Department of Tourism Quarterly Performance; with Ministry

Meeting report

Department of Tourism 2023/24 Quarter 4 and 2024/25 Quarter 1 performance
Minister Patricia de Lille introduced Mr Thabo Makhubedu to present the performance reports.

Mr Thabo Makhubedu, Director: Office of the Director-General, reported that in Quarter 4 of 2023/24 Programme 1 achieved 75% of targets and the other three programmes achieved 100%. He provided highlights on the activities for Programme 1: Administration; Programme 2: Tourism Research, Policy and International Relations; Programme 3: Destination Development; and Programme 4: Tourism Sector Support Services. The challenges noted for Quarter 4 were under expenditure in certain areas with 4% of the 2023/24 budget unspent with a delay in payments for the National Tourism Careers Expo; recruitment challenges leading to 11.5% vacancy rate in the department.

In Quarter 1 2024/25 Programme 1 achieved 70% and only partially achieved these three targets: 40% expenditure achieved on procurement of goods and services from SMMEs; vacancy rate kept below 6%; women representation at senior management level kept at a minimum of 50%. Programmes 2 and 3 achieved 100% and Programme 4 was 94% as the target for the Community-Based Tourism Enterprise Incubation Programme programme was only partially met. The deliverables were delayed due to notice of breach of agreement for unsatisfactory performance by the service provider so the Service Level Agreement timeframes and deliverables had to be renegotiated.
Corrective measures were presented for all unmet targets.

Discussion
Ms G Mchunu (MK) raised concern over the 4% underexpenditure in Quarter 4. She inquired if an application for the rollover of these funds had been made and how DoT will ensure that the 4% is retained in the department. On the underexpenditure in Quarter 1, what measures DoT is implementing to ensure that the targets are met in the Quarter 2? Lastly, she sought clarity about public allegations against the Director General. She asked the Minister to apprize the Committee on what actions she intends to take about these allegations.

An ANC member asked about the progress on tourism legislation and how far along the drafting process is. She asked for an update on the memoranda of understanding with the Development Bank of Southern Africa (DBSA) and other relevant agencies. She requested a report be provided to the Portfolio Committee on the National Tourism Careers Expo, particularly focusing on job opportunities created through the expo. On Programme 3, she raised concern over the R62.3 million underexpenditure in 2023/24. She questioned how the Committee can advocate for more funding or influence the budget allocation for the Tourism budget vote. She asked how much of the underexpenditure will be available to DoT and if it has gone through the necessary rollover request process with National Treasury.

Ms H Ismail (DA) asked for a full report if safety monitors are adequately allocated across the country. What is the government doing to ensure that these monitors receive proper training? She inquired about the impact of media allegations about DoT staff and what measures have been taken to ensure the well-being of the staff. Does the Minister plan to investigate these allegations or not?

Ms L Tito-Duba (EFF) recalled that in the last meeting, the Minister had promised to speak to the Small Enterprise Finance Agency (SEFA) about the Tourism Equity Fund (TEF) budget allocation. She asked if DoT has received feedback from SEFA. She requested information on DoT's ongoing participation in regional, continental, and global tourism structures. DoT paid an annual fee of R2.75 million to the UN World Tourism Organization and asked how DoT is benefiting from this expenditure.

Ms L Ligaraba (ANC) addressed the underexpenditure by SMMEs in Quarter 1. She asked the reasons for this underexpenditure and for information on the challenges and experiences faced by SMMEs. She sought clarity on DoT's support strategies for improving SMME performance. She inquired about Programme 2 monitoring and evaluation efforts. She requested a briefing on the final report of the Expanded Public Works Programme (EPWP) and sought more details on the department’s efforts. She raised a concern over department failure to achieve its target for filling vacancies, which was reported at 11.6%. She asked for an explanation of the measures to address the high vacancy rate.

Mr R Gouws (DA) noted the underspending in both reports. It was important to ensure a larger budget allocation for DoT given its substantial contributions to the economy. He asked what mechanisms are in place to ensure proper budget spending and asked about the Minister’s plan to increase DoT’s budget share.

 Ms E Linde (DA) questioned why DoT set a 40% target for SMMEs instead of 100%. She asked for an explanation for the reported drop in work opportunities in the quarterly programme, which stated 5 820 work opportunities. She noted that there are a lot of DoT reports she would like to read as there is a lot one can learn from them. She asked if Committee members are entitled to request reports and how they should go about obtaining them.

 Mr S Maeco (ANC) was concerned about the competence of officials managing the tourism sector, citing overspending and insufficient financial reporting. He sought clarity on the perceived contradiction in reports, particularly on the empowerment of SMMEs and the EPWP’s involvement. He proposed that DoT ensure that future reports are well-structured and free of contradictions. He expressed dissatisfaction with the lack of focus and utilization of resources within the tourism sector. He said Committee members must not request reports; they must get the reports. Today’s contradictory quarterly reports lack concrete information and should reflect physical statistics. DoT must provide assistance to Committee members performing oversight when they raise questions about the concerns of their constituents.

[The final questions by a Committee member were inaudible.]

Responses
Mr Makhubedu explained that besides the delayed recruitment to fill vacancies, the 4% underexpenditure of R63 million was largely the unachieved incentives for EPWP performance by DOT. He proposed that DOT should start assembling programmes sooner to ensure quicker execution to receive the EPWP incentive.

