ATC180509: Report of the Portfolio Committee on Tourism on Strategic Plans and Annual Performance Plans of the National Department of Tourism and the South African Tourism, Budget Vote No. 33: Tourism, dated 9 May 2018
Tourism
Report of the Portfolio Committee on Tourism on Strategic Plans and Annual Performance Plans of the National Department of Tourism and the South African Tourism, Budget Vote No. 33: Tourism, dated 9 May 2018
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 (SA Tourism) reports as follows:
- Introduction
The United Nations World Tourism Organisation reported that destinations around the world achieved a 7 percent growth in 2017 in international tourist arrivals. This was well above the sustained and consistent trend of 4 percent or higher growth since 2010, and represents the strongest results in seven years. South Africa did not perform well compared to the global average. Notwithstanding the unsatisfactory performance in 2017, tourism remains the economic sector with immense potential to address to socio-economic imbalances in the country. It is important to note that tourism is a foreign income earner and contributes immensely to the trade balance of the country. It was through tourism, including agriculture, that the country weathered the storm during the technical recession of 2017. Currently, the sector directly employs more than 700 000 South Africans. In total, the tourism sector supports more than 1.5 million direct and indirect jobs, which is 9.8 percent of the total employment in the country. The sector also had a total contribution of R402bn in 2016, which was 9.3 percent of the total gross domestic product (GDP) of South Africa. The contribution to GDP was expected to grow by 2.5 percent to R412.2bn, which is 9.4 percent of GDP in 2017.
In recognition of the tourism sectors’ contribution to the economy of the country, the President of the Republic, His Excellency Cyril Ramaphosa, in his maiden State of the Nation Address for 2018 acknowledged that “Tourism is another area which provides our country with incredible opportunities to, quite literally, shine. Tourism currently sustains 700,000 direct jobs and is performing better than most other growth sectors. There is no reason why it can’t double in size. We have the most beautiful country in the world and the most hospitable people. This year, we will enhance support for destination marketing in key tourism markets and take further measures to reduce regulatory barriers and develop emerging tourism businesses”. This was echoed by the Minister of Finance in his 2018 budget speech where he mentioned that “South Africa needs to be bold and coordinated in building sectors where we have comparative advantage and can be truly world class. These include, but are not limited to mining, agriculture, tourism, as well as manufacturing and service exports to the rest of Africa and globally”.
It is against this background that the Committee has closely scrutinised the budget allocated to Vote 33: Tourism in the 2018 Estimates of National Expenditure to ensure that it is aligned to national priorities. It is also crucial that the Committee ensures that the Department of Tourism and South African Tourism develop plans that address the socioeconomic imperatives placed on the tourism sector by the government. In particular, the 2018/19 Annual Performance Plans were examined to ascertain if they contribute to job creation and the GDP of the country.
- The Committee Process
The Committee received and scrutinised the tourism budget allocated to Vote 33 as outlined in the 2018 Estimates of National Expenditure (ENE) tabled by the Minister of Finance in Parliament in February 2018. The Speaker of Parliament referred the Annual Performance Plans of the National Department of Tourism and South African Tourism to the Committee in line with Rule 338 of the National Assembly. The Committee carefully examined the Strategic Plans, Annual Performance Plans, and associated budgets of the National Department of Tourism and South African Tourism in terms of Rule 339 of the National assembly. As part of this process, the Committee held budget hearings with the National Department of Tourism on the 18th April 2018 and South African Tourism on the 21 March 2018. The Committee is reporting on the Annul Performance Plans and the budget allocated to the National Department of Tourism and South African Tourism for the 2018/19 financial year in terms of Rule 340 of the National Assembly.
- Department of Tourism
The Department of Tourism is responsible for the formulation of a legal and regulatory framework for the sustainable development and management of tourism in South Africa. The Department of Tourism has in the past, been able to provide leadership and good governance for the tourism sector in South Africa. South Africa is therefore a competitive tourism destination that provides high quality, value for money tourism products, and memorable experiences. There are numerous externalities that affect the work of the department and this requires collaborations amongst various stakeholders. The tourism sector is also sensitive to government policy, and policy uncertainty in a number of areas, including immigration regulations and the sharing economy have in the recent past had a negative effect in the growth prospects of the sector. The department is expected to pay particular attention to these policy issues to ensure a sustainable growth trajectory for the sector.
- The Strategic Plan and Annual Performance Plan
The Department tabled its 2018/19 - 2020/21 Strategic Plan with the revised 2018/19 Annual Performance Plan in March 2018. The Department undertook a restructuring process in the 2016/17 financial and starting implementing the current Strategic Plan in the 2017/18 financial year. The 2018/19 financial year is thus the second year of Department delivering its mandate under the reconfigured and recalibrated branches and Programmes. The analysis of the Strategic Plan indicates that the departmental focus for the current financial year is aligned to the national government priorities and the National Development Plan. However, the budget allocated to the Department does not reflect the economic development mandate given to the sector. This budget misalignment continues despite numerous recommendations made by the Committee to the National Treasury in the Budget Review and Recommendations Reports.
With regard to the strategic plan, the vision of the Department is to be the leading sustainable tourism development for inclusive economic growth in South Africa. The vision is to grow an inclusive and sustainable tourism economy through good corporate and cooperative governance, strategic partnerships and collaboration, innovation and knowledge management, and effective stakeholder communication. This vision succinctly captures the nature of the tourism sector and its related dynamics.
3.1.1 Organisational strategic objectives
The Department is pursuing the following twelve (12) organisational strategic objectives which are spread over its four Branches/ Programmes:
- To ensure economic, efficient and effective use of departmental resources,
- To enhance understanding and awareness of the value of tourism and its opportunities,
- To create an enabling legislative and regulatory environment for tourism development and growth,
- To contribute to economic transformation in South Africa.
- To accelerate the transformation of the tourism sector,
- To facilitate the development and growth of tourism enterprises to contribute to inclusive economic growth and job creation,
- To facilitate tourism capacity-building programmes,
- To diversify and enhance tourism offerings,
- To provide knowledge services to inform policy, planning and decision- making.
- To reduce barriers to tourism growth to enhance tourism competitiveness,
- To enhance regional tourism integration, and
- To create employment opportunities by implementing tourism projects.
3.1.2 Organisational strategic outcomes-oriented goals
The government Medium Term Expenditure Framework pursues a number of strategic outcomes. The Department is contributing towards the achievement of the four of those government outcomes, namely:
- 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.
3.2 The revised National Tourism Sector Strategy targets
The Department finalised and published the new National Tourism Sector Strategy (NTSS) in December 2017. The new targets span a period 2016 - 2026. The NTSS is a strategic blueprint that channels the future growth trajectory of tourism sector. The 2018/19 Annual Performance Plans will be assessed, amongst other things, through the extent in which the current NTSS targets are pursued and attained. The revised NTSS targets are indicated in Table 1 as follows:
Table 1: Revised National Tourism Sector Strategy Targets
|
Indicators / Measure of Performance |
2015 |
2026 Targets (Est.) |
|
Direct contribution to National GDP |
R118 billion |
R302 billion |
|
Total contribution to National GDP |
R375.502 billion |
R941.222 billion |
|
Number of direct jobs supported by the sector |
702 824 |
1 mil |
|
Number of total jobs supported by the sector |
1 551 200 |
2 260 380 |
|
Increase tourism export earnings |
R115 billion |
R359 billion |
|
Increase in capital investment |
R64 billion |
R148.681 billion |
|
Indicators / Measure of Performance |
2015 |
2026 Targets (Est.) |
Source: NDT Strategic Plan 2018
The Department is thus expected to conduct stringent monitoring and evaluation of SA Tourism performance to ensure that the country performs well against major economic key performance indicators.
