Tourism Industry Transformation; Agreement establishing Africa Institute for Environmentally Sound Management of Hazardous & Other Waste

Meeting report

Briefing by Tourism Empowerment Council of South Africa on Transformation of Tourism Industry
Mr Tami Sokutu, the Chairperson for the Tourism Empowerment Council of South Africa (TECSA) informed Members that Tourism was one of the fastest growing sectors in the country, yet transformation of tourism was not seen as a priority. It was for this reason that the industry required government intervention.

TECSA was mandated to facilitate communication and popularisation of the Tourism Charter, to provide interpretation and guidance with respect to the Charter, to support the industry and to monitor implementation of the Charter. The Council’s mandate also facilitated the implementation of programmes to fast track Broad-Based Black Economic Empowerment (BBBEE) in the sector to ensure a favourable environment in which Black Economic Empowerment (BEE) could flourish.

TECSAs goal was to encourage the private sector to achieve Tourism BEE Charter targets and to ensure that beneficiaries take advantage of an enabling environment brought about by the Tourism BEE Charter. Mr Sokutu indicated that there was growth in the number of empowered tourism businesses and in the number of black people benefiting from tourism.

Ms Beulah Mosupye, the Acting CEO for TECSA, stated that the Aggregated Tourism BEE Scorecard looked at ownership, strategic representation, employment equity, skills development, preferential procurement, enterprise development and social development. Major BBBEE deals involved the Peermont/MIC buyout, the City Lodge, Tourvest, Tsogo Sun and the Southern Sun.

Challenges that were experienced were the cost of verification agencies, access to finance by black entrepreneurs, the inability of black Small, Medium and Micro Enterprises (SMMEs) to take advantage of preferential procurement information and the skills shortage. Other challenges were finding BEE and senior executive partners and the lack of information to quantify the full impact of affirmative procurement.

One of the solutions to the challenges would be to focus on tourism codes. The gazetting of the industry code of good practice would be a catalyst toward compliance. Government intervention would be another solution. TESCA hoped that government intervention would help to provide incentives for black businesses to invest in the industry. TESCA would also work closely with the private sector to ensure annual reporting on the BEE status. They would actively seek empowered suppliers and engage and facilitate partnership with beneficiaries on skills development and enterprise development. TESCA would assist beneficiaries to actively market themselves as business partners and they would engage with the private sector on employment opportunities. TESCA was also in the process of setting up a Matchmaking database, a Black Talent Database and Enterprise Development Case Studies.

In terms of Funding and Advisory Research, the objective was to assess and report on the financial resources and advisory options available to tourism related enterprises to support the implementation of the Tourism BEE Charter. A major gap that was identified was the lack of a consistent and well-communicated definition of the industry.

Key barriers to funding services included early negative cash flows and the lack of transparent approval criteria. Advisory services challenges involved assisting entrepreneurs to meet the criteria from funders that guaranteed automatic approval of applications and assisting in keeping expectations of tourism businesses moderate to avoid over-excitement with the industry.

TECSA recommended that a TECSA task team be established that focused specifically on funding, advisory services and incentives. They also recommended that the Tourism Industry be properly defined for funding purposes and that a commitment to certain tourism general and tourism specific BEE funding products be created. TECSAs role would be to lobby the government for grants and loans and to improve the Financial Services Charter.  

Discussion
Mr Cachalia asked if there was an ongoing evaluation of people in disadvantaged communities and if communities were engaged with to make them aware of their potential in the tourism industry.

Mr Sokutu stated that they worked very closely with the Tourism Enterprise Partnership (TEP) to ensure that they focused on rural communities and found small businesses with the potential for growth. The TEP has found small business and assisted them with marketing. He added that in order for rural areas to benefit, they had to attract tourists. In order for tourists to be attracted to rural communities, the Department had to profile rural areas. 

Mr Morgan addressed the BEE deals. He wanted to know how satisfied the Department was that the BEE component of the deals was broad-based. He stated that he would not be impressed with the BEE deals if there were not a large amount of beneficiaries. He asked if the Department could talk Members through the barriers with regard to skills. The World Economics Forums Tourism Competitiveness report said that two major barriers to the growth of tourism in South Africa were safety and security, and the lack of skills. The reality was that tourism was a competitive environment, training was an issue in the industry, immigration was a problem and the health of the South African people posed a problem.

Ms Sindiswa Nhlumayo, Deputy Director-General for Tourism in the Department, admitted that most of the BEE deals were very narrowly based. They mainly focused on buying equity.

Mr Sokutu stated that there were one or two deals that were broad-based. He did not have the specifics of the deals at the meeting but he would forward it to Members.

