ATC140711: Report of the Portfolio Committee on Tourism on Budget Vote 35: Tourism, dated 11 July 2014.


Report of the Portfolio Committee on Tourism on Budget Vote 35: Tourism, dated 11 July 2014 .

The Portfolio Committee on Tourism, having considered Budget Vote No. 35: Tourism, together with the Strategic Plan and Annual Performance Plan of the National Department of Tourism (NDT) and the South African Tourism (SAT), reports as follows:

1. Introduction

The Constitution of the Republic of South Africa (Act No. 108 of 1996) states that Legislative Authority has an important role to play in the oversight function in overseeing the performance of government departments and public entities. In terms of section 10(c) of the Money Bills Amendment Procedure and Related Matters Act (Act No. 9 of 2009), strategic plans must be tabled in Parliament after the adoption of the fiscal framework.

It is important to ensure that the strategic plan is tabled within the stipulated period because the plan provides information for budget review process of the Portfolio Committee. The focus of the strategic plan must be on issues that are strategically important, linked to and flowing from various plans developed within the Department to fulfill its mandate, especially performance agreement between the President and Minister and Service Delivery Agreement entered into in terms of the broad strategic outcomes. It must also take cognisance of the National Development Plan and be aligned to this Plan to achieve overall developmental goals of the state.

Annual Performance Plans and Strategic Plans form the basis for issues on which the oversight work of the Committee is performed. Issues such as the departmental finances, supply chain management, information systems and human resources can be considered based on strategic priorities. The Committee can then make assessment if some of the issues have to be addressed to facilitate improved performance. The budget and Strategic Plan therefore form the basis of the Annual Report on which the overall performance of the Department is assessed . The Public Service Commission (PSC) in its report “Evaluation of the Departments Annual Reports as an Accountability Mechanisms” states that the emphasis on measurable objectives, which should be part of the strategic plan, is to create a contract between Parliament and the relevant Minister regarding specific deliverables for which the Minister can be held accountable.

The Annual Performance Plan must detail the specific performance targets that the Department will aim to achieve in the budget year and the next two years of the Medium Term Expenditure Framework (MTEF) in pursuit of strategic outcomes oriented goals and objectives set out in the strategic plan.

This explains the importance of budget and strategic plan process in the calendar of Parliament and the necessity for departments to table these on time to ensure Parliament is provided with information required for its oversight work.

2. The committee process

One of the challenges that faced the committee in considering the budget and strategic plans of the National Department of Tourism and the entity was time constraints. There was a very short period between the establishment of parliamentary committees, election of chairpersons and the scheduled debates in the Extended Public Committees.

There was also a need for the revival of strategic and annual performance plans that were tabled before the national general elections and the Department had to submit new documents.

In a normal financial year, the committee would invite critical stakeholders, such as the Financial and Fiscal Commission (FFC) to attend and make presentation on the budget and strategic plan of the NDT to indicate whether the budget and the plan are realistic to address tourism within the developmental agenda of the country.

On the 27 th June 2014, the Minister tabled to Parliament the Strategic and Annual Performance Plans of the National Department of Tourism for 2014/15 to 2018/19 financial year. The Minister further tabled an updated Strategic and Annual Performance Plans of the South African Tourism for 2014/15.

The Speaker of the National Assembly, on the same day, referred these papers to the committee for consideration and reporting. The Committee scheduled extended briefing sessions with the NDT and SAT respectively so as to present their plans and budgets for the Medium Term Expenditure Framework (MTEF) period on the 4 th July.

As part of the budget review process of the NDT, the Committee engaged extensively on operational plans of identified areas of the Department’s programmes. These were areas which the Committee observed would require close monitoring to ascertain whether 2014/15 targets would be met. The budget briefings served to acquaint the Committee with the mandates and programmes of each business unit in the NDT and the SAT.

In 2012, Government adopted the National Development Plan as its overarching planning framework. The Committee expected the Department to ensure that the Tourism Sector plans were consistent with the National Development Plan.

