ATC141103: Budgetary Review and Recommendation Report of the Portfolio Committee on Tourism, dated 29 October 2014
THE BUDGETARY REVIEW AND
RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON TOURISM, DATED 29 OCTOBER
Portfolio Committee on Tourism, having considered the performance of the National
Department of Tourism and South African Tourism for the 2013/14 financial year,
reports as follows:
tourism sector globally, and particularly in South Africa, has shown signs of
resilience and continued to grow year-on-year despite global economic
The tourism industry has
continued to grow year-on-year despite unfavourable foreign exchange rates
amongst countries. Tourism has also proved that it is a labour intensive sector
and continues to create a substantial number of direct and indirect jobs.
2013 the tourism sector created 144 000 jobs which is equivalent to 12
percent of all jobs created in South Africa in the year under review.
tourism sector however, is still reflective of structural constraints in the
economy and has made little inroads in transformation.
The Department of Tourism driving development
and promotion of tourism is relatively new.
Established in 2009, the Department has been able to establish a solid
policy and strategic frameworks to provide the direction for the sector towards
achievement of National Development Plan targets.
The Department has also established an
enabling legislation which provides a conducive environment for tourism
development and investments in the sector.
is highly affected by globalisation.
global economic climate and the depreciation of the rand has seen more
international arrivals due to South Africa being a relatively cheaper
In addition, South Africans
who might have taken overseas trips have been grounded due to financial
This should have worked
well for the domestic industry.
the South African tourism industry is not structured to promote domestic
The industry is geared more
towards international tourism and less efforts have been made to develop and
promote domestic tourism over the years.
The global trends dictate that domestic tourism shields the sector from
global economic turmoil.
The Department therefore
faces a daunting challenge of balancing international and domestic tourism.
appropriation of funds to tourism should therefore take cognisance of the role
the sector is playing in the economy of the country.
The allocation of funds should be
commensurate to the mandate of the Department to enable implementation of all
the strategies that have been developed to grow the sector.
42(3) of the Constitution of the Republic of South Africa, Act No 108 of 1996,
bestows oversight of executive action function to the National Assembly. One of
the functions of the oversight listed in the Oversight and Accountability Model
of Parliament of the Republic of South Africa is to ensure that policies
announced by government and authorised by Parliament are delivered.
Furthermore, the money Bills Amendment Procedure and Related Matters Act, 2009
(Act NO. 9 of 2009) requires that the National Assembly, through its
committees, conducts an annual assessment of the performance of each national
department with regard to the medium term estimates of expenditure.
fulfilling its legal obligations, the Portfolio Committee on Tourism has
exercised rigorous oversight to the National Department of Tourism, hereunder
referred to as the Department, and South African Tourism to ensure fulfilment
of the departmental mandate.
transition in oversight from the Fourth Parliament to the Fifth Parliament has
been seamless in terms of providing oversight to the Executive.
The Committee is ensuring that funding
allocation and expenditure is made towards implementing strategic interventions
that promote transformation, job creation and contribution of the sector to the
This Budget Review and
Recommendations Report is therefore compiled to provide overall assessment of
financial and service delivery performance of the Department in the 2013/14 financial
The Portfolio Committee on Tourism, hereunder
referred to as the Committee, is established by the rules of the National
Assembly as enshrined in Section 57(2) (a) of the Constitution of the Republic
of South Africa, (Act 108 of 1996). The Committee is therefore an extension of
the National Assembly and derives its mandate from Parliament.
The mandate of the Committee is fulfilled
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
The Committee fulfils its mandate by
discharging its oversight role over the National Department of Tourism and
South African Tourism.
conducts oversight visits and hold public hearings to ensure public
participation and corporative governance as stipulated in the Constitution. The
Committee processes legislation, and in the period under review the Tourism
Act, 2014 (Act No.3 of 2014) that repealed the Tourism Act, 1993 (Act No. 72 of
1993) was processed as part of its legislative mandate and became operational in
Core functions of the Department.
This section provides the legislative and policy framework
that govern the Department of Tourism and South African Tourism.
Constitutional and Legislative Mandate
A of Schedule 4 of the Constitution of the Republic of South Africa (Act 108 of
1996) lists tourism as a functional area of concurrent national and provincial
Part B of
Schedule 4 of the Constitution also lists local tourism as a local government
The Constitution therefore
mandates all the spheres of government with a tourism function thus making it a
prerogative of each sphere of government to decide on certain aspects of the
Tourism Act, 1993 (Act No 72 of 1993) as amended, also makes provision for the
promotion of tourism to and in the Republic and for further regulation and
rationalisation of the tourism industry; measures aimed at the maintenance and
enhancement of the standards of facilities and services hired out or made
available to tourists; and the co-ordination and rationalisation, as far as
practicable, of activities of persons who are involved in the tourism industry.
However, as of June 2014, tourism is governed
by the new Tourism Act
, 2014 (Act No.3 of 2014).
challenge posed by concurrency of tourism mandate stifles tourism development,
particularly at local level. The government at a national level has prioritised
tourism and the Department is striving for inclusive tourism growth. The challenges
are still experienced at provincial and local spheres of government where
tourism has not been prioritised in budgeting and planning.
Poor planning and budgeting at a local level
reverses strides made at national level as tourism happens at a local level which
is a critical sphere of government as a base for service delivery.
Tourism, like all other sectors in South Africa, is
governed by the National Development Plan (NDP) which is the government
blueprint that sets targets to 2030. The NDP recognises tourism as one of the
main drivers of employment and economic growth.
White Paper on Development and Promotion of Tourism in South Africa is a
founding policy for tourism in South Africa and sets out broad principles on
which the Departmental tourism mandate is discharged.
The White Paper provides framework and
guidelines for tourism development and promotion in South Africa.
White Paper formed basis for the development of a sector strategy which was
adopted in 2010. The National Tourism Sector Strategy (NTSS) was developed and
agreed upon by both the public and private sector. NTSS provides a blueprint
for the tourism sector in pursuit of growth targets contained in the New Growth
The NTSS seeks to create
225 000 new jobs and contribute R499 billion rand towards the Gross Domestic
Product (GDP) by 2020.
vision which is a driving force of tourism in South Africa is to be one of the
top 20 global destinations by 2020. The targets in the NTSS were transposed to
the National Development Plan.
NTSS suggested a number of strategies that had to be developed for various
facets of the tourism industry.
Subsequently, the Department developed a number of strategies to guide
the development and promotion of tourism for various niches, including the Rural
Tourism Strategy, Domestic Tourism Growth Strategy, National Heritage and
Cultural Tourism Strategy.
transformation, the Tourism B-BBEE Sector Code provides guidelines for both
government and private sector on how to transform the industry.
Oriented Goals of the Department and
targets for 2013/14
The Department set
seven strategic outcome-oriented goals to meet the five government priorities.
The five government priorities on which the
departmental goals and programmes are based are
work and sustainable livelihoods; education and skills development; fighting
crime and corruption; health; rural development and agrarian reform.
The major focus is on inclusive economic
The five government
priorities were unpacked into twelve government outcomes.
The President signed a performance agreement
with the Minister of Tourism and the Minister committed to deal with four of
the twelve government outcomes in the 2013/14 financial year.
The four outcomes are Outcome 4: Decent
employment through inclusive economic growth; Outcome 7: Vibrant equitable and
sustainable rural communities and food security for all; Outcome 11: Create a
better and safer South Africa and world for all; and Outcome 12: An efficient,
effective and development oriented public service and an
empowered, fair and inclusive citizenship.
The government outcomes were catered for in
the Departmental Strategic Plan for 2013/14 through
seven strategic outcome oriented goals that were set
and aligned to government priorities
as indicated in Table
The strategic outcome oriented goals of the Department are as follows:
Table 1: Strategic Outcome Oriented Goals
STRATEGIC OUTCOME ORIENTED GOALS
good corporate and cooperative governance
comprehensive corporate support service to the department to ensure good
Outcome 12: An
efficient , effective and development oriented public service and an
empowered, fair and inclusive citizenship
impact of tourism on the livelihood of all South Africans
To monitor and
evaluate the Implementation of tourism programmes, strategies and policies
Decent employment through inclusive economic growth
priorities integrated within other sector departments, provincial and local
frameworks, stakeholder management and planning related support services at
provincial and local government level by analysing and participating in their
Outcome 12: An
efficient , effective and development oriented public service and an
empowered, fair and inclusive citizenship
Tourism Sector Research, Information and Knowledge Management
Research, Information and Knowledge Management within the tourism sector
Decent employment through inclusive economic growth
contribution of tourism sector to inclusive
compliance to the gazetted Tourism charter by identified tourism sub-sector
Vibrant equitable and sustainable rural communities and food security for
Decent employment through inclusive economic growth
international tourism (country and/ or region) analysis to inform strategic
and develop appropriate integrated support packages that respond to tourism
development and growth trends
levels of competitiveness and sustainability in the sector
responsible tourism best practices to inculcate a culture of responsible
tourism of South Africa
Decent employment through inclusive economic growth
regional, African and international collaboration and partnerships
regional, Africa and international collaboration and partnerships through
bilateral and multilateral engagements
Create a better and safer South Africa and world for all.
NDT Annual Report (2014)
his interaction with the Committee, the new Minister of Tourism has acknowledged
that the tourism industry needs transformation.
He pronounced that in the next five years the Department will focus on
five key areas, namely, job creation and contribution to the gross domestic
product; SMME support and development; skills development and training; quality
assurance; and intergovernmental and stakeholder relations.
Purpose of the Budget Review
and Recommendations Report
The Budget Review and Recommendations Report (BRRR) is an
import annual budgetary process enshrined in the Money Bills Procedures and
Related Matters Amendment Act (Act 9 of 2009).
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, portfolio committees 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 years performance, as well as performance to date, form part of this
The purpose of this report
therefore is to make recommendations to the Minister of Finance to amend the
budget for the Department of Tourism.
process of developing the 2013/14 Budget Review and Recommendation Report involved
a number of institutions and reviewed a number of supporting documents, both
within government and private sector.
Committee also reviewed a number of documents from government institutions and
private sector organisations about the general performance of the tourism
industry. The Committee had a hearing with the Auditor-General and the
Financial and Fiscal Commission on the 17
October 2014 to scrutinise
the departmental audit outcomes, financial and service delivery performance in
the year under review.
This prepared the
Committee well for the briefing held with the Department of Tourism and South
African Tourism on the 24
October 2014 on their Annual
The Committee also received
written submissions from the Public Service Commission on the performance of
the Department. The Committee also considered outcomes of public hearings, and
This assisted the Committee in assessing the
work done by the Department against industry performance and expectations of
the general citizenry on tourism.
Outline of the contents of
report deals with five broad distinct issues. These issues are:
and policy mandate of the Committee and the process that was followed in
developing this Budget Review and Recommendations Report.
performance of the Department on both financial and non-financial aspects.
non-financial and service delivery issues for the period under review.
findings from oversight work of the Committee, public hearings and research by
external stakeholders that inform the recommendations.
Recommendations to the Ministers of Finance
and Tourism in terms of the budgetary requirements, performance, and service
delivery improvement of the Department.
Overview of the key relevant policy focus
Key Government policies
Policy in respect of oversight in the legislative arm of
the State is derived from a number of sources. The State of the Nation Address
is one such policy that provides priorities and directives for the calendar
year and subsequent Cabinet Makgotla that assist to refine it in detail to
inform the strategic plan of departments. Other government policies and
strategies are taken into account when planning for a year ahead.
The Department of Tourism took all these
government policy directives when planning and executing their mandate in the
year under review.
The Executive carried
the tourism mandate and service delivery programmes for 2013/ 2014 based inter
alia on the following policy documents:
Paper on Development and Promotion of Tourism in South Africa
White Paper on the Development and promotion of Tourism in South Africa (1996)
is a pioneering policy that has provided a strong base for other policies and
the legislative framework in South Africa.
The policy outlines the government's tourism strategy and prioritises
for tourism mobilisation of the country's human and material resources in order
to obtain a bigger share of the increasing world tourism industry. The policy
acknowledges the potential of the tourism industry to create opportunities for
emerging and small entrepreneurs, and in so doing, supporting access to greater
socio-economic benefits for the wider population.
The policy also advocates for transformation
in the tourism and sets solid foundation for responsible tourism development in
Government identified tourism as one of the six strategic
economic drivers in the New Growth Path (NGP) adopted in 2010.
The six sectors are infrastructure, agriculture, mining, tourism, green
energy and manufacturing. The New Growth Path 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
For the tourism industry which
is largely untransformed, the NGP is ought to be used as a vehicle to expedite
tourism growth that fosters participation in the mainstream economy by South
The New Growth Path recognises
tourism as a key sector for employment creation and sets a target of 225 000 additional
jobs by 2015. This economic plan stipulates that to achieve the intended
targets, the industry needs to address quality assurance, training, tourism
infrastructure, youth employment and support cultural industries main
The National Development Plan (NDP) offers a long-term
perspective economic policy for the country with a vision of creating an
additional 11 million jobs by 2030. It defines a desired destination and
identifies the role different sectors of society need to play in reaching that
The National Development Plan
recognises tourism as one of the main drivers of the countrys economy and
employment. The plan envisages the promotion of South Africa as a major tourist
destination, with unique features, to boost tourist numbers and enable tourism
to contribute to sustainable economic growth and poverty reduction. The Department
supports these objectives and implements a number of strategies to set and
maintain high service standards and encourage growth in the sector.
targets set in the New Growth Path were transposed
to the National Development Plan.
targets in the NDP also form the basis for execution of the National Tourism
Sector Strategy (NTSS) which is the strategy blueprint of the tourism sector.
to increase tourisms contribution, both direct and indirectly, to the economy
from the 2009 baseline of R189, 4 billion which was 7.9 percent of GDP at the
time, to R499-billion by 2020.
employment effect is that tourism currently supports one in every 12 jobs in
South Africa. The NTSS is as also aligned to the target of creating a total
225,000 new jobs by 2020.