Ms Nhlumayo stated that very little had been done in respect of training and ensuring that there was a tourist guide centre that was sustainable.

In terms of skills, competitiveness was defined as how well a service or good was delivered. South Africa had a good product, however, delivery of the product was a problem. The Department was focused on encouraging the broader South African public to see tourism as a career option. They were also looking at addressing challenges experienced in the industry so that more people would be attracted to the industry. The Department would perfect the basics and address the shortage of skills in the industry.

Mr A Mokoena (ANC) stated that he did was trying to conceptualise the Department’s organogram. He asked for clarity on where TESCA and South African Tourism fit in to the Department.

Ms Nhlumayo stated that there was a tourism branch in the Department, under which South African Tourism, Tourism Grading Council of South Africa, TECSA and the Tourism Enterprise Partnership fell. All four organisations had a different mandate, however, they all worked together to make South Africa a competitive tourism sector. TECSA was positioned as an advisory board to the Minister on BEE related matters. TECSA was not a separate entity; they were a business unit with South African Tourism.

Mr Mokoena commented that TECSA and the Tourism Enterprise Partnership seemed to be very similar. There was no need to have both organisations, it would be better to combine the two so that they were not separate entities.

Ms Nhlumayo answered that TECSA had a limited life span and its role was to monitor how the industry was implementing transformation. The Tourism Enterprise Partnership was about developing entrepreneurs. The mandates were not the same and both organisations were needed.

Mr Mokoena stated that for some reason, the BEE Tourism Conference had escaped the attention of the Committee. He said that Members would have liked to attend the conference. He suggested that an audit be done to see how many BEE people were assisted in the past and how many of them had sustained their businesses. He added that the Committee should hold an indaba, a strategy workshop on the empowerment issue.

Mr Sokutu agreed that the Department needed to specifically invite the Committee to the conferences. An invitation was sent to the Committee, but the Department had not received a response.

The Chair stated that the Committee had not received an invitation.

Mr Sokutu stated that they would ensure that the Committee received the invitations in the future. He added that people that were assisted with the BEE deals who were successful were invited to speak at the conference and share their experiences. 

Ms J Chalmers (ANC) commented that after the presentation, she was left with the feeling that there was a huge gap between the small to medium businesses and the large businesses that controlled most of the tourism industry. She asked what incentives the Department offered the large enterprises to get them to help the smaller ones. She also wanted to know how the smaller businesses could access the advisory units.

Ms Nhlumayo stated that it was the smaller players in the industry that made South Africa different from other destinations. The smaller players gave tourists the intimate experience of what South Africa was actually about. She admitted that the country had not really shown much of its diversity. It was a challenge to get all of the players in the industry to work together. If the country profiled smaller players in rural areas then they would play a bigger role in tourism.  

Mr Sokutu added that there were instances in the industry where large businesses incorporated smaller businesses in to their services.

Mr L Khoarai (ANC) stated that it seemed as if rural areas had not been exposed to the Department’s BEE projects. He added that there were constituency offices that the Department could utilise in order to reach the rural masses that were left behind.

Ms Mosupye answered that TECSA identified beneficiaries in rural areas, as they were aware that these areas needed access to trade. TECSA worked with rural areas to see how they could be assisted.

She added that the Department welcomed the availability of the Constituency Offices. 

The Chair added that there were constituency offices all over the country that the Department could take advantage of. He stated that Soweto was a very big market and that every tourist that came to South Africa wanted to go there. However, the Committee wanted to see tourists spending their money in Soweto. He wanted to know the extent to which the Soweto Chamber of Commerce was involved in the Department’s endeavours.

Mr Sokutu was not sure about the Soweto Chamber of Commerce’s involvement in tourism endeavours; however, the Department was working with businesses in Soweto. 

Mr Mokoena stated that the Committee was to ensure that all organs of state worked together.

Mr Sokutu commented that the department was working with local authorities to encourage them to reach out to local areas.

Mr Mokoena stated that it was obvious that the challenges that the Department faced were too large. They had two options; they could either transform what already existed within the industry or they could develop a completely new strategy through the TEP. He added that they needed to focus on job creation through tourism. The Department needed to find innovative ways to attract people in to the industry and to show them that there was money in tourism. The Committee needed to make money available for tourism, as the industry was in a developmental state and would therefore benefit from the funding.

Agreement establishing Africa Institute for Environmentally Sound Management of Hazardous and other Wastes
Mr G Morgan (DA) voted for the adoption of the Agreement. Mr I Cachalia (ANC) seconded the adoption.

The Committee adopted the Agreement.

The meeting was adjourned.