The report provides a brief summary of presentations made to the Committee, focusing mainly on 2014/15 strategic plans; the annual performance plans; and the 2014/15 to 2018/19 MTEF allocations and an overview of allocations per programmes. The report also provides the Committees’ recommendations relating to the Vote.

3. National Department of Tourism

3.1 Policy priorities for 2014/15

The mandate of the Department of Tourism is to promote sustainable growth and development in the tourism sector. Tourism is a national priority and has the potential to contribute significantly to economic development. The National Tourism Sector Strategy (NTSS) provides a blue print for the sector to meet the growth targets contained in the New Growth Path. These targets commit the Department to create an additional 225 000 jobs and increasing tourism’s total direct and indirect contribution of R499 billion to the Gross Domestic Product of the country by 2020. In pursuing attainment of these targets, the Department has set the following strategic goals over the medium term:

3.1.1 Maximise domestic and foreign tourist arrivals to South Africa.

3.1.2 Expand domestic and foreign investment in South African tourism industry.

3.1.3 Expand tourist infrastructure.

3.1.4 Improve the range and quality of tourist services.

3.1.5 Improve the tourist experience and value for money.

3.1.6 Improve research and knowledge management.

3.1.7 Contribute to growth and development and expand the tourism share of the Gross Domestic Product (GDP).

3.1.8 Improve competitiveness and sustainability in the tourism sector.

3.1.9 Strengthen collaboration with tourist organizations.

3.2 Performance and Service Delivery information

In recent times, unemployment in the country has become a thorny issue that requires a quick and lasting intervention. The NDP and Industrial Action Plan 2 (IPAP2) both recognise tourism as one of those industries that can fast-track job creation. The mentioned frameworks recognise the tourism sector’s potential to create high value jobs as well as jobs that may not require qualifications for the less skilled.

In 2013 the South African tourism sector extended its growth in terms of international tourist arrivals at an annual average of 7.4 percent as of 2011, surpassing the global average of 4.5 per cent by a great margin. This is translated to 9.6 million international tourist in 2013 which is 428 596 more tourist arrivals when compared to 2012. The industry contributed a total of 9.5 per cent towards the country’s GDP in 2013. This contribution translated to R 323 billion into the coffers of the country.

The Department performed well in a number of strategic objectives during the 2013/14 financial year. The Department, by November 2013, had achieved 90 per cent of their set targets and even surpassed some of the targets. In its programmes, the Department has fostered research as an informative tool that will assist in mapping a well-informed way forward. The involvement of higher education institutions will not only assist in creating a knowledge base but will also strengthen relations between the Department and the relevant authorities in producing relevant skills for the tourism industry.

The Department’s spending also correlated with the achieved deliverables; however there was a concern during the 2013/14 period regarding virements from other programmes which violated the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999 as amended) requirements of not more than 8 per cent. In this case, the Department had virements above 30 per cent in the international tourism programme, which violated Section 43(2) of the PFMA. Some of these actions can be condoned on the basis that the Department had, during that term, undergone a revamp of their programmes through a restructuring process. The combined virements amounting to ±R25 million were redirected towards the EPWP, which has, according to the 2012/13 Annual Report, yielded jobs above the set target. This, however, raised serious concerns as the Department had initially planned for 50 projects yet ended up funding 70, and the additional targets therefore are not necessarily based on the original target and claiming to have exceeded targets is somehow misleading.

The Department managed to execute most of their programmes without major hindrances. The Administration Programme met and surpassed some targets such as the Work Place Skills Plan (WPSP), representation of designated groups, and efficient service delivery. Furthermore, the Master System Plan (MSP) was reviewed and phase 1 of the plan was implemented. The Department also reported positive results with regard to compliance with performance and risk management prescripts; compliance relating to regulatory requirements and finally the progress made concerning scheduled international agreements. In terms of procurement from Broad Based Black Economic Empowerment (BBBEE) and Black Economic Empowerment (BEE) enterprises, the Department achieved the target that was set at 59 per cent. The system of monitoring Compliance with BEE rating was piloted and this will assist in ensuring transformation and compliance of the industry with tourism BBBEE Charter.