This calls for
all tourism stakeholders in the sector to work collaboratively towards
realising the goals and targets set in the National Development Plan.
State of Nation Address
In His State of the Nation Address (SoNA) for 2013, the
President reiterated that tourism has been identified as one of the job drivers
in South Africa. He asserted that the industry had performed very well with tourist
arrivals growing at an impressive 10.7 percent between January and September
2012, which was higher than the global average of four percent for the previous
South Africa is still a Safari
destination that prides itself with the Big 5 wild animals which include the
The State of the
Nation alluded that ironically, the very success of South Africas national
conservation effort resulting in over 73 percent of the worlds rhino
population being conserved here, has resulted in our country being targeted by
international poaching syndicates.
dwindling number of this species may affect South Africa as a tourist
destination of choice for the Safari enthusiasts.
The country may lose these tourists to our
competitors elsewhere within the African continent.
Tourism also affected by the delays in finalising
the Land Claims process.
The State of
the Nation Address specified the need to shorten the time it takes to finalise
a claim. Other issues raised in the 2013 SoNA include the need to continue
improving on the Social Responsibility Implementation Programme (SRI) which is
an Expanded Public Works Programme (EPWP) implementation programme for the
Department; implementation of proper tourism strategies to attract more
constant engagements with regard to cultural
tourism and heritage tourism; the need for the Department to adhere to the
30-day payment period for services.
is also imperative for the Department to expedite transformation of the sector
to ensure inclusive growth that creates jobs.
In the State of the Nation Address for 2014
the President highlighted that the country should attract 15 million visitors
This sets the agenda for the
Department in line with the National Development Plan and the National Tourism
Charter and Scorecard
This Tourism BEE Charter and Scorecard
expresses the commitment of all stakeholders in the tourism industry to the
empowerment and transformation of the sector and its commitment to working
collectively to ensure that the opportunities and benefits of tourism are extended
to black South Africans as well.
The BEE Charter sets
two targets, namely 2009 and 2014, which were subsequently changed to 2012 and
The targets represent the ideal scenario
at which the tourism enterprise will score full points for the respective
indicator. During the period of interpretation, the tourism enterprise will be
awarded proportional points on each indicator, represented by the proportion of
the relevant target achieved by the enterprise. Two targets were set for each indicator,
namely: a 2009 milestone to be used during the first five years of
implementation, ending on 31 December 2009 and a 2014 target ending on 31
December 2014. The 2009 targets were to be used by all companies measuring the
BEE status of a tourism enterprise until 31 December 2009.
The overall BEE targets for 2014 were to be
used when one measures the BEE status of a tourism enterprise in the five-year
period between 1 January 2010 and 31 December 2014.
The national Department of Tourism is charged
with the responsibility to drive transformation of the sector. However, the
success of the Department in promoting transformation depends largely on the
willingness of the private sector to implement and comply with the Tourism
Sector Codes. It must be noted that the government does not have any
enforcement mechanisms or punitive measures to ensure compliance by the
Transformation is therefore
left to the good will of the industry and the only incentive is that tourism
companies which are BEE compliant can do business with government.
This however is not a compelling incentive as
some businesses do not rely on government business and therefore whether they
are compliant or not does not affect their business model.
According to the Tourism BEE Scorecard the
tourism industry complies with most elements in the scorecard. The irony,
however, is that transformation in the tourism industry does not ensure
involvement of the historically disadvantaged communities as only existing
companies are made to comply with the Tourism Sector codes without necessarily
adding new entrants in the mainstream tourism economy.
The daunting question is whether the existing legislative frameworks
have led to any real transformation in the tourism sector.
The study conducted by the Department on the
state of transformation indicates that
industry remains in the hands of the population groups that have historically
been involved in the sector.
The lack of
transformation in the sector is therefore evidence-based and not anecdotal
sentiments raised by the historically marginalised groups.
Overview of revised
Strategic Plan and Annual Performance Plans
Department of Tourism is relatively new having been established in 2009 after
being separated from the erstwhile Department of Environmental Affairs and
The Department therefore is
implementing its first five-year strategy spanning 2010/11 2015/16.
drafting of this five-year strategic plan, the Department has been tabling revised
annual Strategic Plans and Annual Performance Plans.
The 2013/14 strategic plan was guided by the
Departmental vision to be a catalyst for tourism growth and development in
South Africa, and driven by the mission to create conducive conditions for
growing and developing tourism through innovation, strategic partnerships and
collaboration, providing information and knowledge management services.
the year under review, the Department reviewed their organisational programme
performance indicators to improve monitoring and evaluation of the Strategic
This enabled Parliament through
the Committee to conduct oversight more effectively.
The Auditor-General had previously raised
issues on the setting of predetermined objectives or targets and the Department
had tried to improve on this.
the Department still needs to put more efforts in refining the way they craft
their pre-determined objectives/ targets to ensure more effective oversight.
revised 2014/15 Strategic Plan is still based on the same mission, vision and
strategic objects as the 2013/14 plan.
However, the revised plan gives more effect to the Departmental mandate
of tourism growth and development through taking cognisance of the triple
challenges of poverty, unemployment and inequality.
The focus of the Department is more on
inclusive economic growth and job creation in order to address the challenges
as outlined in the National Development Plan.
revised Strategic Plan puts more emphasis on the implementation of the sector
plans that had been developed by the Department in the previous financial
The Department, through the
Domestic Tourism Branch, has started already in the 2013/14 to implement a
number of projects contained in the National Tourism Sector Strategy; Domestic
Tourism Strategy; Rural Tourism Strategy; Heritage and Cultural Tourism
Strategy and Responsible Tourism Strategy.
In advocating for inclusive growth, the revised Strategic Plan
emphasises the implementation of the Tourism Incentive Programme.
Department will continue to support community projects through Social
Responsibility Initiative Programme (SRI).
The Department has however opted to implement
more training programmes than infrastructure projects.
To this effect, a Tourism Buddies Programme
is implemented in all nine provinces.
terms of policy environment, the Department in the revised Strategic Plan
purports to draft regulatory frameworks for Tourist Guides and Business
Information; develop norms and standards for visitor information services; and
review of Tourism BBBEE Sector Codes.
of key developments in the organisational and service delivery environments of
Department for 2013/14 and 2014/15 MTEF cycle.
The Department operates in a highly globalised
environment and is susceptible to global trends.
Tourism involves travelling amongst different
countries/ or and destinations and thus connectivity amongst countries is very
At the heart of the current
global trends in international tourism is the significance of travel facilitation.
South Africa is a long haul destination and
highly affected by air connectivity.
he increase in the airfares
in Africa, which is almost 50 per cent higher than those outside the continent,
contributes to a price versus value mismatch. These increases do not bode well
for attraction of tourists. The higher the airfares, the greater the challenge
to attract tourists, as many of them would simply consider more accessible
destinations that compete with tourism in South Africa. Up to 55 per cent of
international passengers on African airlines are travelling for business,
compared to just 15 per cent who travel for what is traditionally understood as
leisure tourism, and 30 per cent travel to visit family and friends.
Notwithstanding the importance of business tourists, who are foreign investors
and facilitate increased trade in goods and services, there is a need to
improve efforts to develop packaging and marketing of tourism offerings that
increase the share of leisure tourism.
The absence of a comprehensive Airlift Strategy in the
country compromises the ability of the tourism industry
reflect on the often non-transparent pricing factors, such as taxes and
monopoly behaviour of airlines, which drive up the cost of air passenger travel
thus affecting number of tourists attracted by South Africa.
The effect of global
economic turmoil also had effect on the performance of the Department against
the set targets.
The factors that affected tourism are
fragile economic recovery
and expected economic recession; promising outbound tourism growth but short
haul travel; shrinking disposable income due to austerity measures in foreign
markets; exchange currency weaknesses; and unemployment dampening domestic
The economy has shown signs of weakness in some of the
departments key markets, which affects decisions of tourists who may tend to
take shorter trips or stay for shorter periods affecting tourism earnings for
The unemployment rate in
South Africa, and a low culture of travel amongst South Africans reduces the
size of the domestic market, affecting its growth. The perceived lack of
tourism skills impacts on the perception of what quality of service the sector
can provide, thereby influencing the decisions of tourists to travel to and
within South Africa.
South African Tourism also have their work cut out in
terms of distinguishing South Africa from the rest of the African continent to
occurrences such as the current Ebola epidemic in West Africa sends jitters to
the international tourism industry about Africa as an unsafe destination.
South African Tourism therefore must make
concerted efforts to ensure that the country does not get negative publicity
Messaging should depict a
safe South Africa for all prospective international tourists.
The Department experienced high staff turnover in the
period under review and suitable candidates declined offers, and personnel
suitability checks (PSCs) were not timeously available, all of which impacted
on the ability to deliver on its mandate
The challenge of personnel shortage affected achievement of critical
programmes such as the Tourism Incentive Programme.
Department received the Tourism Incentive Scheme from the Department of Trade
and Industry (DTI) in the 2012/13.
was due for implementation in the 2013/14 as a revised Tourism Incentive
Programme (TIP) as reported in the Strategic Plan and Annual Performance Plan.
An amount of R4, 536.000 was moved as a
virement from Programme 1 to Programme 4 from the TIP which was not
implemented. The Department has displayed lack of capacity in delivering on its
Strategic Plan and Annual Performance Plan.
At the time of drafting this report, the programme had not been properly
packaged and there was no concept document in place.
The Department had also not appointed
suitable staff to implement the programme and reported delays in the
Based on the recent briefings with the
Committee, it was established that the Department will also not be able to
implement this programme in the 2014/15 financial year.
This matter is of serious concern to the
Committee as the TIP is an important service delivery issue in the tourism
industry, and the programme has been on hold since it was transferred from the
The delays in implementing the TIP
has mostly affected the emerging tourism enterprises who need the most of
assistance in their fledging businesses.
failure of the Department to implement the TIP raises some issues of concern with
regard to the ability of the Department to utilise its appropriated budget.
In 2012/13 Budget Review and Recommendations
Report, the Committee had recommended, inter alia, that the budget of the
Department be increased to enable the Department to fulfill its mandate.
However, with the failure of the Department
to implement the TIP, the Committee is reviewing such recommendations until the
Department has full capacity to utilise all its currently appropriated budget.
major positive key development in the 2013/14 was the passing of the Tourism
Bill by the National Assembly. The Bill was gazetted and assented into law by
the President in April 2014 as Tourism Act, 2014 (Act 3 of 2014).
will inter alia pave a way for the promotion of responsible tourism for the
benefit of South Africa and for the enjoyment of all its citizens and foreign
visitors; effective domestic and international marketing of South Africa as a
tourist destination; promotion of quality tourism products and services;
promotion of growth and development of the tourism sector; and enhancement of
cooperation between all spheres of government in developing and managing
of previous year key financial and performance recommendations of Committee
2012/13 BRRR recommendations
Summary of key financial and
non-financial performance recommendations made by Committee
The major financial
recommendation made in the 2012/13 financial year was that the
National Treasury had to review the baseline budget
for tourism through a steady increase over the Medium-Term Expenditure Framework
(MTEF) period and that the Department should quantify the amount required to
allow them to effectively execute their mandate.
This recommendation was based on the
assertion that the successful execution of the mandate of the Department depends
on budget that allows permeation into all different aspects of the tourism
sector. These include amongst others, planning, transformation, research, development,
and marketing. Marketing traditionally takes a huge budget for the Department.
There is also a need for funding for tourism
in rural areas to allow for identification, planning and development for
attractions in previously disadvantaged communities.
The progress made by
the Department in addressing the recommendations made in the 2012/13 Budget and
Recommendations Report is provided in table 2:
Summary of 2013/14 BRRR
Recommendations and Departmental Responses
A turn-around strategy for
all SRI projects
which are not operational needs
developed before the end of
The department has undertaken a process
to revisit SRI policy and procedures to
ensure sustainability of projects. An audit has been conducted.
SRI projects should be
sustainable job creation
in rural areas.
As part of the Expanded Public Works
Programme, SRI projects are focusing on
developing tourism infrastructure in rural
(iii) It is recommended that the
assists provinces and municipalities
aligning tourism plans at
all spheres of
Assessment of IDPs and PGDs has been
conducted and feedback provided to
provinces and municipalities about how best to align their plans. We
have also provided capacity building to local government
(iv) An integrated approach should be
established between the
Tourism and the Department
of Transport in
The department is an active member of the
Strategy Planning Committee coordinated
by the Department of Transport, at which
agreements are reached on markets to be
participates in the bilateral air service negotiations. Agreements are
reached on the position and approach towards bilateral air service
negotiations before engaging any country.
(v) The department should work closely with the
Department of Home Affairs (DHA) to
issuing of visas to
potential tourists and to
continue working on a univisa
regime in the
country. However, this
should not comprise
The department is currently engaging the
DHA on issues related to visa issuance.
