4. Budgetary Review and Recommendation Report of the Portfolio Committee on Tourism, dated 17 October 2018.

The Portfolio Committee on Tourism, having considered the performance of the National Department of Tourism and South African Tourism for the 2017/18 financial year, reports as follows:

  1. Introduction

The 2018 Budget Review and Recommendations Report (BRRR) is presented against a bleak performance of the tourism sector in South Africa. The continued decline in tourism performance is premised on a number of economic, regulatory, and environmental setbacks that plagued the sector during the 2017/18 financial year under review. With regard to the economic situation in the country, Statistics South Africa recently announced that South Africa has officially entered a technical recession, as the country's real gross domestic product (GDP) had decreased by 0.7 percent in the second quarter of 2018. This follows a GDP contraction of 2.2 percent in the first quarter. A technical recession is declared after two consecutive quarters of negative growth.                                       

In regard to the regulatory environment, the sector continued to be stifled by the introduction of Regulation 6 (2) passed in terms of the Immigration Act (Act No. 13 of 2002) which requires that the parents of all children who travel to and from South Africa produce an Unabridged Birth Certificate (UBC) reflecting the particulars of both parents. This has culminated in a significant decline in tourist arrivals of, amongst others, families into South Africa, and has affected tourism growth, revenue generation, and employment opportunities in the sector.  In regard to the environmental factors, the Western Cape was affected by the worst drought in a hundred years and a subsequent threat of Day Zero looming throughout 2017/18. This resulted in cancellations of forward bookings and decreased the demand of tourism products in South Africa, particularly in the Western Cape. Coupled with this, was the negative reporting about the water crisis in Cape Town around the "Day Zero" messaging and also negative reporting about crime incidents, particularly in 2017.

Despite these negative factors which impacted on tourism, the sector remains a significant contributor to the country’s economy. According to World Travel and Tourism report 2018, the direct contribution of Travel and Tourism to South Africa’s GDP was R136bn, accounting for 2.9 percent of total GDP.  This figure is forecasted to rise by 2.4 percent in 2018, and to rise by 3.6 percent per annum, from 2018-2028, to R197.9bn, which is 3.3 percent of total GDP in 2028. In 2017 Travel and Tourism directly supported 726 500 jobs (4.5 percent of total employment). This is expected to rise by 1 percent in 2018 and rise by 2.9 percent per annum to 980 000 jobs (5.2 percent of total employment) in 2028. In 2017, the total contribution of Travel and Tourism to employment, including jobs indirectly supported by the industry was 9.5 percent of total employment (1 530 500 jobs). This is expected to rise by 3.3 percent in 2018 to 1 580 500 jobs and rise by 2.8 percent per annum to 2 082 000 jobs in 2028 (11.1 percent of total employment).

In conducting oversight, monitoring and evaluating the performance of the National Department of Tourism (hereafter referred to as the Department) and South African Tourism (hereafter referred to as SA Tourism) in the 2017/18 financial year, the Portfolio Committee on Tourism (hereafter referred to as the Committee) had to consider all the factors affecting the financial and non-financial performance of both organisations. Therefore, the Committee considered all the external and internal factors when assessing organisational and sector performance against the 2017/18 Strategic Plan and Annual Performance Plan tabled by the Minister of Tourism to Parliament.

  1. Mandate of the Committee

The rules of the National Assembly as stipulated in Section 57 (2) (a) of the Constitution of the Republic of South Africa, (Act 108 of 1996) establish the Portfolio Committee on Tourism. The Committee is thus an extension of the National Assembly, and derives its mandate from Parliament.  This mandate is executed through five core functions, namely, to pass legislation; scrutinise and oversee executive action; facilitate public participation and involvement in the legislative and other processes; participate in, promote, and oversee co-operative government; and engage in, participate, and oversee international relations. In particular, the Committee fulfills its mandate by conducting oversight over the National Department of Tourism and South African Tourism.  The modus operandi implemented by the Committee in fulfilling its mandate in the 2017/18 financial year was through conducting oversight visits, scrutinising quarterly reports, and holding briefing sessions with the Department, South African Tourism, and other stakeholders.

  1. Core functions of the Department

The following legislative, policy, and strategic frameworks constitute the purview under which the Department and SA Tourism execute their core functions and mandate.

Tourism is listed in Part A of Schedule 4 of the Constitution of the Republic of South Africa (Act 108 of 1996) as a functional area of concurrent national and provincial legislative competence, whilst Part B of Schedule 4 lists local tourism as a local government competency.  This classifies tourism as a concurrent function, and the Constitution enjoins the three spheres of government to perform specific functions to ensure tourism growth and development.

At a legislative level, the Tourism Act of 2014 (Act No. 3 of 2014) enjoins the Minister of Tourism to perform specific tasks to drive tourism policy and strategic direction. The Act has been in existence for four years and the Committee has identified a myriad of gaps and challenges that should be addressed through a new Tourism Amendment Act to ensure that the sector catches up with the technological developments, sharing economy, quality assurance, and provides an enabling regulatory environment to the sector.

  1. Policy mandate

The mandate of the Department is premised on a number of policies at a country and sector level.  The 2018 Budget Review and Recommendations Report of the Committee is anchored on a selected number of policies detailed below:

  1. The National Development Plan

The National Development Plan (NDP) as the blueprint of government recognises tourism as one of the main drivers of employment and economic growth. The target of the NDP is to create an additional 11 million jobs by 2030, and tourism plays a huge role towards attaining that goal. The NDP envisions tourism as a major source of revenue and employment for the country through the investment in infrastructure, product and service development. It envisages rising employment, productivity and incomes as a way to ensure a long-term solution to achieve a reduction in inequality, an improvement in living standards, and ensuring a dignified existence for all South Africans.  Notably, the National Development Plan (NDP) does not have a specific chapter dedicated to the tourism sector. However, the role of tourism in the NDP, and the broad overview of the sector are directly and implicitly conjugated with various sectors in a number of chapters.

  1. The New Growth Path

Tourism is acknowledged in the New Growth Path (NGP) as one of the six economic pillars of South Africa. Tourism is recognised as a labor-intensive sector, with a wide value chain that cuts across various economic sectors. The NGP is intended to address unemployment, inequality and poverty in a strategy that is principally reliant on creating a significant increase in the number of new jobs in the economy. The NGP thus envisages tourism as a vehicle to expedite transformation and inclusive tourism growth that nurtures participation of all South Africans in the mainstream economy.   The White Paper on the Development and Promotion of Tourism in South Africa

The White Paper on the Development and Promotion of Tourism in South Africa (1996) provides the policy direction, framework and guidelines for tourism development in the country. The White Paper is a pioneering policy that has provided a strong base for other policies and the legislative framework in South Africa since the attainment of democracy in 1994. The White Paper recognises that tourism has been inadequately resourced and funded; a myopic private sector; limited integration of local communities and previously neglected groups into tourism; inadequate tourism education, training and awareness; inadequate protection of the environment; poor service; lack of infrastructure, particularly in rural areas; a ground transportation sector not geared to service tourists; lack of inclusive, effective national, provincial and local structures for the development, management and promotion of the tourism sector; and growing levels of crime and violence on visitors.  The Portfolio Committee has used these policy observations to conduct oversight over the Department of Tourism, South African Tourism, and other relevant stakeholders to ensure the implementation of the White Paper. Despite huge strides made by the Department in implementing the White Paper, the sector still faces a number of challenges imposed by endogenic and exogenic factors in the operational environment that that should be immediately addressed.      The National Tourism Sector Strategy

The National Tourism Sector Strategy (NTSS) was developed for the first time in 2011 in collaborative partnership with the Tourism Business Council of South Africa (TBCSA). The implementation commenced in the 2011/12 financial year. The NTSS was effectively implemented in a number of areas, although challenges were experienced with some targets that were not achieved and exceeded. This, in conjunction with the new trends and technological advancements, necessitated the review of the NTSS. The important factors that necessitated the NTSS review include the emerging trends at the macro and micro environment; changes in the policy and legislative environment, such as the National Development Plan (NDP, 2012), the Tourism Act, No. 3 of 2014, and technological trends. The new NTSS was commissioned in 2015, but was only finalized in 2017. The Committee consistently raised concerns about the delays in finalising the strategy, however there was no positive response from the Department. The revised NTSS spans a period of ten years (2016 – 2026) and is based on five strategic pillars, namely, effective marketing; facilitating ease of access; the visitor experience; destination management; and the broad-based benefits. The vision is to be a top world responsible tourism destination, a safe, rapidly and inclusively growing tourism economy that leverages South Africa’s competitive edge in nature, culture and heritage, underpinned by Ubuntu and supported by innovation and service excellence. However, some of the issues in the NTSS cannot be addressed at a strategy level and require a legislative review process to assists with strategy implementation. The Medium Term Strategic Framework (2014 -2019)

The current government Medium Term Strategic Framework (MTSF), which is grounded on the National Development Plan, spans 2014 – 2019, and the 2017/18 financial year is the final year of its implementation. Inherently, there are fourteen core priorities of the MTSF, and the Department is pursuing four.  The applicable government outcomes are:

  • Outcome 4: Decent employment through inclusive economic growth;
  • Outcome 7: Comprehensive rural development;
  • Outcome 11: Creating a better South Africa, and contributing to a better and safer Africa in a better world; and
  • Outcome 12: An efficient effective and development-oriented public service and an empowered, fair and inclusive citizenship.

 The Department and SA Tourism are jointly contributing to these core government outcomes.

  1. State of Nation Address

The 2018 State of the Nation Address confirmed the continued significance of the tourism sector in the economy of South Africa. Despite the decline in the contribution of the key performance indicators, the tourism sector remains a critical driver of economic growth in South Africa. The sentiments raised by the President of the Republic, His Excellency Matamela Cyril Ramaphosa, in his maiden State of the Nation Address in 2018 asserted that “Tourism is another area which provides our country with incredible opportunities to, quite literally, shine. Tourism currently sustains 700,000 direct jobs and is performing better than most other growth sectors.There is no reason why it can’t double in size.We have the most beautiful country in the world and the most hospitable people.This year, we will enhance support for destination marketing in key tourism markets and take further measures to reduce regulatory barriers and develop emerging tourism businesses”. The potential of the tourism sector and its contribution to socioeconomic development of the country was also acknowledged by the Minister of Finance in his 2018 Budget speech where he alluded that “South Africa needs to be bold and coordinated in building sectors where we have comparative advantage and can be truly world class. These include, but are not limited to: mining, agriculture, tourism, as well as manufacturing and service exports to the rest of Africa and globally”. These two policy statements are the basis for tourism continuing to be a focal point for government strategic interventions to combat unemployment.

  1. Strategic Outcome Oriented Goals of the Department and Delivery Agreement targets for 2017/18

The National Department of Tourism intends to achieve its primary objectives through pursuing the following strategic outcome oriented goals:

Table 1: Strategic Outcome Oriented Goals

Government outcomes

Strategic outcome-oriented goals

Government Outcomes

Outcome 12: An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship.

Achieve good corporate and cooperative governance.

The Department conducts its business in a manner that creates public confidence in the state. This requires excellent systems for the management of public resources, ridding the system of any inefficiency and enabling oversight by institutions of the state in the interest of the public.


The Department is responsible to formulate a legal and regulatory framework for the sustainable development and management of tourism. Decisions in this regard are meant to govern the tourism sector to ensure that South Africa’s approach to tourism development is in line with the principles of sustainable and responsible tourism. This requires the formulation of laws, regulations and policies for the sector to ensure a coherent approach to tourism development. It is also recognised that tourism growth depends on various other, contributing sectors. Therefore, a cooperative governance system must coordinate efforts to create coherence among all role-players.

Outcome 4: Decent

employment through inclusive economic growth.









Outcome 7: Comprehensive

rural development.


Outcome 11: Creating a better South Africa, and

contributing to a better and

safer Africa in a better world.

Increase the tourism sector’s contribution to inclusive economic growth.

Tourism’s contribution to the economy is measured by jobs created, contribution to GDP, and revenue generated from tourism activity. Furthermore, as a services export sector, tourism is a significant earner of foreign currency. In the South African context, this growth should be underpinned by the principle of inclusivity to drive tourism-sector transformation.


An increase in tourism’s economic contribution is driven by an increase in domestic and international tourist arrivals as well as an increase in tourist spend. Along with its partners, the department must create an environment conducive to this increase by ensuring a quality and diverse tourism offering as well as by developing sector capacity.

  Source: NDT Strategic Plan 2015 - 2020

  1. Purpose of the Budget Review and Recommendations Report

The BRRR process is governed by the Money Bills Procedures and Related Matters Amendment Act (Act 9 of 2009) which mandates Parliament to develop the Budget Review and Recommendations Report (BRRR). The Act sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department. In October of each year, the Committee must compile the BRRR that assesses service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources. The BRRR also acts as a source document for the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS). The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.In particular, this report makes recommendations to the Minister of Finance to develop a funding model for tourism at local government level.Recommendations are also made to the Minister of Tourism for financial and non-financial performance of both organisations.

  1. Method

The Minister of Tourism tabled the Annual Reports for the Department and SA Tourism to Parliament in September 2018. This assisted the Committee in finalising the draft 2018 BRRR. The process involved considerations of the oversight visits conducted by the Committee, the quarterly reports, and reviewed a number of relevant documents, both within government and the private sector.The Committee then scheduled briefings with the Office of the Auditor –General on the 9th October 2018, the Department on the 10th October 2018; and SA Tourism on the 11th October 2018.The Committee adopted the report on the 17th October 2018.

  1. Outline of the contents of the Report.

The report comprises five broad areas, namely:

  1. Constitutional, legislative and policy mandate of the Committee and the process that was followed in developing this Budget Review and Recommendations Report.
  2. Previous financial performance of the Department on both financial and non-financial aspects.
  3. Financial, non-financial and service delivery issues for the period under review.
  4. Key findings from the oversight work of the Committee, public hearings and research by external stakeholders that inform the recommendations.
  5. Recommendations to the Ministers of Finance and Tourism in terms of the budgetary requirements, performance, and service delivery improvement of the Department.
  6. Overview of the key relevant policy focus areas

Tourism is governed by a number of legislative, policy and strategic frameworks and is aligned with a number of government policies.

  1. Key Government policies

In the period under review the tourism sector was affected by a number of government policies, at both national and local levels. The immigration regulations introduced in 2014 have continued to affect the sector. The regulations entailed the requirement for in person application for biometric capturing on application of visas which mainly affected visitors from India and China due to the limited number and proximity to visa facilitation centres. The regulations also introduced a requirement for children travelling with or without parents, to carry an unabridged birth certificate (UBC) and other relevant documentation. These regulations were introduced without conducting a Socio-economic Impact Assessment (SEIS). This led to unintended negative consequences evident in the decrease in the number of international arrivals and the contribution of tourism to the gross domestic product.

