducted with internal business units and external stakeholders. The latter would inform the finalisation of the concept documents for the two programmes.

Ms Shamilla Chettiar, DDG: Destination Development, DT, reported that the Department's third programme had achieved 100% of its targets in the first quarter. The work opportunities target for the first quarter had been 642, and the actual achievement was 1 676. There had been no impediments to the work of the branch in the first quarter.

Ms Mmaditonki Setwaba, DDG: Tourism Sector Support Services, DT, said challenges in Programme Four had since been managed. Identification of all tourism incubators across the country through an open call was not achieved. The circulation of advertisements for requests for information had been delayed due to price negotiations, resulting in two procurement processes. As a corrective measure, the advertisement prioritised for the first week of July was placed on 30 June and 1 July.

Sourcing of information from academia on incubators was not achieved. However, a call for information had been completed and an email repository was established. The placement of advertisements for requests for information was delayed due to price negotiations, which resulted in two procurement processes. As a corrective measure, the letters to be sent to academia before the end of July were en route for approval.

The Resource Efficient and Cleaner Production (RECP) training and business support programme was not implemented. The service provider appointment could not be finalised, as the procurement process had been initiated only during the first quarter of 2023/24, rather than in the fourth quarter of 2022/23, as had initially been planned. The appointment and drafting of a service level agreement (SLA) was anticipated to be finalised during the second quarter.

The report on implementing the tourism monitors programme (TMP) had been developed, but the programme was not implemented. The service providers to implement the programme were not appointed due to a revision of the concept, as per an executive authority instruction. The revised concept, advertisement and appointment of the service providers would be finalised during the second quarter.

The procurement of the service provider for the training of 250 small, medium and micro enterprises (SMMEs) had not been finalised. The terms of reference (ToRs) and request for quotation (RFQ) were approved in June 2023. The RFQ process to appoint the service was not concluded, and had to overlap into the second quarter. It was anticipated the process of procuring the service provider would be concluded during the second quarter.

Ms Malemane Maponya, Chief Financial Officer (CFO), DT, reported that Programme Two underspending was largely due to reduced transfer payments to SA Tourism. In addition to this, the second-quarter funding tranche had not been transferred to SAT. The transfer of funds to SAT had been suspended due to instructions from the Portfolio Committee that no payment be made to the entity. On 5 September, the Minister reported to the Committee on the progress made in meeting the three conditions placed by the Committee.

Underspending on Programme Three had been mainly due to slow spending within the Expanded Public Works Programme (EPWP). Catch-up plans were being put in place for individual infrastructure projects that were behind schedule. Project delivery was being closely monitored to ensure that any impediments to delivery were removed.

Lastly, underspending on Programme Four was mainly due to slow spending within the tourism incentive programme. The Department would capitalise on the Tourism Equity Fund in accordance with the memorandum of agreement signed with the Small Enterprise Finance Agency (Sefa). The memorandum of understanding (MOU) with the SAT on the Tourism Grading Support Programme had expired, and once a new one was signed, funds would be transferred.
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(Tables and graphs were shown to illustrate budget allocations and expenditure, and human resource information)

Discussion

Ms H Ismail (DA) asked what plan of action would be undertaken to ensure the 18% underperformance was going to be achieved; and wanted to know how incomplete Development Bank of South Africa (DBSA) projects were going to affect the Department, if there were any reasons for non-completion of projects, and how they would be corrected going forward. What was going to be done to correct findings in the Department? How was it going to address the matter of vacancies? Why was it overspending on compensation of employees?

Ms Ngwenya responded that they had received the circular from the Department of Public Service and Administration (DPSA) for concurrence to make appointments. Submissions had been made to the Minister about some of the 50 vacancies. Once concurrence had been received, the Department would continue to conclude processes that had been started, like the placing of advertisements for the filling of vacancies.

Ms Chettiar explained the non-completion of infrastructure projects had been a historical process, but the Department was doing well in terms of managing them. It had been noted that sometimes matters of tax certificates were not compliant at the time of appointment, and there had been issues of scoring on the part of individuals. All the Auditor-General (AG) findings related to matters of compliance had been discussed with the Development Bank of Southern Africa (DBSA) to ensure processes were being followed. She added that there were two ways of monitoring the DBSA. The project team met every two weeks to discuss the projects in detail, and then the steering committee represented by the DG and some officials, plus the person represented by the chief executive officer (CEO) of the DBSA, met quarterly to unblock any blockages. She said bad weather conditions and community facilitation have caused setbacks. Of the 11 projects, four have not been completed.

Deputy Minister Mahlalela explained the 2% under-budgeting on the compensation of employees (CoE) represented a projection. The CFO had indicated it was a result of many factors, like resignations and severance packages. The DBSA had turned things around, and many factors were slowing down the completion of the projects. For example, there had been no breakthrough in the Sangoni Project due to community in-fighting. Sometimes, the contractors would display capacity, and, along the way, fail to pay workers and sub-contractors, and then the project would stop. The Department had done more monitoring of the DBSA projects.