The department further conducts training
workshop for DHA officials that were posted to various missions.
(vi) It is recommended that the department
develops a database of all
projects affected by
land reform and work closely with the Land
Claims Commission to develop
sustaining affected tourism
The department is undertaking a study on
the impact of land claims settlement. Phase 1 has been undertaken on
tourism attractions, i.e. how land claims affect tourism attractions.
(vii) The department should engage the BRICS
countries in promoting the
connectivity to boost
This is a priority for the 2014/15 financial
(viii) It is recommended that the department
expedites the process of
disbursing funds to
The department has developed the Tourism Incentive Programme (TIP) to
support emerging tourism enterprises effective 2014/15.
(ix) It is recommended that the department
government departments and
state entities to
leverage the indirect
benefits from a wide
array of the special
infrastructure projects with
All provinces engaged to submit tourism
infrastructures projects in line with the
requirements of the PICC. The projects
were then submitted to the PICC Technical
Committee which is part of the economic
Source: NDT Annual Report (2014)
Evaluation of response by Department and
Minister of Finance
The National Treasury responded to two recommendations
made by the Committee.
Firstly, the response
was given to recommendation that the National Treasury should review the
baseline budget for tourism over the MTEF period and the Department should
quantify the amount required to fulfil its mandate.
Costs incurred by South African Tourism due to
foreign-currency exposure should also be covered by National Treasury as the
Public Finance Management Act only covers personnel costs and marketing-related
The response from the Minister of
Finance was that the National Treasury undertakes to work with the Department
and South African Tourism to address any budget shortfall.
An amount of R20 million was allocated in
2013 Adjustment Budget to mitigate the impact of foreign exchange fluctuations
on South African Tourism.
Secondly, a recommendation was made that all spheres of
government should align their tourism activities and Budgets to the National Development
Plan to ensure that the sector achieves its targets.
The Minister of Finance responded by saying
the National Treasury supports this recommendation.
To this effect, an amount of R120 million has
been approved over the 2014 MTEF period for the construction of the Golden Gate
Highlands National Park Interpretative Centre.
response by the Minister of Finance is appreciated. However, the foreign
currency exposure by South African Tourism continues at a higher rate.
Currently, this entity is exposed to R80
million which was not budgeted for.
National Treasury should consider allocating more money to South African
Tourism commensurate with currency exposure to mitigate this problem.
The allocation of R120 Million for the
construction of Golden Gate Highlands National Park Interpretative Centre is
However, it would be
more effective if a Tourism Development Fund was established to cater for all
tourism development needs instead of piecemeal and ad hoc allocations.
observed that the Minister of Finance and the Minister of Tourism commendations
responded satisfactorily to recommendations, however with scanty details in
The responses provided by the
Department are not sufficient in that they do not provide sufficient
information on action taken.
also no action plans linked to the departmental interventions.
Some of the responses are too broad and
general and do not address the core issues raised.
The Committee is making new recommendations
in the 2013/14 Budget Review and Recommendations Report.
The Department is urged to ensure that
comprehensive responses are provided and action plans developed to address the
recommendations should also be incorporated in the revised Strategic Plan and
Annual Performance plan for the 2015/16 financial year.
The Department should also provide written
responses to Parliament on all the recommendations made.
2013/14 Committee Budget Report
The Department has a
broad mandate of developing tourism in South Africa and South African Tourism
is charged with responsibility of marketing South Africa domestically and internationally.
In fulfilling this mandate, the Committee in
2012/13 recommended that the baseline budget for tourism be increased in the
MTEF and subsequent financial years to allow the Department to carry its
The mandate of the
Department cannot be achieved if the budget appropriated for Vote 35 is not sufficient
to implement its programmes. This requires the Department to have an increased
capacity in both financial and personal resources to be able to carry its
The Committee noted with
concern that in the 2013/14 financial year the Department had not established
requisite capacity to fulfill its mandate, especially with regard to
implementing the Tourism Incentive Programme.
The Committee therefore urges the National Treasury that the budget of
the Department be increased once the Department has established necessary
capacity to spend the allocated budget.
The Department should also prioritise critical service delivery
programmes and leverage partnerships with other spheres of government and
private sector to maximise performance with little resources available.
South African Tourism still needs to quantify
its budgetary needs for a proper funding recommendation to be made.
Currently South African Tourism budget is
anecdotal and based on their Strategic Plan which is not benchmarked with other
Destination Marketing Organisations.
Overview and assessment of financial
The following section
provides an overview and assessment of reported financial performance for 2012/13
and 2013/14; as well as projected financial needs or areas needing improvement
in terms of spending for the 2015/16 MTEF.
The Estimates of
National Expenditure for Vote 35: Tourism, as issued by the National Treasury
(2013) indicates that the spending focus over the medium term will be
increasing through transfers to South African Tourism in the
Policy and Knowledge Services
and on funding the research and policy formulation strategy of the
aims to encourage South Africans to travel within the borders of the country.
An increase in both domestic and international
tourism numbers is expected to contribute to governments broader objective of
growing Gross Domestic Product and creating jobs.
To further this
objectives of job creation and contribution to GDP, at the beginning of April
2013 the Department introduced a new Tourism Incentive Programme that aims to
help SMMEs and established businesses to grow by improving their access to
international buyers and markets. The incentive programme is allocated R99.6
million in 2014/15, R199.6 million in 2015/16 and R210.4 million in 2016/17.
The need for increased capacity for this programme required that the department
expands its establishment from 467 in 2012/13 to 544 in 2016/17. A total of 36
posts were vacant at the end of November 2013, mainly as a result of
departmental restructuring. The department is expected to fill these posts in
2014/15. The Department uses staff to deliver its programmes and consultants
are used mainly to support the departments IT unit.
The vacancy rate has affected the financial
performance of the Department with regard to spending allocated budget.
of Vote allocation and spending (2009/10
The increase in
allocation over the medium term provide for the expected increase in the number
of international tourist arrivals by air from 3.8 million to 4.1 million and
create 16 775 full time equivalent jobs through the Expanded Public Works Programme.
South African Tourism will receive additional Cabinet approved allocations of
R100 million in 2015/16 and R105 million in 2016/17 for domestic marketing
programmes through the economic competitiveness support package. This funding
will end in 2016/17.
The Financial and Fiscal Commission has warned that given the prevailing
economic environment, it is unlikely to see a significant injection of funds
from the national fiscus. To achieve the targets in NDP, the Department should
focus on strategic interventions that will have multiplier effects in the
sector as well as leveraging the favourable exchange rate climate to attract
Overview of vote allocation and spending
Policy and Knowledge Services
Estimates of National Estimates (2013)
In line with this warning, the Cabinet has
already approved reductions of R32 million in 2014/15, R48 million in 2015/16
and R9 million in 2016/17 have been made, of which R29 million in 2014/15 and
R40 million in 2015/16 will be rescheduled to 2016/17 for use in the Expanded Public
Works Programme. The rest of the total reduction amount is to be effected on
the transfers to South African Tourism, the Expanded Public Works Programme,
transfers and subsidies for SMMEs, and spending on non-essential goods and
services items, such as catering, travel and subsistence, and consultants.
allocation and spending for 2013/14
Department is funded through the funds appropriated in terms of the annual
Appropriation Act (and the Adjustments Appropriation Act).
The Department of Tourism had an
appropriation of R1.
52 billion for
which represents a nominal increase of R146.4 million, or 10.7 per cent, from
Transfers and Subsidies comprise
the bulk of expenditure and account for R1.2 billion of the available budget
and of this amount the department has transferred R1.2 billion, or 100 per
cent, mainly to departmental agencies and accounts. This means the department
had an available budget of R360.2 million for operations.
Of this, the department has spent R352.4
million, 97.8 per cent, the majority of which has been used on compensation of
employees and goods and services.
Departmental budget is distributed to f
our main programmes, namely,
Administration, Policy and Knowledge Services and International Tourism
and Domestic Tourism respectively.
excluding transfers, Departmental allocation equates to 23 percent of the
overall budget in 2014/15.
edium-term priorities for the Departmental
spending are to e
xpand domestic and foreign tourism, increase
contribution of tourism to economic growth, create job opportunities, sector
transformation and integration of tourism sector
total of 76.7 per cent of expenditure was under transfers and subsidies and
payments for financial assets, with the remaining 23.3 per cent spent on
expenditure, 57.4 per cent was on compensation of employees, 39.3 per cent on
goods and services and none was spent on interest and rent on land. Only a
negligible 3.3 per cent of expenditure was on payments to capital assets.
largest portion of operational expenditure in 2013/14 was R211.7 million spent
under the Administration programme mainly on compensation of employees and
goods and services totalling 60.1 percent of the budget.
The main cost driver is the spending under
Administrative Fees on the payments made to Department of Public Works for
office accommodation which is paid under this item.
Expenditure under this programme has
increased by R33.1 million, or 18.5 per cent, when compared with the previous
year primarily due to additional spending on these items with additional
spending under goods and services mainly on computer services, and operating
Departmental allocation and
expenditure in 2013/14
Shifts approved by
and Knowledge Services
Source: NDT Annual Report (2014)
next largest element was R68.5 million under the Domestic Tourism programme,
followed by R39.3 million under the Policy and Knowledge Services Programme,
again primarily for compensation of employees and goods and services.
expenditure has grown at a nominal rate of 18.6 per cent, or R55.4 million,
when compared to the previous financial year. Rand value expenditure growth was
greatest in the Administration programme, mainly driven by increased spending
on goods and services and compensation of employees.
The Domestic Tourism and International
Tourism programmes show the next highest growths primarily due to increases in
spending on compensation of employees and goods and services, and compensation
of employees respectively.
to Foreign Governments and International Organisations to the end of financial
year were R4.8 million, all of which was to the Regional Organisation of
Southern Africa (RETOSA), and United Nations World Tourism Organisation for
Membership Fees transfers. This represents an increase of R1.3 million, or 37.9
per cent, when compared with previous financial year. The majority of this
increase was under the Regional Tourism Organisation of Southern Africa for Membership
to Non-Profit Institutions at the end of the financial year were R26 million,
the majority of which was for Strategic Partners in Tourism as Operations
Transfer. This represents a decrease of R0. 1million or 2 per cent, when
compared with the previous financial year.
The Tourism Enterprise Partnership (TEP) is the operating entity for
Strategic Partners in Tourism which is a Non-Profit Company (NPC) who utilises
funding from Corporate South Africa and government to facilitate the growth,
development and sustainability of small tourism businesses in the country.
Households at the end of the financial year were R253.6 million, the majority
of which was for the Expanded Public Works Programme (EPWP) as Social Relief
Assistance transfer. This represents a decrease of R30.2 million, or 10.6 per
cent, when compared with the previous financial year.
It must be noted that the issue of
classification of EPWP payments is outstanding between the National Treasury
and the Department. Table 5 provides percentage spending by Programme.
Table 5: Percentage of spending by programme
Policy and Knowledge Services
1 520 574
1 512 667
Source: NDT Annual Report (2014)
Average departmental spending increased in real terms by 2.2 percent per
annum (after taking inflation into account) compared to 4.9 percent expected
over the MTEF period.
performance by the Department has improved from 97 percent of the total budget
in 2010/11 to 99 percent in 2013/14.
programme underspent by 10% in 2010/11, largely
due to slow filling of vacancies. However, over the past three years, spending performance
has been close to 100 percent.
Administration Programme spent 99.70 percent of its budget in the year under
The large share of the policy and Knowledge
Services budget is allocated to South African Tourism as transfer payment.
South African Tourism has consistently spent its full allocation over the
Good spending by South African
Tourism contributed to the overall spending by the programme being close to 100
percent with 99.67 percent achieved in 2013/14.
consistently produced the
lowest spending performance in the Department in 2011/12 (5.5%), 2012/13 (6%)
and 2013/14 (8%).
International tourism is
relative to total spending in the Department and therefore does not
significantly impact the spending performance of the department as a whole.
However, this does not detract from department putting in place measures to
improve alignment of budgets with spending in the programme.
The International Tourism Programme spent
92.4 percent of its budget in 2013/14.
a share of budget by the
programme has improved over the four year period, rising from 93.5
per cent in 2010/11 to 99.7 percent in 2013/14. The Domestic Tourism programme
is a key job creation lever in the Department. Any underspending by the Programme
can therefore reduce overall departmental impact of supporting job creation and
contributing to economic
section of the report provides a broad picture of spending patterns and
challenges for 2013/14. It looks at adjustments, virements, cashflows,
over/under-spending, rollovers and savings, and assess the impact.
Quarterly spending trends
quarterly spending trends for the Department in 2013/14 financial year were as
provided in Figure 5:
Figure 5: Quarterly spending trends including
2013/14 financial year
Source: Adapted from Financial and Fiscal
The quarterly spending of the Department in
2013/14 followed a consistent pattern with the previous financial years.
The months of January, April, July and
October show high spending by the Department.
This is attributed to transfer payments to South African Tourism and
The disbursements in January
2013/14 were however significantly higher than the previous two years.
This means the Department spent relatively
slowly in the first nine months of the financial year compared to the previous
This is not a good trend as this
to fiscal dumping in future if the
is not able to spread its spending evenly throughout the year.