  1. Overview of the revised Strategic Plan and Annual Performance Plans

The Department undertook a restructuring process in the 2016/17 financial year, and started implementing the Strategic Plan in the 2017/18 financial year. The Department therefore tabled a revised Strategic Plan for the 2017/18 financial year after the organisational restructuring process.  The vision of the Department is leading sustainable tourism development for inclusive economic growth in South Africa. The mission is to grow an inclusive and sustainable tourism economy through good corporate and cooperative governance; strategic partnerships and collaboration; innovation and knowledge management; and effective stakeholder communication.

  1. Strategic goals

The strategic goals over the medium term are to:

  • ensure economic, efficient and effective use of departmental resources;
  • enhance understanding and awareness of the value of tourism and its opportunities;
  • create an enabling legislative and regulatory environment for tourism development and growth;
  • contribute to the economic transformation in South Africa; accelerate the transformation of the tourism sector; facilitate tourism capacity-building programmes;
  • diversify and enhance the tourism offerings;
  • provide knowledge services to inform policy, planning and decision-making;
  • develop new source markets;
  • enhance regional tourism integration; and
  • create employment opportunities by implementing tourism projects targeted at the unemployed.



  1. Departmental programmes


The Department was pursuing the strategic objectives and the strategic outcome-oriented goals through four Programmes, namely:

(i)         Programme 1: Administration (Corporate Management)

(ii)        Programme 2: Tourism Research, Policy and Internal Relations

(iii)       Programme 3: Destination Development

(iv)       Programme 4: Tourism Sector Support Services


These four Programmes respond to the recommendations of the Committee on restructuring departmental Programmes to be relevant to current domestic and international trends and imperatives. Since the implementation of the organisational structure, the Department has eliminated duplication of activities with SA Tourism; improved stakeholder engagement, and is paying focus to destination development to drive supply and demand of the tourism products. The 2017/18 Strategic Plan is thus in line with the key priorities of government, including the National Development Plan (NDP). The interventions and Programmes implemented by the Department advance the achievement of the tourism mandate and harness the socio-economic benefits from the tourism sector. The Department also took into account the objectives and the opportunities offered by marine tourism, and effected improvements in the training programmes as suggested by the new Tourism Sector Human Resources Development Strategy (TSHRD). SA Tourism also tabled a revised Strategic Plan and started reporting on their financial performance per Programme as directed by the National Treasury. SA Tourism was also requested by the Committee to report on both the annualised and quarterly formats to comply with the Public Finance Management Act whilst still observing the global tourism statistics release intervals. This assisted the Committee to track performance on international arrivals and domestic trips on a regular basis.


  1. Overview of key developments in the organisational and service delivery environments of Department for 2016/17 and 2017/18 MTEF cycle.


There were a number of developments in the organisational and service delivery environments in the period under review, which had significant implications for performance by both the Department and SA Tourism.


  1. Service delivery environment


The Committee acknowledges that tourism is a highly sensitive sector, that immediately responds, either positively or negatively, to prevailing environmental factors for its competitiveness, attractiveness, and effectiveness. These prevailing environmental factors include, but are not limited to, economic conditions; political factors; safety and security considerations;  terrorism and disease outbreaks, and weather conditions such as drought and floods; consistent and increasing global growth in international tourist numbers; mobile digital technology; disruptive technologies; shifts in tourism demographics; personal safety and security issues; increased accessibility and ease of access to destinations; sustainability and tourist concerns about social and environmental issues; other market trends including developments in the sharing economy, and special interests. The Department and SA Tourism were operating in such a volatile environment that affected tourism growth in the reporting period.


2.3.2    Organisational environment


The Committee commends the Department for undertaking organisational restructuring which has improved service delivery against the constitutional mandate of the Department. The Department has undergone a restructuring process which received concurrence on the new structure in March 2017 by the Minister of Public Service and Administration (MPSA). The Department implemented its new structure effective from 1 April 2017. Upon placement of officials in the new structure, 56 officials were declared additional to the staff establishment. As at 31 March 2018, 49 officials were absorbed and only 7 officials remained additional to staff establishment. Through internal advertisement, 61 officials were promoted to higher posts. The restructuring led to the closure of regional offices and about 15 officials were to relocate to Pretoria with effect from 1 January 2018. As at 31 March 2018, 12 officials had relocated to Pretoria. One official applied for Employee Initiated Severance Pay (EISP) and the relocation of the other two officials is still pending. The vacancy rate was 14.6 percent as at 1 April 2017. As at 31 March 2018 the vacancy rate was reduced to 6.2 percent.


The factors that impacted performance for SA Tourism as reported by the organisation and observed by the Committee include:


  • Negative perceptions of the country: Alarm has been raised in markets such as Europe and Asia over the safety and security of international visitors. Furthermore, some governments have issued travel advisories for South Africa, warning travellers to exercise caution due to what they described as high levels of crime. In response, safety monitors are being rolled out in certain high-traffic tourist zones in South Africa, such as walking and hiking trails and inner-city precincts.
  • Water shortage: The drought and resulting water crisis affecting the Western Cape and Eastern Cape had a demonstrable effect on bookings during the peak summer holiday season. South African Tourism embarked on an education drive and a roadshow to emphasise that the country remained open for business and to encourage the tourism trade to embrace #WaterWise tourism practices.
  • Visa processing issues: Challenges relating to the processing of visas, including limited in-country capacity, delays and red tape, continued during the year in review. This has negatively affected bookings from major source markets such as China, Nigeria and India. Ease and convenience of travel will be greatly enhanced should the online visa application process (e-visas) and visas on arrival be implemented. A special visa dispensation is also being considered for African Union member states.
  • Supply-side constraints: Insufficient accommodation options are being reported in high-demand areas such as Cape Town and the Kruger National Park. This lack of supply, coupled with significant accommodation price hikes of up to 40 percent, is proving to be a deterrent to travel. South African Tourism is engaging with the industry in this regard, and the TGCSA is ramping up its efforts to increase the number of affordable one- and two-star establishments, particularly for the domestic traveller.
  • Airlift: There is insufficient air access to South Africa from certain African and overseas markets. The grounding of SA Express, SAA discontinuing certain routes and using smaller aircraft for others, plus other airlines reducing the frequency of their flights, have all had an impact on international and domestic travel.
  • Wildlife issues: The related phenomena of wild animal interactions and canned hunting have damaged the country’s brand as a champion of wildlife conservation. A proactive campaign to address these issues is being planned.
  • Other issues: The lack of quality foreign-language tour guides in South Africa is a deterrent to travellers, making the professionalisation of the practice a priority. In addition, film permits are proving cumbersome to obtain, despite the high return on investment and employment opportunities that film productions provide, but talks are underway with the National Film and Video Foundation to remedy this.


  1. Summary of previous year key financial and performance recommendations of Committee


  1. 2016/17 BRRR recommendations


  1. Summary of key financial and non-financial performance recommendations made by the Committee


In the 2016/17 financial year the Committee made recommendations to both the Ministers of Finance and Tourism. The recommendations to the Minister of Finance included appropriating additional budget for both international and domestic marketing activities according to the Tourism Marketing Investment Framework; capitalising the government owned tourism products to be ready for market and operations by emerging tourism entrepreneurs; and capitalising the Tourism Transformation Fund.


The recommendations to the Minister of tourism included issues around internal controls; project management; finalisations of the GTAC audits of Working for Tourism projects; operational support for projects; proper planning at provincial and local government levels; prioritisation of tourism at local level; improvement of tourism supporting infrastructure; universal accessibility; township tourism; diversification of product offering; implementation plan for the B-BBEE Charter Council programmes; development of the National Tourism Disaster Management Plan; conversion of VFR into leisure tourists; policy review of the grading system; participation of local communities in the oceans economy; and dual pricing for tourist attractions.


  1. Evaluation of responses by the Ministers of Finance and Tourism


The Committee, amongst others, made a recommendation in the 2017 BRRR that the Minister of Finance considers the Tourism Marketing Investment Framework developed by South African Tourism to appropriate additional budget for both international and domestic marketing activities. The Minister of Finance responded by saying that the Department was given an additional funding of R239 million over the 2017 MTEF. Allocations of R40 million in 2018/19, R45 million in 2019/20, and R50 million in 202/21 are made to take advantage of the opportunities identified in the Tourism Marketing Investment Framework.


Another recommendation was that the Minister of Finance appropriates additional budget to Vote 33 in order to capitalise the government owned tourism products to be ready for market and operations by emerging tourism entrepreneurs. It was also recommended that the Minister of Finance capitalise the Transformation Fund to avail financial resources to expedite inclusive tourism economic growth. In response, the Minister of Finance stated that additional funding of R35 million in 2019/20 and R36.9 million in 2020/21 was provided to the Department through the Economic Competitiveness and Support Package. The funding is intended for business incentives for growth and job creation to incentivise priority areas, including providing market access support, tourism grading support, implementation of energy efficiency initiatives, and funding of transformation initiatives in the tourism sector towards unlocking capital investment by black business people.


The Committee welcomes the responses and additional budget allocated by the National Treasury. However, the allocated additional funding does not satisfy the transformation and development needs of the sector. The allocated budget does not address the commercialisation of state owned assets. There is a dire need to capitalise the state owned tourism assets for commercialisation purpose as this will expedite transformation.


On the other hand, the Committee notes that there were no responses received from the Minister of Tourism to the previous reporting period’s BRRR recommendations. This indicates that the Department and Ministry of Tourism encountered challenges in supplying the responses. In order to strengthen oversight and accountability, the Committee encourages the Department to provide responses on BRRR recommendations timeously.


  1. 2017/18 Committee Budget Report


The major submission by the Committee in the 2017/18 Committee Budget Report are that the Department is underfunded and cannot fully execute its mandate as espoused in the Tourism Act (Act 3 of 2014). Underfunding is particularly in regard to product development, destination enhancement, such as maintenance of tourist attractions; market access; and capacitating local government to perform its constitutional duties. The amount allocated to goods and services which is used for service delivery by the Department is insufficient to fulfil its mandate as 53 percent of the budget is used for marketing through transfers made to SA Tourism. This calls for more budget to be appropriated to the Department.

  1. Overview and assessment of financial performance


The Committee scrutinised the budget allocation and expenditure trends in the sector over the 2014/15 - 2017/18 financial years to establish the trends for vote 33.


  1. Overview of Vote allocation and spending (2014/15 -  2017/18)


The 2017/18 Annual Report is the last financial year in which the 5th Parliament Portfolio Committee on Tourism will be assessing the performance of the Tourism portfolio.The Committee is pleased to report that it was able to hold the Executive accountable throughout its tenure. The evidence is in the four unqualified audits, two of which were clean audits, and the 98 percent average expenditure over the four financial years. Table 2 depicts budget allocations and expenditure over the four financial years. In the 2014/15 financial year, the Department was allocated R1 583 260 000 and was able to spend R1 557 594 000 accounting for 98.4 percent expenditure. In the 2015/16 financial year, the Department was appropriated R1 794 178 000 and spent 99 percent of its total budget.


Table 2: Financial performance of the tourism vote - 2014/15 -2017/18

Financial year

Appropriation (R’000)

Expenditure (R’000)

Expenditure as percentage

of Final Appropriation


1 583 260

1 557 594


1 794 178

1 777 394


2 009 516

1 919 646


2 140 156

2 133 976

  • : Portfolio Committee on Tourism

All four programmes spent 99 percent of their respective budgets. In the 2016/17 financial year the Department was allocated R2 009 516 000 and spent R1 919 790 000, representing 95.5 percent expenditure of the appropriated budget. In the period under review, 2017/18 financial year, the Department was allocated R2 140 156 000 and spent R2 133 976 000, which is 99.7 percent of the appropriated budget. The Committee applauds the good financial management systems and the monitoring of the non-financial performance by the Department.




The Department’s budget allocation amounts to R2, 140 billion of which R296, 853 million was allocated to fund Compensation of Employees, R299 860 million to Goods and Services, R1 321 billion to Transfer and Subsidies and R222 260 million to Capital Assets.

Table 3: Expenditure for 2017/18 financial year


Adjustment Appropriation


Final Appropriation


Over/(Under) Expenditure









Corporate Management

234 081

7 797

241 878

241 878



Tourism Policy and Planning

203 108

(5 967)

1 197 141

1 196 743



Destination Development

431 853

2 584

434 437

433 529



Enterprise and Visitor Support Services

271 114

(4 414)

266 700

261 826

4 874



2 140 156


2 140 156

2 133 976

6 180


Source: National Department of Tourism, 2017

The Department transferred 52.8 percent of its total budget to SA Tourism. The Entity received an additional R20 million during the period under review, for the South African Convention Bureau (SACB), to grow tourism from meetings, incentives, conventions and events. Table 3 depicts the financial performance in the year under review. The Department spent 99.7 percent of its total budget and only achieved 90.9 percent (60 out of 66) of its targets for the 2017/18 financial year. The Department reported that the variance between spending and target achievement was as a result of payments held back for the Kruger National Park Energy Efficiency project, which falls in the Tourism Incentive Programme (TIP).The project did not meet the last milestone for final payment within the 2017/18 financial year. This means that some of the money that could have been used for service delivery had to be returned to the National Treasury. The virements between main divisions were for compensation of employees to stay within the earmarked amount allocated to the Department.


The following expenditure patterns were incurred in the period under review:


  • Expenditure - The Department spent R2 133 976 000, which is 99.7 percent of the R2 140 156 000 appropriated for the 2017/18 financial year. The Department is commended for this expenditure as this is the optimum utilisation of allocated budget. The good expenditure pattern by the Department could be used by the Committee to request more budget from the National Treasury.


  • Under expenditure - The Department incurred under R6 180 000 in the period under review. This is negligible given that the Department was able to spend 99.7 percent of the allocated budget. However, the Department is encouraged to avoid underspending in future as this affects service delivery.


  • Variance - The variance was due to payments held back for the Kruger National Park Energy Efficiency project falling within the Tourism Incentive Programme, resulting from the project not meeting the last milestone for final payment within the 2017/18 financial year. This was caused by delays related to poor planning. The Department is encouraged to improve on project management, to improve on spending and project implementation.