Mr Makhubedu suggested that DBSA and DoT come to explain to the Committee about the challenges on the ground. The Expo report will be provided. He explained that the allocation of safety monitors would never be sufficient due to budget constraints. Only 20 monitors could be accommodated, and priorities had to be established. He mentioned that training and stipends are provided to EPWP participants who receive certification upon completion.

Mr Makhubedu clarified that the R2.75 million fee paid to the UN World Tourism Organization includes South Africa benefits by receiving research, statistics and network access. On not meeting the 40% goal for procurement from women and SMMEs, he acknowledged the real challenges in DoT recruitment for SMME market access programs are the dependencies, noting that businesses must apply and meet the requirements. He explained the 5 820 work opportunities is the annual figure and pointed to the quarterly numbers.
Mr Makhubedu said he took the guidance given by Mr Maeco on how to compile reports for the Committee and narrate quarterly performance. He committed to providing detailed reports on incubators, the allocation of safety monitors, and the 2023/24 performance. The delays at municipal level for tourism SMMEs require an intergovernmental interaction to raise awareness and speed up the process.

The Deputy Minister of Tourism, Ms Maggie Sotyu, replied about the allegations against the Director General. She noted that the Minister had assigned her to investigate the matter, starting from documents dating back to 2016. She had a meeting with the former Tourism Minister Kubayi, who provided background information on the case. She had reported to the Minister and she would take it from there.

The Deputy Minister said that the Ministry requires more information on SEFA as the implementing agent of the Tourism Equity Fund for resolution. Likewise, they are investigating the EPWP.

Minister Patricia de Lille thanked the Deputy Minister who has hit the ground running. The strategic planning for the Seventh Administration is based on the GNU agenda and the priorities are focused on economic inclusivity and job creation. DoT has had its own legotla based on those priorities and the Tourism Sector Master Plan to develop its strategic plan for the Seventh Administration.

Minister de Lille noted that the allegations about the Director General were reported to the two previous Ministers. The DGs are directly appointed by the President. The Minister must report such allegations to the President – which she had done. The President decides if the investigation into the allegations is done by the Presidency or whether the President delegates his powers to the Minister. They are awaiting a response from the President. She will not respond on substantive issues of the matter as one must respect the rights of the DG and of the complainants.

Minister de Lille replied about the R1.2billion Tourism Equity Fund approved by Cabinet which the Small Enterprise Finance Agency (SEFA) is implementing. After a lot of frustration and being confronted about many complaints of the slow process by SEFA, she did meet with the Minister of Small Business Development on 15 August. For the first time at the meeting she received a performance report from SEFA and she can share that report with the Committee. There are many breaches in the DoT service level agreement with SEFA. It should provide a quarterly report to DOT which had not happened. The agreement stated that 80% of the funds should go to existing businesses and 20% to new business start-ups and the money to have been committed by end of March 2024. This did not happen instead in this report we found that SEFA had decided to split the budget over three years. One has to expedite transformation outcomes with clear targets. DoT needs to review the performance of SEFA and it is busy with that now.

The Expo is going to be in Limpopo and she will receive a briefing later today on the progress and will provide an update on Expo to the Committee. The requested reports would be made available.
Committee members were asking about securing a bigger share of the national budget. We know the fiscus is not in a good shape and that the departments have to do trade-offs and review their plans. There is strong competition for scarce resources. She advocated zero based budgeting. We have to do more with less. It is possible to look for value for money. There is room for improvement to spend more effectively.

DOT has managed to strengthen its oversight of built environment projects by obtaining two engineers to provide oversight over the implementing agencies such as DBSA. DoT can come with DBSA to report to the Committee about its concerns with those projects.

On the Transformation Council and Transformation Fund, the term of the council came to an end. She has appointed Dr Eddy Khosa as the new chairperson. The new council which is responsible for advising the minister will meet for an assessment of the past five years and move forward based on whether those activities were successful or not.

On the 29 community projects, the Deputy Minister has been assigned to do oversight and DOT will give the Committee a list of the 29 projects, where they are and their status to assist with this. In diversifying tourism, the Minister referenced the South African Township and Village Tourism Association (SATOVITO) and spoke of the success of the expo held at the Cradle of Mankind. They are working together to put more diverse tourist attractions on the map.

Minister de Lille pointed out that in the first quarter of 2024 tourism’s contribution to GDP was more than mining, construction or transport. Tourism is undervalued and under recognised as it does add a lot to our GDP.

On SA Tourism, the Minister said she intends to have a monthly meeting with SAT instead of a ministerial representative merely attending board meetings. They are slowly fixing SAT as they inherited a body that had only acting senior managers and a dysfunctional board. A new board had to be appointed. SAT remains work in progress. She has met with the board chairperson in order to clearly identify and separate the ministry and board roles so that they can work together.

The Minister said that committee members can write to her with any questions they have. She and the DG are looking at the Quarter 1 report to identify remedial actions, by whom and by when. For now all departments are busy with their strategic planning for the Seventh Administration. She noted that in the skills budget review it is important to ensure that those skills are in demand in the sector

The meeting concluded with an agreement to address the identified challenges and to continue monitoring DoT's performance closely. The Chairperson thanked all members for their participation and adjourned the meeting.