The Department is however commendable as it
was able to spend almost all its budget in the period under review,
notwithstanding virements made in some programmes.
and virements for 2014/15
An adjustment was made for Programme 2:
Policy and Knowledge Services for an additional R20 million which was allocated
for the transfer payment to South African Tourism to make provision for the
depreciation of the Rand on foreign currency denominated expenditure.
The Accounting Officer also approved
virements in terms of Section 43 of the Public Finance Management Act (PFMA),
1999. In accordance with this section of the Act, the amount of a saving under
a main division of a vote that may be utilised, may not exceed 8 per cent of
the amount appropriated under that main division.
An amount of R4, 536,000 (1.2 per cent)
was shifted from Programme 4: Domestic Tourism to Programme 1: Administration.
Domestic Tourisms saving is related to the Tourism Incentive Programme which
has not been fully implemented. Administrations over expenditure is related to
the purchase of computer hardware and software as well as the creation of
additional office space on one floor of the head office building, Tourism
House. National Treasury granted approval for the shift of R10 million from
Programme 4: Domestic Tourism (Expanded Public Works Incentive Programme) to
Programme 2: Policy and Knowledge Services (SA Tourism transfer payment) to
alleviate foreign currency losses.
The virements effected in the period
under review reflect poor planning on the side of the Department.
The virements done on Programme 4 highlight
the challenge that the Department has in relation to implementing the Tourism
has not been addressed as the Committee has conducted a hearing with the
Department in the second quarter of 2014/15 and the Department had not
finalised planning for the TIP.
an early indication that the Department will not be able to utilise these funds
and may also effect some virements on the same programme or send money back to
treasury in 2014/15.
Table 6 below indicates all the adjustments
that were effected in 2013/14 per Programme with percentages.
Table 6: Budget adjustments
Shifts approved by
Final Budget (Adjustment
estimate plus/ minus virement)
Actual Amount spent
Virement as a % of
and Knowledge Services
1 520 574
1 520 574
1 520 574
Source: Adapted from NDT Annual Report (2014)
An amount of R10 million was shifted
from Programme 4 to Programme 1 and this indicates poor planning as the
Expanded Public Works Programme (Social Responsibility Implementation)
currently faces a number of challenges.
The funds could have been utilised to address challenges in the SRI
projects which is geared towards job creation and transformation of the sector.
This also reveals some challenges with regard
to planning at South African Tourism in regard to making provision for foreign
South African Tourism
and National Treasury have to find solution to this challenge as it is an
annual occurrence and needs a permanent solution that will not affect the
appropriated budget for the Department in a particular financial year.
The Auditor-Generals opinion for the period
under review is that the Department had a Clean Audit with no findings on
Predetermined Objectives and Compliance.
The financial statements present fairly, in all material respects, the
financial position of the National Department of Tourism as at 31 March 2014
and its financial performance and cash flows for the year then ended, in
accordance with basis of accounting described in Treasury note 1 of the
accounting policies to the financial statements and the requirements of the
Department improved its performance from an unqualified audit with findings to clean
audit for the 2013/14 financial year.
Department had in the 2012/13 financial year received an unqualified audit with
findings due to material misstatements of disclosure notes.
In 2013/2014 the Department was able to
produce financial statements free from material misstatements. The Department,
However, struggled to:
Implement internal control
processes to pick up the errors in the performance information that was
submitted for audit and they relied on the Auditor-General to detect these so
that they could be corrected.
example, in the Domestic Tourism Programme, evidence to support targets
achieved could not be provided.
Subsequently achieved targets were amended to include only those that
could be supported by evidence.
Measure and report on their
performance in accordance with the predetermined objectives in their Annual
Performance Plan in a manner that is reliable and useful.
financial management principles and controls.
Comply with ICT governance
and control as ICT policies and procedures were not updated on time and
sometimes not existing at all.
South African Tourism regressed from a Clean Audit opinion with no findings to
an unqualified audit with findings on predetermined objectives and Compliance.
The entity has achieved thirteen consecutive
The findings at SAT
pertained to flouting of Supply Chain Management processes.
The Chief Financial Officer declared interest
in the building tender when SAT was extending their offices but did not recuse
himself in the adjudication of the tender. The company which got the tender had
his ex-wife as one of the executives. South African Tourism also struggled to:
procedures and controls to ensure they comply with the relevant legislation,
especially Supply Chain Management.
Implement internal control
processes to detect errors in the performance information that was submitted
for audit. They also relied on auditors to pick up the errors so they can
Set clear performance
indicators and targets to measure their performance against the predetermined
Committee noted that some of the findings and observations made with regard to
poor implementation of the Expanded Public Works Programme were still not
reflected in the Auditor-Generals Report.
The Auditor-General made an undertaking to the Committee to take this
matter up with their Performance Management Unit to ensure assessment of some
projects on the ground for future auditing purposes. The Committee also
observed that the audit findings resulted from human error in terms of misstatement
when reporting and also poor governance in terms of observing relevant
legislations. Leadership, especially at South African Tourism, did not perform
their function of ensuring compliance with legislation.
of key issues contained in reports of Finance/Appropriation Committees
Department had no unauthorised expenditure in the year under review.
In the previous year 2012/13, the Department
incurred R97 000.00 fruitless and wasteful expenditure.
This was incurred due to late cancellation
and no shows with regard to travel bookings.
The Department had reported that they were investigating these issues to
The Department also
incurred under spending of R2.075 million in the previous year.
Committee noted with concern that issues raised in the previous years Budget
Review and Recommendations Report (BRRR) are still prevalent in the year under
review as the Department continued to incur wasteful and fruitless expenditure of
R1 944 000.00 relating to travel expenditure.
This expenditure is pending an investigation.
Once investigated, the expenditure will be condoned or transferred to the
departmental debt account for recovery.
The Department has however, developed a guideline document for the
treatment of fruitless and wasteful expenditure to deal with this matter in the
An amount of R330 000.00 was
incurred for the cancellation of the year end function.
This was condoned as a valid
In addition, an amount of
R15 000.00 was incurred due to late cancellation/ no shows/ flight
amendments with regard to travel bookings.
This expenditure was also condoned as valid expenditure.
A further amount of R303 000.00 was incurred
due to late cancellation/ no shows/ flight amendments with regard to travel
bookings is still under investigation to determine liability.
The staff in the Department is bound to
travel as the Department is implementing and supporting a number of projects
throughout the country.
should ensure that the guideline document developed to curb wasteful
expenditure related to travelling is effectively implemented.
An amount of R15 215.00 was
incurred on liabilities with regard to claims against the Department.
The opening balance of this expenditure was
at R14 546.00 at the beginning of the financial year.
Two claim relate to personnel issues with one
in regard to compensation arising from the alleged dismal by the Department and
was already in the books of the Department by the end of the previous year but
had not been resolved, and the other relating to claiming for damages arising
from negligent driving by the official of the Department.
Three claims relate to contract management.
of key financial issues contained in any other relevant report(s) for 2012/13
The Committee had a briefing with the
Financial and Fiscal Commission (FFC) as part of preparation for developing the
Budget Review and Recommendations Report. Invaluable insights were gained in
regard to the spending patterns and forward planning for the Department.
Some of the issues raised by the FFC include
A total contribution of
tourism to Gross Domestic Product (GDP) of R323 billion was recorded in 2012
(i.e. 11 percent of GDP). To achieve National Development Plan target of R499
billion by 2020, total contribution to GDP must grow by 7.7 percent per annum.
Currently, the contribution to GDP is significantly below the required rate.
Domestic expenditure on
tourism shows fastest growth (4%) per annum. The global recession led to
renewed focus on domestic tourism to cushion impact on local tourism industry.
The increased emphasis on domestic tourism in departments budget is welcome.
Infrastructure investment in
tourism has fallen over the five years largely from a slowdown in the local
economy, although improvement is noticeable from 2011 as the economy started to
recover. A significant future investment is required to continue growing the
Upward trajectory in
demand for accommodation continued in July 2014 but this trend may reverse in
coming months as tourists are cancelling trips to South Africa and other
African countries due to the outbreak of Ebola.
The Departments must track the impact of Ebola on Tourism to ascertain
to what extent this epidemic is affecting projected international tourist
Financial performance 2013/14
quarterly performance of the Department given below covers the period up to,
and including the second quarter of the 2013/14 financial and a picture at the
end of the year.
Expenditure per Programme as at 30
Summary of Expenditure as at 30
September 2013 (Two Quarters)
1 500 574
1 500 574
Source: National Treasury (2014)
In the second quarter of 2013/14 financial year the
Administration Programme had spent
45 percent of its
achieved 45 percent of
targets. However, the Department was falling short on its vacancy rate targets.
The Department was at that point sitting
at a vacancy rate of 11 percent. The Department had lost 80 officials and 4
percent of staff had moved to other departments. The Department did not have a
staff retention programme and this was a course of high staff turnover and the
Committee had suggested to the Department that they need to look at developing
a staff retention policy to reduce the rate of resignations from the
Policy and Knowledge Services
The Policy and Knowledge Services Programme had spent 49
percent of its budget and did not meet all its targets as at quarter 2.
The Department had aimed to host a National
Tourism Sector Strategy Delivery Forum in September 2013 but it did not happen
due to clashes with the 2013 Tourism Summit. The Forum did however take place in
October 2013. A Tourism Leadership Dialogue scheduled for the end of September
2013 could also not take place due to unavailability of the steering committee
members for the Department and the private sector. The Tourism Leadership
Dialogue did however take place in October 2013.
International Tourism Management
At the end of the second quarter, the 44 percent of the
budget for programme 3 had been spent. The International Tourism Management
programme had targeted 42 missions for support to institutionalise tourism.
However by the end of September 2013 only 39 missions had been supported. The
remainder of the targets were to be supported in quarter three. The Department
had also set a target of having a Strategy Framework for NDTs participation in
Brazil, Russia, India, China and South Africa (BRICS).
However, due to delays in stakeholder engagements
only a draft framework was in place by the end of September 2013. By quarter 3
the framework would be complete.
Domestic Tourism Management
Only 39 percent of the budget appropriated for programme 4
had been spend at the end of the second quarter. The Domestic Tourism Branch
had met the following targets:
Report on the progress on the implementation of Domestic Tourism Growth
Strategy had been completed; a workshop on Social Tourism had also been hosted;
a Maloti Drakensberg Route Working Group Meeting had been convened in September
2013; four Educator seminars had also been successfully held; and a Domestic
Tourism Implementation Plan had furthermore been completed.
However, the Department was struggling with
meeting the targets for planning towards the implementation of the Tourism
Total expenditure in 2013/14 was 99.8
per cent of the 2012/13 adjusted appropriation. Expenditure in the first six
months of 2013/14 was R689.237 million, or 45.3 per cent of the adjusted
appropriation of R1.521 billion for the year. In comparison, mid-year
expenditure in 2012/13 was R727.720 million, or 53 per cent of the 2012/13
adjusted appropriation. Compared to the first six months of 2012/13,
expenditure over the same period in 2013/14 decreased by R38.483 million, or
5.3 per cent. This was mainly due to undisbursed funds for projects related to
the Expanded Public Works Programme.
the end of the financial year, the Department had spent 99.5 percent of its
appropriated budget amounting to R1 512.7 billion of R1 520.6 billion
An amount of R7.9
million was not spent.
expenditure was incurred mainly due to vacant posts which were filed towards
the end of the financial year and operational costs relating to these posts and
the implementation of cost cutting measures as per Treasury Instruction 1 of
However, Treasury expressed
that this under expenditure is negligible and does not represent an issue for
the Department in terms of management of their financial affairs in 2013/14
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 discovered from
MTEF financial allocations
Summary of funding
submissions to National Treasury for the 2015/16 MTEF.
Committee recommends to the National Treasury to maintain funding of the Department
over the MTEF as presented in the 2014 Estimates of National Expenditure. No
additional budget should be appropriated for the Department until it has
developed internal capacity to spend the currently appropriated funding.
The National Treasury should however in the
long term, look at a feasibility of establishing a Tourism Development Fund
that will enable the Department to fulfill its mandate.
comments on financial performance
The Department has displayed good financial management in terms of
reporting to the National Treasury.
financial performance of the Department warranted a Clean Audit Award which was
conferred to the Department by the Auditor-General for 2013/14 financial year.
South African Tourism also reported efficiently
on their finances in the period under review with challenges in Supply Chain
is noteworthy that the Department has spent almost all of its budget
year-on-year since it was established in 2009 and underspending for the past 3
years has been
within the generally
of 2 percent set by National Treasury.
The underspending was mainly due to the
implementation of cost cutting measures as per Treasury Instruction Note 1 of
2013/14 as well as vacant posts.
Department has also put satisfactory measures in place to promote professional
ethics, in that they have maintained a 100 percent compliance rate regarding
the submission of Financial Disclosure Forms.
Evidence exist that there is willingness to uproot corruption and investigate
and deal with reported cases of corruption.
In addition, the Department has not reported any cases of financial
misconduct in the year under review.
Department should consider putting measures in place to deal with late
cancellation or no shows with regard to travel bookings as this is a recurring
challenge, leading to fruitless and wasteful expenditure.
Overview and assessment of service delivery
delivery performance for 2013/14
section provided information on the performance of the Department against
Performance Plan: Total number of targets for 2013/14 and total number
The Department achieved 89
percent of all its planned targets in 2013/14.
The achievement of targets depict a close alignment between targets met
or exceeded and budget spent, and suggests that performance indicators were closely
aligned with work volume of the department and resource allocation.