  • Virements - The virements done from goods and services to compensation of employees (CoE) amounted to R12 million, to adjust the personnel budget ceiling. In accordance with Section 43 of the Public Finance Management Act, 1999, the Accounting Officer of the Department may utilise a saving in the amount appropriated under a main division within a vote towards the defrayment of excess expenditure under another main division on condition that it does not exceed 8 percent of the amount appropriated under that main division. The virements between main divisions were for compensation of employees to stay within the earmarked amount allocated to the Department.


  • Fruitless and wasteful expenditure – the Department incurred R1 065 000 as fruitless and wasteful expenditure. This was due to late cancellation/no-show/flight amendments with regard to travel bookings. An additional amount of R11 000 was incurred from late cancellation/no-show/flight amendments with regard to travel bookings is under investigation. This is a recurring challenge and the Department should implement a tight travel policy and implement it accordingly to avoid such incidents in future.


  • Irregular Expenditure - The Department procured goods and services under the value of R500 000,00 without calling for three quotations leading to R271 252,00 irregular expenditure. From a compliance perspective, this is deemed irregular expenditure and the Department should desist from such practice as it may be tantamount to corruption.


  • Claims against the Department – the Department incurred R11 059 000 as liabilities claimed against the Department. This was mainly due to breach or cancelation of contracts with a number of service providers. This points to poor contract management with service providers.


  • Multi-year projects – The Committee noted that the Department has total commitments longer than a year amounting to R633,723 million. This includes Expanded Public Works Programme multi-year contract payments for training and infrastructure projects – R411,905 million; Tourism Incentive Programme projects linked to energy efficiency, international marketing access support and destination development - R196,811 million and R25,007 million for other facilities, security and advisory consulting services. The Committee should keep track of the implementation of multi-year projects.







5.1       Quarterly spending trends


The quarterly expenditure over the year was closely monitored and the Department was able to exercise prudent financial management as no material issues were raised by the National Treasury and Parliamentary Standing Committee on Appropriations. Table 4 depicts quarterly spending over the period under review.

Table 4: Appropriation and first quarter expenditure for 2017/18


Quarter (Q)


Main appropriation


Expenditure as % of available budget




Corporate Management


219 094

44 236














Tourism, Policy, Research and International Relations


1 208 708

687 345



1.2 billion




1 208 708

1 024 666



1 203

1 197


Destination Development


443 953

56 076







300 467

191 873






Tourism Sector  Support Services


268 401

65 780







183 936

170 398








2 140 156

2 133 976


Source: Adapted from National Treasury 2017/18 National Treasury Quarterly Expenditure Reports

There were common issues experienced by the Department throughout the financial year. These include delays in finalising the Tourism Amendment Bill; delays in the implementation of projects; delays in appointing service providers; delays in finalising Terms of Reference with third parties; and project management. These culminated in quarterly targets being shifted to the following quarters. However, the Department was able to achieve most of its annual targets by the end of the financial year.

5.2       Transfers and subsidies


The Department transferred funds to strategic organisations that enhance service delivery and assist in fulfilling its mandate. A total of R1 379 033 000 was budgeted for transfers by the Department in the reporting period. A significant transfer of R1 393 097 000, accounting for 52.8 percent of the appropriated budget, was to SA Tourism which is the Entity of the Department responsible for domestic and international marketing.  


5.3       Gifts and donations received in kind from non-related parties


The Department received a donation of R120 million from the European Union via the National Treasury for the Golden Gate Highlands National Park Interpretation Centre. The planning phase and appointment of contractors have been completed and construction will start in the 2018/19 financial year.


5.4       Exemptions and deviations received from the National Treasury


With regard to the exemptions and deviations received from the National Treasury, an approval was granted in terms of Section 43 of the Public Finance Management Act (PFMA) and Section 6.3.1(a) of the Treasury Regulations to shift R100 000 from transfers and subsidies, United Nations World Tourism Organisation (UNWTO) towards Regional Tourism Organisation of Southern Africa (RETOSA) within Programme 2: Tourism Research, Policy and International Relations to cover the membership fee shortfall due to the exchange rate.


  1. Auditor-General Report


The Auditor-Generals’ report for Vote 33 in the 2017/18 financial year is as follows:


  1. Audit opinion


The Department achieved an unqualified audit with findings in the period under review. This is a regression from the clean audit achieved in the two preceding years. The following issues were raised by the Auditor-General:

  1. Compliance with Laws and Regulations

Material non-compliance with key applicable legislation was identified:

  • Material misstatements of disclosure items identified by the auditors in the submitted financial statements were corrected and the supporting records were provided subsequently, resulting in the financial statements receiving an unqualified opinion.
  • Some of the goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury regulation 16A 6.1.


  1. Internal Controls

Internal control deficiency was identified.

  • Management did not review and monitor compliance with applicable legislation relating to Supply Chain Management processes relating to obtaining of three quotations as required. The preparation of financial statements was not done in line with the Public Finance Management Act (PFMA) and the Modified Cash Standard (MCS) except for disclosure notes relating to Prepayments, Advances and Capital Work in Progress.


(iii)       Other reports:

  • The Government Technical Advisory Centre (GTAC) has been requested to review the Expanded Public Works Programme (EPWP) projects to ensure finalisation of these projects in an effective and efficient manner. The review covered a sample of Expanded Works Programme (EPWP) projects not yet finalised since inception of the department until 31 March 2018. At the date of the report, the review was still in progress.


Similarly, South African Tourism received an unqualified audit opinion with findings in the period under review which is a regression from the previous financial year. In relation to SA Tourism’s audited performance, the Auditor-General stated that:

  1. The financial statements present fairly, in all material respects, the financial position of the South African Tourism as at 31 March 2018, and its financial performance and cash flows for the year then ended in accordance with Generally recognised accounting practice (GRAP) and the requirements of the Public Finance Management Act (PFMA) of South Africa, 1999 (Act No. 1 of 1999).


  1. Usefulness and reliability of the reported performance - auditing was done for the two Programmes, namely, Programme 3: Leisure Tourism Marketing, and Programme 4: Business Events. No material findings were raised about the usefulness and reliability of the reported performance information for the following programmes: Leisure Tourism Marketing and Business Events.


  1. Material findings - material findings on compliance with specific matters in key legislation were raised as follows: Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R4 181 159, as required by section 51(1)(b)(ii) of the PFMA. The bulk of the irregular expenditure was caused by non-compliance with Treasury. The majority of the irregular expenditure was caused by non-compliance with Treasury Instruction Note 32. Irregular expenditure amounting to R2 429 550 was incurred on the N1H contract.




In the period under review, the Department and SA Tourism had no issues raised by the finance or appropriation Committees. 


  1. Summary of key financial issues contained in any other relevant report(s)


The Standing Committee on Public Accounts (SCOPA) did not raise any issues with regard to spending by the Department.No financial issues were identified from other sources.


  1. 2018/19 MTEF financial allocations


  1. Summary of funding submissions to the National Treasury for the 2018/19 MTEF.


In the 2018/19 budget report, the Committee recommended that the Minister of Tourism continues to engage the National Treasury on increasing the budget allocation to the tourism vote and report back to the Committee on the progress before the Medium Term Budget Policy Statement (MTBPS) to be delivered in October 2018. However, no response was received from the Ministry of Tourism on those recommended engagements. There is an emerging trend of non-responsiveness to recommendations made by the Committee and the Department should desist this behaviour.


  1. Overview and assessment of service delivery performance

The service delivery performance assessment is presented for both the Department and SA Tourism




The Department reported good performance against set objectives for the 2017/18 financial year. Of 66 targets, the Department reports achievement of 60 (90.9 percent), as well as clear corrective measures in respect of those not achieved. The Department spent 99.7 percent of its appropriated budget, R2 133 976 billion of the R2 140 156 billion allocated. The Department states that the variance between spending and target achievement is as a result of payments held back for the Kruger National Park Energy Efficiency project, which falls in the Tourism Incentive Programme (TIP). The project did not meet the last milestone for final payment within the 2017/18 financial year. The unspent amount of R6 180 million was returned to the National Treasury.


In 2017, Cabinet approved the revised National Tourism Sector Strategy (NTSS). This strategy is key in the Department’s attempts at facilitating easier travel to South Africa, improving the visitor experience, destination management and increasing tourism spending to the rest of the country. In addition to this South Africa has also been appointed as Chair of the Indian Ocean RIM Association (IORA) from October 2017 to October 2019, placing the Department in a viable position to further unlock the country’s marine and coastal tourism potential. Applications for funding under the Tourism Transformation Fund were also opened, including the creation of an internet portal to link black-owned enterprises and facilitate partnerships between large and small enterprises.


  1. Service delivery performance for the 2017/18 financial year


The Department reported good performance against set objectives for the 2017/18 financial year. The Department reportedly achieved 60 (90.9 percent) of its 66 targets, and outlines clear corrective measures to address the remaining 6 targets that were not achieved. As Table 5 illustrates, only one of the Department’s programmes, i.e. Tourism Policy Planning, managed to achieve all of its targets during the period under review.





Table 5: Achievement of Targets Per Programme


Planned Targets


Non Achievement

Total Achieved

% Achieved

Total Not Achieved

% not achieved

1. Corporate Management






2. Tourism Policy Planning






3. Destination Development






4. Enterprise and Visitor Support













Source: Adapted from NDT Annual Report 2017/18


  1. Programme Performance


The performance of the Department across all Programmes was as follows:


  1. Programme 1: Corporate Management


The Department performed well under this programme in delivering on 15 of the 17 identified targets. However, the Department spent 100 percent of its budget with two unachieved targets. Unmet targets relate to the minimum 50 percent threshold for women representation at Senior Management Service (SMS) level, in which the Department only managed to reach 49.3 percent. The second unachieved target is on the finalisation of the Tourism Amendment Bill for tabling to Cabinet. Final inputs on the sharing economy, grading of accommodation establishments and professionalisation of tourist guiding are still to be finalised. While the Department’s reasons for the delay are understandable, the finalisation of this Bill might not occur within the tenure of the 5th Parliament, as envisaged. The proposed amendments in the Bill have significant implications for the competitiveness of South Africa as a destination and its ability to respond to changing market trends. Further delays in this, will continue to place South Africa in a reactive stance in responding to the dynamics of the sharing economy and strengthening issues of quality in tourist guiding and grading.


The Department was able to maintain its vacancy rate below the threshold of 8 percent, at 6.2 percent. While this is commendable, the Department continues to struggle to fill all posts for critical positions, such as finance and senior management roles, which exceed the threshold of 8.6 percent. The Department is to be commended for exceeding Government’s targets for employing people with disabilities, with representation currently standing at 4.7 percent against a threshold of 2 percent. While the Department has fulfilled its legislative duties in this regard, more still needs to be done to create a more inclusive environment for people with disabilities in both the public and private sectors in South Africa. It was with sadness for The Committee to learn of passing away of two staff members with disabilities in the Department.


During the period under review only 488 of the approved 520 posts were filled. Critical posts at senior management level (four chief directors) were not filled, with these having to be re-advertised or incumbents with the required skills headhunted. However, these positions were not filled during the 2017/18 financial year. The Department reports that it has 488 employees with an additional 25 interns and seven employees.


  1. Programme 2: Tourism Policy Planning


The Department performed outstandingly under this programme, as it delivered on all its 16 targets. The focus of the programme is on creating awareness and understanding of the value of tourism and creating an enabling legislative environment for the sector’s growth and development. The Department reports that the review of the National Tourism Sector Strategy (NTSS) for the period 2016-2026 was developed. The report is developed to track progress made towards the achievement of the NTSS objectives and targets.


The Tourism Policy and Planning Programme’s expenditure accounted for R1 196 743 billion of the R2 133 976 billion departmental expenditure. The Department’s financial performance under this programme reflects under-spending in Policy and Planning and International Relations Management. R1 129 288 (53 percent) of the Departmental budget was transferred to its Entity, South African Tourism. The total virement out of this programme was well within the limit (8 percent) for virements contained in Section 43, Subsection 1 of the PFMA, however, this does not seem to be the case for all sub-programmes. For example, if one considers the virement from sub-programme 1 which constitutes 15.5 percent of the adjusted appropriation to the sub-programme. This money, approved by Treasury, was used to pay leave gratuities.


During this period the Department also hosted two national tourism stakeholder forums, the annual public lecture and the annual research seminar, among its many events. While all three events serve different purposes, they provide opportunity for continued engagements between key stakeholders in the drive to a common tourism agenda. The research seminar not only continues to strengthen the relationship between government and institutions of higher learning, it also provides research findings that can inform tourism policy to better position South Africa as a tourism destination and enable it to better respond to changing market trends and tourist needs.


The Department also reported that it has developed a policy position on the negative unintended implications of developments in the sharing economy. While this position has not yet been publicised, the expectation is that it will place South Africa’s tourism sector in good stead to benefit from and manage current trends affecting the sector.


During the period under review, the Department also signed bilateral cooperation agreements with Zambia, Malawi and Senegal, thus providing opportunity for strengthening interaction platforms for engagements on emerging trends in tourism, challenges and unity on the Continent.

The Department also reported increased strides in regional tourism integration through South Africa’s chairship of the Indian Ocean Rim Association (IORA), from October 2017 to October 2019. Through this platform, the Department is driving the establishment of a Tourism Core Group that will provide a platform for the coordination of vital tourism projects and programmes. This platform will provide further opportunity for the Department’s Marine and Coastal Tourism strategy, in response to Operation Phakisa’s Ocean Economy programme, which is a national priority. The target for training youth as data capturers at 257 municipalities was achieved. It would be of interest to the Committee to know the overall number of data capturers appointed and the duration of their appointments. The Department also indicates that training only commenced in the last quarter of the financial year. While training still took place within the stipulated financial period, it is important to understand whether candidates were placed and whether work on the project has commenced.


  1. Programme 3: Destination Development


The Destination Development Programme expenditure accounted for R433 529 million of the final R2 133 976 billion departmental expenditure. The Department reported significant performance on its identified targets for this programme, achieving 6 (85.7 percent) of the 7 targets, with a total 99.7 percent of the budget spent. This programme focuses on the diversification and enhancement of tourism offerings, including employment creation through projects. The one unmet target relates to the funding of the Letlamoreng Dam project in the North West, which was not done. The Department reports that this project is one of those being evaluated by the GTAC and has since been placed on hold.


The Department added an additional 25 beaches, overall total of 75, on its Blue Flag monitoring programme, which bodes well for beach tourism in South Africa. The methodology for the development of tourism precincts was also developed, which will serve the industry well on tourism projects for urban renewal and economic development. The Department has exceeded its target of creating 3085 full-time equivalent jobs, by creating 3457 jobs (i.e. 372 additional jobs).