3.3 Departmental spending focus during the Medium Term Expenditure Framework
The Department is delivering its constitutional mandate under the following four Programmes (Branches):
3.3.1 Programme 1: Administration (Corporate Management)
The purpose of Programme 1 is to provide strategic leadership, management and support services to management. The sub-programmes for Programme 1 are Ministry; Management; Corporate Management; Financial Management; and Office Accommodation.
- Programme 2: Tourism Research, Policy and Internal Relations
The purpose for Programme 2 is to enhance strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations. The related strategic outcome-oriented goal is to achieve good corporate and cooperative governance. The objectives of Programme 2 in the 2018/19 financial year, amongst other things, are to:
- Provide knowledge services to inform policy, planning and decision-making by:
- developing the National Tourism Sector Strategy report on the state of tourism, the implementation report, evaluation reports on the tourism guide training programme and the tourism incentive programme on the grading of accommodation establishments over the medium term;
- maintaining mobile applications for tour guides and visitor information centres by March 2019;
- developing the national tourism information and monitoring system, and a database for black-owned tourism products and services.
- Enhance regional tourism integration by:
- hosting the sharing best practices workshop in 2019 targeted at African countries that have tourism agreements with South Africa
- hosting of two tourism initiatives during South Africa’s chairship of the Indian Ocean Rim Association.
- Enhance understanding and awareness of the value of tourism and its opportunities by hosting the annual public lecture, and meetings of the national tourism research committee over the medium term.
The sub-programmes for Programme 2 are as follows:
- Tourism Research, Policy and International Relations Management, which provides strategic direction, comprehensive administration and operational support services, research, and information and knowledge management. This sub programme also manages policy development and evaluation, and promotes sector transformation and responsible tourism.
- Research and Knowledge Management, which oversees tourism research, knowledge management and impact evaluation of the sector.
- Policy Planning and Strategy, which oversees and guides policy and strategy development for the tourism sector, and ensures efficient and effective stakeholder relations management.
- South African Tourism, which stimulates sustainable international and domestic demand for South African tourism experiences, and regulates the standard of tourism facilities and services.
- International Relations and Cooperation, which drives South Africa’s interests through international relations and cooperation.
3.3.3 Programme 3: Destination Development
The purpose of Programme 3 is to facilitate and co-ordinate destination development. The strategic outcome-oriented goal is to increase the tourism sector’s contribution to inclusive economic growth. The objectives for Programme 3 in the 2018/19 financial year, amongst other things, include to:
- Diversify and enhance tourism offerings by:
- reporting on the implementation of 6 destination enhancement projects (Shangoni Gate, Phalaborwa Wildlife Activity Hub, Blyde River Canyon, Hilltop Camp, Gariep Dam Nature Reserve and Dwesa-Cwebe Nature Reserve) in 2018/19;
- developing 2 tourism precinct plans by March 2019 (Khayelitsha township and Karoo region);
- supporting 6 projects over the medium term that contribute to the maintenance or improvement of routes to tourism destinations;
- hosting 2 workshops in each of the 9 provinces to institutionalise the manual as a planning tool by March 2019;
- implementing the blue flag programme at 25 South African beaches by March 2019; and
- developing 3 master plans for prioritised tourism nodes (Sutherland to Carnarvon, Hondeklipbaai to Port Nolloth and Port St Johns to Coffee Bay).
- Create employment opportunities by implementing tourism projects (Lotlamoreng Dam, Phiphidi Waterfall, Platfontein Game Farm, National Youth Chefs, 1 sommelier training course, youth hospitality training and 1 food safety programme) through the expanded public works programme, yielding 6 355 job opportunities in the 2018/19 financial year, and resulting in 13 475 full-time equivalent jobs over the medium term.
The sub programmes for programme 3 are:
- Destination Development Management, which provides strategic leadership and administrative support to the programme’s activities;
- Tourism Enhancement, which increases the competitiveness of South Africa’s tourism industry;
- Destination Planning and Investment Coordination, which ensures that tourism infrastructure supports the current and future growth of the sector; and
- Working for Tourism, which facilitates the development of tourism infrastructure projects under the expanded public works programme through labour intensive methods that target the unemployed, youth, women, disabled people and SMMEs.
3.3.4 Programme 4: Tourism Sector Support Services
The purpose of Programme 4 is to enhance transformation of the sector, increase skills levels and support its development to ensure that South Africa is a competitive tourism destination. The strategic outcome-oriented goal for the Programme is to increase the tourism sector’s contribution to inclusive economic growth. Some of the objectives of this Programme in the 2018/19 financial year are to:
- Accelerate the transformation of the tourism sector over the medium term by:
- monitoring the implementation of the amended tourism broad-based black economic empowerment sector codes
- facilitating 5 social tourism initiatives that promote open access to selected government-owned attractions.
- Facilitate the development and growth of tourism enterprises to contribute to inclusive economic growth and job creation by March 2019 by:
- supporting the development of 400 enterprises
- launching a tourism incubation programme to implement the enterprise development programme
- implementing the tourism incentive programme (market access support, tourism grading, energy efficiency, universal accessibility and sector transformation).
- Facilitate tourism capacity building programmes by March 2019 by:
- training 577 chefs, 300 in the blue flag training programme, 1 200 tourism monitors, 500 food safety inspectors and 60 learners in the resource efficiency training programme;
- establishing a coordinating body for tourism human resource development;
- implementing the local government tourism induction programme, focusing on rural areas with tourism potential in 10 district municipalities; and
- placing 20 black female managers of tourism enterprises at institutions of higher learning for management training.
The sub programmes for Programme 4 are:
- Tourism Sector Support Services Management, which provides administrative support to the programme’s activities;
- Tourism Sector Human Resource Development, which facilitates the efficient management and implementation of human resource development initiatives for the tourism sector;
- Enterprise Development and Transformation, which facilitates inclusive participation and sustainability in the tourism sector;
- Tourism Visitor Services, which ensures information integrity and facilitates accurate information for travelling; and
- Tourism Incentive Programme, which creates direct linkages between South African inbound tour operators and international tourism companies by assisting South African tour operators to exhibit their products at trade shows across the world.
