ATC150504: Report of the Portfolio Committee on Tourism for Budget Vote 33: Tourism, dated 29 April 2015


Report of the Portfolio Committee on Tourism for Budget Vote 33: Tourism, dated 29 April 2015.

The Portfolio Committee on Tourism, having considered Budget Vote No 33: Tourism, together with the Strategic Plans and Annual Performance Plans of the National Department of Tourism (NDT) and the South African Tourism (SAT), reports as follows:


  1. Introduction


The Twenty Year Review and the Diagnostic Report of the National Planning Commission (2011), highlight that poverty, inequality and unemployment continue to negatively affect the lives of many citizens in South Africa. Too few people have work and investment is too slow.  Tourism, however has proved its resilience to economic meltdown and ability to create labour intensive jobs.  The profile of tourism should therefore be raised at all spheres of government and National Treasury budget allocation to the sector should be commensurate to the potential of tourism sector to address poverty, inequality and unemployment.


The National Development Plan (NDP) which is the blueprint of government recognises tourism as one of the main drivers of economic growth and job creation.  The plan envisages the promotion of South Africa as a major tourist destination to boost tourist numbers and enable the sector to contribute directly to poverty reduction and economic growth. This is also emphasised in government’s 2014-2019 medium term strategic framework, which sets the target of the tourism sector’s contribution to the economy at more than R370 billion by 2017.

The tourism sector has a huge potential of contributing towards achieving the 11 million additional jobs by 2030.  Tourism is therefore regarded as a source of revenue and employment for the country through the investment in infrastructure, product and service development. The NDP envisions rising employment, productivity and incomes as a way to ensure a long-term solution to achieve a reduction in inequality, an improvement in living standards ensuring a dignified life for all South Africans.  The tourism sector has a potential to achieve this through reversing sluggish economy, mobilizing domestic and foreign investment, developing small medium and micro tourism enterprises (SMMEs), and curbing unemployment.  A full tourism potential can be achieved through a well-resourced Department that will champion programmes that facilitate socio-economic and inclusive tourism growth. 


The Constitution of South Africa (Act No. 8 of 1996) recognizes that Parliament has an important role to play 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.  The Department of Tourism complied with provision of the Act as the strategic plan and annual performance plan were tabled within the stipulated period.  This provided the Committee ample time to consider these documents in line with the fiscal framework.  The new fiscal framework in the Estimates of National Expenditure (ENE) indicate that the budget vote for tourism has been changed from Vote 35 to Vote 33 in 2015.


The Strategic Plan and the Annual Performance Plan of the Department should be aligned to government priorities and policies. The Public Service Commission 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 strategic objectives of the Department are therefore important to ensure that the budget appropriated for tourism is utilised effectively and efficiently.  This emphasises the significance 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. 


This being the first year of the implementation of the 2014 – 2019 Medium Term Strategic Framework, the Department and South Africa Tourism tabled their five-year strategic plans and Annual Performance Plans for 2015/16.   This report therefore provides the five-year and the 2015/16 outlook for Vote 33: Tourism.


  1. The Committee process


In preparation for considering the tourism vote, the Committee interacted with a number of stakeholders to establish the needs of the sector and ascertain strategies that could be implemented to promote inclusive tourism growth in the next five years. At the beginning of 2015, the Committee met the Tourism Business Council of South Africa to get a private sector perspective on tourism.  This was also done to promote partnerships between the Department and private sector for well-coordinated programmes that could be implemented jointly. The Committee also arranged a briefing by the Tourism Enterprise Partnership on the 27th February 2015 to get a better insight on the needs of tourism SMMEs and to assist the Department in crafting better programmes to promote entrepreneurship and sustainability of small tourism businesses. On the 8th of March 2015, the Committee met with the Federated Hospitality Association of Southern Africa (FEDHASA) to get the views of the accommodation sector. These engagements were organised to prepare and equip the Committee with the information that would assist when considering the tourism budget vote and scrutinizing the five-year strategic plan of the Department. The Committee, when adopting its 2015 first term programme, agreed that as part of enhancing its budget  process, will invite the Department and the South African Tourism to make presentations on budget and strategic plans and to demonstrate whether the plans and the budget are realistic to address tourism needs within developmental agenda of the country.