The communication strategy of the Department needed to boost its performance where the implementation plan was concerned, because for a number of projects to achieve their intended results , effective communication is required. However, it must also be noted that the Department was doing well in terms of high level media interventions that led to media coverage, as the Department was able to obtain 13 interventions, more than the targeted 8. Despite the Department’s efforts in conducting nationwide workshops for Supply Chain Management (SCM) officials, as well as public and private sector tourism associations on the implementation and alignment of BBBEE and Preferential Procurement Framework Act to advance transformation in the tourism sector, transformation is moving at an alarmingly slow pace.

The EPWP programme has been faced with a number of challenges since its migration from the former Department of Environmental Affairs and Tourism (DEAT) to the Department of Tourism in 2009. These challenges include: poor communication between the three spheres of government on projects identified per affected area; poor human resource capacity in some municipalities; mismanagement of EPWP project funds; lack of planning; alleged theft of project materials and to a certain extent, lack of leadership. The Department has, however, managed to perform a lot better during the 2012/13 financial year as compared to its performance in previous years. However, it remains important that more focus be invested in these projects in order to bear the desired result and deal with issues of corruption. This will further improve the Department’s contribution towards decent work through sustainable projects. The Department was on track towards achieving its target of full time equivalent jobs.

Some of these challenges were raised by the Auditor-General (AG) during the 2012/13 Audit period and are subsequently receiving the necessary attention, and some of the allegations were referred to the South African Police Services (SAPS) for investigation. However, it must be noted that some of these projects were successful and for those that had failed, a turnaround strategy was being implemented. The continued success of the EPWP projects rests on the establishment of good relationships between the spheres of government and the beneficiaries, as well as the appointment of credible project implementers within the strict guide lines of the EPWP.

The most worrying factor is that the Department’s Strategic Plan in some instances is characterised by Key Performance Indicators (KPIs) which are not necessarily within the Department’s power to deliver but are dependent on a third party. The Department needs to work hard at creating platforms that allow these issues to be discussed and further develop ways of addressing overlapping issues.

On South African Tourism (SAT), the Department achieved most of their set targets, as well as doing well in fostering service excellence through the promotion of grading services to tourism establishments. The Tourism Grading Council of South Africa managed to grade a total of 6022 establishments. The other function that falls under SAT is that of the National Conventions Bureau, which by the end of 2013/14 had secured hosting rights to 87 international associations’ meetings.

3.3 Budget analysis

The Department carries out its mandate through four programmes (Table 1). The budget is expected to grow at a moderate rate reaching R2 billion in the Medium Term Expenditure Framework (MTEF) due to the shift in focus and the more emphasis on Policy and Knowledge services and Domestic Tourism in order to allow the Department to market South Africa from an informed base using research. This will possibly address the consistent concern regarding minimal domestic tourism marketing. It is expected that the increase in tourist arrivals will positively contribute towards the broader objective of growing the GDP and creating jobs. Under the Domestic Tourism Programme, the Tourism Incentive Programme will be introduced during the 2014/15 financial year to help SMMEs and established businesses to grow through improved access to international buyers and markets. This Programme will have an allocation of R99.6 million in 2014/15, R199.6 million in 2015/16, and R210.4 million in 2016/17. An additional allocation of R205 million will be allocated for South African Tourism as additional Cabinet-approved allocations to assist domestic marketing programmes, however Cabinet-approved reductions of R32 million in 2014/15, R48 million in 2015/16 and R9 million in 2016/17 will be effected. Amongst these reductions an amount of R29 million in 2014/15 and R40 million in 2015/16 will be deferred to the 2016/17 financial year. Table 1 shows the programme allocation for the Department of Tourism’s budget.