- Overall budget allocation and expenditure
The Department is allocated R2, 261.9 billion in 2018/19 financial year. Over the medium term, 14.9 per cent (R1.1 billion) of the department’s total budget is allocated to the Working for Tourism sub-programme through the expanded public works programme.
|
Tourism |
Budget |
Nominal Increase / Decrease in 2017/18 |
Real Rand change in 2018/19 |
Nominal Percent change in 2017/18 |
Real Percent change in 2018/19 |
|||
|
R million |
2017/18 |
2018/19 |
2019/20 |
2020/2012 |
||||
|
Programme 1: Administration |
234.1 |
271.4 |
290.8 |
311.6 |
37.3 |
23.2 |
15.93 % |
9.89 % |
|
Programme 2: Tourism Research, Policy and Internal Relations |
1 203.1 |
1 282.0 |
1 350.5 |
1 424.8 |
78.9 |
12.1 |
6.56 % |
1.00 % |
|
Programme 3: Destination Development |
413.9 |
401.8 |
446.2 |
470.2 |
-30.1 |
-51.0 |
-5.97 % |
-11.82 % |
|
Programme 4: Tourism Sector Support Services |
271.1 |
306.7 |
316.8 |
336.0 |
35.6 |
19.6 |
19.6 % |
7.23 % |
|
TOTAL |
2 140.2 |
2 261.9 |
2 404.3 |
2 542.6 |
121.7 |
3.8 |
5.69 % |
0.18 % |
Table 2: Overall budget allocation for 2018/19
1o R205 in 2012om R192 was accounted for in salariesNational Treasury (2018) – Vote 33 Tourism
A total of R310.35 million is allocated for the Compensation of Employees to fund an establishment of 519 posts. An amount of R245.56 million is budgeted for the Goods and Services. A total of R1, 482 billion is budgeted for the Transfer and Subsidies, whilst R224, 1 million is allocated to the payments of Capital Assets. Table 2 depicts the overall budget allocation and expenditure in the medium term.
Vote 33 incurred specific baseline reductions of R27.8 million; R30.3 million; and R33.4 million in the 2018/19, 2019/20, and 2020/2021 respectively for goods and services within the Destination Development Programme. There were also reductions of R21.2 million; R22.4 million, and RR23.6 million in 2018/19, 2019/20, and 2020/21 respectively in the Expanded Public Works Incentive Programme within the Destination Development Programme.
The Working for Tourism programme facilitates the development of tourism infrastructure that leads to job creation, particularly for SMMEs, and accredited training and skills development facilities and programmes targeted at food safety, as well as young sommeliers and chefs. These initiatives are expected to create an estimated 13 475 full-time equivalent jobs by 2020/21. Other specific baseline reductions were for the National Tourism Careers Expo at R109 000, R95 000, and R100 000 in 2018/19, 2019/20, and 2020/21 respectively; and Culture, Arts, Tourism, Hospitality and Sport Sector Education and Training Authority (CATHSSETA) at R7000, R6000, and R7000 in 2018/19, 2019/20, and 2020/21 respectively.
The Department relies on South African Tourism to market the country, and is set to transfer 52.7 per cent (R3.8 billion) of its budget to the entity for this purpose over the MTEF period. The Cabinet approved an additional funding of R35 million in 2019/20 and R36.9 million in 2020/21 through the economic competitiveness and support package in the Tourism Incentive Programme sub-programme. This funding is intended to increase economic growth and job creation through the provision of support for market access and tourism grading, the implementation of energy efficiency initiatives, and transformation initiatives that encourage capital investment by black business people. The leveraged investment capital will be used to support 1 400 small, medium and micro enterprises (SMMEs) in the rural tourism sector over the MTEF period through the enterprise development programme, with the aim of transforming the sector and increasing its geographic footprint. To remain within the government’s expenditure ceiling for compensation of employees, the department aims to reduce its number of personnel from 519 in 2017/18 to 471 in 2020/21. The operational expenditure, including compensation of employees, accounts for an estimated 27.5 percent (R2 billion) of the department’s budget over the MTEF period.
5. Programme budget analysis
The Department is executing its mandate through the four Programmes which were recalibrated after the restructuring of the Department in the 2017/18 financial year. The budget allocation for each programme in the medium term is as follows:
5.1 Programme 1: Administration
The purpose of Programme 1: Administration is to provide strategic leadership, management and support services to the department. The total Administration budget has increased from R234.1million in 2017/18 to R271.4 million in 2018.19. The overall budget change in Programme 1 was a 15.9 nominal percent change and 9.89 real percent change in the 2018/19 financial year. This Programme consumes 12 percent of Department’s total budget. Most of the budget in this sub-programme will be spent on Corporate Management which is allocated R172.7 million in the 2018/19 financial year.
|
Tourism |
Budget |
Nominal Increase / Decrease in 2018/19 |
Real Rand change in 2018/19 |
Nominal Percent change in 2018/19 |
Real Percent change in 2018/19 |
|
|
R million |
2017/18 |
2018/19 |
||||
|
Sub- Programme 1: Ministry |
25.2 |
23.6 |
-1.6 |
-2.8 |
-6.35 % |
-11.23 % |
|
Sub-Programme 2: Management |
3.1 |
2.7 |
-0.4 |
-0.5 |
-12.90 % |
-17.44 % |
|
Sub-Programme 3: Corporate Management |
146.1 |
172.7 |
26.6 |
17.6 |
18.21 % |
12.04 % |
|
Sub-Programme 4: Financial Management |
30.1 |
35.0 |
4.9 |
3.1 |
16.28 % |
10.22 % |
|
Sub-Programme 5: Office Accommodation |
29.6 |
37.5 |
7.9 |
5.9 |
26.68 % |
20.08 % |
|
TOTAL |
234.1 |
271.4 |
37.3 |
23.2 |
15.9 % |
9.89 % |
Table 3: Budget allocation and expenditure for Programme 1: Administration in the 2018/19 financial year
Source: Adapted from
1o R205 in 2012om R192 was accounted for in salariesNational Treasury (2018) – Vote 33 Tourism
This sub-programme had 26.6 percent nominal increase which translates to 17.6 percent in real terms. With regard to economic classification, the growth in expenditure for Programme 1, which is 55 percent of the sub-programme expenditure, is in the compensation of employees. Expenditure in this sub-programme will increase from R131.5 million in 2017/18 to R147.9 million in 2018/19.
5.2 Programme 2: Tourism Research, Policy and International Relations
The purpose for Programme 2 is to enhance the strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations. The budget allocation for Programme 3 as depicted in Table 3 is R1, 282.0 billion in the 2018/19 financial year, which accounts for 94.2 percent of the total branch’s budget. This sub-programme consumes the largest part of the total departmental budget, which accounts for 56.68 percent. The nominal increase is R73.7 million, which is R10.7million in real terms. This accounts for nominal percentage increase of 17.57 percent, which translates to 11.44 percent increase in real terms. The largest budget allocation in this sub-programme is R1, 208 billion transfer payment to South African Tourism. The transfer payment to South African Tourism accounts for 52.7 percent of the total departmental budget. It should be noted that the transfer payment to SA Tourism is critical in maximising the socio-economic impact of the sector. However, SA Tourism has not achieved their targets in the previous financial years, and this expenditure will be closely monitored. The struggle by SA Tourism to perform in their mandate results in the failure of the tourism sector in it fulfilling its economic mandate.