The format used by the Department to report on targets for the implementation of destination enhancement initiatives complicates a proper assessment of progress on these initiatives. The Department provides no clear information on whether the construction of the Phalaborwa Wild Activity Hub or the National Heritage Monument Park Interpretation Centre has taken place and the phase at which it is. While the report indicates that construction commenced in the 2016/17 financial year, it fails to indicate whether this has been finalised. Of the seven EPWP projects identified, only six were funded. These projects are critical towards creating employment opportunities and their effective implementation is important in dealing with national priorities for inclusive economic growth. In its 4th Quarterly report for 2017/18, the Department indicated that construction on both LP Phiphidi Waterfall and NC Platfontein is progressing well. However, no further feedback on these projects was provided in the annual report.


  1. Programme 4: Enterprise and Visitor Support Services


The Department was not able to deliver on all 26 of its targets, with only 23 (88.4 percent) achieved under this programme. Two of the unmet targets concerned the social tourism initiatives, which include creating a framework to support tour operators and developing a social tourism scheme. The Department cited capacity constraints as the main reason for the non-achievement, with the targets only to be finalised by the end of the 2018/19 financial year. The significance of this KPI is its focus on undertaking social tourism initiatives with the view to promote open access to government-owned attractions. The ultimate aim is to support tour operators to facilitate social tourism. This is also linked to the Department’s NTSS objectives of creating access to local markets, promoting domestic tourism numbers, achieving transformation in the sector and ultimately entrenching a tourism culture among South Africans.


The Enterprise and Visitor Support Services Programme underspent by R4 874 million on its appropriated budget of R2 66 700 million. This was as a result of underspending in mostly the tourism incentive sub-programme. Underspending in the tourism incentive programme (TIP) continues to be a challenge for the Department. The question that arises is how best this can be managed, as it has implications for departmental budgetary allocations. There was also a significant variance on goods and services under the TIP sub-programme, which resulted from a payment being held back for the Kruger National Park Energy Efficiency project not meeting the last milestone for final payment within the period under review.


The Department is to be commended for its attempts at facilitating the development of enterprises and providing support to already existing ones. Four hundred enterprises were supported for development, two new incubators were supported, four incentive programmes were supported with funding and five community enterprises were supported with access into the sector’s value chain. These achievements are critical to national priorities of inclusive economic growth, employment creation and transformation of the tourism sector.


The Department was also able to meet the target on upgrading the security features of tourist guides’ identification. This target is an essential component in further professionaling the tourist guide sector, while ensuring a safe interface between tourists and South Africa’s tour guides. The Department has also made significant strides in achieving all the targets under its capacity building programmes. All trainees identified for the hospitality programmes, such as the Sommelier training course and the Food Safety Programme, received the identified training as intended. The Department was also able to induct ten rural municipalities that have tourism potential on issues of product development and destination enhancement. This initiative provides opportunity in terms of further unveiling ‘Hidden Gems’ in South Africa’s tourism sector, increasing tourist geographic spend, stimulating rural economies, enhancing the role of local government in tourism development and support, improving the maintenance of tourism attractions and employment creation.


The Department also provided support to 40 Black women enrolled in the Executive Development Programme. The aim is to upskill women in tourism to be able to take up executive positions within the industry. Statics on transformation trends in the tourism industry, specifically on the representation of Black females at management levels, point to the value of this initiative. The Department reported that, in the 2017/18 financial year, the Enterprise Programme supported 500 Small Micro Medium Enterprises (SMMEs) in tourism through a combination of support instruments.


These include business mentorship, coaching, incubation, entrepreneurial skills training, exposure to market access platforms, such as the Indaba, social media and online marketing initiatives, networking events and provision of accounting software for bookkeeping purposes.


6.2       South African Tourism 2017/18 Service delivery performance


In terms of arrivals, South Africa’s international tourism performance in 2017 lagged behind the rate of regional, continental and global tourism growth. The lower-than-expected international tourist numbers can be attributed, in part, to the strength of the Rand against major currencies, depressed economic conditions in many of South Africa’s African source markets, perceptions of crime, and the water shortages in the Western Cape and Eastern Cape. South Africa’s visa processes also had a negative impact on attracting tourists from China, India and Nigeria, which are some of the world’s largest outbound travel markets.


The year 2017 was challenging for South Africa’s domestic tourism sector. Approximately 17.2-million domestic trips were undertaken in the country during the course of 2017, marking a decline of 29.3 percent compared to the 24.3-million trips undertaken in 2016. The number of domestic trips has been in decline since 2015, mainly due to the unfavourable economic conditions prevailing in the country. Visiting friends and relatives (VFR) is the most common reason for domestic trips undertaken in South Africa, and travel for this purpose plummeted by 38 percent during 2017. This was the main driver for the overall decrease in domestic trips during the year under review. While leisure holiday trips are on the rise, concerted efforts are required to boost the domestic market in these tough economic times. While cost continues to be cited as the key reason for local people not travelling, the Entity has to establish innovative ways to convert those at 23 percent claiming to have no reason to travel, into day trip travellers, with the ultimate aim of them being regular travellers.


The Entity recorded a positive year in its Meetings, Incentives, Conferences and Exhibitions (MICE) sector for 2017. A total of 12 558 meetings were held around the world, which is a 3 percent increase compared to 2016. South Africa hosted 122 International Congress and Convention Association (ICCA)-registered international and regional meetings and conferences, which attracted 73 884 association professionals to the country. This performance led to South Africa being ranked 34th worldwide by ICCA in terms of the number of meetings held in the country in 2017, maintaining the same ranking as 2016. The regional spread of the ICCA qualifying conferences that took place in South Africa improved during 2017, with several cities, towns and locales outside the major centres hosting international association meetings. These included Stellenbosch, the Kruger National Park, Port Elizabeth, Bloemfontein, George, Nelspruit, Skukuza and Vanderbijlpark


The Tourism Grading Council of South Africa (TGCSA), which is a business unit of the Entity, reported that in 2017 there were 5 058 graded establishments in South Africa, resulting in a total of 118 497 graded rooms. This represents a decline of 6.1 percent in the number of graded establishments and a 0.8 percent drop in the number of graded rooms. Of the total number of graded establishments in South Africa, only 15 percent are large hotel chains, as well as facilities for meetings, exhibitions and special events. The majority – 85 percent - are smaller, non-hotel establishments such as guesthouses. However, the large hotel groups and conference facilities account for 50 percent of graded rooms, with the remainder located in small to medium-sized establishments. The TGCSA experienced a difficult year in terms of membership numbers, with most months reflecting a downward trend. A significant disruptor in this area was Airbnb, which has grown in the South African market.


6.2.1    Strategic overview


The 2017/2018 financial year marked the Entity’s implementation of the 5-in-5 strategy. The strategy resulted from a Marketing Investment Framework that directed the Entity about where to invest its tourism marketing budget in order to deliver maximum returns. Considering the growth forecasts and anticipations from the international tourist arrivals and domestic holiday-taking market, the Entity set an aspirational, yet realistic, goal to add five (5) million more high-value visits to its international and domestic base in the period 2017-21. The goal comprises four million international tourist arrivals and one million domestic holiday trips.


The following key thrusts were identified as part of the 5-in-5 framework:

  • Optimising marketing investments – develop and implement an investment strategy that allows South African Tourism to focus on prioritised markets and segments.
  • Reassessing and realigning the brand – build a recognised, appealing, resilient and competitive tourism (and business events) brand for South Africa across the target markets and segments.
  • Developing effective stakeholder partnerships – collaborate with partners, both local and international, to maximise synergies, enhance the traveller experience and close sales.
  • Utilising resources effectively – drive operational efficiencies in all activities, including human, marketing and other resources available to South African Tourism.
  • Being an inspired organisation – build an inspired and energised organisation that is motivated to meet the defined goal.

Through this strategy the Entity seeks to achieve two strategic goals:


  1. Increase the tourism sector’s contribution: this is to increase tourism’s contribution to the South African economy. This is by contributing approximately R117-billion to the economy per year by 2021, helping to grow the economy in an inclusive and sustainable manner that creates jobs.


  1. Achieve operational efficiency and good governance: by optimising the use of existing resources and streamlining its underlying processes, while continuing to improve its internal controls to achieve an unqualified audit.


The Entity has identified the need to be more agile in terms of its operations to tap into any opportunities, while adapting to the rapidly evolving macro-environment. This has included the implementation of Project iGnite, SA Tourism’s organisational review. In its reporting the Entity indicates that the first year of rolling out the strategy has however yielded mixed results.


6.2.2    Overview and assessment of financial performance


The assessment of the financial performance of SA Tourism in the year under review is as follows:   Financial Statements for the 2017/18 financial year


The Entity receives approximately 90 percent of its annual budget from Government grants and subsidies, and 10 percent from the private sector – via Tourism Marketing South Africa (TOMSA) levy allocated through the Tourism Business Council of South Africa (TBCSA). For the period under review, the Entity received an increase of 5 percent in terms of government grants and subsidies, up from R977 712 000 in 2016/17 to R1 024 847 in the 2017/18 financial year. Voluntary TOMSA levies totalled R137 577 643, up from the R123 203 348 received in the 2016/17 financial year. This represents an increase of 12 percent. Grading revenue collected during the year under review also increased by 12 percent from R18 393 524 in 2016/17 to R20 569 006 in 2017/18. With the appropriate incentives to the relevant stakeholders, these income streams could provide even more revenue into the Entity’s budget.

The 2017/18 period saw SA Tourism over-spend by R26 244 million. The Entity had an appropriated budget of R1 363 609 billion, which they overspent by R1 382 958 billion. However, the Entity did not achieve all of its annual targets. Out of 33 targets only 21 (63.6 percent) were achieved. This is worrisome as it raises queries on the Entity’s financial management controls and its ability to manage its budget in line with targeted performance. It is even more concerning in relation to the material findings resulting from the Auditor-General’s (AG) report on the Entity. According to the AG’s report effective and appropriate steps were not taken to prevent irregular expenditure amounting to R4 181 159 by the Entity.

Table 6: Budget and Expenditure Summary 2017/18







Actual Expenditure

(Over)/ Under Expenditure


Actual Expenditure

(Over) / Under Expenditure

1.Corporate Support

139 991

151 212

(11 221)

95 539

102 7


2.Business Enablement

81 295

60 926

20 369

84 194

99 07

(15 713)

3.Leisure Tourism Marketing

959 217

955 996

3 221

903 964

846 955

57 09

4.Business Events

119 000

172 123

(53 123)

84 103

154 552

(70 449)

5.Tourist Experience

64 106

49 596

14 510

54 035

54 035



1 363 609

1 382 958

(26 244)

1 221 835

1 257 576

(35 741)

Source: South African Tourism Annual Report, 2017/18


The bulk of the irregular expenditure was as a result of non-compliance with Treasury regulations. If the required channels were followed, this means that the Entity could have avoided this irregular expenditure with money directed to programmes and targets requiring the funding. The over-spending was in the following programmes: Corporate Support and Business Events. The same programmes reported a loss in the previous financial year.


  1.  Overview and assessment of programme performance


The Entity executes its mandate through five programmes, as reported in the Annual Report for 2017/18. These programmes are Corporate Support; Business Enablement; Leisure Tourism Marketing; Business Events; and Tourist Experience. Table 7 provides an overview of the number of targets achieved and not completely achieved.


Table 7: SA Tourism performance targets per main programme 2017/18


No. of targets


Partially Achieved

Not Achieved

% achieved

1.Corporate Support






2.Business Enablement






3. Leisure Tourism Marketing






4. Business Events






5. Tourist Experience












Source: Adapted from South African Tourism Annual Report (2017/18)


Overall, the Entity performed fairly against its set objectives for the 2017/18 financial year, except under the indicator for tourist experience where the Entity did not achieve any of its targets. Of the set 33 targets, the Entity was able to achieve 21 (average performance rate of 64 percent). Targets set towards increasing tourist arrivals and tourist spending were not achieved as envisioned, thus limiting the anticipated contribution from tourism towards the economy. As alluded earlier, the water shortage in Cape Town, safety and security and visa regulations were cited as some of the constraints to international tourist arrivals, while tough economic conditions greatly affecting the visiting friends and relatives (VFR) market segment resulted in the significant decrease in domestic arrivals for the 2017/18 financial period.


6.2.3    Programme Performance


The programme performance for SAT in the 2017/18 financial was as follows:


  1. Programme 1: Corporate Support


The Entity achieved five of the eight identified targets. The Entity only achieved 63 percent of its targets for this Programme, yet reported over expenditure at 108 percent. The Entity was able to maintain its staff turnover rate at lower than 7 percent, meaning less employees left its employ. The Entity was also able to implement the Workplace Skills Plan (WSP), purchase from B-BBEE compliant suppliers and increase representation among the workforce by appointing people with disabilities. While the Entity recorded the receipt of an unqualified audit opinion from AGSA as an achieved target, it however comes with findings. This finding relates to contravention of the applicable law, resulting in management not having accounted for irregular expenditure of up to R4 181 159 million.


(ii)       Programme 2: Business Enablement


For the period under review, the Entity performed well by achieving four of the set targets, with one not achieved. The unachieved target is in relation to the maintenance of the stakeholder satisfaction score achieved in the 2017/18 financial year. The reporting on the target is unclear as to what exactly was not achieved. The Entity had roadshows with stakeholders, however, it is not clear whether these were completed in order to obtain the required score. The Entity was able to conduct the ten trade webinars as planned. These are held in partnership with Tourism Update and are aimed at interactions with the tourism trade on key matters of concern and interest. Engagements of this nature are critical in ensuring that the Entity remains in tune with what is happening on the ground and is able to respond more accurately to industry needs. They also ensure collaborations with partners on marketing campaigns and tourism packages, which are critical for destination competitiveness and increased tourism numbers.


A significant step is the implementation of the Tourism Growth Strategy, which the Entity started implementing during the period under review. However, the Entity reports mixed results from this first year of reporting. It would be of interest to understand the reasons for these results and how they will affect the Entity’s performance for the remaining four years. The key issue for discussion being the remedial measures to address identified challenges and maximise on possible quick-wins.


The Entity was able to deliver on producing the seven intelligence reports as planned. The focus of the reports, such as the Tourism Index, are important in providing the Entity with an overview of tourism business performance in the country. This type of information will serve the Entity and its partners in dealing with emerging issues more adequately and timeously. In addition, two Global Brand Tracker reports were produced by the Entity. These focus on global perceptions of the South African brand, which is important for tourism development. In addition, Tourism South Africa’s wildlife conservation brand has been negatively affected recently around the canning and exporting of lion bones. Issues around safety and security continue to affect the country’s tourism industry and South Africa has to be at the forefront in changing and directing this content. It thus speaks to the Entity’s ability to quickly respond to media reports about it in the market and proactively sending messages that protect the tourism brand.


