ATC190709: Report of the Portfolio Committee on Tourism for Budget Vote No. 33: Tourism, dated 9 July 2019

Tourism

Report of the Portfolio Committee on Tourism for Budget Vote No. 33: Tourism, dated 9 July 2019

 

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 (Department) and the South African Tourism (SA Tourism) reports as follows:

 

1. Introduction

The tourism industry is a growing economic sector globally, and South Africa in particular. Tourism is thus a sunrise sector, and the New Gold of South Africa's economy. The sector has a wide value chain that stimulates economic activity in other sectors such as services sector, creative and cultural industries. It is thus commendable that the President retained the Department of Tourism during his reconfiguration of the government departments for the 6th Administration. The Committee acknowledges the bold and ambitious target of doubling tourism figures from 10.5 million in 2018 to 21 million by 2030.

The tourism sector has been affected by a number of factors, including policy uncertainty and blockages that diminished tourism growth, investment and job creation. To achieve higher and more inclusive tourism growth and job creation, the Committee will ensure the rebranding, repositioning, and renewal of the tourism sector. The oversight work will be driven by the ideals of radical economic transformation to ensure that the sector works for all South Africans.

In addition, South Africa continues to confront a challenging economic environment in which global growth is slowing and trade tensions are mounting. The 2019 Budget addresses immediate risks to the economy and public finances and outlines measures to build the capacity of the state and renew economic growth. The Annual Performance Plans of the Department of Tourism and South African Tourism are cognisant of this fiscal reality and demonstrate that the public resources will be spent wisely and in accordance with the legal mandate to render quality tourism services.

The purpose of this document, therefore, is to table the Committee report after a close scrutiny of the budget allocated to Vote 33: Tourism in the 2019 Estimates of National Expenditure to ensure that it is aligned to national priorities.

 

1. The Committee Process

The Committee received and scrutinised the tourism budget allocated to Vote 33 as outlined in the 2019 Estimates of National Expenditure (ENE) tabled by the Minister of Finance in Parliament in June 2019.  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 then carefully examined the 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 3 July 2019 and South African Tourism on 4 July 2019. The Committee is reporting on the Annual Performance Plans and the budget allocated to the National Department of Tourism and South African Tourism for the 2019/20 financial year in terms of Rule 340 of the National Assembly.

 

1. Significance of Tourism

In South Africa, the National Development Plan (NDP) recognises tourism as one of the key drivers of employment and economic growth. The NDP envisages the promotion of South Africa as a tourist and business events destination. The direct economic impact of the tourism industry has significant indirect and induced impacts. Table 1 depicts the contribution of the sector in 2018.

Table 1: Socio-economic contribution of tourism in 2018

Economic indicator	Contribution
International arrivals	10.5 million
Direct jobs	720 000 direct jobs
Total jobs	1.5 million direct and indirect jobs accounting for 4.5 percent total employment in South Africa
GDP – Direct contribution	R130 billion, accounting for 2.8 percent contribution to the total GDP
GDP – Total contribution	R425.5 billion, accounting for 8.6 percent total contribution to the economy
Total Tourism Foreign Direct Spend (TTFDS)	R58.57 billion
Domestic Trips	13 million
Total Direct Domestic Spend (TDDS)	R18.29 billion

Source: Computed from UNWTO, WTTC, and SA Tourism 2019

As depicted in Table 1, the contribution of tourism to the economy is measured against economic indicators such as direct contribution to the GDP; total contribution to the GDP; direct contribution to employment; total contribution to employment; international tourist arrivals; domestic holiday trips; visitor exports; and travel & tourism investments.

The international arrivals and domestic trips have a direct impact on other economic indicators such as contributing to the GDP and job creation, and the Committee will be conducting close oversight on these two indicators in the 2019/20 financial year.

 

1. Legislative and policy mandate

The following legislative, policy, and strategic frameworks constitute the ambit under which the Department and SA Tourism execute their core functions and mandate.

1. Constitutional mandate

Tourism is listed in Part A of Schedule 4 of the Constitution of the Republic of South Africa (Act 108 of 1996) as a functional area of concurrent national and provincial legislative competence, whilst Part B of Schedule 4 lists local tourism as a local government competency.  This classifies tourism as a concurrent function, and the Constitution enjoins the three spheres of government to perform specific functions to ensure tourism growth and development.

1. Legislative mandate

At a legislative level, the Tourism Act of 2014 (Act No. 3 of 2014) enjoins the Minister of Tourism to perform specific tasks to drive tourism policy and strategic direction. The Act seeks to promote practising of responsible tourism for the benefit of the Republic and for the enjoyment of all its residents and foreign visitors; provide for the effective domestic and international marketing of South Africa as a tourist destination; promote quality tourism products and services; promote growth in and development of the tourism sector; and enhance cooperation and coordination between all spheres of government in developing and managing tourism.