On the 11th March 2015, the Minister tabled to Parliament the Strategic Plans and Annual Performance Plans of both the Department and the Entity for 2015 to 2020 financial years.  On the same day, the Speaker of the National Assembly referred these instruments to the Committee for consideration and report. The Extended briefing sessions were scheduled for the Department and South African Tourism so as to present their plans and budget for the Medium Term Expenditure Framework period on 20th March and 27th March 2015 respectively.


As part of the budget review process, the Committee engaged the Department and South African Tourism extensively on their strategic plans and annual performance plans.  The Committee engagements simultaneously reviewed the past performances and interrogated plans for future implementation.


  1. National Department of Tourism


  1. Department spending focus during the Medium Term Expenditure Framework


The Department carries out its mandate through four programmes. The budget for the National Department of Tourism has been appropriated as summarised in Table1. The budget increased from R1.5 billion in 2014/15 to R1.8 billion in 2015/16. The budget will be increased to R2.05 billion in 2016/17 and R2.12 billion in 2017/18.  An amount of R1.17 billion will be transferred to South African Tourism leaving the NDT with R626.7 million for its operational budget in the 2015/16 financial year.  Cabinet approved a reduction of R44 million in the Domestic Tourism Programme and this will affect the target of the number of jobs to be created in the MTEF.


Table 1: Budget summary



Nominal Rand Change

Real Rand Change

Nominal Change %

Real Change %

R million





2014/15 – 2015/16

2014/15 – 2015/16








3.18 %

-154 %

Policy and Knowledge Services


1 215.6

1 274.1

1 328.0



43.01 %

36.46 %

International Tourism







2.88 %

-1.83 %

Domestic Tourism







133.90 %

-36.93 %


1 583.3

1 800.2

2 053.3

2 127.6



13.70 %

8.50 %

Source: National Treasury (2015) – Vote 33: Tourism


An amount of R557.3 million is allocated to the Tourism Incentive Programme (TIP) over the MTEF period.  The Tourism Incentive Programme has been created as a sub-programme under the Policy and Knowledge Services, the Programme will receive a budget allocation of R557.3 million over the MTEF, and this allocation is earmarked for the facilitation of market access for local tour operators and tourism businesses in recognised local and overseas exhibitions. Some of the projects for the TIP will include assistance towards the grading of tourism establishments and retrofitting renewable energy initiatives to promote responsible tourism. The Cabinet approved budget reduction of R67.6 million in the Tourism Incentive Programme over the MTEF.  The Tourism Incentive Programme is projected to increase by R100 million in 2015/16 and R105 million in 2016/17.  The funding was instituted in the 2013/14 and will end in the 2016/17. 


The Expanded Public works Programme is expected to support the creation of 10 922 full time equivalent jobs over the MTEF, this is however inadequate given that funding for this sub-programme will increase from R253 million in 2015/16 to R427 million in 2017/18. 


  1. Alignment of the budget and strategic objectives for the National Department of Tourism to the MTEF and MTSF


Government has developed a Medium Term Strategic Framework (MTSF) that will guide departmental programmes and budgets in the next five years. The Department selected four out of fourteen government outcomes in the 2014 – 2019 MTSF.  These are:

Outcome 4: Decent employment through inclusive economic growth

Outcome 7: Comprehensive rural development

Outcome 11: Creating a better South Africa, and contributing to a better and safer Africa in a better world.

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

  1. Strategic objectives of the Department

The Department will be pursing achievement of eleven strategic objectives in the coming five years.  The strategic objectives have been set as follows:

Strategic Objective 1: To ensure economic, efficient and effective use of departmental resources.

Strategic Objective 2: To enhance understanding and awareness of the value of tourism and its opportunities.

Strategic Objective 3: To create an enabling legislative and regulatory environment for tourism development and growth.

Strategic Objective 4: To contribute to economic transformation in South Africa.

Strategic Objective 5: To accelerate the transformation of the tourism sector.