  1. Programme 3: Leisure Tourism Marketing


For this programme, the Entity only achieved half of the set targets (6 of 12), i.e. 50 percent, yet it spent 99.6 percent of the allocated budget. This KPI forms the core of the Entity’s mandate, as it encompasses increasing both tourist arrivals and tourist spending, which it was unable to deliver on for the period under review. Under the same programme, the 5-in-5 growth strategy was being implemented for the first time. The Entity has cited that the first year of rolling out this strategy yielded mixed results. These are not clearly stipulated and it is difficult to ascertain whether the identified corrective measures in the annual report speak to these activities or are merely generic. The Entity does make reference to a number of marketing and public relations initiatives embarked upon to promote tourism South Africa during this period. However, these seem not to have yielded the desired results, as both targets for tourist arrivals and spend were not achieved.


The target for 10.9 million international tourist arrivals was not achieved, as only 10.3 million is recorded for the 2017 period. However, total foreign spend was up by 0.5 percent at R80.7 billion. This was credited to tourists staying longer in destinations (12.2 nights). The Entity reported a downturn in domestic travel and spend for the 2017/18 financial year. Only 17.2 million domestic trips were taken in comparison to the envisioned 24.9 million. This is a 29 percent decline compared to trips taken in 2016 (24.3 million). Tough economic conditions and a decline in the number of visiting friends and relatives (VFR) trips have been cited as major contributors to reduced domestic trips. Thus resulting in a decrease in both direct domestic spend and holiday revenue.


Total domestic direct spend stood at R22.1 billion compared to the targeted R24.8 billion. This number is less than that of previous years at R26.5 billion (2016) and R23.6 billion (2015). Domestic tourists took shorter holiday trips in 2017, with the length of stay declining from 4.9 nights in 2016 to 3.4 nights in 2017; thus resulting in a decline in revenue. These targets are the bread and butter of South African tourism and current spending does not justify the results. Brand positivity for the year under review declined. The target was unachieved at 38 percent against the set 40 percent goal. Safety and security was the main contributor to this, with South Africa seen as an unwelcoming destination. India, Nigeria and Kenya showed notable declines in brand positivity towards South Africa. The issue of safety and security is recurring and has negative implications for both international tourist and domestic numbers. People will not visit attractions where they feel unsafe and this affects weekend and day travels throughout the year that can further boost domestic travel.


While the two targets that focus on setting a percentage baseline for geographic spread and seasonality for both international and domestic travellers were achieved, it would also be instrumental to have some form of reporting on the actual trends of these key performance indicators. Detailed reporting on geographic spend and seasonality trends in the country are pivotal for marketing activities, destination enhancement and product development. This kind of information is also beneficial in building a business case for tourism with municipalities, as a means to increase their revenue stream.





  1. Programme 4: Business Events


In the 2017/18 financial year, the South African National Convention Bureau (SANCB), in conjunction with the provincial and city convention bureaus, submitted 94 bids for international and regional meetings, incentives, conferences and exhibitions. This number increased by 16 more bids compared to the previous financial year. The 94 submitted bids have a combined economic value of R1.9-billion, and the potential to attract 88 673 delegates to South Africa and generate 382 event days. Thirteen of the 94 bids submitted were for smaller cities outside the major centres, including Kimberley, Port Elizabeth, Stellenbosch and Pilanesberg (North West Province), as well as Mpumalanga, ensuring the geographical spread of business across South Africa. The Entity performed well under this programme, as it met all six of its targets. However, the overspending raises questions. Bidding for international meetings is largely affected by currency dynamics, it is therefore critical that the Entity plans better for this and optimise spending where possible.


  1. Programme 5: Tourism Experience


The TGCSA was unable to meet its targets for the 2017/18 financial year. Only 5 058 accommodation establishments were graded against the targeted 5 932, resulting in only 118 497 graded rooms instead of the targeted 128 821. The Entity cited a decrease in its membership numbers, resulting from external challenges, as a key reason for the unachieved target. Reasons for membership cancellations entail: business closures, changing business models (from overnight rooms to long-term rentals) and effect of sharing economy players. Smaller stakeholders are seeking more sustainable models for their operations and are also looking at how best to respond to challenges posed by the sharing economy, a factor that South Africa’s tourism industry seems to be responding to very slowly. The recurring underperformance under this target has overall implications for performance in the Council’s five-year period. The Council is not catching up on performance but rather regressing year on year. The key question is how this will be addressed to meet this strategic objective while ensuring quality standards in the accommodation sector. It also poses a challenge to the TGCSA and its response to the effects of the sharing economy and other external challenges affecting its performance.



6.4       An analysis of the Department of Tourism and South African Tourism for the first quarter expenditure 2018/19

The Committee has conducted oversight over the first quarter performance for 2018/19 and a number of concerns were raised.

  1. Achievement of targets

In the first quarter of 2018/19 financial year, the Department was pursuing 88 targets. The Department was able to achieve 72 targets and failed to achieve 16 targets. This accounts for 81.8 achievement and 18.2 percent underachievement on the set targets. With regard to the appropriated budget, the departmental expenditure for the period under review amounted to R1.125 billion. The overall variance was R83.0 million or 6.9 percent slower compared to the projected spending of R1.208 billion. Table 8 depicts the departmental performance across all four Programmes:

Table 8: Quarter 1 Performance (2018/19) against pre-determined objectives


No. of Targets


Not Achieved

Percentage Achieved

Percentage not Achieved

1.Corporate Management






2. Tourism Research, Policy and International Relations






3.Destination Development






4.Tourism Sector Support Services












Source: Adapted from NDT 2018/19 Quarter 1 Report


Issues that emerged from the 2018/19 quarter 1 performance assessment are similar to those identified in the previous financial year. The Department did not meet all its targets and underspent on the projected quarterly budget. The Committee commented on the progress on projects not completed in the 2017/18 financial year and underperformance incurred in all areas of economic classification, i.e. under expenditure in the compensation of employees, goods and services, transfers and subsidies, and payment for capital assets;  poor planning and contract management; Supply Chain Management shortcomings; continued underperformance in the Tourism Incentive Programme; underutilised tourism assets; the Executive Women Development Programme which was commended for intensification; stringent qualifying criteria that excludes the beneficiaries it was intended for; and air access that remains one of the inhibiting factors to tourism growth in South Africa.


The reasons for underperformance related to:


  • In Programme 2, municipalities delayed in identifying candidates and recruiting them for the National Tourism Information and Monitoring System (NTIMS); no service provider was appointed; and participant qualifications are still to be verified and security clearances are still to be conducted.
  • In Programme 3, the four targets not met were due to delays in the procurement of a service provider, and thus delays in delivery of final product. This challenge of the Department relates to the manner in which it plans, or sets the timeframes. 
  • In Programme 4, the underspending was as a result of the Tourism Incentive Programme due to delays in the signing of contracts and thus projected money not spent. 
  • The concern was also raised for SA Tourism which has overspent on its activities for the first quarter. SA Tourism reported that the over expenditure was as a result of upfront commitments that were contractually agreed upon for projects for the 2018/19 financial period.


  1. Key reported achievements.


The Department recorded a number of achievements in the year under review. A selected list of the key achievements observed by the Committee in its oversight work during the reporting period include:


  1. The National Tourism Sector Strategy

The Committee was satisfied that the Department eventually reviewed the National Tourism Sector Strategy. This had been delayed for a long time due to the need to incorporate the emerging trends in the sector, including the sharing economy. The major revised NTSS targets R302 billion contribution the National Gross Domestic Product Direct and 1 million jobs to be directly supported from the tourism industry by 2026. The Strategy is based on five pillars, namely, effective marketing, facilitating ease of access, the visitor experience, destination management, and broad-based benefits. Each of these pillars has detailed work streams with associated targets.

  1. The Tourism Transformation Fund

The Committee noted that the Department established the Tourism Transformation Fund (TTF) which is capitalised with R120 million over the MTEF (R40 million each year over three years). The TTF is a dedicated capital investment funding established by the Department of Tourism in collaboration with the National Empowerment Fund (NEF) and focuses specifically on financial support for black investors and communities investing in capital projects in the tourism sector. The Fund aims to drive transformation in the tourism sector in a more direct and impactful manner that will not only assist black-owned tourism enterprises to expand and grow, but also catalyse the rise of a new generation of black owned youth, women and community owned tourism enterprises to take the tourism sector to new heights. The Fund is administered by the National Empowerment fund (NEF) on behalf of the Department of Tourism. However, the fund is not adequately capitalised to redress the Apartheid structure of ownership patterns within the tourism sector.

  1. The State of Transformation Report (2017)

The Committee welcomed the State of Transformation Report commissioned by the Tourism B-BBEE Charter Council in 2017. The findings of the study paint a bleak picture of transformation in the country. The findings against the elements of the scorecard were as follows:

  1. Ownership – the results on black ownership showed some improvement, but there were concerns around black female ownership. The black female ownership figures on new black entrants against a target of 10 percent was at 2 percent, 5 percent, and 5 percent across accommodation, hospitality and travel subsectors respectively.


  1. Management Control – the findings for the advancement of black women in management control, with women in executive director positions against a target of 30 percent were 8 percent, 11 percent and 6 percent across accommodation, hospitality and travel subsectors respectively. Regarding provincial performance on black executive directors, the Limpopo Province fared the best with the Western Cape Province being the worst.


  1. Skills Development – the Committee raised concerns about the poor absorption rate of learnerships. A target of 100 percent was pursued and the actual performance sits at 6 percent, 1 percent and 3 percent across accommodation, hospitality and travel subsectors respectively. The KwaZulu-Natal Province fared the best with the Eastern Cape Province being the worst.


  1. Enterprise and Supplier Development – the enterprise and supplier development was the worst. The target is 40 percent, whilst procurement spend on 51 percent, black owned enterprises was a shocking 0 percent across all the sectors of accommodation, hospitality and travel subsectors.


  1. Socio-Economic Development – this is measured mainly from levy collectors of the Tourism Marketing SA (TOMSA). The TOMSA levy collector registrations were equitably spread between the subsectors of accommodation, hospitality and travel at 38 percent, 27 percent and 38 percent respectively. About 50 percent of accommodation and travel subsectors had achieved the annual value of all qualifying socio-economic development expenditure that exceeds 1 percent of Net Profit after Tax (NPAT).


  1. The National Tourism Human Resources Development Strategy (TSHRD)

The Department is congratulated for developing the Tourism Sector Human Resource Development Strategy (TSHRD) for the sector. The study was conducted to identify the specific workforce skills needs and gaps in the tourism sector; compile employees’ current skills profile; provide the existing skills and knowledge in the tourism industry; identify the scarce and critical skills needs of the tourism industry; recommend targeted training and skills development interventions; provide accurate information to support the tourism industry to develop Workplace Skills Plans; and to guide the Department  and industry stakeholders. The findings have been useful in guiding a new approach of capacity building and skills development in the sector.



  1. Representation of designated groups


The Department has exceeded Government’s targets for persons with disabilities and currently stands at 4.7 percent representation for this group. At SMS level, the Department has reached 49.3 percent female representation.


6.5.6    Preventing conflict of interest


A 100 percent disclosure rate was recorded in respect of SMS members’ financial interests.


  1. Human resources


Regarding future human resource plans/goals, the Department’s existing human resource policies, procedures and systems (codes of practice) and the HR Plan 2017- 2020 provide an effective framework for recruiting, developing and retaining staff in a fair and supportive environment. To this end, the goals listed in the HR Plan 2017-2020 are the strategic partnerships with core business; employee championship; and organisational development and design. Achievements also include the recruitment and employee life-cycle management, with two sub-categories, namely, human resource utilisation, and human resource development.


  1. Non-financial Audit outcomes and steps taken to address adverse audit findings


The Committee observed that irregular expenditure has increased from R1 093 661 in 2016/17 to R4 181 159 in 2017/18 and relates in both years to irregular expenditure incurred by SA Tourism. The increase is as a result of contract extension of a service beyond the 15 percent and National Treasury approval was not obtained, as well as non-declaration of interest and instances of cover quoting.


The Auditor-General recommended that the Committee should follow up with the Department and Entity on progress made on the audit action plans put in place to address 2017/18 audit outcomes. It was also recommended that the Committee should monitor and evaluate all deliverables on the agreements entered with third parties by the Department and the entity (implementing agents) and Joint Marketing Agreements (JMA). The Government Technical Advisory Centre (GTAC) has also been requested to review the Expanded Public Works Programme (EPWP) projects to ensure finalisation of these projects in an effective and efficient manner. The review covered a sample of EPWP projects not yet finalised since inception of the department until 31 March 2018. At the date of the report, the review was still in progress.


  1. Other service delivery performance findings


This Committee was able to make other service delivery findings for 2017/18 based on oversight visits and research from external stakeholders. These are as follows:


  1. Oversight visit reports- summary of key service delivery issues


The Committee conducted oversight visits to the Limpopo Province from 11-15 September 2017    and to the Western Cape from 1- 4 August 2017.  The service delivery and industry observations made recommendations in Limpopo included issues with poor tourism infrastructure, including road networks, with the road infrastructure leading to important tourist attractions in Limpopo are in a perilous state of disrepair; opportunities for niche tourism development;  poorly documented history for tourism purposes;  poor airlift strategy for the province; lack of convention centres for business tourism; domestic tourism dominated by VFR segment; dissimilar operational support to Working for Tourism; poor provincial branding with municipalities  particularly using municipal names to market their destinations instead of town names; bad practice of paying service providers after 30 days; a number of municipalities in Limpopo do not have staff responsible for tourism; and poor alignment of tourism strategies with national and local spheres of government.


With regard to the Western Cape Province, the Committee made recommendations in relation to the development of a National Tourism Disaster Management Strategy;  development of  a business case for tourism as an economic driver at a local level; preservation of  the integrity of the Cango Caves;  rebranding of  Eden Municipality as The Garden Route; addressing the discretionary enrolment in the grading scheme; clarity on the Cradle of Human Ki;  impacts of Regulations for a Prohibition on Fishing at Night in the Estuary of the Breede River;  development of oceans economy;  development of a Regional Events Calendar;  prioritisation of tourism at local level; the development of an airlift strategy for regional airports;  development of  a framework for the establishment, funding, and operation of Visitor Information Centres.




  1. Relevant external research assessing performance of the Department


There period under review experienced a challenge with tourist arrivals and there was a myriad of publications on the matter. Only the information from the official documents at a country and global level is provided below to provide perspectives given on the sector performance and its continued significance in the economy of South Africa.