Table 1 : Programme Allocation



Nominal Rand change

Real Rand change

Nominal % change

Real % change

R million














6.58 per cent

0.36 per cent

Policy and Knowledge Services



1 026.1

1 079.7


- 30.6

2.59 per cent

-3.39 per cent

International Tourism







26.59 per cent

19.20 per cent

Domestic Tourism







25.32 per cent

18.01 per cent


1 520.5

1 662.1

1 872.2

2 076.4



9.31 per cent

2.93 per cent

.93 that translates to a mere 3ed nger to some operations within the Entities National Treasury (2013) – Vote 35 Tourism

The budget makes mention of the Cabinet-approved reductions for transfers directed at South African Tourism in the MTEF of R2.5 million in 2014/15, R6.8 million in 2015/16 and R7.6 million in 2016/17. This move may pose a challenge to some operations within the entity. An increase of 9.31 per cent in the Department’s allocation has been observed for the budget year 2014/15 in nominal terms although in real terms that translates to a mere 2.93 per cent (Table 1). This is due to an increase in three of the programme budgets.

It must be noted that Programme 2 carries most of the Department budget at 55.7 percent. This is attributed to transfers to South African Tourism which are made from this programme.

Programme Analysis

Programme 1: Administration

Table 2: Allocation for Programme 1



Nominal Increase / Decrease in 2014/15

Real Increase / Decrease in 2014/15

Nominal Percent change in 2014/15

Real Percent change in 2014/15

R million




37 506.0

36 204.0

- 1 302.0

- 3 415.6

-3.47 per cent

-9.11 per cent


17 412.0

17 807.0


- 644.6

2.27 per cent

-3.70 per cent

Corporate Affairs

124 141.0

141 381.0

17 240.0

8 986.1

13.89 per cent

7.24 per cent

Office Accommodation

29 051.0

26 427.0

- 2 624.0

- 4 166.8

-9.03 per cent

-14.34 per cent


208 110.0

221 819.0

13 709.0


6.6 per cent

0.36 per cent

1o R205 in 2012om R192 was accounted for in salaries National Treasury (2013) – Vote 35 Tourism

The budget allocation to the Administration Programme is for strategic governance and risk management; legal, Corporate Affairs, information technology, and strategic communications support services to the Department. The allocation of the budget for this programme significantly increased during the fourth Parliament, this was as a result of the declaration of the Department as a stand-alone department as of 2009. This increase in departmental expenditure was thus informed by the expanded mandate of the Department that required new personnel, premises and fittings. This increase in expenditure was accounted for in salaries, goods and services. The total Administration budget has increased from R208.1 million in 2013/14 to R221.8 million in 2014/15. This represents a nominal increase of 6.6 per cent; an increase of 0.36 per cent in real terms. This Programme constitutes 13.69 per cent of the Department’s total budget, most of which will be spent through the Corporate Affairs sub-programme to enhance management oversight to create an enabling policy and legislative environment. Over the MTEF spending will be directed towards advertising, auditing, communications, computer services for data lines and services consultants for internal auditing, contracts for maintenance, office accommodation and domestic travel for reporting to Parliament.

Programme 2: Policy and Knowledge Services

Table 3: Allocation for Programme 2



Nominal Increase / Decrease in 2014/15

Real Increase / Decrease in 2014/15

Nominal Percent change in 2014/15

Real Percent change in 2014/15

R million



Policy and Knowledge Services Management

4 275.0

4 012.0

- 263.0

- 497.2

-6.15 per cent

-11.63 per cent

Policy Development and Evaluation

17 125.0

21 549.0

4 424.0

3 166.0

25.83 per cent

18.49 per cent

Research and Knowledge Management

17 695.0

23 292.0

5 597.0

4 237.2

31.63 per cent

23.95 per cent

South African Tourism

754 929.0

876 309.0

121 380.0

70 220.7

16.08 per cent

9.30 per cent


794 024.0

925 162.0

131 138.0

77 126.7

16.5 per cent

9.71 per cent

National Treasury (2013) – Vote 35 Tourism

The budget allocation for the Policy and Knowledge Services Programme, which has received the largest allocation in the budget increased by 9.71 per cent in real terms from 2013/14 financial year. This Programme is entrusted with ensuring strategic tourism sector policy development, monitoring and evaluation, and research and knowledge management services. The South African Tourism sub-programme, which is tasked with responsibility of stimulating sustainable international and domestic demand for South African tourist experiences, consumes 94.72 per cent of the Programme’s budget.