Table 8 depicts departmental achievement of
targets by Programme and indicates that Administration achieved 88 percent of
its targets, Policy and knowledge Services 94 percent, International Tourism Management
100 percent, and Domestic Tourism Management 80 percent.
Table 8: Total number of targets achieved per Programme
National Treasury (2014)
The reported achievement of
targets by the Department is however misleading.
In many cases, where targets were exceeded,
planned outputs for 2013/14 were lower than the baseline figure in the previous
year. This raises the question of whether some of the departments targets are
realistic and reliable.
Auditor-General made no material findings on the performance information of the
However, in close assessment
of Departmental performance, it is clear that the Department has improved since
the issue of poor setting of predetermined objectives was raised in 2011/12.
Nonetheless, the Department still needs to improve in setting targets that will
align more closely with the SMART principle.
The Department reported that there were
no major internal challenges that impacted on the Departments ability to
deliver on its Strategic Plan and Annual Performance Plan (APP) during the
period under review. No key management personnel resigned during the 2013/14
However, this is not collaborated by
non-achievement of some targets, such as the Tourism Incentive Programme
whereby the Department reported reasons for non-achievement of the target as
delays in the vetting process as well as candidates being counter-offered, and
failing to attract the right candidates.
This had negative impacts on staffing the responsible unit and meant the
Department had no capacity to deliver on the Strategic Plan and Annual Performance
This means the Department has to
be more careful when doing environmental scanning to assess internal and
external factors that might have negative impact on achieving the set
African Tourism also did not achieve most of its target set for 2013/14. The reason
provided for non-achievement of targets is the unattainable National Tourism Sector
Strategy targets which were set under different economic conditions. Poor
performance was recorded in the following pre-determined objectives:
2: Increase domestic visitor arrivals coming to South Africa - South African
Tourism set a target of 15.0 million to increase domestic visitor arrivals
coming to South Africa for 2013/14.
Only 12.0 million was achieved, with the deviation
of 20 percent from planned targets.
South African Tourism indicated that these adverse results were
anticipated given the unattainable NTSS target which was set under different
economic conditions. Revision of targets will be considered during the NTSS
Review planned for 2015.
African Tourism should not have planned targets they knew were impossible to
This reflects poor strategic
planning and ability to set pre-determined objectives.
3: Increase in Tourism trended revenue contribution to the economy - South
African Tourism set a target of R115.4 billion to increase tourism trended
revenue contribution to the economy for 2013/14. Only R90 billion was achieved
from January to September 2013.
a deviation of 22 percent from the planned target. This is misleading given
that figures provided are only for three quarters.
South African Tourism gave an explanation
that Statistics South Africa did not have all the information at the time of
submitting information for auditing.
Information provided after auditing indicated that the trended revenue
of R128 billion was achieved at the end of the period under review and
surpassed the target.
also reflects poor project management by South African Tourism in drafting
terms of reference with service providers as there were anomalies in the spend
data that was produced by the service provider and as a result, a review of the
methodology was required to determine the reasons for the anomalies in the data
5: Provide quality assurance for tourism products - South African Tourism set a
target of 6 789 for 2013/14 for graded establishments. Only 5 587
were achieved which amounts to the deviation of 18 percent from the
predetermined objectives. This shortfall was due to an increase in non-renewal
of graded establishments, payment defaults and cancellations.
The Tourism Grading Council needs to
implement a new business model to ensure that more establishments and rooms are
The Committee also observed that
the grading system was not yielding much revenue and payment system for grading
needs to be revisited.
of the Department in 2012/14 per each of the four programmes is given below:
Programme 1: Administration
Programme 1 achieved 88
percent of its targets in the year under review.
This is a drop in performance when compared
to 97.8 percent achieved in 2012/13 financial year.
The serious shortcoming in the performance of
Programme 1 is in regard to vacant posts within the Department.
The Department takes too long to fill
The Committee acknowledges
the reasons of delays caused by vetting of suitable candidates.
However, this challenge is known in advance
and the Department has been providing the same reasons to Parliament over the
The Department is also
affected by high staff turnover.
talks to failure of Department to retain staff in its establishment. Failure to
recruit suitable staff has affected performance of other programmes,
particularly Programme 4 where the Tourism Incentive Programme has not been
implemented due to lack of suitable staff.
It is however acknowledged that the Department achieved 8.6 percent on
its vacancy rate on an 8 percent target set for the year and that this is
higher than government target of 10 percent.
The challenges on
Information Technology reported by the Auditor-General are also results of
shortcomings in IT management.
managers should intensify controls and ensure that all systems that need to be
developed and maintained are effectively and efficiently operational.
Programme 1 is also
responsible for reporting performance of the Department to Parliament.
The Department has been reporting on biannual
basis to Parliament. This led to poor accountability of the Department with
some challenges in Departmental performance only uncovered by Parliament in the
The Committee has
resolved that the Department should report quarterly to ensure effective
oversight over the Executive.
Programme 2: Policy and knowledge services
Programme 2 achieved
94 percent of the set targets in 2013/14.
This Programme has developed a number of tools that assist the
Department to monitor and evaluate performance of the tourism industry in
The challenge is with
implementation of the tools and models that have been developed.
There is a challenge with monitoring and
evaluation of implementation of programmes.
For example, Programme 2 is responsible for coordinating NTSS delivery
Meetings are held at a national
level for various working groups and the NTSS delivery forum set twice in the
year under review.
However, there is
still a gap in the implementation of the NTSS at provincial and national
Some provinces and municipalities
do not have structures to coordinate implementation of the National Tourism
This presents a risk
with regard to attainment of NTSS targets as implementation needs to occur and
be monitored at all levels of government.
The Programme is also
responsible for a number of targeted initiatives and platforms to promote
compliance with the Tourism BEE Scorecard.
The tourism industry is still untransformed and the challenge for this
Programme is to develop programmes that will expedite transformation in the sector.
The current initiatives under the Tourism BEE
Scorecard have not achieved desired outputs with regard to transformation.
The Programme Managers should package
innovative initiatives that will augment the Tourism BEE Scorecard.
The Committee acknowledges that the
Department is currently consulting stakeholders on the new Tourism BEE
This presents an opportunity to
the Department to assess progress made with the old Scorecard and plan new effective
mechanisms to expedite transformation.
Some of the
achievements of Programme 2 include:
The 2012 State of Tourism
Report was developed, which sheds light on tourism performance in the country.
Two models were developed to
forecast tourist arrivals in the country. These models will be tested using
2013 data and the one with acceptable results will be adopted for use by the Department.
In addition, a model which forecasts the number of tourists creating one job
was also initiated and will be finalised during 2014/15 financial year.
To regulate some of the
functions that are of importance to the industry, two frameworks that will
inform these regulations were developed. The frameworks are for regulations in
respect of tourist guides and a call for information from tourism businesses.
Resilience Strategy was developed, which seeks to guide tourism businesses on
how to respond to economic crises.
study was undertaken on land settlement cases with tourism implications in
order to understand the effect of land claims on tourism businesses, as well as
land settlement cases with tourism implications. A report, which shed light on
the implication on some of the tourism businesses affected, was developed.
Local government was
supported by rolling out capacity building for the municipalities through various
training programmes designed together with University of Pretoria.
Policy makers and other tourism practitioners
at local government level were trained during 2013/14 financial year. In order
to understand the challenges and share information in tourism, four tourism
leadership dialogues were hosted. These dialogues were attended by stakeholders
from both private and government sectors.
To understand the impact that other services have on tourism, four
studies were conducted in collaboration with universities, the results of which
would be shared with other stakeholders through research colloquiums.
In order to monitor the
state of transformation in tourism, the BBBEE Charter Council Plan of Action
was implemented, and reports developed on quarterly basis.
An investigation was
undertaken to understand the state of universal accessibility in tourism in
provincial parks. A report was developed to give the current state of
accessibility in provincial parks.
Programme 3: International Tourism Management
Programme 3 achieved
100 percent of the set targets in 2013/14 and this was on par with the
performance achieved in 20112/13.
work done by the International Tourism Programme has similarities with the
mandate of South African Tourism.
Financial and Fiscal Commission indicated that t
here could be overlap of responsibilities between South African Tourism
and the Department regarding marketing South Africa internationally and
domestically. The Department should reassess whether the International Tourism
Programme adds value to the Departmental mandate as initially intended or this
branch should be disbanded and its mandate spread between South African Tourism
and other branches within the Department.
Some achievements of International Tourism Programme in the year under
During 2013/14 memorandum of agreements
were signed in the field of tourism with four countries, namely Seychelles,
Saudi Arabia, Mexico and China.
of outbound tourism as measured by international tourism expenditure, Russia
and China continued to be the most important source markets in the world.
China`s outbound expenditure in 2013 was $129 billion compared to $102 billion
in 2012. South Africa acknowledges that China will remain an important source
market because of its large population, spending.
The department developed the multilateral
framework which is designed to prioritise multilateral organisations to be
engaged, and also to define the agenda, which the department can influence in
each of these organisations.
African Development Community (SADC)
Department of Tourism has been instrumental in the restructuring of the
Regional Tourism Organization of Southern Africa (RETOSA) and the establishment
of a tourism desk at SADC Secretariat which will be aligned to the African
Union (AU) Structure.
The AU has
recognised tourism as an important sector that contributes to the economic
growth of the continent.
through the department, is part of the working group that took a decision to establish
the AU Ministers of Tourism Conference which is a platform for addressing the growth
and development of tourism in the continent.
Nations World Tourism Organization (UNWTO) -
Africa, represented by the department, is a member of the Executive Council of
the UNWTO, responsible for approving and shaping the agenda and programme of
the UNWTO and General Assembly.
Programme 4: Domestic Tourism Management
Programme 4: Domestic
Tourism Management is a crucial programme in the Department in terms of
fulfilling its mandate of job creation and contribution to the Gross Domestic
This Programme is also critical
in ensuring provision of necessary skills in the sector, including critical skills
and transformation of the sector in terms of promotion of emerging tourism
The Tourism Incentive
Programme is also administered under Programme 4.
Domestic Tourism achieved only 80 percent of
its targets for the 2013/14 financial year.
This is a cause for concern as this Programme carries a critical mandate
for the Department.
It is also noted
that some critical posts have not been filled in this Programme, including the
director responsible for the Tourism Incentive Scheme and the Chief Director for
the Southern Region.
It is however
acknowledged that this Programme implemented critical projects in the year
under review and some of the achievements of Programme 4 are:
The Department entered into
an agreement with Tourism Enterprise Partnership (TEP) to ensure SMME support
takes place to improve the performance and increase the profitability of SMMEs
by focusing on skills, product development, quality assurance and access to
finance. This is done to actively support the creation of new jobs and
maintenance of existing jobs, as well as to increase the participation of Black
tourism enterprises in the economy by focusing on enterprise development and
market access for enterprises that are predominantly black-owned. The SMME
support programme has created 4,040 fulltime equivalent (FTE) jobs. There were
2,757 enterprises trained, 977 assisted with market access and 891 rural
enterprises supported with skills development.
Public Works Programme -
The Department is driving
the Social Responsibility Implementation Programme that facilitates the
development of tourism infrastructure projects under the Expanded Public Works
Programme through the use of labour intensive methods targeting the unemployed,
youth, women, the disabled and SMMEs. Through the programme, the Department
created 2,797 full-time equivalent (FTE) jobs during the period under review.
Youth Training Programme -
The Department identified
that there was a shortage of chefs in the tourism industry in South Africa and
embarked on a training programme with the South African Chefs Association to
design a training programme for young people to become chefs. Eight hundred
(800) unemployed young people in all nine provinces of South Africa are in
various stages of training in the Professional Cookery (Chef) qualification.
The hospitality industry in South Africa is characterised by a dire skills
shortage and are currently not meeting the demand for qualified chefs.
Currently, graduates of the programme have been employed by some of the major
hotel chains, others have started their own catering businesses and some have
gone on to their third year of training.
The Department has continued
with the project since 2011, which has been rolled out across all nine
provinces. The youth are trained in the hospitality field and will emerge with
a SAQA qualification in either Accommodation Services or Food and Beverages
Services. Learners are trained and placed in various hospitality institutions
for experiential learning. In the 2013/14 financial years, 3,860 learners were
enrolled in the programme nationally.
Four hundred and forty one learners have been permanently employed by
the hospitality industry during the period under review.
The National Rural Tourism Strategy was
developed in order to ensure a developmental approach to the packaging of rural
tourism products and opportunities in South Africa. This approach is also meant
to prioritise spatial nodes that have the potential to stimulate growth of the
rural tourism sector in the country.
order for the Department to maintain its principle for sustainability and
responsible tourism, the strategy adopted a nodal developmental methodology in
order to achieve a higher sustainability.
Key reported achievements.
The following achievements were made by the
Department of Tourism and South African Tourism in the year under review:
Clean Audit Award
The Department of Tourism
was recognised for its clean audit achievement at an awards ceremony for state
The Clean Audit Awards were
handed over by the Auditor General to 13 out of 41 audited state entities in
the Economic Cluster for the 2013/14 financial year.
The Auditor-General indicated that the National
Department of Tourism was the only National Department to receive the award in
New Tourism Act (Act no 3 of
The major achievement in the year under
review is that the Department was able to finalise a long legislative process
which began in 2011 of drafting and finalising the new Tourism Act (Act No. 3
The Department was able to
repeal the old Tourism Act (Act no72 of 1993) which had a number of shortfalls.
The Tourism Bill was introduced to Parliament in 2012 in terms of Joint Rule
The Bill was debated in the
National Assembly and National Council of Provinces (NCOP) and was passed by
the National Assembly in February 2014. The President has since assented the
Tourism Bill in April 2014 into the Tourism Act, 2014 (Act 3 of 2014) which was
gazetted in April 2014.
The new Tourism
Act, 2014 (Act 3 of 2014) paves the way to promote responsible tourism for the
benefit of South Africa and for the enjoyment of all citizens and foreign visitors;
for the effective domestic and international marketing of South Africa as a
tourist destination; promote quality tourism products and services; promotes
growth and development in the tourism sector; and enhance cooperation and
coordination between all spheres of government in developing and managing
South African Tourism
achieved 14,8 million in increased arrivals in the year under review from
a target of 13 million.
equivalent to 14 percent over-achievement of pre-determined objectives which
was 10.5 percent growth from 2012 against 10.2 percent in 2011.
The Department entered into an agreement with Tourism
Enterprise Partnership (TEP) to ensure SMME support takes place to improve the
performance and increase the profitability of SMMEs by focusing on skills,
product development, quality assurance and access to finance. This is to
actively support the creation of new jobs and maintenance of existing jobs, as
well as to increase the participation of Black tourism enterprises in the
economy by focusing on enterprise development and market access for enterprises
that are predominantly black-owned. The SMME support programme has created
4,040 fulltime equivalent (FTE) jobs. There were 2,757 enterprises trained, 977
assisted with market
n the first quarter of 2013 tourism generated R35 billion
when compared to mining which generated R32 billion.
The industry at large generated 1, 4 million
jobs in 2013.
This continues to
advocate a case for tourism as a priority sector that is able to generate
labour intensive employment.
internal projects, t
is driving the Social Responsibility Implementation Programme that facilitates
the development of tourism infrastructure projects under the Expanded Public Works
The programme uses labour
intensive methods targeting the unemployed, youth, women, the disabled and
SMMEs. Through the programme, the department has created 2,797 full-time
equivalent (FTE) jobs during the period under review.
Critical Skills Training
The Department has trained 800 Chefs in partnership with
the South African Chefs Association.
This is important for the sector as the country is already importing
chefs, especially from neighbouring countries to fill this critical skills gap
in the hospitality sector.
Tourism Buddies Programme
The Department has continued with the project since 2011,
which has been rolled out across all nine provinces. The youth are trained in
the hospitality field and will emerge with a SAQA qualification in either
Accommodation Services or Food and Beverages Services.
Learners are trained and placed in various
hospitality institutions for experiential learning.
In the 2013/14 financial years, 3,860
learners were enrolled in the programme nationally.
Four hundred and forty one (441) learners
have been permanently employed by the hospitality industry during the period
Fighting crime and
The Department has
instituted forensic auditing for the Social Responsibility Implementation projects.
The audit is at the advanced stage.
Some matters are already before the courts
The following challenges were either reported
by the Department tor deduced from the analysis of Departmental operations.
The Department and South African Tourism
should improve on the challenges and improve its systems to ensure mitigating
and eradicating recurrence of such challenges in subsequent financial years.
Challenges in the period under review
The key challenge observed through reported performance
of the Department and South African Tourism is poor planning when setting
Department and South African Tourism failed to consider prevailing
circumstances when setting their targets. The Department, for an example
planned to activate 18 national programmes to implement the approved Domestic
Tourism Growth Strategys action plan.
15 programmes were supported.
for deviation is given as the miscalculation on the finalisation of the plan
when the Annual Performance Plan was finalised.
South African Tourism also knows in advance that they operate in
international markets but this is not factored into the budget and the reason
given is that the Public Finance Management Act does not allow hedging of
However, the Entity has no plan
in place to cater for this exposure.
South African Tourism also planned a high target for domestic arrivals
but when they failed to achieve them a reason was given that these were
difficult to attain due to targets set in the NTSS under different economic conditions.
South African Tourism has always been aware
of the NTSS targets but they did not set their targets realistically.
Both the Department and South African Tourism
need to improve on their planning and ensure targets set in the Strategic Plan
and the Annual Performance Plan meet the SMART principle of being
specific, measurable, attainable, realistic and
Tourism is dependent on many
other factors outside the jurisdiction of the Department.
The Economic climate, both globally and
domestically influence the movement of tourists.
The management of the Department and South
African Tourism should practice forward planning and take all these, and other
factors when setting targets in a particular financial year.
The Department experienced high staff
turnover and internal promotions. These, coupled with suitable candidates
declining offers and personnel suitability checks (PSCs) not timeously
available impacted on the vacancy rate.
The Department achieved an 11.17 percent vacant rate in 2012/13 and had
targeted 8 percent in 2013/14.
a deviation of 0.6 percent from the planned target.
The Department also failed to meet its target
on the percentage of representation of designated groups.
The reason cited for this was a lack of
suitable candidates with disabilities to fill available positions.
Vacancies in critical line functions such as
domestic tourism programme led to non- achievement of targets.
Foreign Currency Exposure
In 2012/13 the Budget
Review and Recommendations Report the Committee indicated that South African
Tourism (SAT) experienced currency loss due to foreign currency exposure based
on their marketing activities abroad.
The challenge of foreign exchange and currency exposure continued in
2013/14 financial year.
allocated an amount of R20 million to assist SAT with this matter.
However, the challenge is not abating as SAT
has indicated to the Committee that they have already been exposed to an amount
of R80 million in the current 2014/15 financial year and this may increase as
the year goes on.
As stated before,
South African Tourism is aware of this annual challenge and they need to
consider its implications in their planning to avoid further expenditure not
reflected in the budget to cover foreign currency exposure induced expenditure.
Fraud in Expanded Public
Works Programme projects
The Department continues to
face challenges with regard to fraud and corruption in the Social
Responsibility Implementation projects.
In 2012/13 the Budget Review and Recommendations Report the Committee
highlighted that Some Project Implementing Agents had committed criminal
offenses that affected completion of projects. Once the criminal activities
were detected, the Department was proactive in arresting the situation. A
number of projects throughout the country were put on hold and second phase
In line with the
government priority of fighting crime and corruption, the Department instituted
forensic investigations against suspected Project Implementing Agents.
Forensic auditing was instituted for all
projects after discovering fraudulent reporting of financial statements by some
Project Implementers. In some instances, criminal charges were laid against
some project implementers.
payments to Project Implementers before reaching some project milestones was
also one of the challenges in controlling expenditure on these projects as
Expanded Public Works Programme and Treasury condoned this practice.
In the period under review, the Department
had not finalised forensic audits and the challenges experienced in the
previous years are still prevalent in the Social Responsibility Implementation
Failure of self-regulation
in the tourism industry
The tourism industry is
mainly self-regulated with many voluntary undertakings by the private
The two of these undertakings
which had challenges in the year under review is the grading system and TOMSA
Levy which are both voluntary.
he number of levy collectors
decreased from 506 contributors in 2012 to 470 in 2013.
On the other hand the number of graded
establishments decreased from 6 022 in 2012/13 to 5587 in 2013/14.
The decrease in figures for both these
activities can be ascribed to voluntary implementation and enrolment by the
industry. The Department should assess the impact of self-regulation on these
aspects of the sector and review implementation if necessary.
Flaws in Internal Auditing
The Department and
South African Tourism both have internal audit committees.
However, the Auditor-General discovered
numerous errors in the records submitted for auditing.
These misstatements could have been picked up
and corrected before submitting.
However, they were only corrected after Auditor-General had uncovered
In the case of South African
Tourism the Auditor-General also made a finding that observation of relevant
legislation was not made in regard to supply chain management.
This raises serious concerns about internal
auditing capacity and quality assurance in both organisations.
Non-financial Audit outcomes
and steps taken to address adverse audit findings.
Auditor-General made findings on non-financial issues that need be corrected by
Department has a challenge with the design and implementation of IT policies.
The Department should take responsibility of IT
as SITA only
provides the software
but responsibility remains with the Department.
did not play oversight over the Departmental programmes.
There was a challenge with tracing
achievement of targets and reporting these to the Auditor-General.
This poses a risk to the Department in the
future if not adequately addressed.
Capacity to implement
Expanded Public Works Programme
Auditor-General raised a concern that the Department did not have full capacity
to implement the Expanded Public Works Programme and the Parliament needed to
play more oversight role to ensure that objectives of this programme are met.
Quality of performance
Department submitted performance information to the Auditor-General with a
number of misstatements.
Had it not been
for the Auditor-General, those issues would not have been discovered. The
Department should ensure that performance information is verified before
Auditor-General suggested some commitments to the Committee.
The Committee should:
Intensify the oversight role
on Expanded Public Works Programme to ensure that objectives are being met;
Request progress on the
discussions with the National Treasury regarding the correct accounting
treatment for EPWP expenditure at the Department;
Request updates on the
controls being implemented by both the National Department and South African
Tourism to address the misstatements in the predetermined objectives;
Follow up on action plans
implemented to address the IT related findings.
service delivery performance findings
This section contains service delivery
findings for 2013/14 based on oversight visits and research from external
Oversight visit reports-
summary of key service delivery issues.
The Committee undertook three oversight
visits in the period under review. Oversight visits were undertaken to Western
Cape, Free State and KwaZulu Natal.
Committee also hosted a Tourism Summit that was convened in September 2013 to
establish the state of tourism in South Africa.
The Committee reported on some of the tourism issues discovered in the
oversight visits and the Tourism Summit in the 2012/13 Budget Review and
also received briefings from the Department and South African Tourism on their
programmes. The Committee observed the following factors affecting tourism in
Lilizela Awards had been hosted twice at a time of compiling this report.
The Committee noted that winners of these
awards reflect lack of transformation.
This depicts a picture of transformation in the entire industry.
The awards have a wide range of categories
but despite this, the profile of winners remains a concern.
South African Tourism should look at the
categories and ensure that they accommodate all the sectors of the
tourism industry in South Africa remains grossly transformed.
There is a big gap between emerging
enterprises and large tourism businesses. The transformation programme of the
Department is based on the Tourism Scorecard and BEE Sector Codes has not
achieved transformation in the sector. The Department should conceptualise and
device innovative transformation programme that will change the state of the
tourism industry in the country.
Small, Medium and Micro
tourism industry is characterised by a number emerging enterprises.
These SMMEs are struggling with a number of
issues including market access, access to funding and appropriate skills.
The Committee observed that at a local level
there is also unequal development amongst SMMEs with more attention given to
those in urban areas at the expense of those in peripheral areas such as
townships and rural areas.
The SMMES in the city were fairing much better than those in townships.
The Committee noted
that the Department is assisting SMMEs through a number of programmes,
including Tourism Enterprise Partnership Funding.
However, the Department lacks a comprehensive
SMME strategy geared towards incubating SMMEs to ensure they are
self-sufficient and sustainable. SMME programmes are fragmented and impact is
not visible on the ground.
A number of
SMME success stories have little to do with Departmental interventions.
The Department should therefore have a
targeted SMME strategy that will ensure growth and sustainability in the SMME
The SMMEs who had started businesses on their own without government
assistance displayed more sustainability and some of them had won some national
competitions including Emerging Tourism Entrepreneur of the Year Award (ETEYA)
or the newly implemented Lilizela Awards.
This indicates that in addition to government support that
must be afforded
to SMMEs, SMMEs themselves should
be self-motivated and not entirely depend on government.
There needs to be a strong balancing act
between assistance given to SMMEs and their self-drive to make their business
Tourism at local level
Municipalities are at
a coal face of tourism delivery and therefore success of tourism heavily relies
on this sphere of government.
the Committee observed that some municipalities do not prioritise tourism in
their budgets and local economic development plans.
Planning and legal issues such as rezoning
and bylaws also hamper tourism development at local level.
The Committee urges municipalities to ensure
proper planning that creates a conducive environment for tourism development at
The Department is also
encouraged to assist municipalities in infusing tourism in their plans.
spheres of government in implementing Extended Public Works Programme
observed that provinces vary in terms of their coordination efforts in implementing
the SRI projects.
It was discovered that
whilst other provinces were struggling to coordinate among the national,
provincial and local structures, others had good structures on the ground that
assisted with coordination.
Institutional arrangements and coordination
The Department has well
established governance and coordination structures at a national level as
enshrined in the National Tourism Sector Strategy.
Some provinces and especially municipalities
do not have these structures.
holds quarterly MinMec meetings which should be informed by discussions at a
provincial and local level.
The MECs are
expected to cascade information to all the structures at a provincial level.
However, the lack of governance structures at
a local level break the conduit of cascading information to all levels.
The Department has an important task of
assisting provinces and municipalities to establish their structures for
planning in general.
Lack of bulk infrastructure
needs bulk infrastructure such as water and electricity, including road
Some areas identified with prime
tourism development potential do not have this infrastructure. This stifles development,
especially along the coastal areas and rural communities.
South Africa is a
long haul destination and airlift remains at the centre of facilitating foreign
tourist arrivals and unlocking domestic tourism in the country. Travel by air
within South Africa is too expensive and stifles domestic tourism.
In addition to expensive air travel, some
destinations in the country have poor connectivity. Some smaller towns with
tourism potential have poor connectivity or frequency of flights and can be
accessed through connecting flights via OR International airport.
The Committee has also noted that the cost of
flights is also linked to other travel related charges such as airport taxes
which are very high in some airports in South Africa.
Relevant authorities such as the Department
of Transport, Public Enterprises and Airports Company South Africa must be
consulted to discuss the impact of poor airlift in the tourism industry.
Private sector contribution
There is decline in
TOMSA Levy collectors and the private sector is not matching the contributions
made by government.
This is ascribed
mainly to levy collection being voluntary.
Marketing of South Africa therefore relies more on state funding from
South African Tourism whereas business should be responsible for marketing
The TOMSA Levy should be
revisited to access its impact and implementation methodology.
Project management and
Appointment of Implementing Agents
The Committee observed that the Department has challenges with project
managing the Social Responsibility Implementation projects.
SRI projects are implemented more efficiently
in the provinces with resident project implementers whereas the same cannot be
said for provinces where implementers are sourced from other provinces.
Resident implementers could provide project
management on daily basis.
In such provinces,
municipalities also provided maximum support to the projects to ensure their
success and sustainability.
acknowledged that these are national projects and adverts for implementers are
Department should try, where possible, to appoint implementers in the provinces
where projects are located.
Tourism signage is
in some areas
in others throughout the
Some major national and provincial
attractions such as World Heritage Sites have no proper signage from national
roads and major access routes.
Travelling to these attractions and facilities becomes difficult and
Poor signage also
exposes tourists to danger and make them prone to opportunistic crimes such as
mugging and hijacking.
is acknowledged that the Department has started efforts to coordinate signage
issues with the Department of Transport. However, collaboration between the
Department of Tourism and the Department of Transport should be intensified to
get a quick solution to this problem.
Maintenance of tourist
attractions fall outside the span of control of the Department.
Some important attractions such as cultural
and heritage sites fall within the ambit of the Department of Arts and Culture,
provinces or even municipalities. The committee noted with concern that some of
these attractions are not well maintained and some are in the estate of
This affects product offering
as some of them such the Robben Island Museum are internationally acclaimed and
draw a number of tourists to South Africa.
The Department is urged to work closely with relevant departments and
authorities to promote proper maintenance of tourist attractions throughout the
Relevant external research
assessing performance of the Department
Committee reviewed a number of documents from various organisations to get
insight into their perspectives on service delivery by the Department and South
Some of the thematic
issues identified include:
Statistics South Africa (StatsSA), in their release of
2013 tourism statistics, indicated that international foreign arrivals to South
Africa reached its highest levels ever, namely 14 860 216 in 2013. This 10.5
per cent increase in international foreign arrivals (over 13 451 565 in 2012)
translated to 9.6 million international tourist arrivals. All international
tourist arrivals combined increased by 4.7 per cent, while the overseas tourist
arrivals sub-category increased by 7.1 per cent.
South Africa welcomed a total of 9 616 964
tourists in 2013, up from the 9 188 368 tourists that visited South Africa in
2012. Tourist arrivals to South Africa in 2013 showed positive growth from all
In total, South Africa recorded 417 582 North American
tourists in 2013, up from 393 446 in 2012.
South Africas second largest market, the USA, accounted for 348 646
tourist arrivals in 2013, reflecting 6.7 per cent growth on the 326 643
Americans that visited South Africa in 2012. Asia, and Central and South
America continued to record good growth on top of the exceptional levels
witnessed in 2012, in which these markets grew by 34 per cent and 37 per cent
A total of 435 076 Asian
tourist arrivals were recorded in 2013, a 9.2 per cent increase on 2012
numbers. China, South Africas fourth largest source market for tourist
arrivals for the second year in a row, continued to perform, growing by 14.7
per cent to reach 151 847 tourist arrivals in 2013. Arrivals out of India
tempered in 2013, growing by 5.5 per cent to reach 112 672 arrivals.
Africa, by far the largest source of tourism
arrivals to South Africa, grew from 6 634 933 in 2012 to 6 889 389 in 2013.
This amounts to growth in arrivals of almost 4 per cent. African air markets
continued to perform, with African air tourist arrivals growing by 12 per cent
in 2013, with growth recorded from all markets. Nigeria, the largest African
air market for South Africas tourist arrivals, grew by 15.4 per cent to reach
84 589 tourist arrivals.
The PWC (2014)
that increases in foreign overnight visitors were recorded from each region.
Despite sluggish economies, travellers from Europe increased 5.4 per cent,
while the number of North American visitors rose 5.6 per cent. In Latin America
and Asia-Pacific, where economic conditions have been relatively healthy,
travel to South Africa rose by 7.4 per cent and 6.7 per cent respectively. The
number of visitors from countries outside of Africa rose 5.7 per cent in
Visitors from other countries in
Africa totalled 6.9 million in 2013, up 3.3 per cent from 2012 and accounting
for 72 per cent of the total number of foreign visitors to South Africa.
Rethinking TOMSA Levy
The tourism industry is a multifaceted and complex sector
that is linked and interdepended with a number of other sectors.
The major role-player is the private sector
as they own and operate the tourism plant.
The relationship between the Department and the private sector is
therefore pivotal to tourism growth and achieving the National Development Plan
targets set for the sector.
regard, the Tourism Business Council of South Africa (TBCSA) is a strategic
The TBCSA collects tourism
marketing levy from its members through Tourism Marketing South Africa
According to Tourism Business
Council South Africa (2014), T
OMSA has contributed over R800 million to the
marketing efforts of South African Tourism (SAT) since its inception in 1999.
As the appointed marketing agency for Destination SA, SA Tourism allocates the
funds to the dedicated marketing and promotion of South Africa as a preferred
destination of choice for local and international tourists.
With this contribution, TOMSA has actively
been a part of the growth in visitor numbers to South Africa.
However, in their 2014 annual Report, TOMSA has
indicated that while levy collections were on the increase, the number of
collectors decreased from 506 contributors in 2012 to 470 in 2013. This is
considered as grounds for concern but the decline can be rectified with the
correct mix of TOMSA brand awareness in marketing Destination SA.
The decrease in number of collectors could be
ascribed to unhappy product owners who do not see any benefits of TOMSA levy in
Some of the benefits
from TOMSA levy include discounts on exhibitor rates at Indaba and discounts
for grading fees.
at local level do not see the benefits as South African Tourism uses TOMSA levy
to market the country at a national and international level.
Some provinces have suggested charging a
Hospitality Levy of ten per cent which will be equivalent to a tourism
This may create a precedence
whereby many sub-destinations may start imposing tourism levy at provincial
The Department, particularly South African Tourism,
should work closely with the TBCSA to revisit TOMSA levy collection and
benefits accruing to members.
African Tourism markets destination South Africa as a whole and benefits even
those private sector members who do not pay the levy.
In other countries a Tourism Tax is imposed
to ensure all tourism businesses pay towards national fiscus which is used for
marketing their countries.
The option of
a Tourism Tax should be investigated to ensure all tourism businesses which
benefit from South African Tourism funded from national fiscas pay for
payment of the levy is also a challenge.
This therefore is unfair to levy collectors. If the number of levy
collectors continues to decline, an idea of a standardised Tourism Tax should
be considered against the TOMSA Levy.
Initially, the idea of TOMSA Levy was that government would match the
money collected in budget allocations to South African Tourism.
However the money allocated to South African
Tourism far exceeds what the industry is contributing.
In 2013, TOMSA Levy contributed R104 million
to South African Tourism whilst the Department transferred R866, 333,000 to
South African Tourism for marketing initiatives in 2013/14.
The Tourism Tax will ensure that all tourism
establishments are treated fairly and equally.
This will also discourage provinces from legislating their own
hospitality levies which will make destinations expensive and destroy tourism.
Contribution to skills development
The Tourism Enterprise Partnership (TEP) which is
partly funded by the Department reported in their 2013/14 Annual Report that
they supported 920 small tourism businesses, which collectively created 4 040
new jobs and increased their turnover by R850.5 million, during the financial
The Department transferred an
amount of R25 million to TEP in the period under review.
Even with a number of strategic changes, TEP
has yet again presented a solid performance, achieving and, in some cases,
exceeding the exacting targets identified for the year.
The increased turnover of over R850 million
reported by TEP clients during the period compares with an increase of R775
million in 2012/13 and R472 million in 2011/12. The 4 040 increase in jobs
compares with 4 901 for 2012/13 and 5 095 in 2011/12. TEP continued to show
increased efficiency in delivering services, seeing a decrease in the investment
required to generate R1m increase in turnover.
During the period under review, an average of R40 913 was invested by
TEP per R1m increase in revenue by its clients. This compares with an average
of R75 408 per million in 2012/13 and R128 289 per million in 2011/12.
Similarly, the investment per job created decreased to R8 608. This compares
with R11 924 in 2012/13 and R11 885 in 2011/12.
Status of South Africa in the Global
At an international level, the World Economic Forum produces the annual Travel
and Tourism Competitiveness Report to indicate competitiveness of countries in
the Travel and Tourism sector. This Report was issued for the seventh time in
The Travel and Tourism
Competitiveness Index Ranking assesses and ranks 140 economies/ countries.
The index is based on three broad categories
that facilitate or drive travel and tourism.
(1) the T&T regulatory framework sub-index;
(2) the T&T business environment and infrastructure sub-index; and (3) the
T&T human, cultural, and natural resources sub-index.
Each of these three sub-indexes is composed
in turn by a number of pillars of T&T competitiveness, of which there are
14 in all. These are
Policy rules and
regulations; Environmental sustainability; Safety and security; Health and
hygiene; Prioritization of Travel & Tourism; Air transport infrastructure; Ground
transport infrastructure; Tourism infrastructure; ICT infrastructure; Price
competitiveness in the T&T industry; Human resources; Affinity for Travel
& Tourism; Natural resources; and Cultural resources
In the period under review, the
2013 Travel & Tourism Competitiveness Index (TTCI) Report ranked
South Africa 3rd in the region and 64th overall, gaining two places since the
last edition. South Africa comes in high at 17th place for its natural
resources and 58th for its cultural resources, based on its many World Heritage
sites, its rich fauna, its creative industries, and the many international
fairs and exhibitions held in the country. Infrastructure in South Africa is also
well developed for the region, with air transport infrastructure ranked 43rd
and a particularly good assessment of railroad quality (46th) and road quality
(42nd). Overall, policy rules and regulations are conducive to the sectors
development (ranked 29th); this is an area where the country has improved
steadily over the past few assessments, with well-protected property rights and
few visa requirements for visitors. Indeed, tourism continues to be one of the
five priority sectors in the countrys growth plan, and the government has
reviewed tourism legislation in an effort to streamline it further. However,
there are also some areas of weakness that have brought down the countrys
overall ranking. Safety and security remains quite worrisome (ranked 117th), as
does the level of health and hygiene (87th) as a result of low physician
density and concerns about access to improved sanitation. Related to this,
human resources are also negatively affected by the poor health of much of the
workforce, with a low life expectancy (129th, at 52 years) driven by high rates
of communicable diseases such as HIV (137th). Improving the health of the
workforce is of urgent concern for the future of the T&T sector, as well as
for all other sectors in the economy.
Additionally, this year South Africa has experienced an increase in fuel
prices (77th) and ticket taxes and airport charges (105th), which have
diminished its price competitiveness.
The 2013 TTTCI reveals that Switzerland, Germany and
Austria lead the world in terms of travel and tourism competitiveness, with
Spain, the United Kingdom, the United States, France, Canada, Sweden and
Singapore completing the top 10.
Department needs to strengthen those indicators under their control and work
closely with other government sector departments and the private sector to
improve in those areas falling outside their span of control.
in the Hospitality Sector
The South African Hospitality outlook 2014 -2018 produced
by PWC in 2014 indicates growth in the hospitality sector in 2013.
This publication focuses on
segments within the hospitality industry with detailed forecasts and analysis.
It discusses the key trends observed in each segment as well as critical
challenges and future prospects.
South African market, overall spending on rooms in all categories rose 14% in
2013 to R17.3 billion, reflecting an increase in stay unit nights and an 8.4%
rise in the average room rate.
Concluding comments on
service delivery performance
Service delivery depends amongst other
things, on the capacity of the Department to deliver on its predetermined
objectives. The Department had staff challenge with resignations and slow
process of recruitment which reduced their capacity to deliver. On some
programmes. Nonetheless, the Department met a number of their predetermined
objectives in line with their mandate and five goals of government.
Tourism arrivals in South continued to
increase and 1.4 million jobs were created in the industry as a whole.
The Department is also coordinating its
efforts with a number of other government departments and the private sector to
grow and promote tourism both domestically and internationally.
The Department did not do well in domestic
tourism. This could be ascribed to the economic climate in the country and poor
marketing efforts for domestic tourism.
Service delivery at the local government level remained a challenge and
more efforts must be made to improve capacity of this sphere of government.
Collaboration of the Department with universities in conducting specific
critical studies in the sector is also seen as a good initiative that will
improve service delivery of the Department in the future.
Finance and Service delivery performance assessment
This section assesses the service delivery
performance against spending patterns for 2012/13 and 2013/14 including
efficiency, effectiveness and value for money.
The Department showed improvement in
financial performance in terms of service delivery.
The Department had an available budget of
R360.2 million for operations and was able to spend R352.4 million, which is
equal to 97.8 per cent.
The majority of
this budget was used on compensation of employees and goods and services.
A large amount of money was transferred to
South African Tourism for marketing the country.
The Department implemented a number of Social
Responsibility Implementation projects.
As in the previous financial year, some of these projects were
incomplete but the entire budget had been spent.
In some cases there is poor workmanship on
the structures constructed whereby structures had to be dismantled and new ones
constructed to meet required standards.
In other instances, cases of fraud had been reported and forensic investigations
are in progress.
The Committee noted and
supports the Department in its continued endeavours of conducting forensic
audits and opening court cases to reduce crime and corruption related to
KEY FINDINGS -
COMMITTEE OBSERVATIONS AND RESPONSES
Section 40 (1) (e) of the Public Finance
management Act of 1999 stipulates that the accounting officer for a department,
trading entity or constitutional institution must, in the case of a
constitutional institution, submit to Parliament that institutions annual
report and financial statements, and the Auditor- Generals report on those
statements, within one month after the accounting officer received the
Auditor-Generals audit report.
Department and South African Tourism tabled their Annual Reports on time and
met the technical requirements of submission to Parliament. The Committee notes
with appreciation that the Department and South African Tourism have always met
this technical requirement over the years.
This gave the Committee ample time to study the documents in preparation
for the BRRR.
the period under review, the Department continued to report performance to the
Committee on biannual basis as agreed with the Committee in the Fourth
This perpetuated the
challenge, poor oversight by the Committee over the Department and South
The Committee in the fifth Parliament has
resolved that the Department should report quarterly as required to ensure
performance related issues could be identified and rectified within the
financial year instead of discovering them at the end of the year when the
Department and entity table their Annual Reports.
Governance and operational issues
This section deals with general governance
and operation concerns and Committee evaluation of how well the Department
operates; such as IT, infrastructure matters human resources, disciplinary and
grievance processes and audit action plans.
Auditor-General had no findings with regard to governance issues in the
Department. However, there were material issues discovered by the Committee
during the oversight visits and briefings with the Department.
Governance and operational issues are:
The Committee noted that
Department had taken too long to finalise the forensic audits and criminal
charges regarding financial mismanagement and corruption in the SRI
It is acknowledged that the
investigations are subjudice, however the Committee is concerned that no information
has been provided to Parliament to date since investigations began. The
Department should report to Parliament once matters have been finalised in
The Department and
South African Tourism had challenges with internal audit.
The information in the performance report submitted
for auditing had material misstatements that had to be corrected after being
identified by the Auditor- General.
points to poor internal controls and verification of reported performance by
various business units.
and South African Tourism should ensure quality assurance of information before
it is submitted for auditing.
The user access management
and programme change management were not effectively monitored in the
This resulted from management
oversight in ensuring that the IT system is implemented properly.
The Department should tighten management of
its IT systems as there were a number of issues raised by the Auditor-General
in this regard.
Compliance with good
The Board of South African
Tourism did not comply with the King 111 Report recommendation in terms of good
The King 111 Report stipulates that the Chairman of
the Board may not be the Chairperson of the Remuneration Committee. However,
SAT does not comply with this as the Chairperson was also the Chairman of the
The Committee is
concerned about this issue as it is a recurring challenge and the new
chairperson of SAT Board should ensure the entity adheres to good governance
In the year under review, the Financial and
Fiscal Commission indicated that total contribution of tourism to GDP R323
billion in 2012 (i.e. 11% of GDP).
achieve NDP target of R499 billion by 2020, total contribution to GDP must grow
per annum. Currently, the industry is performing significantly below
the required growth rate.
concerning since the FFC had already warned in the previous year that if the
growth for tourism remains at the then rate of
percent per annum, the industry will fall
short by R150 billions of NDP target of R499 billion by 2020.
The growth rate should be increased to a
higher pace to allow the Department to meet its 2020 targets.
This calls for a more coordinated approach between
the Department and private sector to ensure that he set targets are met.
The Committee is concerned that the
Department will not be able to meet its 2020 targets and the review process of
the National Tourism Sector Strategy should ensure that targets set for the
sector follow SMART principles.
Financial performance including funding proposals
The financial performance of the Department
for 2013/14 is commendable in that 99.48 percent of the appropriated budget was
spent, despite poor performance on the Tourism Incentive Programme.
The Department has developed a number of
strategies to develop and promote tourism in South Africa.
However, there has been slow implementation
of programmes proposed in those strategies.
The department should devise innovative ways of implementing tourism
programmes given poor prospects of additional funding for tourism under the
current national fiscus climate.
department should consider:
Identifying projects for
their global significance and demonstrate feasibility for further development
and active promotion domestically and internationally.
towards activities that directly or indirectly create jobs through enhancing
provinces and municipalities in their planning endeavours to ensure tourism is
prioritised in the budgets of municipalities.
Funding pro-poor tourism initiatives that
promote transformation in the tourism industry through community-based projects.
appropriated for domestic tourism is maximised in terms of value for money in
the initiatives meant to inculcate culture of travel amongst South Africans.
marketing budget requirements by South African Tourism to allow the Committee
to make informed recommendations
marketing presence in emerging markets in Asia and regional Africa to capture
market share for South Africa.
South African Tourism from foreign currency exposure when they conduct their
marketing activities abroad.
partnerships with the private sector for marketing South Africa internationally.
thorough consideration of the performance of the Department of Tourism and
South African Tourism, and the environment under which these entities operate,
the Committee would like to make the following recommendations to both the
Minister of Finance and Minister of Tourism:
Recommendations to the
Minister of Finance
performance including forward funding recommendations
Appropriation of Tourism
It is recommended that the National Treasury
appropriates the budget for Vote 35 as per current projections in the Estimates
of National Expenditure and the increase be only
considered once the Department has established
internal capacity to deliver on the allocated budget.
Classification of EPWP Expenditure
The EPWP payments are currently
classified as transfer payments to households. National Treasury issued
Modified Cash Standards in February 2014 which required the reclassification of
expenditure. Given the timing of the finding and magnitude of the changes to be
made within the financial system the National Treasury has granted permission
to the Department to continue with this classification for the 2013/14
financial year. Reclassification of the payments to goods and services and
capital payments will be considered in accordance with the Modified Cash
Standard for the 2014/15 financial year.
It is recommended that the Department finalises the
discussions on classification of Expanded Public Works payment with the
South Africa has no mechanism to fund tourism
development similar to the Tourism Development Fund in other countries.
In South Africa there is no mechanism to fund
A huge chunk of the
National Department of Tourism budget goes towards marketing through a transfer
payment made to South African Tourism. There is therefore no sufficient budget
to fund tourism development related activities.
The fund will support investment in tourism industry related
accommodation, infrastructure, experiences and facilities.
The focus could be on funding new innovative
tourism ideas and expansions for smaller operators.
Clear funding criteria and guidelines will
need to be developed to ensure the fund is not misappropriated but is directed
to the purpose for which it will be established.
This fund could be an enhancement of the
existing Tourism Incentive Programme that was transferred from the Department
of Trade and Industry.
is recommended that the National Treasury explores possibilities of
establishing a Tourism Development Fund that will cater for all aspects of the tourism
to the Minister of Tourism
The following recommendations are made with regard to
both National Department of Tourism and South African Tourism:
Department of Tourism
Governance and Leadership
The senior management in the Department has provided
solid leadership and displayed quality governance on Departmental strategic and
Department should improve on the following issues:
is recommended that the Department reports to Parliament on quarterly basis
instead of biannually as agreed with Committee in the Fourth Parliament to
enable the Committee to properly and efficiently track financial and service
delivery performance of the Department.
is recommended that leadership of both South African Tourism and The Department
should ensure proper setting of predetermined objectives and compliance with
and SAT should also develop action plans to ensure improvement towards achieving
and maintaining clean audits and reflect this when tabling their 2015/16
Strategic plans and Annual Performance Plans.
It is recommended
that the Department implements the internal guidelines developed to curb
wasteful and fruitless expenditure incurred due to late cancellations, no shows
and flight amendments and report to Parliament on quarterly basis with regard
to progress on eliminating this needless expenditure. This will curb
expenditure such as the R1.9 million incurred in 2013/14.
Reassessment of the
International Tourism Management Programme
is recommended that the Minister assesses whether Programme 3: International
Tourism adds value to the mandate of the Department or creates duplication of
activities with South African Tourism.
This must be done with an objective of realigning the Departmental
structure to avoid wastage of resources if duplication exists.
It is recommended that the Department strengthens
their contract management capacity from the point of drafting the Service Level
Agreements with service providers and/ or implementing agents to actual project
management during implementation of projects to avoid liabilities incurred due
to claims against the Department due to repudiation and termination of contracts.
TOMSA Levy Collections
It is recommended that the Department engages the Tourism
Business Council of South Africa to maximise TOMSA Levy collections as failure
to this creates the possibility of establishing a Tourism Tax in the long term.
Responsibility Implementation (SRI)
It is recommended that the Department:
expedites the process of forensic audits on
SRI projects and report findings to Parliament as soon as matters have been
finalised in court.
reviews the implementation methodology for
SRI projects to ensure accountability, efficacy, effectiveness and value for
Tourism Institutional Arrangements
It is recommended that the Department assists
provinces and municipalities to establish their tourism coordinating structures
as proposed in the National Tourism Sector Strategy.
International Tourist Airlift
It is recommended that the Department works with the
Department of Transport to finalise the Airlift Strategy and advocate for the
open skies policy to ease tourist travel and attract more visitors to South
It is recommended that the Department and South
African Tourism works closely with the Low Cost Airlines and Destination
Marketing Organisations in provinces to develop affordable packages and
increase airlift in less visited provinces.
It is recommended that the
Department intensifies its interaction with the Department of Home Affairs to
explore possibilities of introducing an e-Visa in South Africa to facilitate
ease of travel for tourists.
It is recommended that the
Department engages the Department of Home Affairs to ensure that Visa agencies
used by the Department of Home Affairs abroad should be located within
embassies to facilitate processing of travel documentation.
It is recommended that the
Department prioritises domestic tourism and implement programmes that enhance product
development, skills development, market access and cultivate the culture of
travel amongst South Africans in order to grow this market and be on par with
the global trends.
It is recommended that the
Department champions preferential pricing for South Africans with dual pricing
for domestic and international tourists to ensure affordability for locals.
It is recommended that the
Department conducts product development that promotes involvement of local
Community-Based tourism development
It is recommended that the Department initiates
projects that foster community-based tourism and activates the PPP Toolkit for
Tourism targeting communities living around protected areas.
It is recommended that the Department initiates
innovative programmes that enhance transformation in the tourism sector beyond
compliance with the Tourism Scorecard and Sector Codes.
is recommended that the Department intensifies efforts to improve tourism
signage throughout the country, especially to cultural and heritage sites.
of Bulk Infrastructure
is recommended that the Department works closely with South African Local Government
Association to facilitate provision of bulk infrastructure such as electricity,
water and roads in areas earmarked for tourism development, especially in rural
South African Tourism
Quantification of marketing budget
It is recommended
that South African Tourism conducts a funding or budget needs analysis to
quantify how much is needed to effectively market South Africa both
internationally and domestically.
It is recommended
that South African Tourism investigates measures that could be taken to
mitigate foreign currency exposure.
It is recommend that South African Tourism adapts
their marketing strategy to changes in international trends, particularly
emerging markets that are not core markets for South Africa.
Improved domestic and regional marketing
It is recommended that South African Tourism:
domestic tourism marketing campaigns to inculcate culture of travel amongst
South African thus growing the domestic tourism market.
marketing presence in regional Africa markets to attract more visitors from the
promotes and grows
local events to ensure geographical spread of business tourism and thus grow
Targets and Tourism statistics
is recommended that South African Tourism:
arrival targets against the National Tourism Sector Strategy to ensure that
realistic attainable targets are projected.
cleans the tourism
statistics of the country and reports on tourist arrivals instead of foreign
arrivals to South Africa.
works closely with
Statistics South Africa to assist provinces and local municipalities to
establish their Tourism Economic Accounts to allow them to have destination
specific statistics and quantify the value and volume for tourism at a local
trends and external factors such Ebola when setting targets for international
Improvement of Indaba as premier African tourism consumer
is recommended that South African Tourism improves Indaba as a Premier African
Consumer Show to match international standards and withstand domestic and
Reviewing of some aspects of the Tourism
Given the declining
numbers in graded establishments and meagre revenue collected from grading, it
is recommended that the Grading Council of South Africa explores a possibility
of reviewing the payment scheme of grading tourism facilities from a voluntary
scheme with payment for grading to a compulsory but free grading system.
It is recommended
that the grading scheme must be extended to other tourism services beyond
planning by the National Conventions Bureau
It is recommended
that the National Conventions Bureau sets realistic targets which represent a
true picture of business tourism in South Africa.
It is recommended
that the National Conventions Bureau ensures an equitable geographic spread of
business tourism in South Africa through distribution of events equitably in
The process of
developing a Budget Review and Recommendations Report involved a number of
stakeholders inside and outside Parliament.
The Committee would like to thank all the stakeholders that participated
in various ways in ensuring that the BRRR was compiled with the industry-wide
inputs. As special appreciation goes to the offices of the Speaker and the
House Chairperson for their continued support in the work of the Committee;
members of the Committee for their dedication and ensuring growth in the
sector; the Minister of Tourism for his accountability to the Committee and the
senior Departmental officials.
to be considered.
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