  1. Visa-related reforms


The Committee has been calling for the amendment or scrapping of the Immigration Regulations introduced in 2015. A number of recommendations were made, including the establishment of the Inter-Ministerial Committee to look at the unintended consequences of the Regulations on the tourism sector. The Inter-Ministerial Committee (IMC) was established, and in October 2015 the IMC led by President Cyril Ramaphosa in his previous capacity, as Deputy President of the Republic and Leader of Government Business, recommended that the immigration regulations should be amended. The Committee noted, with appreciation, some interventions made by the government from 2015 to September 2018 in easing travel for tourists. However, as the Committee indicated previously, all the earlier interventions did not yield the expected outcomes as tourist numbers continued to dwindle as a consequence of the burden imposed by these regulations. The Committee noted at its ordinary meeting of 19 September 2018, that the Cabinet announced that a number of changes will be made to make it easier for tourists, business people and academia to come to South Africa.  Subsequently, the Minister of Home Affairs issued a statement on the 25th September 2018 on the visa-related reforms. The major reforms in relation to the requirements for people travelling with minors to carry the Unabridged Birth Certificates include that:


  • Instead of requiring all foreign nationals travelling with minors to carry documentation proving parental consent for the minor to travel, Home Affairs will rather strongly recommend that travellers carry this documentation.
  • Immigration officials will only insist on documentation by exception, for instance high-risk situations, rather than for all travellers.
  • Rather than denying entry where documentation is absent, travellers will be given an opportunity to prove parental consent.

The Committee had expected that the requirements for the unabridged birth certificates would be completely repealed. Nonetheless, the Committee welcomes these long awaited amendments to the Regulations. The Committee is of the view that given the unintended consequences experienced by the industry, especially the international markets, airlines and tour operators, more clarity is needed to ensure that prospective tourists are sure what the amendments really entail. This clarification is needed, especially for the airlines, inbound tour operators, and people travelling with minors, on what “strongly recommend that travellers carry this documentation” and “officials will only insist on documentation by exception, for instance high-risk situations...” mean.

Other notable aspects of the visa related reforms include:

  1. Visa waivers
  • Of SA’s top 10 overseas tourism markets, only India and China require a visa.
  • Visa waivers are already in place for the rest of the top 10 overseas markets, including travellers from the UK, the USA, Germany, France, the Netherlands, Australia, Brazil and Canada.
  • Negotiations are being finalised to conclude visa waiver agreements for ordinary passport holders with the following countries, from respective regions:
  • Africa: Algeria, Egypt, Morocco, Sao Tome & Principe, Tunisia, Saharawi-Arab Democratic Republic and Ghana.
  • Middle-East: Saudi Arabia, United Arab Emirates, Qatar, State of Palestine, Iran, Lebanon, Bahrain, Oman and Kuwait.
  • Eastern Europe: Belarus and Georgia.
  • Caribbean: Cuba.


  1. Simplification of visa requirements
  • Visa requirements are being simplified for countries such as China and India.
  • This will make provision for taking biometrics on arrival in South Africa, allowing visa applications via courier and issuing 5-year multiple entry visas. This should take place in October 2018.
  • Consideration will also be made for easing travel restrictions for certain categories of visitors for other countries, including Nigeria, Kenya and Uganda.


  1. Long-term multiple entry visas
  • Three-year multiple entry visa for frequent trusted travellers to South Africa
  • Ten-year long-term multiple entry visa for business people and academics from Africa


  1. BRICS visa
  • Business people from BRICS countries who require visas (China and India) are issued a 10-year multiple entry visa, within five days of application


  1. eVisas
  • eVisas will be piloted in New Zealand by April 2019
  • This will significantly enhance efficiency in the issuing of visas to tourists and business people visiting our country


  1. eGates
    • eGates will begin a piloting phase at OR Tambo, Cape Town, and King Shaka International Airports by 2019.
    • This will allow returning SA citizens and certain categories of trusted travellers to be processed electronically rather than having to interact with an immigration officer.


  1. Border Management Authority

•     A related priority is the need to optimize border control operations and processes.

  • Establishing an integrated Border Management Authority is quite critical in this regard.
  • The Border Management Authority Bill is currently at the National Council of Provinces, for finalisation.


  1. Recent Tourism and Migration reports


The tourism industry in South Africa continued to be wreaked with a decrease in tourist arrivals experienced during the reporting period. The latest Tourism and Migration Report for July 2018 released by Statistics SA indicates that the numbers for July 2018 tourist arrivals were slightly below 2017, with overall arrivals dropping by 2 percent. The European market also declined with 876 884 arrivals so far in 2018, which is 2 percent decline for the same period in 2017. The arrivals from key markets were consistent with the overall year trend, generally showing declines across the board. With regard to the top 10 markets for South Africa, there were 246 063 from the UK showing a 5 percent decrease; United States of America was 218 277 indicating a 1 percent increase; Germany was 176 740 with 1 percent decrease; France was 101 936, down by 3 percent; The Netherlands was 77 19, down by 7 percent; Australia was 63 130 with no change; India was 57 219, down by 3 percent; China was 55 058, down by 2 percent; Brazil was 40 120, up by 4 percent; and Canada was 36 570, depicting no change.


The poor performance in July followed another depressing report for June 2018. A comparison of movements in the ten leading countries between June 2017 and June 2018 shows that the number of tourist arrivals increased for three of the ten leading countries (China, the United Kingdom (UK) and the United States of America (USA), but decreased for Germany, Brazil, Australia, France, India, the Netherlands and Canada. The largest decrease was experienced in tourist arrivals from Germany, at 12.8 percent (from 10 677 in 2017 to 9 306 in 2018). Tourist arrivals from China increased significantly, at 9.2 percent (from 6 019 in 2017 to 6 572 in 2018). There seemed to be no strategies in place to increase tourist arrivals from Brazil and India. It was also not clear how SA Tourism utilised the opportunity presented by South Africa’s Chairship of the BRICS group of countries, where a Tourism Track of Cooperation has been agreed upon, to increase tourist arrivals from the affected countries. The largest market for South Africa overall continues to be SADC countries, with Zimbabwe on top 1 266 681 arrivals, up by 1 percent; Lesotho 1 093 341 arrivals, up by 1 percent; Mozambique 800 688 arrivals, up by 3 percent; Swaziland 494 318 arrivals with no change; and Botswana with 363 240 arrivals, up by 2 percent.


The reports reveal a bleak picture for arrivals from Africa in the preceding month. A comparison between movements in June 2017 and June 2018 for the ten leading Southern African Development Community (SADC) countries shows that the number of tourists from eight of these countries (Angola, Malawi, Botswana, Zimbabwe, Tanzania, Swaziland, Mozambique and Lesotho) increased, while the number of tourists from the remaining two countries (Namibia and Zambia), decreased. Angola showed the largest increase of 22.6 percent (from 2 813 in 2017 to 3 450 in June 2018), while Namibia showed the largest decrease of 5.4 percent (from 13 967 tourists in June 2017 to 12 956 in June 2018). The country continues to be predominantly a leisure destination with 96 percent of visitors coming to South Africa on holiday, 3 percent on business travel, and 1 percent to study. The major reasons for decline in tourist arrivals as reported by the trade include the Cape Town water crisis; safety concerns; and visa restrictions as some of the key constraints affecting international arrivals into the country.


  1. Tourism Consumer Price Index


The inflation data released by Statistics SA in June 2018 shows that hotel prices in the Western Cape dropped by 11.2 percent between May 2017 and May 2018. The hotel prices increased by 0.6 percent nationally, and by 4.5 percent in the North West. The Western Cape numbers are starkly different from those recorded in the rest of the country. The Northern Cape and Mpumalanga both saw small drops in prices, but the national average price of a hotel room increased by 0.6 percent during the same period. In Gauteng prices were up by 3.5 percent, and in the North West prices increased by 4.5 percent. The declining prices in the Western Cape were attributable to the water crisis and the “Day Zero” phenomenon.


  1. Concluding comments on service delivery performance

The departmental programmes in the period under review focussed on inclusive and sustainable growth. However, the prevailing environmental factors, economic constraints, and policy uncertainty affected the achievement of desirable outcomes. These mainly had negative impacts on both international and domestic tourism. The country did not achieve favourable international arrivals and domestic holiday trips. Performance in these key performance areas have a potential to reduce the contribution of the sector to the socio-economic benefits of the country. The reduced international arrivals and domestic holiday trips reduce tourism revenue. The reduced tourism revenue may culminate in reduced contribution to the gross domestic product and thus fewer jobs created.


  1. Finance and Service delivery performance assessment

The Department spent 99.7 percent of the budget to achieve 90.9 percent of the pre-determined objectives. This performance is not commensurate with the expenditure patterns. However, the Department is applauded for having a high impact in the tourism sector with the little appropriated budget. The nature and impact of the programmes implemented by the Department provide the service delivery that surpasses the allocated budget. In order to get more insights into the service delivery impact of the Department, during the course of the period under review, the Committee recommended that the Department should undertake the cost-benefit and impact analysis of its programmes. This includes both skills programmes and infrastructure projects implemented as part of the Working for Tourism programme.

The Department offers skills training in a number of areas, including hospitality, Sommelier profession, food safety, resource efficiency and the Blue Flag programme. The SMME support programmes include enterprise development by providing various support instruments, such as business mentorship, coaching, incubation, entrepreneur skills training and exposure to market access platforms such as the Africa Travel Indaba and international trade shows. The Department also implements a Tourism Incentive Programme. Through the social tourism programme, the Department had a special focus on the designated groups, namely, youth, women, elderly and people with disabilities to encourage them to travel their country. A highlight was the introduction of the Youth Exchange Programme which involved disadvantaged high school learners from Mbizana local municipality (Eastern Cape) and Ekurhuleni metropolitan municipality (Gauteng) who visited attractions linked to O R Tambo legacy. Most of these learners were exposed to flying for the first time and staying in a hotel. The programme aims to inculcate a culture of travel and tourism among the youth as tourism Ambassadors and future travellers. Through the Executive Development Programme, in partnership with UNISA School of Business Leadership, twenty women were enrolled into the Programme and five have since been promoted to senior management positions. The aim is to have more women representation in Boards and executive management positions. Additional forty women are currently enrolled in the Programme, and will graduate later this year.

The Committee is cognizant of the mixed success in the implementation of both skills and infrastructure projects through the Working for Tourism Programme. The Department has partnered with the Government Technical Advisory Centre (GTAC), an entity of National Treasury, in order to understand and address some of the challenges in the implementation of its infrastructure projects. Primarily the findings, conclusions and recommendations from GTAC on the individual assessments point to the urgent need for the implementation of a revised Project Management model. This includes completing detailed feasibility studies as part of project planning and facilitating effective public-private-community partnerships for project operationalisation and long term sustainability. Secondly, GTAC recommended that the Department strengthens Working for Tourism through improved collaboration with requisite expertise in tourism infrastructure, facilities investment and financing. The Department is presently in the process of fully aligning with the Treasury Standard for Infrastructure Procurement and Delivery Management (SIPDM). The Committee is aware that the second phase of the GTAC assignment is expected to be completed by October 2018. This work involves a realignment of the systems, processes and capacity of the Working for Tourism team to better manage future infrastructure projects. The individual project assessments undertaken in phase one will inform this process.




In its oversight work over the period under review, the Committee made a number of observations that are pertinent to the reported performance of both the Department and SA Tourism:


  1. Technical issues


  1. Underspending, irregular expenditure, and fruitless expenditure


The Committee observed that the Department incurred a negligible underspending in the period under review. In regard to irregular expenditure, South African Tourism has been the biggest contributor to the irregular expenditure in the portfolio over the past five years. The portfolio incurred a cumulative irregular expenditure of R5 554 159 of which R4 181 159 was identified in the 2017/18 financial year.


  1. Allocations to the Tourism Vote


The Committee maintains that tourism remains underfunded in South Africa. The tourism budget, especially for marketing, is far below that of the competitor destinations around the world. It should be noted that tourism is a global economic activity where countries compete for similar markets. The marketing presence of SA Tourism in global markets increases the demand for South Africa, whilst product development by the Department improves the supply aspect of the industry. The country falls short on both, with regard to tourism supply and demand at international and domestic level. This calls for more budget to be appropriated to the Tourism Vote to improve supply and demand of the tourism products at international and domestic level.


8.1.3    Setting pre-determined objectives


As observed in the past financial years, the Department continues to set targets that are dependent on other stakeholders without proper planning and implementation protocols in place. The projects are included in the Annual Performance Plans as either quarterly or annual targets without forward planning having been finalised. This resulted in a number of projects being delayed and quarterly targets not achieved.  With regards to SA Tourism, the targets for business tourism continue to be set as annual targets instead of quarterly targets. The Committee is of the view that these should be disaggregated into quarterly targets.


8.1.4    Usage of consultants


The Committee acknowledges that the mandate of SA Tourism requires that the Entity uses consultants to fulfil some of its obligations.  The consultant fees include retainer fees for above and below the line marketing advertising agencies, PR agencies, exhibition management services and market research. SA Tourism developed a consultancy reduction plan for 2017/18 financial year, as mandated by National Treasury through its Treasury Instruction 1 of 2014: Cost containment measures. Other marketing expenses relate to marketing development, research and campaigns, incurred by SA Tourism during the 2017/18 financial year in order to fulfil its mandate of marketing South Africa both domestically and internationally. The increase in consultancy fees is mainly due to annual inflationary increases as per contract terms and conditions. The Committee encourages SA Tourism to continuously innovate and find new ways of reducing consultant fees.


  1.  Governance and operational issues


The Committee, in its oversight work throughout the period under review, evaluated various general governance and operations by both the Department and SA Tourism. The Committee is generally satisfied with the adherence to good governance principles by both institutions. The following matters warrant acknowledgement:


  1. Risk management


 The Committee noted that the Risk Management function resides within the Office of the Director-General to ensure that it is properly positioned to influence the leadership and decision-making at the highest level, advise management on the materialisation of the high risks as well as to optimise opportunities presented by identified risks. The Department implemented Risk

Management processes as per the approved Risk Management Policy and Strategy. The Department has also established governance committees to assist the Accounting Officer in discharging the duties and responsibilities for the effective administration of the Department. The Risk Management Committee chaired by an independent Chairperson drives the implementation of the Risk Management Policy and Strategy. It is reported that the Committee met on a quarterly basis in line with its approved charter to consider and review risk management policies, and to provide oversight on the effectiveness of risk management within the Department.