As part of the cabinet approved budget reductions, transfers to South African Tourism have been reduced by an amount of R2.5 million for the 2014/15 financial year; this reduction is expected to impact on operational expenditure and will affect projects such as the upgrade to the oracle system. Another noteworthy sub-programme growth is the Research and Knowledge Management, this sub-programme has experienced an increase of 23.95 per cent in real terms.

This increase has been attributed to the growth in the number of extended research and knowledge management activities, as well as the corresponding increase in the compensation of employees. Furthermore, this growth in expenditure will also make provision for the development and maintenance of nine information and knowledge system and services. These will include visitor information knowledge database, tourist guide central database and the two national tourism information gateways.

Programme 3: International Tourism

Table 4: Allocation for Programme 4



Nominal Increase / Decrease in 2014/15

Real Increase / Decrease in 2014/15

Nominal Percent change in 2014/15

Real Percent change in 2014/15

R million



International Tourism Management

3 791.0

3 710.0

- 81.0

- 297.6

-2.14 per cent

-7.85 per cent

Americas and Caribbean

10 704.0

13 564.0

2 860.0

2 068.1

26.72 per cent

19.32 per cent


8 479.0

9 195.0



8.44 per cent

2.11 per cent

Africa and Middle East

9 501.0

15 438.0

5 937.0

5 035.7

62.49 per cent

53.00 per cent


41 013.0

51 916.0

10 903.0

7 872.1

26.6 per cent

19.19 per cent

National Treasury (2012) – Vote 35 Tourism

The International Tourism Growth Programme is responsible for the development and support of South Africa’s tourism potential throughout the various regions of the world. This Programme increased by a significant 26.6 per cent in nominal terms from R41 million in 2013/14 to R51.9 million in 2014/15. This significant change is attributed to the need for the training of tourism officials, translation of material and the development of marketing material for subsequent distribution in 126 South African missions.

This Programme is also expected to negotiate, facilitate and implement international tourism agreements, and produce annual reports on the implementation plans of bilateral agreements. The major spending on this Programme is expected to be on the compensation of employees as well as travel and subsistence brought about by trips taken to analyse international tourism market and attend multilateral fora .

Programme 4: Domestic Tourism

Table 5: Allocation for Programme 4



Nominal Increase / Decrease in 2014/15

Real Increase / Decrease in 2014/15

Nominal Percent change in 2014/15

Real Percent change in 2014/15

R million



Domestic Tourism Management

10 076.0

10 373.0


- 308.6

2.95 per cent

-3.06 per cent

Domestic Tourism Management: Southern Region

11 549.0

13 250.0

1 701.0


14.73 per cent

8.03 per cent

Domestic Tourism Management: Northern Region

10 603.0

16 650.0

6 047.0

5 075.0

57.03 per cent

47.86 per cent

Social Responsibility Implementation

314 350.0

399 940.0

85 590.0

62 241.3

27.23 per cent

19.80 per cent


371 578.0

463 213.0

91 635.0

64 592.4

24.7 per cent

17.38 per cent

0.17 in the 2015/16 fuinancial year the transfer to South African Tourism will be reduced by 40.7 millionernal audit cost. the National Treasury (2012) – Vote 35 Tourism

The Department’s budget allocation for the Domestic Tourism Programme has increased by 17.38 per cent in real terms from R371.5 million in 2013/14 to R463.2 million in 2014/15. This programme is responsible for the promotion, development, and growth of sustainable domestic tourism throughout South Africa.

