South African Tourism (SAT) presented a report on its performance in the first quarter of the 2023/24 financial year. It noted that while there was overspending, several targets were not achieved.
The Committee was told that recommendations arising from a risk assessment report had been implemented. Internal controls were being improved to obtain a clean audit report. Targets for producing reports on tourism were not met.
A global marketing campaign was finalised. It would use interesting stories about people and places to deliver a message about South Africa as an exceptional destination. Domestic and global Business-to-Business (B2B) campaign plans were approved.
A total 4 053 tourist establishments were graded against a target of 1 356. This was attributed to the annual tourism grading cycle for individual properties.
Committee Members asked about the timeframe for filling key posts currently occupied by acting officials. They were assured that a new board and permanent officials would be in place by the end of November, 2023. They asked what strategic steps would be taken to address targets not achieved and what measures would be taken to ensure findings by the Auditor-General would be addressed.
They also asked to be provided with details of marketing contracts with the SA Rugby Union and the Springbok captain, Siya Kolisi.
In her opening remarks, the Chairperson stated that she had received a letter from the Minister of Tourism, Ms Patricia de Lille, about suspending an employee of South African Tourism (SAT). She said the report was detailed and asked the Minister to brief the Committee on the matter first.
The Minister said she had sent a request to the board about the suspension and asked the board to provide details to the Committee.
Mt Tim Harris, Chairperson, SAT Board, said there were complaints from a whistleblower about the digital marketing officer. The board decided to start an investigation and sought a legal opinion on the matter. The individual concerned was given an opportunity for representation. The individual was on suspension with salary.
There was a discussion about who should make the presentation to the Committee.
Mr A Matumba (EFF) asked why the acting chief executive officer (CEO) could not make the presentation as the accounting authority.
The Chairperson said the Committee resolved that the acting CEO could not present both the financial and administrative matters. She could not be the acting CEO and the chief financial officer (CFO). There was a separation of powers. An arrangement had been made that she present only the finances and that the chief operating officer (COO) should make the presentation.
The Minister said she was finalising the process of appointing a permanent board by the end of November and the permanent CEO would be appointed by the end of November as well. She stated it was not desirable to have the acting CEO and CFO make the presentation. The matter would be resolved when SAT appeared before the Committee to present a second quarter performance report.
South African Tourism Quarter 1 Report for the 2023/24 financial year
Ms Nomasonto Ndlovu, COO, South African Tourism (SAT), took the Committee through the quarter one performance of the entity, reporting on its five programmes.
Programme 1: Corporate support
The three recommendations arising from the 2022/23 Risk Management Maturity Assessment Report were implemented, including a review of the operational risk registers, linking the key risk indicators to the operational risk registers, and assigning risks to risk owners.
The Quarter 1 milestones in the Corporate Compliance Campaign were implemented, including developing the Operation Clean Audit (OPCA) implementation plan, establishing the project steering committee and the inaugural project steering committee meeting. The objective of OPCA was to ensure the internal control environment was effective, efficient, and conducive to the entity obtaining favourable audit outcomes which could result in improved productivity and a clean audit by March 2026. SAT implemented 26 percent of valid audit recommendations, exceeding the planned target of 25 percent.
One hundred percent of compliant invoices were paid within thirty days from date of receipt.
Initiatives were implemented to promote integrity and ethics in supply chain management (SCM). These included letters to business unit managers confirming budget allocations and related accountability; capability building for procurement committees; and creating awareness across the organisation of the SCM code of conduct.
In terms of employment equity targets, 65 percent of staff were women, against a target of 60 percent. There were women in 44 percent of the senior and top management positions, against a target of 50 percent. There were no people with disabilities, against a target of two percent. Across all occupational levels, 75 percent of staff were Africans, Coloureds, or Indians, against a target of 60 percent. The challenge with regard to women in senior and top management positions was the moratorium that was in place during the quarter and an increase in resignations. Regarding people with disabilities, the challenge was that disclosure was voluntary.
Programme 2: Business enablement
Two of the eight planned Quarter 1 milestones for the Integrated Digital and Analytics Operating Framework were recorded. The challenge was that the performance could not be verified. This was corrected in Quarter 2.
The Departure Survey Fieldwork Report and the Domestic Tourism Survey Fieldwork Report were not produced as planned. Additional training was provided to the business unit to ensure optimal performance in Quarter 2.