  1. Fraud and corruption


There were no issues of fraud and corruption identified by the Committee in the year under review, except for issues of corruption related to officials that do business with government and cover quoting to influence procurement of goods and services at SA Tourism. It is commendable that the Department has an approved Fraud Prevention Policy and Plan that provide mechanisms for the implementation of fraud prevention. A fraud risk assessment was conducted on the basis of the strategy and no issues were raised.  


  1. Code of conduct


The Committee acknowledges that the Department’s Code of Conduct sets the minimum standards with which employees need to comply. It assists in promoting appropriate conduct in delivering services to communities. The Service Charter also helps the Department to commit to certain standards in rendering public services. Any alleged breach of the Code of Conduct is regarded as misconduct, which the Department investigates. Based on the outcome of the investigation, appropriate sanctions are imposed against implicated officials in terms of the Disciplinary Code and Procedure for the Public Service (Resolution 1 of 2003).


  1. Minimising conflict of interest


It is noted that the objective of Chapter 2 of the Public Service Regulations of 2016 is to identify any conflict of interest in order to promote just and fair administrative actions by officials in senior positions and to protect the public service from actions that may be detrimental to its functioning and that may constitute unlawful administrative actions as a result of ulterior motives. The SMS members are obliged to disclose their financial interests, and thereby placing a responsibility on the employer (i.e. Executing Authority) to determine whether the employees’ financial interests will not negatively impact on the execution of their duties. The Committee commends the Department for ensuring that this was adhered to through an online process and no major issues were raised.


  1. Safety, Health and Environment (SHE)


In the wake of fires that gutted government buildings in the Gauteng Province, it is commendable that the Department has an approved internal Occupational Health and Safety Policy which is aimed at safeguarding employees and all visitors/clients through providing and maintaining, as far as reasonably practical, a working environment that is safe and without risks. The Committee noted that the Department has provided and maintained safe offices and equipment that pose no risk to the health of employees and visitors/clients. The Department has also appointed Health and Safety Representatives, Fire Marshals and First Aiders who have completed their training on Basic First Aid and Fire Fighting. The Committee notes that inspections are conducted in the workplace to identify and minimise hazards that will affect and expose employees and visitors/clients to health risks. Training is also conducted annually to ensure that representatives are well equipped to safeguard the lives of employees, visitors and guests should there be an emergency.


  1. Service delivery performance


The service delivery observations made by the Committee in the 2018 Budget Review and Recommendations Report are the culmination of the work done in the reporting period, and deal with recurring issues that have plagued the Department and South African Tourism over the entire Fifth Parliament. These include:

8.3.1    Membership of international organisations and bilateral agreements


The Department transfers funds and pays affiliation fees to a number international and regional organisations. These organisations have proved to be beneficial to raise the profile of the country at an international stage. A number of projects have also been implemented through the bilateral agreements signed with a number of countries. For example, the Robben Island Museum now has an interpreter on Mandarin; and there are South African chefs trained and employed in Seychelles. The BRICS membership has also opened opportunities for more collaborations as the member states declared tourism as a strategic sector to grow the economies of these countries.  However, the Committee is concerned about the governance issues in the regional Tourism Organisation of Southern Africa (RETOSA) which led to this regional entity being wound up. This could have been averted if all the member states paid their dues and provided proper oversight over the organisation.


  1. Safety and security for tourists


In 2017 the Committee observed the growing trend of crimes committed against tourists. These included, inter alia, muggings at the Table Mountain and tourist robberies in the Eastern Cape beaches.  This was exacerbated by targeted follow home attacks at the OR Tambo International airport. The Committee commended the Department, South African Tourism, and the Minister of Police on the swift action when the 36 Dutch tourists were ambushed and robbed of their luggage, including their travel documents. These tourists were going to spend 22 days in South Africa and their spending was going to inject much needed capital to our struggling economy. However, this scourge must be eradicated as safety and security issues remain one of the reasons for the decline in tourist arrivals throughout the reporting period, all the way to the second quarter of 2018.


  1. Barriers to destination accessibility


The Committee observed that there is a number of reasons that contribute to destination South Africa having a challenge of accessibility that leads to a decline in the number of tourist arrivals. Firstly, the Committee was concerned about the slow pace of exploring electronic visas to facilitate tourist travel. The work done by the departments of Tourism and Home Affairs in this regard is acknowledged, but the pace is too slow as South Africa has lost market share to its competitors due to delays. Secondly, airlift remains a challenge at a country level, particularly in sub-destinations where there is poor airlift and exorbitant fares charged to tourists. However, the Committee observed that there are pockets of excellence in some provinces, with the Western Cape and KwaZulu-Natal having made important strides in improving airlift. The Committee noted that airlift improves when provinces themselves play a leading and critical coordinating role. The Airports Company South Africa (ACSA) is a critical stakeholder in this regard and should be taken on board in all airlift initiatives. Thirdly, the Committee condemns Immigration Regulations introduced in terms of Regulation 6(2) of the Immigration Act, No. 13 of 2002 which requires that the children under the age of 18 travel to South Africa with an unabridged birth certiļ¬cate since 2014.


Tourism is an interdependent sector and its growth is affected by decisions made by various sister organisations. The dynamism of the sector also calls for a responsive system that is able to immediately capitalise on opportunities as they arise. Operating in a reactive manner when responding to tourism developments will result in numerous missed opportunities, such as the slow response to the introduction of electronic visas. Countries such as Ethiopia, Rwanda and Turkey are experiencing the value of easing access through minimising visa restrictions.


  1. Delays in introducing the Tourism Amendment Bill


The Committee is concerned by the delays of the Department to table the draft Amendment Bill to Parliament. Despite numerous calls during the cause of the Fifth Parliament, the Department kept furnishing the Committee with similar reasons why the Amendment Bill was not tabled. The Department claimed that the delays were caused by the need to finalise the policy review and analysis, which informs the drafting of the Bill in the areas of sharing economy and professionalising of guiding. The Committee acknowledges that the drafting of the amendments has commenced and the Department undertook to introduce it in the Sixth Parliament. The delays have caused the tourism sector to lag behind in the emerging technologies that cause disruptions in the sector, such as Airbnb and Uber.


  1. Quality assurance


The Committee was concerned that SA Tourism, through the Tourism Grading Council of South Africa (TGCSA), has struggled to make the grading system work in South Africa. This has been a case since the beginning of the 5th Parliament. There has been a decrease year-on-year in the number of graded establishments and the number of graded rooms. This was induced by the trade who have been opting out of the grading system. The TGCSA has failed to curb these cancellations through effective engagements and strategies that entice establishments to stay in the system. The Failure to achieve this target compromises quality assurance in the country. The Committee has always raised concerns about the negative consequences of the grading system failures in the overall destination quality assurance. The concerns were also due to the low level of uptake for the Tourism Incentive Programme (TIP) meant for grading and marketing support remains very low, with some slight improvement in the first quarter of 2018/19 financial year. The poor destination quality assurance has never been more of a threat to destination performance as in the current era of technological advancement and social media, where tourists share their destination experiences with the rest of the world. The poor grading system is therefore a threat to destination South Africa and should to be addressed with the urgency and seriousness it deserves. The Committee insists on a policy shift that will convert the grading scheme to be free but compulsory.


  1. Transformation


The Department’s introduction of a Transformation Fund and an internet portal for black economic empowerment might contribute towards addressing tourism’s transformation challenges. The recently published study by the Tourism Broad-Based Black Economic Empowerment (B-BBEE) Charter Council on the state of transformation in South Africa’s tourism sector shows minimal progress in sector trends. The Committee observed that transformation remains a challenge in the tourism sector. The Baseline Study on the State of Transformation in Tourism in South Africa commissioned by the B-BBEE Charter Council in 2017 indicates that the tourism sector has not transformed despite being the trailblazer in adopting the sector codes. The tourism sector has not done well across most elements of the Scorecard. This requires urgent and robust engagement with all the tourism stakeholders to advance the transformation of the sector. The B-BBEE scorecard as an instrument of transformation has also failed in transforming the tourism sector. The Committee has always maintained that the Tourism B-BBEE Scorecard is not sufficient to effect meaningful transformation in the sector. Thus, the Committee has always called for more innovative interventions to augment the Tourism sector codes, including the amended sector codes. The Committee is of the view that the government should conceptualise interventions beyond the scorecard to achieve sector transformation. The National Department of Tourism as custodians of the tourism sector in the country should, in collaboration with other stakeholders, develop targeted interventions to achieve sector transformation.


The major cause for concern is that, although the Tourism B-BBEE Charter Council was in place, its work had not yielded any concrete results in effecting transformation. The Department has also conceded that the transformation of the tourism sector in the country is the huge challenge that needs to be attended in different ways to tackle it holistically. The Committee remains resolute that transformation needs a multi-pronged approach and the Department should not solely rely on the work of the B-BBEE Charter Council to achieve this important task.


  1. Support for emerging tourism enterprises


 The Committee acknowledges that the tourism industry in South Africa comprises a number of small enterprises. There is also an emergence of dynamic township tourism products that bring vibrancy to domestic tourism. This is accompanied by the emergence of Home stays in rural communities. The Committee thus reiterates the importance of supporting small and emerging tourism   businesses as a vital component of reinvigorating the local tourism economy. This can be done effectively and efficiently if all stakeholders are involved and the government understands the nature of support required by these emerging enterprises. The Committee has noted that the Department is implementing projects that support rural and township enterprises. These initiatives must also be implemented by provinces and municipalities in their product development endeavours. The important stakeholders in that regard are the Department of Cooperative Government and Traditional Affairs (Cogta) and the South African Local Government Association (Salga). The funding institutions also form an important part of the SMME ecosystem and need to be engaged on the type of support needed. The funding institutions must also be engaged to ensure they simplify the funding criteria to increase the number of the qualifying emerging enterprises for support. The Committee is also of the view that the Department of Small Business Development should play a pivotal role in supporting emerging tourism enterprises.


  1. Rural and Township Tourism


Considerable strides are being made by the Department in its attempts to stimulate tourism in South Africa’s rural and township areas with tourism potential. The Department achieved its annual target of supporting 400 entrepreneurs in a business incubation programme in the rural Pilanesburg region. The Department also supports community tourism enterprises to enter the tourism value chain. Support is also evidenced through capacity building workshops held across different municipalities to equip local businesses. Various projects, such as the Letlamoreng Dam in the North-West and Phiphidi Waterfall in Limpopo are funded to stimulate growth. However, the nature of tourism as a package requires widespread development in a destination. Opportunities for rural and township tourism require the development of proper infrastructure, maintenance of amenities, an enabling environment for local businesses and basic service delivery. Developing a business case for tourism at municipal level is critical for the development of both rural and township tourism packages.


  1. Sharing Economy


Peer-to-peer markets, collectively known as the sharing economy, have emerged as alternative suppliers of goods and services traditionally provided by long-established industries. These alternative suppliers, in the form of Airbnb, Uber and Taxify, have introduced new competitive dynamics to traditional suppliers of similar services. New sharing economy businesses are appearing at an unprecedented rate and cannot be ignored and wished away as a passing trend. Technological advancements are set to continue to change the nature of how business is done and this has both economic and legislative implications for the sector. Both the World Tourism and Travel Council (WTTC) and UNWTO, have called on the tourism sector to maximise the power of technology in order to harness innovation and digital advances. By capitalising on the opportunity, the industry can create more jobs and ensure growth is sustainable and inclusive. The key issue is to find ways to better regulate and manage these trends. Lawmakers and businesses around the world are continuing to grapple with how to interpret existing laws in the context of the sharing economy business models and considering whether new regulation is required. While considerable strides are being made in South Africa’s tourism sector, changing global market trends continue to test the country’s ability to respond to and maximise emerging opportunities, while proactively insulating itself against detrimental factors. The dynamism of the tourism industry continues to challenge the Department’s resolve in responding to changing tourist demands, while fully exploiting the economic and social benefits provided by the sector.




  1. Prioritisation of tourism at local level


Since the beginning of the Fifth parliament, the Committee has observed that tourism is not prioritised at the local level. Some provinces do not have capacity to harness the full tourism potential and they do not provide an enabling environment for the sector to thrive. This is evident in poor airlift and lack of Convention Centres to drive business tourism. Some municipalities still consider tourism as an unfunded mandate and they do not allocate reasonable budget to facilitate local tourism growth. The Committee has, over the years, been recommending to the Minister of Tourism to engage his counterparts to deal with the matter. In this current reporting, the Committee is of the view that this matter must to be escalated to the National Treasury as the Ministry of Tourism has struggled to achieve the desired outcomes.


  1. Poor planning


The Department continues to incur delays in the implementation of projects due to poor forward planning, finalisation of the Terms of Reference, stakeholder consultations, contract management, procurement strategy, and signing of relevant agreements beforehand. Of these, poor planning and contract management are the two major causes for delays in the implementation of projects. The poor planning and contract management caused delays in payments from the Expanded Public Works Programme (EPWP); the slower spending on the Tourism Incentive Programme as large amounts of funds projected for spending are not disbursed due to delays in signing of contracts by the beneficiary. The Committee has always recommended to the Department to improve on forward planning and contract management to improve on both financial and non-financial performance. However, there seems to be no improvement in these critical areas as the Department continues to incur delays which lead to underperformance.


  1. Domestic tourism


South Africa has seen a decline in the total number of domestic trips; total number of domestic travellers; and domestic travel spend in real terms. The total number of domestic trips declined to 17.2 million in 2017, with the sharpest drop occurring in the visiting friends and relatives (VFR) category. Adverse macro-economic conditions in the country have resulted in a decline in domestic tourism numbers. The Department and its Entity, South African Tourism, are faced with the challenge of stimulating domestic travel in tough economic conditions despite the additional funding appropriated for this purpose. The Shot’ Left campaign advertisements have also not been effective enough to stimulate domestic tourism.


8.3.13  Cost benefit analysis for departmental programmes


The Committee appreciates that the Department is implementing a number of training programmes and infrastructure projects. The observation was made particularly in relation to the Working for Tourism Programme which involves both hard infrastructure and soft skill training projects. The Committee holds a view that there is a need for a benchmarking exercise to ascertain the cost-benefit analysis of the creation of one full time equivalent job. The Committee acknowledges that the cost per job is higher on the infrastructure projects compared to soft skills training programmes. In addition, the Committee acknowledges that the Department benchmarks with the information provided by the Department of Public Works on the costs and rates of creating a job in similar projects. However, the Department should work smarter to create more jobs with the allocated Expanded Works Programme budget. The Committee also commends the Department for placement achieved in some skills development programmes such as the Women Executive Development Programme, chefs, sommeliers, and food safety assurers. However, the placement rate is very low. The Department has no tracking mechanism in place to locate beneficiaries that have been assisted through the training programmes. This makes it difficult to ascertain the value for money on the skills programmes. The Committee, however, acknowledges that some of the beneficiaries are not absorbed within the tourism sector as their skills are also needed in other sectors. This, nonetheless, does not exonerate the Department from developing a tracking mechanism of the people they have trained through their programmes.