The spending focus will mostly be on the Social Responsibility Implementation sub-programme which focuses on infrastructure projects under the EPWP programme targeting the youth, disabled, women, and SMMEs. The expected increase to this Programme will be highly influenced by the additional funding of R70 million approved by Cabinet for the Social Responsibility Implementation (SRI) Programme for the 2016/17 financial year.

The expected jobs to be created through the SRI programme will be 5625 and 5575 for the 2014/15 and 2016/17 financial years respectively. Expenditure is also expected to increase in the Programme due to the funding for the tourism incentive programme which previously was part of the SMMEs programme in the Department of Trade and Industry (DTI). This Programme is expected to support growth of SMMEs in the tourism Industry, through improved access to international buyers and markets.

4. South African Tourism

The mandate of the South African Tourism is to position and market South Africa as a tourism destination of choice. The key activities include promoting tourism by potential visitors to travel to and within South Africa, and ensuring the highest attainable quality of standards of tourism services and facilities.

To develop and implement a world-class tourism marketing strategy, SA Tourism has undertaken to:

· Implement domestic, regional and international marketing strategies informed by research.

· Implement a business events strategy.

· Implement and maintain a recognisable, credible and globally benchmarked system of quality assurance.

· Facilitate strategic alignment of Provinces and industry in support of global marketing of tourism.

· Facilitate the removal of identified obstacles to tourism growth; and

· Ensure the efficient utilisation of resources to deliver the tourism strategy.

SAT selects its markets every 3 years taking into consideration the latest marketing intelligence. The review process adopts a “fresh eyes’ approach by considering all the countries in the world, and filtering them based on a set of objective attractiveness criteria.

The 5 th Portfolio Review indicates the markets on which the SAT will be focusing on for the following 3 years effective from 1 April 2014 to 30 March 2017. The categories identified were core, investment, tactical and watch-list markets. Countries from various continents are then categorised in the types of tourism markets they ought to fit into.

In the 5 th Portfolio Review, the SAT decided to subdivide Africa into 5 different regions. Countries with outbound less than 150 000 per year and a population of 3 million are filtered out. The average outbound per annum for African countries is 500K, while population is 7 million. The aim is to include as many countries as possible hence the very low threshold. The Southern Africa Development Community (SADC) which comprise Africa land markets, automatically qualify because of its proximity.

For the rest of the world, South African Tourism will no longer use the 2000 Gross Domestic Product (GDP) filter, but will use GDP Purchasing Power Parity (PPP) of 11 000 per annum as a filter for affordability.

Other activities of the SAT include the following:

The Hub Approach – the Hub Strategy Approach for Global Markets is to increase market penetration, footprint and efficient resources utilisation. The objective is to link and combine markets of strategic importance as hubs in order to realise a greater return on investment.

Africa Growth Strategy – the South African Tourism has an African Growth Strategy in order to generate growth from the continent to meet National Tourism Sector Strategy targets. In addition, SAT would look at growing arrivals in key regional markets in Africa using the hub strategy. Over the MTEF period, ring-fenced budget is meant to increase arrivals and spend from Africa to contribute to GDP and job creation. In 2012/13, R50 million was allocated and R84 million for the MTEF period up to 2016/17. By 2020 5 marketing office would be set up in key African markets.

Domestic Tourism – a new Domestic Tourism Campaign “Nothing is more Fun Than a Sho’t Left” was launched in September 2013 to encourage South Africans to discover their own country and its hidden gems; and to inculcate the culture of taking short breaks. The total annual spend has increased from R21.8 billion in 2012 to R24.3 billion in 2013 and average spend from R850 per trip to R960 per trip. The number of trips undertaken decreased from 25.4 million in 2012 to 25.1 million and the number of nights from 4.8 to 4.4. Additional budget of R100 million has been allocated to increase domestic tourism from the 2015/16 financial year.

Tourism contribution to GDP – the tourisms contribution to Gross Domestic Product has increased from 2.8 percent in 2011 to 3.0 percent in 2012.