Ms L Makhubela-Mashele (ANC) commended the work of the DBSA, because it had concluded projects the Department could not complete. She wanted to understand what systems had been put in place to avoid a recurrence of the findings of the AG concerning the DBSA, because the AG had found that it was not following Public Finance Management Act (PFMA) processes in hiring contractors. She asked the Department to assure the Committee that it was not building "white elephants," because it appeared there was no proper plan in the running of projects, and the Committee recommended the upskilling of the recipients of the contracts. She cited the case of the Ngobe Lodge in Limpopo, where the community was contemplating hiring out the facility to some companies, because it did not have the skills and capacity to run the project.

Ms Chettiar replied that the Department would provide post-construction project support. It was in the process of finalising the details, and was looking at the model that could be used. The plan had been to provide a post-construction support package that would look at governance elements, business development and the human resources (HR) support function, upskilling, etc, to ensure the infrastructure did not remain a white elephant.

Ms S Maneli (ANC) wanted to know why offers to service providers were withdrawn for not having one module, and asked if they had been informed of the requirements before the submissions. She asked when the MoU with SAT on tourism support would be signed, because there had been an under-expenditure on the tourism incentive programme in Programme Four.

Ms Setwaba said the service provider concerned did not have the relevant core module required for occupational health and safety. There had been a gap between evaluation and specifications, but the matter was being dealt with.

Ms M Gomba (ANC) commended the Department for its achievements in the work opportunities programme. She wanted to know if there were systems in place to monitor the employment or placing patterns to ensure people who were employed were South Africans, because foreign nationals dominated the industry. She enquired why, in Programme Four, there were always failures to appoint service providers because there were targets that had not been achieved, and this was not the first time the Committee had heard about this.

Ms Setwaba responded that the Department was busy trying to catch up on unmet targets. Regarding incubators, there had been an open call for information. Responses had been received from different institutions, and these were being analysed. Service providers had been appointed to provide training to 250 SMMEs. She admitted there had been delays in the tourism monitors' programme, but during the first quarter, the Department had conducted stakeholder engagements with provinces and the private sector to take the monitors to identified hotspots. The South African Police Service (SAPS) has also been approached to provide some kind of training to the monitors. Challenges had been around irregularities in the contracts.

Ms Chettiar said the EPWP jobs were open to only South Africans. Timesheets and copies of the participants' identity documents (IDs) were submitted.

Deputy Minister Mahlalela added that the Department of Labour was in the process of drawing up a policy on the number of migrant workers to be employed. He commented that there was a shortage of skills in tourism. A programme had been put in place to train locals instead of foreigners. For instance, some vacancies had been advertised, and 4 000 applications were received, but none came from South Africans.

The Chairperson enquired why the Department underspent on the EPWP, because this was where the communities mostly needed it. She wanted to establish if there was a system in place to spot the fine print in identity documents, because, in some, it was written, “permanent citizen of SA,” while others stated “non-SA citizen.” Did the DT have prescribed processes that had to be followed by the DBSA so that the Department did not have findings on projects done by the DBSA? She wanted to know why the Department was not strong enough when conducting oversight on its entity, and wanted to find out if there were plans to achieve a clean audit.

Ms Chettiar explained that the DBSA was an entity of National Treasury in the department of finance. The DT had always asked DBSA for assurance concerning the procurement processes it was following, and had given it leeway to follow its own procurement processes. The DBSA had a funding facility that had been assisting small enterprises that were struggling with cash flows. The DBSA was penalising contractors for late deliveries, but also provided assistance in guiding the contractors to remedy the situation. The Department was not involved in the procurement processes of the DBSA, and did not sit in on its bidding processes. The DBSA would always indicate in its letters to the Department that all procurement processes had been followed, but going forward, the Department had decided it would double-check the information.

Pertaining to a clean audit, she said the Department was following up on all the audit action plans every week to avoid a recurrence of the AG's findings. Concerning the EPWP underspending, she explained that two things were related to the tourism monitors programme -- the implementation had not started. There were many participants, and the Department was behind schedule for work on the infrastructure.

Deputy Minister Mahlalela pointed out there might be a need to make a presentation to the Committee on sustainability to indicate what the Department was planning to do, so that projects could be able to sustain themselves.

Ms Ngwenya said the challenge in overseeing the SAT had been because the Department was busy developing the entity's oversight framework, and developments within the SAT had led to gaps. The focus had always been on financial oversight, but now the focus was going to shift. Once the framework was finalised, things would change.

Deputy Minister Mahlalela added that there had been calls for a person representing the Department to be on the SAT board to report back to the Department and take the mandate of the Department to the SAT board. However, it appeared the Department did not want that representative to have anything to do with the Department, and to stay with the SAT.

Ms Ismail wanted to establish if contractors that claimed to have capacity, but did not, were red-flagged so that they did not do work in other provinces.

Ms Makhubela-Mashele suggested the Department should furnish the Committee with details of the after-care for all the individual projects so that the Committee could make its own assessments and inputs, to avoid having white elephants.

Ms Chettiar indicated the Department would be able to provide detailed plans to the Committee when they were about to be finalised, closer to the completion of the projects. However, it could provide details about the current status of the projects and where they were leading to.

In her conclusion, the Chairperson said there was a commitment from the Department to fill all the vacancies to meet employment equity targets. She hoped that the entity oversight framework the Department was developing would be shared with the Committee, to assist the DG. The Department needed to make improvements and put systems in place for the monitoring of DBSA's procurement processes. Lastly, she indicated that the weekly monitoring of audit action plans was a system that would lead to a clean audit.

The meeting was adjourned.