SA Tourism received R30 million additional budget in the 2018/19 financial year allocated to the South African National Conventions Bureau (SANCB). The SANCB plays a critical role in growing business tourism. The budget allocated to SANCB should also drive transformation of business tourism in South Africa by pursuing the geographical spread of business tourism throughout South Africa.
|
Tourism |
Budget |
Nominal Increase / Decrease in 2018/19 |
Real Rand change in 2018/19 |
Nominal Percent change in 2018/19 |
Real Percent change in 2018/19 |
|
|
R million |
2017/18 |
2018/19 |
||||
|
Sub- Programme 1: Tourism Research, Policy and International Relations Management |
7.4 |
8.7 |
1.3 |
0.8 |
17.57 % |
11.44 % |
|
Sub-Programme 2: Research and Knowledge Management |
26.0 |
26.3 |
0.3 |
-1.1 |
1.15 % |
-4.12 % |
|
Sub-Programme 3: Policy Planning and Strategy |
11.3 |
11.7 |
0.4 |
-0.2 |
3.54 % |
-1.86 % |
|
Sub-Programme 4: South African Tourism |
1 134.3 |
1 208.0 |
73.7 |
10.7 |
6.50 % |
0.95 % |
|
Sub-Programme 5: International Relations and Cooperation |
24.1 |
27.3 |
3.2 |
1.8 |
13.28 % |
7.37 % |
|
TOTAL |
1 203.1 |
1 282.0 |
78.9 |
12.1 |
6.6 % |
1.00 % |
Table 4: Budget allocation and expenditure for Programme 2: Tourism Research, Policy and International Relations in the or 2017/18 and 2018/19 financial years
Source: Adapted from
1o R205 in 2012om R192 was accounted for in salariesNational Treasury (2018) – Vote 33 Tourism
Sub-Programme 2: Research and Knowledge Management had a real percentage decrease of -4.12 percent, whilst Sub-Programme 3: Policy Planning and Strategy had a real percentage decrease of -1.86 percent. With regard to economic classification, the largest budget in this branch goes to transfers and subsidies, which account for 94.7 percent of expenditure.
5.3 Programme 3: Destination Development
The purpose of Programme 3: Destination Development is to facilitate and coordinate tourism destination development. The budget allocation to Programme 3 is depicted in Table 5.
|
Tourism |
Budget |
Nominal Increase / Decrease in 2018/19 |
Real Rand change in 2018/19 |
Nominal Percent change in 2018/19 |
Real Percent change in 2018/19 |
|
|
R million |
2017/18 |
2018/19 |
||||
|
Sub- Programme 1: Destination Development Management |
46.4 |
20.3 |
-26.1 |
-27.2 |
-56.25 % |
-58.53 % |
|
Sub-Programme 2: Tourism Enhancement |
19.3 |
19.0 |
-0.3 |
-1.3 |
-1.55 %t |
-6.69 % |
|
Sub-Programme 3: Destination Planning and Investment Coordination |
36.6 |
27.7 |
-8.9 |
-10.3 |
-24.32 % |
-28.26 % |
|
Sub-Programme 4: Working for Tourism |
329.5 |
334.8 |
5.3 |
-12.2 |
1.61 %t |
-3.69 % |
|
TOTAL |
431.9 |
401.8 |
-30.1 |
-51.0 |
-7.0 %cent |
-11.82 % |
Table 5: Budget allocation and expenditure for Programme 3: Destination Development in the or 2017/18 and 2018/19 financial years
Source: Adapted from National Treasury (2018) – Vote 33 Tourism
The budget allocation to Programme 3: Destination Development is R401.8 million in the 2018/19 financial year compared to R444 million in 2017/18. This Programme has experienced a decrease in allocation in all its sub-programmes, with a total decline of 11.82 percent in real terms. The significant allocation in Programme 3 is a total of R334.8 million to the Working for Tourism programme. Working for Tourism Programme represents 83.3 percent of the total in this branch. The Working for Tourism programme is important for the creation of Full-time Equivalent jobs through labour intensive public works programme. In the previous financial year, the expenditure in this programme was affected by the assessment of the implementation methodology by the Government Technical Advisory Centre. The Department will be engaged in the rigorous implementation of the infrastructure projects in the 2018/19 financial year and this should be closely monitored. This is important as an amount of R217.9 million, accounting for 42.3 percent of the Programme budget, will be allocated to the payment of capital assets. The decline in the budget allocation to Programme 3 is, however, a cause for concern given that this Programme is responsible for service delivery and funding of infrastructure projects meant for transforming the tourism sector.
5.4 Programme 4: Tourism Sector Support
The budget allocation for Programme 4: Tourism Sector Support, in the 2018/19 financial year is R306.7 million. The budget comprises an amount of R68.6 million for the Compensation of Employees and R198.8 million for the Tourism Incentive Programme (TIP). The projects that will be implemented under this Programme include tourism market access, tourism grading support, tourism destination development, and energy efficiency. Notably, TIP consumes 68.8 percent of the programme budget, followed by 22.34 percent for the Compensation of Employees at 22.34 percent. The budget allocation for Programme 4 is detailed in Table 6.
|
Tourism |
Budget |
Nominal Increase / Decrease in 2018/19 |
Real Rand change in 2018/19 |
Nominal Percent change in 2018/19 |
Real Percent change in 2018/19 |
|
|
R million |
2017/18 |
2018/19 |
||||
|
Sub- Programme 1: Tourism Sector Support Services Management |
8.4 |
12.7 |
4.3 |
3.6 |
51.19 %t |
43.31 % |
|
Sub-Programme 2: Tourism Human Resource Development |
27.5 |
22.6 |
-4.9 |
-6.1 |
-17.82 % |
-22.10 % |
|
Sub-Programme 3: Enterprise Development and Transformation |
44.4 |
49.7 |
5.3 |
2.7 |
11.94 % |
6.10 % |
|
Sub-Programme 4: Tourism Visitor Services |
22.8 |
22.9 |
0.1 |
-1.1 |
0.44 % |
-4.80 % |
|
Sub-Programme 5: Tourism Incentive Programme |
168.0 |
198.8 |
30.8 |
20.4 |
18.33 % |
12.16 % |
|
TOTAL |
271.1 |
306.7 |
35.6 |
19.6 |
13.1 % |
7.23 % |
Table 6: Budget allocation and expenditure for Programme 4: Tourism Sector Support Services in the or 2017/18 and 2018/19 financial years
Source: Adapted from
1o R205 in 2012om R192 was accounted for in salariesNational Treasury (2018) – Vote 33 Tourism
Programme 4 consumes 13.56 percent of the departmental budget. In the allocation for the 2018/19 financial year, the Programme experienced a nominal percentage increase of 13.1 percent and a real percentage increase of 7.23 percent. The largest allocation in this Programme is towards Tourism Sector Support Services with the 51.19 percent nominal increase, which translates to 43.31 percent real percentage increase. It should be noted that the Department experienced under-expenditure in the Tourism Incentive Programme during the previous financial year. The Department should improve its implementation methodology and ensure adequate intake of the incentives provided for in the budget.
6. South African Tourism
South African Tourism is the Entity of the Department of Tourism responsible for marketing South Africa internationally and domestically as a preferred tourism and business events destination, ensures that tourist facilities and services are of the highest standard, and monitors and evaluates the performance of the tourism sector as mandated by the Tourism Act (Act No. 3 of 2014) mandates South African Tourism.