Tourist Arrivals – tourist arrivals to South Africa grew by almost 5 percent in 2013 in line with global growth. Foreign arrivals to South Africa from January to December 2013 grew by 10.5 percent over 2012 to reach 14.8 million. Tourist arrivals to South Africa in 2013 grew by 4.7 percent over 2012 to reach 9.6 million. All regions showed positive growth in tourist arrivals in this period. Europe remains the main source of tourist arrivals to South Africa while Asia remains buoyant with the highest growth. All markets grew faster than global growth rate between 2011 and 2013.

Graded Establishments – the number of graded establishments as at the end of March 2014 is 5 671, while the number of graded rooms as at the end of March is 113 074.

South African National Convention Bureau – the focus of the Convention Bureau is to position and sell South Africa as a preferred business events destination and growing the industry’s capacity and skills. The total number of Bids secured for South Africa for 2014 to 2018 is 150 for 689 days with the estimated number of delegates 243 468. These have an estimated economic impact of R3.2 billion.

5. Key issues for the Committee

The Committee welcomed the proposed budget allocations and medium term strategic framework as presented. The Committee will closely monitor the following:

5.1 Implementation of Social Responsibility Programme

The Committee observed that the Department still experienced a challenge in the implementation of the Social Responsibility Project (SRI) which is allocated R399 million in 2014/15 financial year. The Committee implored the Minister to improve the implementation methodology to ensure viability of these projects.

5.2 Employment Incentive Scheme

The Committee noted that the tourism industry has a huge potential of creating more job opportunities thorough the facilitation of higher intake of the Employment Incentive Scheme by the private sector. The Department needed to work closely with the private sector to create conducive conditions for tourism businesses to absorb as many unemployed citizens as possible.

5.3 Ease of access

The Committee observed that South Africa’s Visa regime was not friendly to the tourism industry. Other countries in the world had introduced e-visa and m-visa but South Africa was introducing stringent immigration regulations.

The Committee was concerned that the New Immigration Regulations issued by the Department of Home Affairs due for implementation by the 1 st October 2014 will have negative effects on tourism and affect the attainment of tourist arrival targets set in the Strategic Plan for South African Tourism. This also has a potential to affect the tourism targets of creating additional 225 000 jobs by 2020 and contributing R499 billion to the Gross Domestic product of the country. The committee suggested that the Minister of Tourism convenes a special meeting with the Minister of Home Affairs to discuss the implications of the Regulations. The Portfolio Committee will also consider holding public hearings on the matter.

5.4 Grading

The following issues were raised around grading:

5.4.1 Grading statistics

Statistics for graded establishments only reflect the accommodation sector. South African Tourism should consider including attractions, tour operators and other facets of the industry to ensure an improved visitor experience.

5.4.2 Effectiveness of the grading system

The Committee observed that the grading system charged a fee to establishments and this acted as a deterrent to potential establishments to enrol in the programme. Some establishments that had been enrolled in the programme were pulling out. As a result of the instability of the grading system, it is not easy to have a complete picture of how standards are maintained in the sector. Given the minimal revenue generated by the grading system, it is suggested that moving forward, the Grading Council considers grading establishments for free to encourage more businesses to join the scheme thus increase service excellence and competitiveness of destination South Africa.

5.5 Tourism statistics

The methodology used to collect tourist data in South Africa may somehow be flawed. This cast doubt on the credibility of tourism statistics and South African Tourism should ensure that the methodology used to collect data eliminates double counting, and concentrates on tourist arrivals instead of international arrivals.

Another challenge is that the tourism statistics is not user friendly as it is not easy to discern the composition of tourist arrivals, such as, whether the country is losing high spending tourists and getting low spenders.

5.6 Budget adequacy

The Committee observed that the Department was not allocated sufficient budget given their broad mandate. The budget for South African Tourism was also not adequate as this entity had to adapt its strategy to not only promote international tourism, but to have a special focus on domestic tourism.