Strategic Objective 6: To facilitate tourism capacity-building programmes.

Strategic Objective 7: To diversify and enhance tourism offerings.

Strategic Objective 8: To provide knowledge services to inform policy, planning and decision making.

Strategic Objective 9: To develop new source markets.

Strategic Objective 10: To enhance regional tourism integration.

Strategic Objective 11: To create employment opportunities by implementing tourism   projects.

Most of the strategic objectives set by the department are in line with the Medium Term Strategic Framework of government.  This confirms that the Department will be allocating budget to programmes and projects that will achieve some of the fourteen government outcomes. However, the challenge is with programmes and projects conceptualised to efficiently and effectively achieve these strategic objectives and government outcomes.  Notwithstanding the alignment of strategic objectives to the MTSF, the Department should strengthen project conceptualisation targeting specific government outcomes for budget to make meaningful change in the life of citizens.


  1. Programme analysis


3.3.1     Programme 1: Administration  


The budget allocation to the Administration Programme is for strategic leadership management; and support services to the Department. The budget allocation 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 in 2009. This increase in departmental expenditure was thus informed by the expanded mandate of the Department that required new personnel, premises and fittings. The Average growth rate of the budget between 2011/12 and 2014/15 was 4.8 per cent, this growth rate is expected to drop to 4.4 per cent between 2014/15 and 2017/18. The total Administration budget has increased from R224.1 million in 2014/15 to R231.8 million in 2015/16. This represents a nominal increase of 3.2 per cent; an increase of -1.54 per cent in real terms.


This Programme constitutes 12.9 per cent of the Department’s total budget, most of which will be spent through the Corporate Affairs sub-programme which accounts for 64.2 per cent of the administration programme, this sub-programme’s role is to enhance management oversight to create an enabling policy and legislative environment. The growth in expenditure for the Administration programme is accounted for in compensation of employees which accounts for 52.2 per cent of the programme’s budget and goods and services which account for 45.8 percent of the programme’s budget. The bulk of expenditure on goods and services will be on travel, operating leases and computer services. Over the MTEF, spending will be directed towards computer services for data lines, office accommodation and domestic travel for reporting to Parliament.


3.3.2     Programme 2: Policy and Knowledge Services


The budget allocation for the Policy and Knowledge Services Programme, which has received the largest allocation in the budget representing 62.7 per cent of the total Departmental budget increased by 22.15 per cent in real terms compared to the 2014/15 financial year. This Programme is entrusted with ensuring strategic policy development, monitoring and evaluation, and research and knowledge management services. The South African Tourism (SAT) sub-programme, which is tasked with responsibility of stimulating sustainable international and domestic demand for South African tourist experiences, consumes 83 per cent of the Programme’s budget. The South African tourism Budget will grow at an average growth rate of 6.9 per cent over the MTEF.


Another noteworthy sub-programme growth is the Tourism Incentive Programme (TIP). This sub-programme has experienced an increase of 730 per cent in real terms. This increase has been attributed to the under expenditure experienced during the 2014/15 financial year. During the 2014/15 budget cycle it was reported that the Tourism Incentive Programme was to be introduced under the Domestic Tourism Programme. The Programme was introduced during 2014/15 however the programme did not deliver on the set mandate to help SMMEs and established businesses to grow through improved market access and R78 million was returned to National Treasury due to under-expenditure. The Department was engaged with the development of a concept document on how to disperse funding allocated to TIP and implementation plan during 2014/15 financial year. During that process the TIP was subsequently moved to the Policy and Knowledge Services sub-programme. This is worrisome as the purpose of this particular programme is not in line with the TIP which is better placed within the Domestic Tourism programme.


Furthermore, this growth in expenditure will also make provision for the review and implementation of the NTSS, policies and regulations such as the tourist guides. 


3.3.3     Programme 3: International Tourism


The International Tourism Management 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 mere 2.9 per cent in nominal terms from R45.4 million in 2014/15 to R46.7 million in 2015/16.