The Quarterly Trend Analysis Report planned for the quarter was not published as planned. This was corrected through additional training for the business unit. Twenty-five thought leadership pieces were published, against the target of two, to provide data on the 24 marketing and investment priorities. One Tourism Statistics and Performance Report was produced as planned. The improvement plan based on the 2022/23 South African Tourism Corporate Brand Index was developed.
Programme 3: Leisure tourism marketing
The 2023/24 Global Tourism Brand Campaign Plan (Live Again 2.0) was finalised. The campaign would use interesting stories about exceptional people and places to deliver the message of South Africa as an exceptional destination. Live Again 2.0 was launched at the Africa Travel Indaba on 9 May 2023. Timeous planning and project management led to the achievement of the target.
Two global tourism campaigns were localised in South Africa - the 30 Years of Freedom campaign celebrating the lifetime achievements of Hugh Masekela and the Indaba Brand Experience which showcased South Africa as an exceptional destination for both business and leisure travel.
Two global brand collaborations and partnerships were secured, which included an MOU with the South African Tourism Services Association (SATSA) to strengthen relations between the public and private sectors and a brand ambassador agreement with Siya Kolisi.
Based on the 2023/24 Global Tourism Brand Campaign, annual localised campaign concepts and implementation plans for each hub were developed, except for the Asia and Australasia regions. This region did not achieve its target because of non-compliance with reporting requirements due to capacity constraints.
The annual seasonal campaign and implementation plan for domestic tourism was developed and approved. It sought to showcase a variety of affordable experiences in a clear and accessible way, supported by a personal safety message. The Sho’t Left Travel Week campaign concept was also developed and approved.
Programme 4: Business events
The domestic and global Business-to-Business (B2B) campaign plans were developed and approved. The domestic campaign aimed to create awareness about the bid support programme. Thirty-three bid submissions were achieved as planned. The submissions were for South Africa to host international and regional business events. The global campaign sought to promote the exceptional sectors of South Africa, its role as key player and leader within the knowledge economy and its exceptional infrastructure and hosting capabilities.
One business event, the Tourism Investment Forum Africa, was hosted in Upington. The event attracted 194 delegates and speakers from the African continent and provided 38 job opportunities.
The Quarter 1 Business Events Bidding Impact Report was produced as planned.
The Africa Travel Indaba was successfully hosted from 8 to 11 May 2023. It attracted 8 688 attendees, 1 464 buyers, and saw 55 423 meetings being held. The Post-Show Economic Impact Study briefing for Meetings Africa (MA) 2023 was successfully concluded.
Programme 5: Tourist experience
A total of 4 053 establishments were graded against a target of 1 356. This was attributed to the annual tourism grading cycle for individual properties. The three milestones of the grading model and the Tourism Grading Council of South Africa (TGCSA) Value Proposition Roadmap were achieved for Quarter 1. This included the TGCSA brand campaign launch, commencement of change management for the business model, and the development of the operational model. The achievement of the target was due to adequate planning and implementation. The intention of this work was to broaden the opportunities for the inclusion of emerging tourism products.
A product proposition was developed. It would identify tourism establishments, attractions and experiences to match them to the brand of South Africa as an exceptional tourist destination with a variety of authentic and diverse tourism offerings. A three-year Tourism Value Chain Strategy was developed.
(Tables and graphs were shown to illustrate budget allocation and expenditure per programme and employment equity numbers)
Ms L Makhubela-Mashele (ANC) asked what percentage of the board worked on filling vacancies, seeing that it had to stabilise the entity and more capital was needed to fill vacancies. She asked what the timeframes were for filling the CEO and other vacancies, because there had been a commitment that systems would be in place by the end of November 2023. She asked that the Committee be furnished with a report when the study on Meetings Africa 2023 had been concluded.
She remarked that the nine board meetings that had been held were an indication the SAT board was busy. She asked if this did not mean it was stretched in terms of capacity seeing that it comprised three people and one of them was very busy and never attended meetings. She asked the board chairperson to explain what he meant by the short-term appointment of Ms Nomasonto Ndlovu because the investigation into whistleblower allegations against her had been concluded. She had requested to step down when the allegations surfaced.
The Minister said the appointment of the board would be finalised by 29 November 2023.
Mr Harris said the moratorium on hiring was lifted for several posts like those of the CEO, CFO, CMO, and strategy officer. The recruitment process for the CFO was progressing well. The board had been focusing on resolving the CFO matter, making use of National Treasury guidelines. He added that the board had received a report about the previous CFO.
He pointed out that the delegation from SAT was there to support the Minister. The board and management of SAT were jointly responsible for putting together the presentation, and it was decided it made sense for the CFO to present the report because it dealt with the time she was the acting CEO.
Mr M De Freitas (DA) enquired why spending was above where it should be at 40 percent vs 25 percent.
Ms Nombulelo Guliwe, acting CEO and interim CFO, said that in a normal financial year, the planning for finances was done during the first quarter to determine the budget for the whole year. Sometimes there were contracts that required pre-payments. The pre-payments did have approvals. Overspending on programmes was caused by the current financial situation of the entity.
Mr A Matumba (EFF) asked why the chairperson of the SAT board was undermining the recommendations of Parliament by appointing senior executives without finalising the appointment of a permanent board. The recommendations stated the Minister should expedite the process of appointing a permanent board so that executives of the entity could be appointed.
He said the Committee should be told about the number of meetings held and the attendance. The report should indicate if there were any special meetings, and also show costs spent on the board members. He said it was important to know the spending on marketing the country and the number of foreign visitors coming to South Africa to visit or work so that value for money could be seen. He remarked that issues raised by the Committee were not taken seriously because what happened to Ms Ndlovu should not be repeated. Even though she was performing, she was removed as an acting CEO, but now the whole thing appeared to have been window-dressing.
The Minister stated that figures on marketing South Africa reflected the input from the private sector and what SAT invested. That was why there was one figure. There had been competition between the private sector and SAT in marketing the country. Currently, the Department is working on a process of joint marketing.
On the appointment of senior executives, she said one of the conditions set by the Committee was that executive positions should be filled as soon as possible. That was why the filling of executive positions was started and she was the one who lifted the moratorium on that. She asked whether she could gather more information about issues related to the board meetings and costs and send a report to the Committee. The appointment of a new minister to the Department and the coming in of the new board contributed to the many board meetings. There was assurance that SAT had not spent too much on board affairs.
Ms Guliwe said that marketing investment always started with the work being done in Programme 2. There were also overlaps with the private sector. A return on investment (ROI) analysis was done for every campaign.
Ms S Maneli (ANC) asked how many board meetings were held virtually and how many were held physically. She asked whether the overspending in Quarter 1 was something that was going to happen every year. She sought clarity on why targets were not met. She asked what recruitment was being done to attract the disabled.
The Minister stated that she agreed with the Committee on the matter of employing people with disabilities. The target was only two percent. A strategy needed to be developed and certain posts should lean towards disabled people. She also stated that SAT was presenting on what occurred in Quarter 1. The only concern was overspending. There was a process for internally approving overspending before it took place, and that had been her concern.
Ms Ndlovu said SAT was implementing disability learnerships and conducting gap analysis so that the organisation was receptive to people with disability. When the employment moratorium was fully lifted, recruitment would be intensified. They had approached Disability Info SA to see if they could phrase their advertisements differently.
Ms H Ismail (DA) asked what strategic steps would be taken to address targets not achieved and what kind of internal audit measures would be put in place to meet the targets. She asked what measures would be taken to address the Auditor-General's (AG) findings, because there had been over-expenditure but less performance.
Ms Guliwe said the internal audit committee was responsible for reviewing the budget regularly and coming up with mitigations. The controls were in place.
Ms Ndlovu said mitigating steps were started in all areas identified in Quarter 1. There would be significant improvements in the second quarter. There were new internal processes to improve reporting and provide training and re-training.
Ms P Mpushe (ANC) remarked that SAT continued to report non-achievements in recruiting people with disabilities. She asked how far the entity was with the Best Company to Work for survey and wanted to understand what plans were in place to ensure the targets on the Brand Index were met.
Ms Ndlovu said there was poor planning around the Brand Index. She noted the concerns of the Committee and said they were continuously trying to ensure that meetings were not cancelled.
The Chairperson remarked that overspending in the report did not correlate with what had been achieved. She sought clarity on the 120 percent overspending on human capital. SAT had not been complying with statutory quotas regarding the disabled. There was a lack of clarity on the moratoriums on filling vacancies.
In a previous meeting with the Committee, SAT indicated that 23 board meetings were held but now said there were nine meetings. She had asked for clarification on the 23 board meetings and that report had not been submitted.
What were the reasons for introducing a new programme which had no achievements? She wanted to know the reasons why there were no achievements in programmes 2, 3, 4, and 5.
Lastly, she wanted to understand why SAT was not visible during the Rugby World Cup tournament yet it had signed a contract with Siya Kolisi. SAT had a responsibility to sell the country globally. There was also currently a cricket world tournament.
The Minister said she noted the misalignment of budget and performance. She said she received information from the board about rugby contracts on 12 September 2023 after the Committee requested it on 9 September. The Springbok contracts were started by SAT and that information would be sent to the Committee. One contract was with the SA Rugby Union (SARU) and the second was with Siya Kolisi. She had questioned reference to a bonus clause because such things did not exist within government. An amount of R7.7 million was provided to activate a campaign at the friendly match between South Africa and New Zealand at Twickenham. SA was not allowed to advertise at the actual World Cup events. The executive committee of SAT had a mandate to spend up to R10 million, hence it was broken into instalments. The Minister of Sport, Mr Zizi Kodwa, was not aware of the contract with SARU. She had scheduled a meeting with him to discuss the matter.
Ms Bronwen Auret, Chief Marketing Officer, said there was no partnership between SAT and SARU. The contract with Siya Kolisi would end in June 2024. There had been quite a few restrictions because he was focusing more on the game. But now he would continue with his role and his audience had grown.
Mr Harris said the nine meetings referred to were in Quarter 1. Four meetings were for inductions, two for discussions around the resignation of the CEO and the remainder were about the whistleblower allegations. The previous board conducted the 23 meetings.
Ms Guliwe said that budget optimisation was not achieved. SAT did not meet the targets for Quarter 1 and it was agreed to fast-track the meeting of targets.
She said SAT spent R7.7 million on the rugby campaign on top of R6 million that was contributed. The contracts did not end with the end of the World Cup. Concerning the overspending on human capital management, she stated that each functional head had to identify what needed to be reprioritised to reach the targets.
The Chairperson remarked that there was a difference between visibility and rands and cents.SAT had decided to disengage on visibility during the World Cup. It was summertime, and more people would flock to South Africa after this World Cup. Tourism was meant to contribute immensely to the GDP, but SAT was failing the country.
Ms M Gomba (ANC) remarked that the Rugby World Cup was an opportunity to market South Africa. The spectators and viewers would have learnt more about the country and would want to visit. SAT did not take advantage of the many millions of spectators. She said the acting CEO should better understand where the budget went, and asked if SAT operated on an accrual budget system or a zero-based system.
Ms Guliwe said zero-based budgeting was used and it was aligned to National Treasury regulations.
Mr Matumba asked whether SAT had a team in France to activate its campaign. He asked why SAT was relying on Stats SA for information considering that it was spending a lot of money on research. He remarked that the current board was repeating what the previous board did in the chopping and changing of the CEO. It was doing the same in the appointment of the CFO.
The Minister said Stats SA was the best source for statistics and information. It had the best resources.
She said she and the Director-General of the Department of Tourism would meet with SAT on what it wanted to achieve with the Tracking Information System. She stated that the Department had decided that all acting positions would end at the end of November 2023. She assured the Committee the Department would not be spending money on the AGOA Summit but would still be in the inter-ministerial committee on the summit.
Regarding sports events, she proposed that the policy of SAT needed to be reviewed because there were a number of national teams. She would approach the Minister of Sport about signing an MOU on the issue.
In her closing remarks, the Chairperson said the Minister had committed that the Committee would receive a report on the board matters. The Committee was of the view that the moratorium on filling vacancies should be lifted so that there would be an opportunity to meet the target on people with disabilities. The Minister had committed to meeting SAT on the Information Tracking System, and had committed to engaging the private sector on joint marketing of South Africa. The Minister had further proposed that the policy of SAT had to be reviewed so that the Departments of Sport and Tourism could partner with the national teams.
The Chairperson said the report about SARU would be considered in a closed meeting. The Committee wanted a report on all SIU investigations conducted at SAT. The Committee acknowledged improvements at SAT even though there was no achievement of targets.
The meeting was adjourned.
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