ATC140711: Report of the Portfolio Committee on Tourism on Budget Vote 35: Tourism, dated 11 July 2014.
Tourism
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
Departments 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
tourisms 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 sectors 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 countrys 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
Departments 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 Departments
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 Departments
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 Departments
Strategic Plan in some instances is characterised by Key Performance Indicators
(KPIs) which are not necessarily within the Departments 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 Tourisms budget.
Table 1
: Programme Allocation
Programme
|
Budget
|
Nominal
Rand change
|
Real
Rand change
|
Nominal
% change
|
Real
% change
|
|||
R million
|
2013/14
|
2014/15
|
2015/16
|
2016/17
|
2013/14-2014/15
|
2013/14-2014/15
|
||
Administration
|
208.1
|
221.8
|
243.3
|
248.0
|
13.7
|
0.8
|
6.58 per cent
|
0.36 per cent
|
Policy and Knowledge
Services
|
901.8
|
925.2
|
1 026.1
|
1 079.7
|
23.4
|
-
30.6
|
2.59 per cent
|
-3.39 per cent
|
International Tourism
|
41.0
|
51.9
|
54.4
|
57.5
|
10.9
|
7.9
|
26.59 per cent
|
19.20 per cent
|
Domestic Tourism
|
369.6
|
463.2
|
548.4
|
691.2
|
93.6
|
66.6
|
25.32 per cent
|
18.01 per cent
|
|
|
|
|
|
|
|
|
|
TOTAL
|
1 520.5
|
1 662.1
|
1 872.2
|
2 076.4
|
141.6
|
44.6
|
9.31
per cent
|
2.93
per cent
|
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 Departments 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
Programme
|
Budget
|
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
|
2013/14
|
2014/15
|
||||
|
|
|
|
|
|
|
Ministry
|
37 506.0
|
36 204.0
|
- 1 302.0
|
- 3 415.6
|
-3.47 per cent
|
-9.11 per cent
|
Management
|
17 412.0
|
17 807.0
|
395.0
|
-
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
|
|
|
|
|
|
|
|
TOTAL
|
208 110.0
|
221 819.0
|
13 709.0
|
759.1
|
6.6 per cent
|
0.36 per cent
|
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 Departments 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
Programme
|
Budget
|
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
|
2013/14
|
2014/15
|
||||
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
TOTAL
|
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 Programmes 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
Programme
|
Budget
|
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
|
2013/14
|
2014/15
|
||||
|
|
|
|
|
|
|
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
|
Europe
|
8 479.0
|
9 195.0
|
716.0
|
179.2
|
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
|
|
|
|
|
|
|
|
TOTAL
|
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 Africas 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
Programme
|
Budget
|
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
|
2013/14
|
2014/15
|
||||
|
|
|
|
|
|
|
Domestic Tourism
Management
|
10 076.0
|
10 373.0
|
297.0
|
-
308.6
|
2.95 per cent
|
-3.06 per cent
|
Domestic Tourism
Management: Southern Region
|
11 549.0
|
13 250.0
|
1 701.0
|
927.5
|
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
|
|
|
|
|
|
|
|
TOTAL
|
371 578.0
|
463 213.0
|
91 635.0
|
64 592.4
|
24.7 per cent
|
17.38 per cent
|
National Treasury (2012) Vote 35 Tourism
The Departments 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
Shot
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 industrys 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 Africas
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.
Documents
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