A significant amount of the International tourism Budget will be focused on the Americas and Western Europe sub-programme, as it will account for 37.3 percent of the total programme budget. Majority of the Programmes budget will be allocated for compensation of employees at 72 per cent as well as travel and subsistence at 7.5 per cent for trips taken to analyse international tourism markets and attend multilateral fora. Foreign governments and international organisations (which is the Regional Tourism Organisation of Southern Africa and the United Nations World Tourism Organisation) will account for 12.3 per cent of the Programmes budget. This Programme will also focus its spending on training South African missions abroad.


3.3.4     Programme 4: Domestic Tourism


The Department’s budget allocation for the Domestic Tourism Programme has decreased by 19.66 per cent in real terms from R363.6 million in 2014/15 to R306.2 million in 2015/16. 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. This sub-programme accounts for 85.6 per cent of this programme. The expected decrease to this Programme will be highly influenced by the decline in the transfers to the Tourism Enterprise Partnership (TEP). The expected jobs to be created through the SRI programme will be 3008 and 3970 for the 2015/16 and 2017/18 financial years respectively. This is however worrisome considering that the budget allocation for the EPWP is projected to increase from R253.1 million in 2015/16 to R427 million in 2017/18.


  1. South African Tourism (SAT)


The mandate of South African Tourism (SAT) is to position and market South Africa as a tourism destination of choice, ensure that tourist facilities and services are of the highest standard; and monitor and evaluate the performance of the tourism sector.  The key activities include promoting tourism by encouraging potential visitors to travel to and within South Africa and ensuring the highest attainable quality standards of tourism services and facilities through the grading process. SA Tourism has expanded its international and domestic marketing mandate to include leisure, business events, meetings; and quality assurance.


  1. Strategic objectives


South African Tourism will be implementing six strategic objectives in the next five years as follows:


  1. Contribute to the growth of international tourist arrivals to South Africa.
  2. Contribute to the growth of domestic tourism in South Africa.
  3. Grow tourism revenue.
  4. Improve brand awareness of South Africa as a tourist destination.
  5. Increase the number of business events hosted in South Africa; and
  6. Provide quality assurance for tourism products.


  1. Overview of 2015/16 Budget and MTEF Estimates


South African Tourism operates in the global markets and is exposed to foreign currencies which in most cases depreciates the amount budgeted for service delivery.  The Entity’s total budget for 2015/16 financial year amounts R1.173 billion.  The Estimates of National Expenditure for 2015 indicate that expenditure over the medium term is expected to increase from R1.2 billion in 2015/16 to R1.3 billion in 2017/18.  Transfers to South African Tourism constitute 51.5 per cent of the departmental budget over the medium term.


Transfers to SA Tourism consisted of government grant which constitutes 83 percent,   TOMSA levies amounting to 9 percent; Indaba and Meetings Africa which amounts to 4 percent; grading fees which contribute 2 percent; and sundry revenue at 2 percent.


  1. The National Conventions Bureau


The SAT strategy is to convince consumers and clients that South Africa can be trusted to deliver memorable experiences and successful business events. The target market for business events is determined in terms of major international business events; priority targets within those markets; and South Africa’s potential to attract delegates. These include: 


  1. Corporate meetings – the number of delegates at international corporate meetings.
  2. Incentive meetings – the number of attendees at international incentive meetings.
  3. International conventions – the number of attendees at international conventions; and
  4. Exhibitions – the number of international attendees at trade exhibitions


4.4          Leisure Tourism Market Segments


The strategy for SAT is to invest only in selected markets in order to deliver volume and value. These leisure tourism markets are selected through a portfolio review process conducted every three years.  The current portfolio review has yielded the following market segments: 


  1. Core markets – these markets are very attractive and have easier access from a tourism-marketing point of view. Approximately 60 percent of the organisations effort (in terms of human capital and budget) is deployed in these markets.  
  2. Investment markets – these markets are very attractive, but more difficult to access from a tourism-marketing point of view. Given the future potential of these markets it is of great importance for SAT to invest in these markets, ahead of future returns.  Approximately 20 percent of the organisations effort (in terms of human capital and budget) is deployed in these markets.   
  3. Tactical markets – these markets are less attractive, but very easy to access from a tourism-marketing point of view. About 15 percent of the organisation’s effort is deployed in these markets. 
  4. Watch-list markets – these markets are less attractive and more difficult to reach from a tourism-marketing point of view. About 5 percent of the SAT effort (in terms of human capital and budget) is deployed in these markets.   