- Strategic outcomes-related goals
The strategic outcome related goals with associated Key Performance indicators are as follows:
Table 7: Key performance areas for SA Tourism per programme
|
PROGRAMME
|
STRATEGIC OBJECTIVE
|
KPI
|
|
1. Corporate Support
|
To achieve operational efficiencies in all activities, including human, marketing and other resources available to South African Tourism
|
|
|
2. Business Enablement
|
|
Stakeholder satisfaction score achieved |
|
3. Leisure Tourism Marketing
|
|
|
|
4. Business Events
|
|
|
|
5. Tourist Experience
|
To contribute to an improved tourist experience in line with the brand promise
|
|
Source: Adapted from South African Tourism Annual Performance Plan for 2018/19
- Budget appropriation to South African Tourism
The budget allocated to SA Tourism in line with the Estimates of National Expenditure appropriation for 2018/19 is R1,439.6 billion. The allocation to SA Tourism will increase to R1,515.2 billion in 2019/20 and R1, 596.9 billion in 2020/21 respectively. The average growth rate of the allocated budget is declining, as projected to increase by 3 percent in the 2017/18 – 2020/21, compared to 9.7 percent increase in the 2014/15 – 2017/18 MTEF. The decline in average growth rate has been incurred despite budget increase proposals made by the Committee to the National Treasury in the Budget Review and Recommendations Report of 2017. The Committee had recommended that SA Tourism develop an Econometric Study to determine the amount of budget required by the tourism sector. This was done by SA Tourism and the Committee recommendations were forwarded to the National Treasury in line with the findings of the study. The budget allocation is presented in Table 8.
|
R million |
Audited outcome |
Revised estimate |
Average Growth Rate (%) |
Average Expenditure/ Total (%) |
Medium-term expenditure |
Average Growth Rate (%) |
Average Expenditure Rate (%) |
|||
|
Programme |
2016/17 |
2017/18 |
2014/15 – 2017/18 |
2018/19 |
2019/20 |
2020/21 |
2017/18 – 2020/21 |
|||
|
Administration |
102.1 |
140.0 |
12.4% |
8.5% |
132.3 |
136.7 |
142.5 |
0.6% |
9.2% |
|
|
Business Enablement |
99.9 |
81.3 |
19.2 |
5.7% |
85.9 |
90.7 |
95.7 |
5.6% |
5.9% |
|
|
Leisure Tourism Marketing |
847.0 |
1 045.7 |
7.7% |
73.5% |
1 026.3 |
1 079.0 |
1 143.0 |
3.0% |
71.4% |
|
|
Business Events |
154.6 |
119.0 |
21.1% |
7.8% |
129.3 |
139.3 |
142.5 |
6.2% |
8.8% |
|
|
Visitor Experience |
54.0 |
76.6 |
10.7% |
4.6% |
65.7 |
69.5 |
73.3 |
-1.5% |
4.7% |
|
|
TOTAL |
1 257.6 |
1 462.6 |
9.7% |
100% |
1 439.6 |
1 515.2 |
1 596.9 |
3.0% |
100% |
|
Table 8: South African Tourism expenditure trends and estimates – 2018/19 – 2020/21
Source:
1o R205 in 2012om R192 was accounted for in salariesNational Treasury ENE (2018) – Vote 33 Tourism
However, South African Tourism also receives revenue from other sources. The final budget for the Entity therefore includes revenue from government grant allocation by the National Department of Tourism; TOMSA levies received from levy collectors through the Tourism Business Council of South Africa; Grading fees; and sundry revenue from interest income. The budget breakdown for SA Tourism showing contributions from various revenue sources is given in table 9.
Table 9: Total budget estimates for SA Tourism – 2018/19 to 2020/21
|
Revenue |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
2020/21 |
||
|
(R’000) |
Audited |
Audited |
Audited |
Estimate |
Adjustment |
Approved |
Estimates |
Estimates |
Estimates |
|
Government Grant |
880 009 |
977 712 |
1 024 847 |
1 134 288 |
|
1 134 288 |
1 208 048 |
1 271 539 |
1 340 491 |
|
TOMSA levies |
111 638 |
123 203 |
137 578 |
124 586 |
|
124 586 |
130 815 |
137 356 |
144 224 |
|
Indaba, Meetings Africa & Other Exhibitions |
65 134 |
81 547 |
55 431 |
63 391 |
|
63 391 |
57 000 |
60 192 |
63 503 |
|
Grading fees |
17 843 |
18 394 |
20 569 |
21 344 |
|
21 344 |
22 561 |
23 824 |
25 134 |
|
Sundry revenue |
28 191 |
12 452 |
56 123 |
20 000 |
99 00 |
119 000 |
21 140 |
22 324 |
23 552 |
|
Total |
1 102 815 |
1 213 308 |
1 294 548 |
1 363 609 |
99 000 |
1 462 609 |
1 439 564 |
1 515 235 |
1 596 903 |
Source: South African Tourism Annual Performance Plan 2018/19
The grant from the government represents 83 percent of the total budget. The funding from TOMSA Levy accounts for 9 percent, Indaba and meetings Africa is 5 percent, grading fees is 2 percent, and sundry income accounts for 1 percent.
6.3 Overall budget expenditure patterns in the MTEF
Over the medium term, SA Tourism intends focusing on marketing South Africa as a tourism destination of choice, and increasing the contribution of the sector to the South African economy by increasing the number of tourist arrivals from a projected 11 million in 2017/18 to 13 million in 2020/21. This is expected to lead to an increase in tourism revenue from R91.7 billion in 2017/18 to R139.3 billion in 2020/21. Accordingly, the entity’s budget is expected to increase at an average annual rate of 3 per cent, from R1.5 billion in 2017/18 to R1.6 billion in 2020/21. It should be noted that SA Tourism did not achieve the projected tourist arrivals for the 2017/18 financial year. The achievement of tourist arrivals will be closely monitored as the non-achievement of this target negatively impacts other key performance indicators.
SA Tourism plans to transfer R713.8 million to all international offices to expand media and trade events tailored to specific markets, media campaigns, customer relations management and joint marketing agreements with private sector operators to collaborate on the marketing of tourism packages. Through collaborative efforts with stakeholders, South African Tourism plans to implement domestic, regional and international marketing strategies that are informed by research, data and knowledge sharing.
SA Tourism will continue to market South Africa as a destination for business events and provide support for bids to host such events in its efforts to increase the number of business events hosted from 153 to a projected 161 over the MTEF period. In 2016, South Africa hosted 125 international and regional meetings and conferences, which attracted almost 74 000 delegates. These events represented 538 combined conference days and generated an estimated R1.1 billion. The entity plans to spend R129.3 million in 2018/19 to increase the number of delegates attending business events in South Africa to 90 564 in 2020/21. Revenue generated from international delegates attending conferences and business events is estimated to reach R74.6 billion by 2020/21.