8.3.14  Staff competency levels


In the period under review, the Committee observed a worrying trend of lack of capacity by the departmental staff to implement some of the planned projects. This points to low competency levels that should be addressed immediately through training and development programmes identified in the contracting phase of the performance management system. The Human Resources Development function in the Department must ensure that all staff members have reasonable Personal Development Plans (PDPs) that address specific on the job training for the staff. For example, the capacity constraints and lack of requisite skills has compelled the Department to outsource work which could otherwise be executed in-house, such as the development of the Social Tourism Framework.


8.3.15  Implications of the technical recession on tourism


The Committee noted that the operating environment for both the Department and SA Tourism was affected by a number of factors, including the current technical recession. The Committee observed with keen interest the 2.2 and 0.7 contraction in the economy which led to a consecutive contraction in the economy leading to the technical recession. This has exacerbated the affordability issues, and shrinking disposable income to allow citizens to travel. In a broader sense, the recession will result in a decreased contribution of the tourism sector to the GDP, and employment in the country. The Committee is of the view that this situation could be turned into positive benefits for domestic tourism.


8.3.16  Performance against the 5-in-5 strategy


The Committee observed with concern the slowdown in the growth of international arrivals from the rest of the world, except Africa, has been recorded in the first few months of the beginning of 2018. At the same time, the start of 2018 has dampened the hope for domestic tourism growth as the total domestic trips declined compared to the same period in 2017. The Committee is concerned that the total international arrivals and domestic trips for 2018 will be worse than those observed in 2017. This is happening despite the new 5-in-5 strategy being implemented to boost the performance of the sector. The cause for concern is that SA Tourism is already behind with regard to the achievement of its 5-year 5-in-5 strategy. There seems to be no appropriate responding turnaround measures in place to drive recovery in the lost ground as the Entity continues to fall behind on its core key performance indicators of international arrivals and domestic performance.


8.3.17  Inter-Ministerial cooperation


The Committee is cognisant of the external factors partly contributing to the failure of the Department and SA Tourism to meet their mandate. In its oversight work, the Committee has observed that tourism is compromised by poor coordination of mandated functions amongst various sector departments. There is a need for enhanced inter-ministerial cooperation amongst various government departments. In particular, there is a dire need for improved cooperation between the departments of Tourism; Cooperative Governance and Traditional Affairs; Labour in terms of salary determination; Arts and Culture; Environment; Transport; Small Business development, and Home Affairs to promote tourism growth; safeguard destination image through the provision of appropriate support services at local government level; and facilitate ease of travel.

8.3.18  TOMSA levy versus Tourism Tax

The Committee appreciates the Tourism Marketing South Africa (TOMSA) Levy contributed by the private sector towards the marketing endeavours of SA Tourism through the Tourism Business Council of South Africa (TBCSA). The Committee also notes that the TOMSA Levy is a voluntary payment of one percent of the Net Profit After Tax contributed by the levy collectors.  Over the years, the Committee has noted that the TBCSA has failed to significantly increase the number of levy collectors. This is due to two main reasons, firstly, that the industry is not happy about how SA Tourism utilises the levy and, secondly, that the levy is voluntary and there is no enforcement mechanism. The Committee has noted that over the years, the Department transfers an average of 53 percent of its budget to SA Tourism. This benefits the private sector, but there is no reciprocal commitment to contribute towards the TOMSA levy. This calls for a review of the TOMSA Levy system from a voluntary collection to a compulsory collection. Alternatively, the government should explore the introduction of a tourism tax. This will assist Parliament to lobby for more budget allocation by the National Treasury to the Tourism Vote and increase allocations in the Estimates of National Expenditure (ENE) in the subsequent MTEF periods.

9.3.19  Public Private Partnerships


The Committee observed that the Department has no Public Private Partnerships registered with National Treasury. This is a disservice to the tourism sector, particularly transformation. The National Treasury developed the PPP Toolkit for Tourism in 2005. The PPP Toolkit for Tourism is a practical, step-by-step guide, with numerous templates to aid its efficient application. Its aim is to empower relevant institutions to forge partnerships, and to encourage private tourism investors and operators to do business with them. The toolkit was developed after realising the opportunities abound to expand tourism, to grow revenues for conservation and heritage, to boost entrepreneurship, to attract international investment, to extend black economic empowerment, and to create jobs in remote and poor communities. These opportunities can become realities through public private partnership agreements. The Department, through its Programme 3: Destination Development, is encouraged to work closely with the National Treasury and other relevant organisations to forge public-private-partnerships to expedite transformation.


  1. Financial performance including funding proposals

The Committee performed very well in relation to expenditure of the appropriated budget in the 2017/18 financial year. As alluded earlier, the Department spent R2 133 976 of the R2 140 156 appropriated budget in the year under review. This accounts for 99. 7 percent of the allocated budget in 2017/18. This is commendable as this indicates a continuous healthy expenditure as 95.5 percent was spent in 2016/17 and 99.1 percent t in the 2015/16 financial years. Notably, about 53 percent of the budget was spent for marketing, leaving little budget for goods and services in the Department. This causes a perpetual underfunding of the tourism mandate in the country.  Regrettably, despite the budget transferred to SA Tourism, the Entity continues to fail in attaining its core key performance indicators. More budget is required for destination enhancement, product development, and market access. There is also a need to ensure proper funding and coordination of tourism at all spheres of government. In its oversight work, the Committee has identified the lack of prioritisation of tourism at a local level as a missing link in the development and growth of tourism in South Africa. Despite numerous attempts by the Committee and the Department to encourage adequate budgeting for tourism at local level, this remains a challenge. Some of the interventions implemented to improve the situation included developing and workshopping municipalities on the Tourism Planning Toolkit for Local Government. The Toolkit was meant to assist municipalities in advancing their competences in tourism planning and setting minimum standards for local tourism plans and budget structure. In addition, the Department of Tourism convenes a bi-annual Local Government Tourism Conference in partnership with the Ministry of Cooperative Governance and Traditional Affairs to reinforce the responsibilities of all spheres of government, municipalities and communities in achieving their mandate. 

Given the aforementioned factors, the major funding proposal for the 2018 Budget Review and Recommendations Report is that the National Treasury should develop a funding model for tourism at a municipality level. This requires the Ministry of Cooperative Governance and Traditional Affairs (CoGTA), and the National Treasury to work out a funding model that will ensure that tourism is prioritised in the Local Economic Development Fund through specific conditions attached to the Division of Revenue allocations. Tourism prioritisation at both local and municipality level may be effected through determining a percentage of the budget that should be ring-fenced for tourism in the Division of Revenue allocations. This should be a condition for all provinces and municipalities that have identified tourism as a priority sector in their Provincial Growth and Development Strategies (PGDS), and Integrated Development Plans (IDPs) respectively. The ring-fenced budget should be utilised to streamline tourism into the Local Economic Development (LED) Fund to drive local destination enhancement, market access, and product development.

  1. Recommendations 

The Committee, having considered the service delivery environment and the associated financial and non-financial performance by the Department and SA Tourism in the 2017/18 financial year recommends to the Ministers of Finance and Tourism as follows:


  1. Financial performance including forward funding recommendations

It is recommended that the Minister of Finance, through the National Treasury:

  1. Develops a tourism funding model for local government through determining a percentage of budget that could be ring-fenced for tourism in the Division of Revenue allocations, in order to advance destination enhancement, market access, product development, and linkages to the Local Economic Development budget.
  1. Capitalises the Tourism Transformation Fund with the budget commensurate to the transformation imperatives of the tourism sector which still resembles the Apartheid patterns of ownership, management and control.

9.1.3    Advices Parliament on the feasibility of introducing a Tourism Tax that could be introduced in South Africa, and whether such a tax would have a substantial impact on the increase of budget appropriated to the Tourism Vote.

  1. Recommendations to the Auditor-General

It is recommended that the Office of the Auditor-General conducts a Performance Audit for the selected Working for Tourism infrastructure and skills training programmes to ascertain if project implementation is effective, efficient, and economical in rendering service delivery to targeted communities and beneficiaries.


The following recommendations are made to the Minister of Tourism with regard to both the National Department of Tourism and SA Tourism, and due for reporting back to the Committee before the end of the 2018/19 financial year:


National Department of Tourism


  1. Governance and Leadership


Considering the regression in the audit opinion and the service delivery environment, it is recommended that the Minister of Tourism:

  1. In collaboration with National Treasury, conducts a Tourism Tax referendum, and commissions both a feasibility study and Socio-Economic Impact Assessment of the nature and scope of the Tourism Tax that could be introduced in South Africa to ascertain the increase that could be realised to the budget appropriated to the Tourism Vote.
  2. Engages the Minister of Cooperative Governance and Traditional Affairs (CoGTA), and the National Treasury to ensure that tourism is prioritised at provincial and local government through determining a percentage of budget that should be ring-fenced for tourism in the Division of Revenue allocations, particularly in provinces and municipalities that have identified tourism as a priority sector in their Provincial Growth and Development Strategies (PGDS) and Integrated Development Plans (IDPs) respectively, in order to advance pro-poor tourism development in South Africa.
  3. Ensures that the Department improves internal controls and keeps abreast of the developments and the changes made by the National Treasury on the accounting standards to comply with relevant legislations and policies.
  4. Works with the National Treasury, the Department of Cooperative Governance and Traditional Affairs on undreutilised government resorts and facilities; conservation agencies; and heritage institutions to explore and conclude public-private-partnerships using the PPP Toolkit for Tourism in order to boost entrepreneurship, attract international investment; extend black economic empowerment for the previously marginalized communities, and create jobs in remote and poor communities.
  5. Engages the Minister of Home Affairs to further clarify the newly announced visa-related reforms to provide policy certainty to tourism stakeholders, including the international tourism markets and airlines, and explore the possibility of completely repealing the requirement/ nuances for minors to carry the unabridged birth certificates, and the expansion of the electronic visas to key tourism markets.
  6. Ensures that the country optimises the value for money on the subscriptions and participation of South Africa in regional and international tourism bodies.
  7. Ensures that the Department maintains an effective Performance Management System with distinctive Personal Development Plans and tailor-made training programmes that address particular skills shortages to enable individual staff members to perform their respective duties as agreed in the annual performance contracts.
  8. Improves the engagements with other sector departments and social partners, including the private sector, funding institutions, and labour formations, to enhance collaboration and coordination of activities to develop interventions that drive tourism growth, transformation, SMME development, township tourism, rural tourism, and improve the safety for tourists.
  9. Ensures that the Department improves on project management with regard to forward planning, contract management, procurement strategy, stakeholder consultations; and signing of relevant agreements with third parties before including intended projects in the Annual Performance Plans in order to facilitate effective and efficient implementation of projects.

South African Tourism

  1. Ensures that SA Tourism develops and implements effective internal controls and policies to discourage and detect acts of corruption such as officials doing business with the Entity and flouting procurement procedures.

9.3.11  Engages the Board of SA Tourism to improve the performance against the targets of the 5-in-5 strategy and report to the Committee on the turnaround strategy to catch-up with the already missed targets.           

  1. Engages the SA Tourism Board to determine whether the salary packages for the senior management within the Entity are market related in order to attract, recruit, and retain incumbents in critical positions.
  2. Engages the Board of South African Tourism to ensure that the organisation has an appealing staff recruitment and retention policy that attracts professionals in strategic positions that drive the mandate of the organisation.

9.3.14  Ensures that the domestic marketing campaigns implemented by SA Tourism are effective through not only showing experiences and attractions people can visit in South Africa, but also include specific destinations and products, and negotiate prices to address affordability.

9.3.15    Ensures that South African Tourism develops a comprehensive China Strategy to tap into the growing outbound and high spending Chinese market.

9.3.16    Engages the Tourism Business Council of South Africa to conduct a policy review of the TOMSA Levy collection from being a voluntary to compulsory collection.

9.3.17    Ensures that South African Tourism receives value for money on all the Joint Marketing Agreements signed with agencies domestically and abroad.

10.3.18  Develops an air access plan for all provinces through engaging all the stakeholders, including airlines, cities, and the Airports Company South Africa to unlock the airlift in South Africa as a destination to improve tourist arrivals.

9.3.19    Improves the quality assurance in destination South Africa through a policy shift in the Tourism Amendment Bill by changing the grading system from voluntary to free but compulsory.

9.3.20    Engages the Board of SA Tourism to explore opportunities presented by the technical recession/ slow economic growth in the country to convert outbound tourism into domestic tourism, and business and VFR tourists into leisure tourists.


The Committee would like to thank the internal and external stakeholders who directly and indirectly contributed to the process of developing this Budget Review and Recommendations Report. A particular word of gratitude goes to the office of the Auditor-General, the Minister of Tourism, the Deputy Minister of Tourism; and the offices of the Speaker and the House Chairperson.


The tourism sector remains a critical economic sector for South Africa to drive sustainable job creation. The Department of Tourism and South African tourism have put plans and strategies in place to steer the sector towards the right direction. The Department has recently reviewed the National Tourism Sector Strategy and SA Tourism is implementing its 5-in-5 growth strategy. These strategies have a potential to stimulate further growth of the sector over the next five years. The overarching strategic goal is to increase the number of foreign and domestic travellers, as well as the inclusivity of the sector to alter the ownership patterns. There are also huge untapped opportunities in the niche tourism market to stimulate demand and supply of new attractions and activities. The new opportunities prevail in the rural tourism, township tourism, medical tourism, heritage and cultural tourism, and agro tourism. The contraction in the economy which make outbound tourism expensive should be used as an opportunity to develop and grow domestic tourism.

The growth of tourism is, however, stifled by government policy and non-prioritisation of the sector at a local level of government. This calls for the national Treasury to develop at a funding model that will assist municipalities in fulfilling their local tourism mandate. A new funding model will assist with destination enhancement, product development and market access. The delays in the Tourism Amendment Bill have also created a gap in dealing with disruptors such as the sharing economy. The quality assurance in the destination has also not kept up with the technological trends and changing tourism clientele who have become eco-friendlier and sustainable development attuned. This calls for a shift in policy and amendment of the current enabling legislation to unleash the potential of the sector.

The Committee is satisfied with the performance of the Department and SA Tourism in the 2017/18 financial year. However, the Committee calls for the improvement in internal controls to prevent regressing on the Auditor-General findings.

Report to be considered.