4.5        Hub Strategy Approach


The SAT strategy is to set up regional hubs to increase market penetration. The Hub strategy implementation is aligned to the current market portfolio, in terms of:


  • Linking all markets in investment, tactical and watch-list to the core markets looking at close proximity and same geographical area.
  • Assessing capability of the Hubs to service the additional markets considering budget, human resources, geographic spread; and ease of marketing.
  • Markets which could not be serviced through the hub office were reallocated to be services through the watch-list unit at Head Office.


However, SAT envisages that five marketing offices will be established in key African markets by 2020.  The number of South African Tourism offices in foreign countries will increase from 13 in 2014/15 to 15 by 2017/18.


4.6        Global Marketing Approach


The major work of South African Tourism is on international tourism marketing. SAT has conducted successful global campaigns with its partners. These campaigns include:


  • Fully integrated global marketing channels. #MeetSouthAfrica campaign has been rolled out across most core markets and was successful.
  • #ReconsiderSouthAfarica campaign has been rolled across most core markets as an extension of the #MeetSouthAfrica to ensure conversion. 


International tourist arrivals will be expected to increase from 10.9 million in 2015/16 to 12 million in 2017/18. It is expected that the increase in tourist arrivals will positively contribute towards the broader objective of growing the gross domestic product (GDP) and creating jobs.


4.7        Regional Africa


SA Tourism wants to achieve increased market presence in the following targeted regional hubs:

  • SA Tourism Nigeria office opened and is positioned to service the West Africa hub.
  • SA Tourism Angola Office was scheduled to be opened by 31 March 2015 and launched by the Minister on 20-21 April 2015; and
  • Kenya Office opening is planned for 2015/16.


4.8        Domestic Tourism


South African Tourism has been given R100 million and R105 million budget allocation for 2015/16 and 2016/17 respectively. This allocation is meant for the improvement of domestic marketing programmes. SAT has indicated an expected increase in domestic trips of two hundred thousand, this is a course for concern as during the 2013/14 financial year domestic tourism trips reached 3.1 million, the under performance of the entity should not be a determinant to the down ward revision of targets. The Department is therefore expected to exercise more and tighter oversight over SAT for the Entity to perform better than preceding years. With a cash injection of 205 million the Entity’s targets towards growing domestic tourism trips is still below the 2013/14 baseline of 3.1 million.


South African Tourism has to strive towards creating a domestic tourism industry that seeks to encourage the culture of travel, discovery of hidden gems and encouraging South Africans to take short breaks.  Engagement with trade, airline and media partners will be important to drive conversion.  In addition, partnership with Provincial and Cities Tourism Agencies to drive alignment of campaigns, media buy and other marketing initiatives should be forged to promote domestic tourism.


4.9        Tourism Grading Support


SAT will be strengthening its grading support through the new Tourism Incentive Programme.  The Tourism Grading Council interacted with the Department when the incentive scheme was developed and that resulted to the grading support that will be offered through the Tourism Incentive Programme.  Grading will result to:


  • Greater conformity to quality standards through wider participation in the Tourism Grading Scheme;
  • Enhanced visitor experience, and
  • Improved destination competitiveness.


  1. Committee Considerations


The Committee welcomed the proposed budget allocations and the medium term strategic framework as presented.  Generally, the Committee observed that the Department had previously experienced slow progress in terms of implementing high impact programmes and projects lacked close monitoring to ensure all the appropriated budget was spent efficiently and effectively.  The Committee will closely monitor the following:



  1. Strategic objectives


The Committee observed that some of the Departmental strategic objectives did not meet the SMART principles of being specific, measurable, attainable, realistic/relevant, and time-bound.  The Department was urged to improve on setting SMART strategic objectives in future and the Committee will closely monitor the revised strategic plans and annual performance plans in the MTEF.


  1. Targets


The Department and South African Tourism revised a number of their targets downwards.  The most glaring ones are full-time equivalent jobs to be created through the Social Responsibility implementation where the Department indicated that 3 008 full-time equivalent jobs will be created in 2015/16 and 3 970 and 3 944 in 2016/17 and 2017/18 respectively.  South African Tourism on the other hand has been given additional budget for domestic tourism.  However, the targets set by SAT are very low despite the additional budget. A number of domestic holiday trips achieved in 2011/12 was 3 900 000. SAT has set new targets at 2 841 209 for 2015/16; 3 059 764 for 2016/17; and 3 278 319 for 2017/18.  The MTEF targets are therefore lower that 2011/12 targets.  This might lead to the Department and South African Tourism failing to achieve targets set for 2020 in the National Tourism Sector Strategy.  The Committee will monitor that the Department sets realistic targets that will promote inclusive tourism growth and meet industry targets.


  1. Domestic Tourism


The international best practices have demonstrated that countries that develop and promote domestic tourism achieve remarkable tourism growth and accrue sustainable benefits in terms of job creation and contribution to their gross domestic product. The Committee is concerned about poor efforts made by the Department and South African Tourism to develop and promote domestic tourism in their 5-Year Strategic Plans which is contrary to best international practices. The Committee holds the view that there should be a policy shift on domestic tourism and the Department should improve and incorporate strong domestic tourism programmes in their revised Strategic Plans during the MTEF.


  1. Criteria used to choose projects


The Department introduced programmes in the Strategic Plan without comprehensive concept documents and guidelines being developed for implementation. The Committee is therefore concerned about how programmes will be implemented and it is not clear what criteria were used by the Department to choose some of the projects that will be supported in the MTEF. 


  1.  Co-operative governance


The Committee acknowledges that successful growth of tourism in South Africa can only be realised through strong co-operative governance.  This could be achieved through inter-departmental cooperation with other departments mandated to deliver services that either directly or indirectly affect tourism. The Department is urged to work closely with other sector departments.





  1. Impact assessment for departmental projects


The Committee observed that the Department was continuing to implement some programmes without conducting impact analysis to ascertain their effectiveness in changing lives of South Africans.  The Department however indicated that they will start conducting impact analysis internally as part of monitoring and evaluation of projects implemented on the ground.  Project impact analysis will assist the Department in allocating budget appropriately to projects and programmes that make socio-economic impact to citizens.


5.7        Duplication between the Department and its Entity


The Committee observed that Programme 3: International tourism, of the Department will be implementing programmes that are somehow duplication of the programmes implemented by South African Tourism. The Department should compare the strategic plan of South African Tourism and its Programme 3: International Tourism and eliminate duplication of activities. 


  1. Conclusion


Tourism has continued to grow in South Africa with the latest figures of the 2013 Tourism Satellite Account issued by Statistics South Africa in March 2015 indicating that the tourism sector in South Africa contributed R103 557 billion or 2.9 percent to Gross Domestic Product.  The sector directly employed 655 609 persons or 4.4 percent of the total labour force which translates to 1 in 11 jobs in the country.  The inbound visitors spent R95 183 billion within the South African economy whilst South African visitors spent R124 687 billion within the South African economy.   South African visitors spent R62 596 million in other economies; and most importantly, South Africa had a positive tourism trade balance of R31 587 million with the rest of the world.

The continued growth of the tourism sector warrants that the National Treasury seriously considers the amount appropriated to the Department of Tourism.  The Committee acknowledges that the Department had displayed some capacity constraints in the past whereby some funds had to be returned to Treasury.  However, the Committee is working closely with the Minister of Tourism to ensure that the Department operates at its full capacity and that the tourism growth trajectory becomes inclusive to benefit all the people of South Africa.

The Committee will continue providing rigorous oversight to the Department to ensure that the budget in the MTEF is aligned to the National Development Plan and that departmental strategies are aligned with the developmental agenda of the state. 

  1. Recommendation


The Committee having considered its report on Budget Vote 33, recommends that the House adopts the report.



Report to be considered.                                 



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