1. Policy mandate

The mandate of the Department is premised on a number of policies at a country and sector level.A selected number of policies on which the oversight work of the Committee is anchored are detailed below:

 

 

1. The National Development Plan

The National Development Plan (NDP) adopted in 2012 serves as the blueprint of government, and recognises tourism as one of the main drivers of employment and economic growth. The target of the NDP is to create an additional 11 million jobs by 2030, and tourism plays a huge role towards attaining that goal. With regard to the tourism sector, the NDP envisions:

• tourism as a major source of revenue and employment for the country through the investment in infrastructure, product and service development;
• 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, and ensuring a dignified existence for all South Africans.

Notably, the National Development Plan (NDP) does not have a specific chapter dedicated to the tourism sector. However, the role of tourism in the NDP, and the broad overview of the sector are directly and implicitly conjugated with various sectors in a number of chapters.

1. The New Growth Path

Tourism is acknowledged in the New Growth Path (NGP) as one of the six economic pillars of South Africa. Tourism is recognised as a labour-intensive sector, with a wide value chain that cuts across various economic sectors. The NGP is intended to address unemployment, inequality and poverty in a strategy that is principally reliant on creating a significant increase in the number of new jobs in the economy. The NGP thus envisages tourism as a vehicle to expedite transformation and inclusive tourism growth that nurtures participation of all South Africans in the mainstream economy.

1. The White Paper on the Development and Promotion of Tourism in South Africa

The White Paper on the Development and Promotion of Tourism in South Africa (1996) provides the policy direction, framework and guidelines for tourism development in the country. The White Paper is a pioneering policy that has provided a strong base for other policies and the legislative framework in South Africa since the attainment of democracy in 1994. The White Paper recognises that tourism has been inadequately resourced and funded; a myopic private sector; limited integration of local communities and previously neglected groups into tourism; inadequate tourism education, training and awareness; inadequate protection of the environment; poor service; lack of infrastructure, particularly in rural areas; a ground transportation sector not geared to service tourists; lack of inclusive, effective national, provincial and local structures for the development, management and promotion of the tourism sector; and growing levels of crime and violence on visitors.  The White Paper comprehensively addresses sustainable tourism development in South Africa and there is no urgent need to overhaul it.

1. The National Tourism Sector Strategy

The revised National Tourism Sector Strategy spans a period of ten years (2016 - 2026) and is based on five strategic pillars, namely, effective marketing; facilitating ease of access; the visitor experience; destination management; and the broad-based benefits. The vision is to be a top world responsible tourism destination, a safe, rapidly and inclusively growing tourism economy that leverages South Africa’s competitive edge in nature, culture and heritage, underpinned by Ubuntu and supported by innovation and service excellence. However, some of the issues in the NTSS cannot be addressed at a strategy level and require a legislative review process to assist with strategy implementation. This strategy covers all the strategic interventions needed to stimulate tourism growth in the country.

1. The 2014-2019 Medium Term Strategic Framework

The period 2019/20 is the last financial year that concluded the implementation of the 2014-2019 Medium Term Strategic Framework (MTSF). The concluding MTSF was grounded on the National Development Plan and had fourteen core priorities. The Department was pursuing four as follows, 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; and Outcome 12: An efficient, effective and development-oriented public service and an empowered, fair and inclusive citizenship.

1. The State of the Nation Address

In the State of the Nation Address, the President outlined new seven government priorities for the 6th Administration as follows, namely, eeconomic transformation and job creation; education, skills and health; consolidating the social wage through reliable and quality basic services; spatial integration, human settlements and local government; social cohesion and safe communities; a capable, ethical and developmental state; and a better Africa and World.

These pronouncements by the President point to a need for increased collaborations amongst various government departments, and between the public and private sector in South Africa. The concrete oversight deliverables for the 6th Parliament will be derived from the new MTSF to ensure that the country achieves the bold and ambitious target of attracting 21 million arrivals by 2030.

 

1. The National Department of Tourism

In line with its vision of complementing the national priorities, the Department identified objectives that would accelerate the delivery of services in the tourism sector. Table 2 outlines the strategic outcomes of the Department, as stated in the 2015/16 – 2019/20 Strategic Plan, which correlate with Government’s Outcomes.

Table 2: Strategic Outcome-Oriented Goals

Government Outcomes	Strategic Outcome-Oriented Goal
Outcome 4: Decent employment through inclusive economic growth	Improve the impact of tourism on the livelihood of all South Africans
Outcome 7: Comprehensive rural development and land reform	Increased contribution of tourism sector to inclusive economic growth
Outcome 10: Environmental assets and natural resources that are well protected and continually enhanced	Improve levels of competitiveness and sustainability in the sector
Outcome 11: Create a better South Africa and a better world	Strengthen regional, African and international collaboration and partnerships
Outcome 12: An efficient and effective, and development orientated public service and an empowered fair and inclusive citizenship	Achieve good corporate and cooperative governance

Source: NDT Annual Performance Plan 2019/20

5.1       Departmental Programmes

The Department fulfils its mandate through four branches, namely, Programme 1: administration; Programme 2: Tourism Research, