Department of Tourism 2022/23 Annual Report & Q1 & 2 2023/24 Performance; with Deputy Minister

Meeting report

Deputy Minister's opening remarks

Mr Fish Mahlalela, Deputy Minister of Tourism, highlighted significant aspects of the Department's performance. There had been an improvement in overall performance, with a commendable 96% delivery rate on set objectives, and an overall performance score of 80%. However, he acknowledged challenges, including project failures, indicating that certain initiatives faced difficulties or had been unsuccessful.

In addition to the performance update, the Deputy Minister addressed the Department's audit outcomes. The Department had received a qualified audit, suggesting that while progress had been made, areas still needed attention to meet stringent audit standards. An interesting point emerged on an issue created by an external agent. This raised questions about the complexities or challenges introduced by external entities or intermediaries in the Department's operations.

Department of Tourism Annual Report 2022/23

Mr Victor Tharange, Director-General (DG), Department of Tourism (DT), presented the Department's annual report. In Programme 1, he emphasised the improved overall performance at 80%, with a 96% delivery rate on objectives.

Ms Anemé  Malan, Deputy Director-General (DDG), Tourism Research, Policy and International Relations) provided insights into Programme 2, highlighting Cabinet's approval to gazette the Green Paper for public comment.

Ms Shamilla Chettiar, DDG: Destination Development, focused on Programme 3, detailing challenges in project implementation, especially the tourism monitors' programme.

Ms Mmaditonki Setwaba, DDG: Sector Support Services, addressed Programme 4, discussing safety campaigns, youth training, and challenges with fund transfers to the South African Tourism entity. The presentations touched on various aspects, including budget allocations, project failures, and the need for collaboration with the private sector for effective marketing.

See attached for the full presentation.

First and Second Quarter Performance Report for 2023/23: Department of Tourism

In the first quarter, the Department achieved 82% of its targets and in the second, achieved 78%.

See attached for detailed performance information per programme per quarter.

Discussion

Mr M Dangor (ANC, Gauteng) said that, based on the information presented in slides four and six, the reports for both quarters indicated the need for intervention in the total sector support services programme, where 21% and 25% of deliverables were not achieved, respectively. He asked about the challenges facing the programme, and sought information on the planned interventions.

The tourism programme had not reached the goal for the number of domestic tourism awareness programmes. Mr Dangor asked about the next steps and how they planned to resolve this issue.

He commented that receiving an unqualified audit report in the AG's report had been good. However, the Department had to clarify why there was non-compliance with applicable legislation, which was a significant concern. He asked if any consequences or management actions were planned to address this issue specifically.

He asked about the capacity-building programmes, specifically training young chefs. He asked for further information on the provincial distribution of these training programmes, emphasising that they should not focus only on provinces with larger populations.

He referred to an issue about the usual focus on compliance during audits, and said there was a need to examine the outcomes and their effectiveness. He wanted to know how tourism has improved over time, including where and what kind of tourists were attracted. He questioned whether the focus was solely on attracting backpackers, and asked about the tourism yield from the targeted countries.

Ms S Boshoff (DA, Mpumalanga) commended the Department for achieving a 40% spend on women-owned businesses in the annual report. However, she expressed concern that this percentage had remained stagnant for quite some time. She highlighted the significant role of women, especially in rural areas, where they were often involved in small and medium enterprises (SMEs) and income-generating tourism projects. She asked the DT whether they envisioned improving the percentage from 40%, to 42% or 45%, for example.

She stressed the importance of reviewing the Green Paper on the development and promotion of tourism, particularly in light of the significant changes in the dynamics of tourism, especially after the Covid pandemic. She understood that the Cabinet cluster process had not started because of the socio-economic impact assessment system (SEIAS), and requested information on this matter, as there was a need for the Paper to be reviewed so that a policy document could be developed.

Regarding the destination enhancement programme, she asked for feedback on the Metsi Matso Lodge project in the Free State. She also mentioned the Vredefort Dome project, noting that it was discussed about a year ago, and she expressed the need for updated information. She mentioned that a family member had visited the Vredefort Dome and had not been very impressed, and requested more details on the current status.

She asked for feedback on the Dinosaur Park and the Interpretation Park Centre in the Free State, expressing concern about a previous lack of activity in that area.  

She said the tourism monitors programme target for Limpopo was not achieved due to the non-finalisation of the service provider. She asked about any consequence management in place for this situation, emphasising that while it may not directly impact the Department, it would have impacts on the people of Limpopo if the provincial Department did not fulfil its responsibilities.

She raised questions about the safety campaign mentioned on Slide 38, expressing concern about why not all provinces were involved in it. She asked why some provinces were not included in the safety campaign, and the reasons for the drop-outs.

Ms Boshoff asked about the follow-up procedures after training individuals, especially young people, as she assumed that not all of them could be placed in jobs. What measures were in place to help trained youths who were not successfully placed in employment?

Referring to the work opportunities created, she acknowledged the commendable cumulative total, but sought clarification as to why the Department was able to secure only 475 work opportunities in the second quarter.

In the tourism monitors programme, she noted that a service provider was not appointed. She emphasised the importance of promptly addressing this to enhance the country's image for potential tourists, especially in light of safety issues that had emerged in the past.

She said the transfer to the Tourism Business Council (TBC) was lower than projected, and the second transfer had not occurred. Recent news about South African Tourism (SAT) suggested that the SAT should report to the Committee to provide firsthand information on the current situation.

Mr M Mmoiemang (ANC, Northern Cape) said there was a need for the Department to focus not only on the issues previously raised, but also to promote rural tourism. The focus should extend to targeted groups, such as young people and women's entities. He sought clarity on whether there had been any change within the context of the district development model (DDM), expressing a desire to move beyond the current emphasis on Gauteng and the Western Cape to change the overall face of tourism.

Mr Mmoiemang asked about the delivery programme, focusing particularly on the need for improvement. The recorded cases of wasteful expenditure were associated with relations, amendments, or no-shows, and he wanted to know whether there was any consequence management in place for these cases. He acknowledged the positive aspect that there was no authorised expenditure in 2020, although fruitless and wasteful expenditure had been recorded during that period.

He outlined the importance of understanding any movements or developments related to programmes supporting expenditure. He raised questions about the latest updates in this regard, particularly about unexpected expenditure due to instructions from Parliament. He sought insights into what was presented and whether there were proactive measures or updates from the Leader of Government Business.

He was interested in any decisions or improvements related to the composition of the SAT board, as he wanted to assess whether the situation was getting under control.

The Chairperson sought more details on why the Portfolio Committee had decided to take the specific action of stopping or suspending the allocation or transfer of funds to South African Tourism. He wanted to inquire specifically about the decision-making process, considering that Parliament approved the budgets of both the Department and the entities, not just one House.

He sought clarification on the issue of not obtaining a clean audit, specifically mentioning the implementing agents, such as the Development Bank of Southern Africa (DBSA). He expressed surprise that non-compliance with relevant legislation was attributed to implementing agents, and asked about potential violations of other legislation by these agents.

He used the example of employment equity as a possible area of concern. How would the Department be aware if the DBSA-appointed service provider did not comply with tax regulations? The aim was to gain insight into how to avoid similar issues in the future.

The Chairperson requested a breakdown of the number of work opportunities created through the 'Working for Tourism' programme. He wanted to understand the provinces' distribution of work opportunities, considering the overachievement of the target.

He also extended this request to Programme Four, seeking a breakdown of the numbers related to retrenched and unemployed individuals, particularly by province. He sought more information on the breakdown of sectors, such as food and beverages. He requested details on sub-categories like professional cookery, food safety quality, and service training in hospitality.

DT's response

Mr Tharange provided information on the initial transfer of just under R600 million to SAT before finalising certain processes. He said additional transfers were planned for SAT to carry out its business. However, conditions had later been imposed on the transfers, originating from the National Assembly (NA), not the National Council of Provinces (NCOP). These conditions included the appointment of the board and executives and a request to adjust the target of 21 million tourists by 2030, which the President initially set. Mr Tharange noted that the conditions had been communicated in a response from the Minister to the Speaker of Parliament. To the best of his knowledge, the board was not yet appointed, but the Minister had indicated that it would be done in November. There was a process underway for the appointment of executives, although he did not have specific details, as the board managed it. There had been a revision to the target, and although 21 million remained a stretch target, realistically, around 15 million was considered a feasible target for 2030. He was uncertain if there had been a response to the Minister's communication to the Speaker.

Adv Shamara Ally, Procedural Officer, NCOP, clarified the roles and responsibilities related to the budget process. She explained that each committee considered portfolios within its domain. While the tourism portfolio was under consideration by the current committee, the final allocations fell within the purview of the Select Committees on Appropriations and Finance. Consultation between the Portfolio Committee and the Select Committee would have occurred to make decisions with serious implications.

The Select Committee could make recommendations, but beyond that, there might be limitations in their ability to take substantial actions outside their domain. She suggested that individuals, including the Chairperson, could write to the Select Committee on Appropriations. However, she expressed uncertainty about the effectiveness of such action at the current juncture.

The Chairperson clarified that the budget had already been approved in the House. However, there was confusion about the Portfolio Committee on Tourism making decisions independently about a budget that both Houses had approved. He expressed the need for clarification and acknowledged that raising the matter with the Select Committee on Appropriations could be a possible course of action.

Adv Ally clarified that the budget was scheduled to be passed by the NCOP on 8 December, so there was still time to provide input and engage with the Chair of the Select Committee on Appropriations. A distinction was made between the report on the annual performance plan (APP) that the House had adopted, and the pending budget approval process in the NCOP.

The Chairperson clarified that the matter in question pertained to the APP that had already been adopted around June. The concern was that changes were being made to it independently, without consulting the other committee specifically dealing with tourism. This raised issues of amendments being made without proper consultation and coordination between relevant committees.

Adv Ally reiterated that the Select Committee on Appropriations would typically make any adjustments to the budget during the plenary session scheduled for 8 December. She emphasised that there was still time to navigate the situation and, if necessary, to engage in consultations with the Committee in the NA. However, she clarified that the bill would not be passed unless the NCOP considered it on the specified date.

Deputy Minister Mahlalela expressed concern about the decision taken in June by the Portfolio Committee on Tourism, which had placed conditions on the transfer of money. He said decisions should be made collectively by both Houses. He argued that a decision by one committee alone, without consulting the select committee, lacked legal standing and could not supersede the decision of the NCOP.

He emphasised that decisions should be reached through proper processes, including consultation, discussion, and mediation between the portfolio and select committees if necessary. He criticised the perception that decisions made by the portfolio committee or the NA should override those of the NCOP. He also pointed out that the Speaker did not follow proper processes by writing to the Department based on the Portfolio Committee's report, rather than a parliamentary report representing both Houses.

The Chairperson said the matter would be followed up with the management committee and Adv Ally for further advice. He acknowledged that the issue in question was not related to the current budget adjustment processes, but rather to events that took place while considering APPs and budgets for the DT and its entities. He intended to discuss and pursue the matter with Adv Ally outside of the current platform.

Mr Tharange addressed the issue of wasteful expenditure, and pointed out the significant progress in consequence management. A considerable amount of money from finalised investigations had been recovered. In cases where recovery was not possible due to justified reasons, such as valid proof of inability to travel, limited action could be taken. However, where responsibility and delinquency were evident, money had been successfully recovered through deductions from the individuals' salary.

Moving on to the broader issues raised by Mr Dangor about the state of tourism, Mr Tharange mentioned positive developments. He noted double-digit growth, and, in some instances, triple-digit growth in tourism. There were substantial increases in domestic tourism, including both overall trips and holiday trips. Revenue from domestic tourism has also seen significant growth. While improvements were acknowledged, he suggested that more could be done to enhance revenue from specific markets.

He expressed optimism about the future, indicating that certain markets were already showing signs of recovery, with the second quarter of the current period surpassing the performance of the same period in 2019. He remained hopeful that tourism could continue on a positive trajectory into 2024, highlighting promising indicators for the industry's recovery.

Mr Tharange addressed the issue related to the Development Bank of Southern Africa (DBSA), and explained that it pertained to supply chain-related matters. When government agencies were used for implementation, they were expected to adhere to supply chain management (SCM) rules. To mitigate potential issues, they had communicated with the DBSA, emphasising the need for assurance that proper controls were in place to prevent such incidents in the future. The DBSA had committed in writing to review each file thoroughly. This included ensuring that all documents were in order during the bidding process and confirming the correctness of all aspects, including tax matters, at the point of appointment. The commitment also extended to providing assurance to the Department that a comprehensive review had taken place before presenting any files to them, confirming that everything was in order.

Mr Tharange said there had been an improvement in procurement from women-owned businesses, noting that the second quarter report already showed a positive trend at 42.7%. He expressed the hope that this improvement would continue throughout the financial year.

The DT would provide the requested information on the breakdown per province and respective programmes targeting specific beneficiaries.

Ms Malan provided an update on the review of the White Paper and the development of the Green Paper. She confirmed that after the previous financial year, the Department had received Cabinet's approval to publish the Green Paper for public comment. The public comment period lasted for two months, ending at the end of October. Her team had been analysing the inputs received, and as of the last update, there had been over 3 000 inputs. They were now at the stage of analysing the inputs and providing responses. The process involved considering the inputs for inclusion in the final draft of the Green Paper, which would be submitted for approval after ministerial consideration.

Ms Chettiar discussed challenges in various processes, noting that some could not be concluded due to irregularities. In some cases, decisions on appointments were not made because bidders did not meet specifications, leading to the need to restart the process. Specifically, the tourism monitors programme had had to undergo procurement processes more than twice.

Dedicated committees have been established to address these challenges to streamline procurement processes. However, some issues, such as irregularities and bidders not meeting specifications, remained outside of their control.

Ms Chettiar also provided insights into the domestic tourism awareness campaigns. There were no planned campaigns in the first quarter, but domestic tourism awareness was incorporated into the planning process, focusing particularly on the upcoming summer campaign. In the second quarter, activities were launched on World Tourism Day to promote domestic tourism, aligning with the planned capacity building and provincial spread initiatives.

Ms Boshoff asked about consequence management on the implementation issues involved in the tourism monitor programme. Investigations were ongoing for instances where targets were not met, particularly in areas facing challenges in the procurement process. The investigations aimed to determine the root causes and assess if any foul play was involved in managing the processes.

On safety campaigns, they followed a rotation structure, planning four campaigns per financial year and aiming to cover provinces not visited in the next year.

She said there were various reasons why youths dropped out, such as pursuing better opportunities, joining other employment programmes, absorption by host employers, pursuing further studies, or disciplinary reasons. The Department engaged with the private sector to prioritise trained youths for job placements.

In response to whether there were follow-ups with trained youth not yet placed in permanent jobs, she said the Department collaborates with the private sector to prioritise their placement. The training programmes aimed to expose youth to opportunities and careers in tourism.

To address youth unemployment, the Department was working with an accelerator and non-profit organisation (NPO) to recruit from the Presidential Youth Employment Intervention (PYEI) database. The goal was to encourage trained individuals to register on the database and facilitate recruitment efforts, ensuring that trained individuals did not remain unemployed.

Deputy Minister Mahlalela emphasised that the funding for the marketing of South Africa by the Tourism Business Council of South Africa (TBCSA) through Trevor Noah was 100% private funding, and no government money was involved. However, TBCSA, besides executing its own initiatives, also funds SAT through the Tourism Levy.

He stressed that the collaborative efforts of government and the private sector were essential to achieve the long-term targets of the tourism sector. The sector, recognising the challenges posed by Covid-19, had adjusted its target from 21 million to 15 million by 2030/2035. The private sector, including TBCSA, played a crucial role in contributing to the marketing of South Africa.

It was important to invest in marketing to compete globally and attract tourists to South Africa. This investment was necessary to effectively communicate the reasons why people should visit South Africa, especially when facing competition from other countries.

He provided an example to illustrate the importance of marketing efforts, citing the case of Rwanda, which had been prominently promoting its tourism with slogans like "Visit Rwanda." The Deputy Minister emphasised that countries globally were engaged in aggressive marketing strategies to attract tourists, and South Africa needed to similarly invest in marketing initiatives to remain competitive.

Deputy Minister Mahlalalela also mentioned the potential of tourism to address unemployment, poverty, and other socio-economic challenges. By working collaboratively, both the public and private sectors could contribute to putting South Africa on the map, boosting the tourism sector, and creating opportunities for the country's residents.

Closing remarks

The Chairperson acknowledged the importance of clarifying certain matters, especially considering recent discussions in the media. Referring to the CEO of the Tourism Business Council of South Africa's explanation on a TV channel, he highlighted the need to use platforms such as radio shows with significant listenership, to clarify and provide accurate information to the public.

The meeting was adjourned.