5.7 Decrease in arrivals

The Committee observed that there was a decline in the rate of increase tourist arrivals from 10.2 percent in 2012 to 5 percent in 2013. The country had regressed to low arrivals at world average from above double global percentage increase since the hosting of Fifa Soccer World Cup in 2010. The Department and South African Tourism should provide reasons as to why the country was regressing and rectify the declining trend if the sector has to achieve its long term targets.

5.8 Growing middle class in Africa

The Committee observed that there is a growing middle class in Africa in general, and South African particular. Some of African tourists are big spenders in Europe. South African Tourism should conduct research on this growing potential market segment and devise marketing strategies to attract them to South Africa.

5.9 Targets set in the National Tourism Sector Strategy

Given the uncertainty with the current tourism figures, the Committee was concerned whether the Department, through South African Tourism, will be able to achieve the target set in the National Tourism Sector Strategy. The Committee indicated to South African Tourism that they needed to provide realistic projections that will be achievable in the MTEF and the next five years, even if this meant revising some of the current projections downwards.

5.10 Currency exposure

The Committee observed that the budget for South African Tourism is negatively affected by foreign currency exposure. The entity had already incurred R82 million deficits in 2014/15 financial year. South African Tourism was literally spending money they do not have. If treasury was to fund a lesser amount than requested to cover the deficit, the targets set in the Strategic Plan and the Annual Performance Plan will be negatively affected as the entity will have to do virements and cancel some planned projects for 2014/15 financial year.

5.11 Coordination at local level

The Committee observed that despite various programmes at improving tourism at local government there were still challenges. These relate mainly to capacity of municipalities to deliver on tourism. The Committee was concerned that if tourism continued to be improperly coordinated at local level the national plans may not be effective. The Local Government Tourism Conference planned for January 2015 was appreciated and the Department was encouraged to intensify its coordination role and fostering implementation of Section 8 of the National Tourism Sector Strategy that outlines institutional arrangements that are necessary at all spheres of government.

5.12 International agreements

The Committee observed that there were a number of challenges experienced in processing and implementing International Agreements. Some of these included time taken to get agreements signed, other departments abroad have multiple functions and not tourism alone which complicates matters, and that some countries which want to sign Memoranda of Understanding ( MoUs ) with the Department do not add value to tourism in the country but have to be accommodated for diplomatic reasons.

5.13 Tourist Guides accreditation

The Committee noted that some institutions had offered unaccredited tourist guide training and that graduates in these programmes were not certificated as the South African Qualifications Authority (SAQA) did not recognise training offered. Some institutions had opted to offer a certain modules of accredited qualifications which nullified the qualification as incomplete. The Committee however appreciated that some institutions were redressing this situation. The Department is encouraged to ensure that tourist guides who obtained incomplete training are not registered in the provincial and national databases as this might compromise the quality of tourist experience. However, the Department should work closely with the affected institutions to ensure this does not happen again and that where possible, the affected institutions provide relief to affected trainees.

6. Conclusion

The Department has made strides in taking tourism to new heights since its establishment in 2009. The challenges of setting targets observed when the Department was newly established have been completely eliminated and the Department has continued to set meaningful targets in line with Treasury requirements. The Strategic Plans and Annual Performance Plans for both the Department and South African Tourism have demonstrated an alignment with the National Development Plan and other sector strategies. The President signed the new Tourism Act, 2014 (Act No.3 of 2014) and the budget for 2014/15 is starting to address some of the pertinent issues in the Act such as emphasis on grading of establishments, research, and local government support in terms of intergovernmental relations and coordination.

However, there are possible risks areas that were identified in the budget that need special attention. These relate to foreign currency exposure of South African Tourism when they conduct their marketing activities abroad. Other challenges in the budget include targets that may not be achieved due to external factors. Targets of international arrivals are somehow dependent on economic climate and an increase in the rand, for example, can reduce international arrivals as destination South Africa will become relatively expensive. The Department is on a recruitment drive to fill vacant posts and this strengthens the delivery capacity and will enable the Department to perform even better.

7. Recommendation

The Committee recommends that the House adopts the Budget Vote and the Strategic Plan of the Department.

Report to be considered.


No related documents