The number of domestic trips taken in South Africa increased from 2.7 million in 2015/16 to 3 million in 2016/17 despite persistently high levels of unemployment and weak economic growth. This is a good sign that the Entity’s marketing efforts are gaining traction. However, SA Tourism did not do well in in domestic tourism in the 2017/18 financial year as total domestic trips decreased from 24.3 million in 2016 to 17.2 million in 2017. This also had an effect on revenue generated from domestic tourism as the total domestic revenue decreased from R26.5 billion in 2016 to R22.1 billion in 2017, a decline of 16.6 percent year-on-year in 2017. To entrench a culture of travel among South Africans, SA Tourism plans to spend R110 million on media campaigns, and R47.1 million on joint marketing agreements and consumer activations.
- Programme analysis
SA Tourism implements its mandate through five Programmes. This follows a thorough recalibration of delivery Programmes, organisational reconfiguration, and staffing. The budget programme allocation for 2018/19 is as follows:
6.4.1 Programme 1: Administration
Programme 1 has a budget of R132.3 million in the 2018/19 financial year, R136.7 million in 2019/20, and increasing to R142.5 million in 2020/21. This represents an average growth rate of 0.6 percent from 2017/18, and an average expenditure rate of 9.2 percent in 2020/21. With regard to key performance indicators, SA Tourism will be pursuing 3.4 staff satisfaction score; 7 percent vacancy rate; compliance with Employment Equity Act; Unqualified Audit; and achieving a level 4 BBEE rating.
6.4.2 Programme 2: Business Enablement
Programme 2 is allocated R81.9 million in the 2018/19 financial year, R90.7 million in 2019/20, and increasing to R95.7 million in 2020/21. This represents an average growth rate of 5.6 percent from 2017/18, and an average expenditure rate of 5.9 percent in 2020/21. With regard to key performance indicators, SA Tourism will be pursuing 4.1 stakeholder satisfaction score in the 2018/19 financial year.
6.4.3 Programme 3: Leisure Tourism Marketing
Programme 3 executes the core mandate of SA Tourism. In the 2018/19 financial year, SA Tourism is pursuing two strategic objectives under Programme 3, namely, SO 1 meant to contribute to inclusive economic growth by increasing the number of international and domestic tourists, and SO 2 meant to contribute to an enhanced, recognised, appealing, resilient and competitive tourism business events for South Africa across the target markets and segments.
Programme 3 is allocated the largest portion of the Entity’s budget with R1, 026.3 billion in the 2018/19 financial year, R1, 079.0 billion in 2019/20, and increasing to R1, 143.0 billion in 2020/21. This represents an average growth rate of 3.0 percent from 2017/18, and an average expenditure rate of 71.4 percent in 2020/21. In the 2018/19 financial year, SAT will be pursuing 11.2 million international arrivals in the financial year and 10.9 million in a calendar year; and a total tourist foreign direct spend (TTFDS) of R81.3 billion in the financial year and R79.6 billion in the calendar year; a 19 percent geographic spread of international tourist arrivals; a seasonality index of international arrivals at 1.35 percent; percentage brand positivity of 39 percent; percentage brand awareness of 78 percent.; domestic trips at 25.5 million in the financial year and 25.4 million in the calendar year; number of domestic holiday trips at 3.2 million in the financial year and 3.1 million in the calendar year; total domestic direct spend (TDDS) at R27.1 billion in the financial year and R26.7 billion in the calendar year; domestic holiday revenue of R8.3 billion in the financial year and R8.2 billion in the calendar year; a geographic spread of domestic tourists at 12 percent; seasonality index of domestic tourists at 20 percent; a total of 140 SME attendance at SA Tourism Trade Platforms; and participation of 25 SMEs for all SA Tourism hosting activities.
6.4.4 Programme 4: Business events
SA Tourism is pursuing two strategic objectives under Programme 4. These are SO 1, namely, to contribute to inclusive economic growth by increasing the number of international and domestic tourists, and SO 2, namely, to contribute to an enhanced, recognised, appealing, resilient and competitive tourism business events for South Africa across the target markets and segments.
Programme 4 is allocated a budget R129.3 million in the 2018/19 financial year, R139.3 million in 2019/20, and increasing to R142.5 million in 2020/21. This represents an average growth rate of 6.2 percent from 2017/18, and an average expenditure rate of 8.8 percent in 2020/21. In the 2018/19 financial year, Programme 3 is pursuing 153 business events hosted in South Africa; 86 006 international delegates hosted in South Africa; 105 bids supported for international and regional business events; and R67.0 million generated through Indaba and Meetings Africa. The Cabinet approved additional allocations of R30 million in 2018/19, R40 million in 2019/20 and R42 million in 2020/21 to increase South Africa’s competitiveness in attracting business events, and provide increased support for bids to host these events.
The South African Conventions Bureau has performed well in the past in their mandate, having exceeded their targets in the 2017/18 financial year. The concern remains with the geographical spread of business events into smaller towns.
6.4.5 Programme 5: Tourist experience
The strategic objective for Programme 5 is to contribute to an improved experience in line with brand promise. A budget of R65.6 million is allocated to Programme 5 in the 2018/19 financial year, R69.5 million in 2019/20, and increasing to R73.3 million in 2020/21. This represents a decrease in average growth rate of -1.5 percent from 2017/18, and an average expenditure rate of 4.7 percent in 2020/21. In the 2018/19 financial year SA Tourism is pursuing 6 229 number of graded accommodation establishments; 135 262 number of graded rooms; and a total of R22.6 million grading revenue collected.
Over the years, including the 2017/18 financial year, the Tourism Grading Council of South Africa has struggled to achieve the predetermined objectives set for this Programme. This puts the brand image of south Africa as a tourism destination in jeopardy. Consequently, the quality assurance in the destination is compromised and the country may lose its competitive and comparative advantages. The country has also experienced an increase in crimes against tourists. This has struck a blow to the brand image of South Africa as a safe destination. In response, some countries have issued travel advisories warning potential tourists about crime and related safety matters. The budget appropriated to this Programme should therefore be utilised, amongst other things, on initiatives intended to deal with safety and security for tourists.
7. Committee observations
After a careful scrutiny and examination of the departmental and South African tourism annual performance plans and allocated budgets for the 2018/19 financial year, the Committee made the following observations:
Observations with regard to the National Department of Tourism
The Committee made the following specific observations with regard to the National Department of Tourism
7.1 Budget allocation
The National Treasury has allocated additional budget to Vote 33: Tourism, however, this is not commensurate with the socio economic benefits that could be derived from the well-funded sector vote. The overall budget appropriation to Vote 33 has not fully taken into consideration the recommendations to increase budget allocations as advanced by the Committee to the Minister of Finance in the 2017 Budget Review and Recommendations Report. The Committee acknowledges the dire economic conditions in the country and the shrinking national purse. It is also commended that Vote 33-Tourism is amongst the few that were allocated additional budgets in the MTEF. However, the current Marketing Investment Framework has three scenarios developed to harness the full potential of the tourism sector in the country. These are Scenario 1 - a budget increase of R240 million on air markets within the core focus areas, to achieve some maximum additional arrivals of 355 000 tourists; Scenario 2 - a budget increase of R2.6 billion to bring in 11 million extra passenger movements; and Scenario 3 - accommodation capacity requiring a budget increase of R850 million to fill 19.7 million graded rooms.
The response to the recommendation by the Minister of Finance to consider the Tourism Marketing Investment Framework developed by SA Tourism to appropriate additional budget for both international and domestic marketing activities is not satisfactory. The Minister of Finance indicated that the Department of Tourism was given an additional funding of R239 million over the 2017 MTEF. Allocations of R40 million in 208/19, R45 million in 2019/20, and R50 million in 2020/21 were made to take advantage of the opportunities identified in the Tourism Marketing Investment Framework.
The Committee had also recommended that the Minister of Finance appropriates additional budget to Vote 33 in order to capitalise the government owned tourism products to be ready for market and operations by emerging tourism entrepreneurs. In addition, it was also recommended that the Minister of Finance capitalises the Transformation Fund to avail financial resources to expedite inclusive tourism economic growth. In response, the Minister of Finance indicated that additional funding of R35 million in 2019/20 and R36.9 million in 2020/21 was provided to the Department of Tourism through the Economic Competitive and Support Package. The funding is intended for business incentives for growth and job creation to incentivise priority areas, including providing market access support, tourism grading support, implementation of energy efficiency initiatives and funding transformation initiatives in the tourism sector towards unlocking capital investment by black business people.
With the current budget allocations, tourism remains underfunded and the current budget does not make the country competitive against other destinations which offer similar tourist experiences. The sector transformation imperatives are being thwarted as the Tourism Transformation Fund will not increase in the next three years. This requires that the future allocations to the tourism vote be carefully crafted. The Committee will intensify its role in engaging various stakeholders in budget advocacy. Tourism funding should involve a political decision-making and a lobby process, as all political parties serving in the Committee agree on the increase of sector funding.
More funding for tourism is also needed to keep South Africa on par with its counterparts. The compelling economic case of tourism is forcing governments around the world to invest more on tourism. The 8th Meeting of the Tourism Ministers of the G20 economies held in Buenos Aires in April 2018 agreed on considering the following:
- Encouraging policies that promote full and productive employment and facilitate the progress of innovation in tourism and foster the creation of decent jobs, sustainable enterprises and entrepreneurship, in particular among women and the youth;
- Establishing favourable frameworks to stimulate innovation, entrepreneurship and connect ecosystems linking start-ups, main companies, investors and governments along the tourism value chain;
- Creating cooperation mechanisms between educational institutions at all levels, the private sector, governments and technology partners to review educational programmes and skills development policies
- Considering the importance of SMEs in the tourism, heritage and cultural sectors due to their contribution to job creation as well as their role in preserving and promoting cultural resources;
- Promoting the use of digital technology to facilitate travel as well as involving technology stakeholders in national tourism policies.
These and many other tourism focus areas should compel the National Treasury to fund tourism. If South Africa remains underfunded, the sector will fail to compete at a global level and its contribution to the Gross Domestic Product will diminish. Consequently, the sector will fail to contribute to the socio-economic upliftment of the country through intensive labour absorption.
7.2 Communication strategy
The Committee observed that the Communication Strategy of the Department has not worked well as communities are not fully aware of the bouquet of programmes offered by the department. Some communities have no idea whatsoever what the department is offering and the department should improve in this regard. The Committee acknowledges Izimbizo that are always held in different communities, but these are not enough.
7.3 Volatile operating environment
The Committee acknowledges that tourism is sensitive to a number of factors. The department and South African Tourism operate in a high risk environment where socio-political, safety and security issues, and health concerns may affect the number of tourists coming to the country. Currently, the country is experiencing listeriosis which has a potential to affect the marketing endeavours of SAT.
7.4 Master Plans
It was noted with approval that the department will be conducting a master planning exercise for potential tourism sites throughout the country. This master planning will create a blueprint for progressive development of many tourism sites in the country. The Committee noted that this requires an agreement on the components of the Master Plans by various stakeholders, and that the three spheres of government should be committed in fulfilling their specific mandates to make this a success. This will assist in enhancing inclusive tourism development and driving transformation as the neglected tourism sites with a huge potential, such as Port St. Johns in the Eastern Cape province will now have a master plan to attract investors.
7.5 Improvements in project planning
The Committee noted that the department has improved in project planning, a factor which has led to non-achievement of some pre-determined objectives in the previous financial years. For the 2018/19 financial year, the department has already conducted all the advanced planning for all the planned projects to avoid unnecessary delays. This includes the targeted number of the Full-Time Equivalent jobs which have always not been achieved.
7.6 Legislation, policy and strategy formulation
The department had planned to introduce the Tourism Amendment Bill in the previous financial years but this did not materialise. The Committee noted with concern that the 2018/19 Annual Performance Plan does not contain this target. The Committee is concerned that the department is not taking the current trends and technological advancements that are disrupting the sector seriously. In particular, the sharing economy is disrupting the accommodation sector but remains highly unregulated.
The delays in amending the Tourism Act also perpetuates the challenges faced by the grading scheme in the country as a policy decision needs to be made about the home of the Tourism Grading council and whether the scheme should remain voluntary or be made free but compulsory. This in turn threats the destination image as such developments in the sector do not comply with the technological advancements and quality assurance mechanisms implemented by the Tourism Grading Council of South Africa.
7.7 Tourism statistics
The Committee remains concerned with the uncoordinated manner of collecting and collating the tourism statistics in the country. For example, there are different methodologies used to measure domestic tourism and calculating the number of tourists that support the creation of one job but there is no standardised and universal agreement on this. The Ministry and the Department of Tourism has not facilitated a speedy resolution of these matters by South African Tourism. This should be expedited to ensure credible tourism statistics that inspire confidence to investors.
7.8 Ease of access
The Committee realises that South Africa is long haul destination and that this is a deterrent to some potential tourists as the cost of coming to South Africa is too high. Coupled with this is the continuous inconvenience caused by the immigration regulations and the Visa regime in South Africa. The Committee notes that the Ministry and the Department are dealing with the ease of access, however, the continued inconvenience to tourists cost the country both in terms of tourist arrivals and contribution of the sector the Gross Domestic Product.
7.9 Tourism Transformation Fund
The Committee was pleased that the department is continuing with implementing the Tourism Transformation Fund. However, the Committee is not satisfied that the fund is only capitalised with R120 million for the next three years. It is acknowledged that the funding comes from three streams, namely, government, Industrial development Corporation (IDC), and the National Empowerment Fund (NEF). The Committee is of the opinion that the department should have provided more funding to unlock more collateral funding from other partners. As it is, the fund is not enough to make a meaningful impact in the transformation of the sector that still strongly reflects the structural inequities of the past.
7.10 Youth Employment Service
The Committee noted that the Youth Employment Service (YES) recently launched by the President of the country presents an opportunity for the sector to absorb more youth in the meaningful and gainful employment. The Committee realises that there are already partnerships with the private sector in a number of areas, including skills development. This may be increased by developing an employment scheme anchored on the YES initiative.
Observations with regard to South African Tourism
The following observations were made with regard to South African Tourism:
7.11 Implementation of the 5-in-5 strategy
The Committee noted that the 2018/19 Annual Performance Plan tabled by SA Tourism is the continuation of the implementation of the 5-in-5 strategy (additional five million travellers constituted by four million more international tourists and one million extra local holiday trips). The Committee noted with concern that SA Tourism has completed the first year of implementing this strategy and has already incurred a deficit of 614 000 tourists in year one. This poses a threat to the achievement of the set targets of 5 million tourists in 5 years as there are no improved and innovative ways presented to the Committee to make up for the difference.
- Domestic tourism
The Committee observed with concern the growing trend of fewer South Africans travelling but spending more on domestic tourism as this points to domestic tourist becoming superficially and impressionistically an activity of the rich and affluent citizens only. Domestic tourism is thus becoming a class activity and is not affordable to most South Africans. The Committee was also concerned that SA Tourism continues to underperform with regard to domestic tourism. The underperformance continues despite the ring-fenced budget and numerous campaigns such as Shot Left and We Do Tourism. The Committee also noted with concern that SA Tourism does not understand the domestic consumer behaviour which might be an additional causal factor to poor performance. SA Tourism should attend to these matters urgently to alter the downward trajectory of domestic tourism in the country.
- Usage of consultants
The Committee noted with concern that SA Tourism continues to use consultants in the execution of their daily activities, especially on IT related services. Consultants will cost SA Tourism R25.7 million in the 2018/19 financial year. The Committee is of the view that SA Tourism should in source this activity by employing young graduates with IT specialisation to do the work in-house. This will not only reduce expenditure on consultants, but will also contribute to job creation.
- The Tourism Grading Scheme
The Committee observed with concern that the tourism grading scheme in South Africa seems to be failing. The Tourism Grading Council of South Africa continues to struggle with improving the performance of the grading scheme. There is a decline in the number of graded establishments as more businesses opt out of the system. The private sector also does not see the value added by being graded as the ungraded establishments continue to operate illegally without consequences. The Committee continues to call for the review of the grading scheme and improved monitoring to ensure quality assurance and good tourist experience in the country.
- TOMSA Levy
The Committee appreciates the continued support by the private sector towards marketing South Africa through the TOMSA Levy. It was observed with appreciation that the TOMSA Levy will increase from R130 million in 2018/19 to R144 million in 2020/2021. However, concerns remain in the private sector about the optimum utilisation of this levy by SA Tourism. The Committee noted the memorandum of Agreement between SA Tourism ad TOMSA on the implementation of the levy. However, the Committee remains concerned about the voluntary nature of the levy collection and the number of levy collectors.
- Homestays
The Committee noted the emerging trend of Homestays around the country, with recent launch of the programme in Goedverwacht in the Western Cape. The Committee noted that these kinds of initiatives do not feature prominently in the marketing campaigns for SA Tourism. The Committee calls for the inclusion of such products in the marketing campaigns to promote rural tourism and geographic spread.
- Conversion
The Committee noted with concern the lost opportunity in the conversion of business tourists to leisure tourists. The country hosts a number of events but there is no evidence that the Tourism Bureau of South Africa has managed to convert business delegates into leisure tourists. The Committee calls for more delegate boosting activities to ensure that business delegates stay in South Africa for longer after the businesses events hosted in the country. The Committee also calls for the intensification of the conversion initiatives of Visiting Friends and Relatives (VFR) tourists to leisure tourists. The Committee noted with concern that SA Tourism still do not understand the role that VFR visitors play in conversion to holiday trips despite numerous calls by the Committee to do that.
- Nordic markets
The Committee noted that SA Tourism had indicated to the Committee that they were making inroads into the Nordic Markets and had ring-fenced a budget for those activities. This initiative is important in increasing the market share for the country and more such initiatives are needed. However, these should be accompanied by evidence of the return-on-investment.
- Safety and security for tourists
The Committee noted with concern the increase in safety and security incidents reported against tourists in South Africa. These include crimes reported in and around OR Tambo International Airport, Table Mountain and elsewhere. The Committee noted with concern the damning travel advisories issues by some source markets such as the Unites States of America, Australia and the United Kingdom. These have a potential of affecting the industry.This requires targeted responses to mitigate the negative impacts. Urgent interventions are needed to mitigate the negative publicity, especially in source markets.
- SME Support
The Committee noted with endorsement the continued support given to emerging tourism enterprises by SA Tourism through the Hidden Gems programme. However, the Committee was concerned that this programme is inadequate as it has not made an impact at the community and township level. More support and visibility of SME programmes is needed for rural and township tourism emerging tourism enterprises.
8. Recommendations
Having made a number of observations based on the analysis of the Annual Performance Plans and Budgets for the 2018/19 financial year, the Committee recommends that the Minister of Tourism:
8.1 Continues to engage the National Treasury on the increasing allocation of budget to the tourism vote and report back to the Committee on the progress before the Medium Term Budget Policy Statement (MTBPS) to be delivered in October 2018.
8.2 Improves on and prioritise legislation, policy, and strategy formulation to keep up with the emerging trends in global tourism, including the regulation of the sharing economy in the sector.
8.3 Engages the Department to improve on its communication strategy, especially on programmes offered, to ensure a wide reach and more uptake by the target market.
8.4 Engages investors after the finalisation of the masterplans to ensure value for money on the budget spent and expedite transformation especially in neglected high potential community destinations.
8.5 Ensures that the department improves on project planning and implements the improvement plans, including advanced planning for all the projects implemented with external stakeholders.
8.6 Improves on the collection and collation of tourism statistics to ensure credible and useful measurement of the impact of tourism in the socio-economic landscape of South Africa.
8.7 Continues to engage the Minister of Home Affairs to improve the ease of access through tourist friendly immigration regulations and visa regime, including expediting the eVisa facilitation and report to the Committee on progress within six months of receiving this report.
8.8 Expedites transformation of the tourism sector by implementing pro poor programmes and capitalising the Tourism Transformation Fund to enable participation of previously marginalised communities.
8.9 Monitors the implementation of the 5-in-5 strategy to ensure increase in international arrivals and domestic trips.
8.10 Minimises the usage of consultants and contribute to job creation through employing the skilled youth to conduct the work currently commissioned to the consultants.
8.11 Consolidates activities meant to ensure safety and security for tourists and report quarterly to the Committee about progress made in this regard.
8.12 Engages the Minister of Cooperative Government and Traditional Affairs with regard to tourism product development and marketing at local level.
8.13 Engages the Minister of Transport on accessibility of tourism in relation to the road conditions around the country, the airlift strategy, and signage of tourist attractions.
- Conclusion
The Committee is generally satisfied with the contents of the 2018/19 Annual Performance Plan of the National Department of Tourism and South African Tourism. The plans are seamlessly aligned to the national priorities of government and address the core developmental principles of the tourism sector. The efforts by the Department to achieve this alignment and continuing to provide sound leadership to the tourism development of the country is commendable.
The Committee is fully aware of the tremendous responsibility put on the department and South African Tourism to contribute to job creation and the Gross Domestic Product of the country. The budget allocated to the tourism vote should thus be revisited for the sector to achieve its intended growth prospects and meaningful contribution to the country’s economy.
The Department can, however, still improve on a number of issues, including planning, policy formulation, enforcement of regulations, and communication strategy. Improvements could also be made in stakeholder engagement and collaboration on a number of issues including a working relationship with all spheres of government, partnerships with the private sector and communities, better coordination with the airliners for improving airlift at a domestic and international level.
Report to be considered
Documents
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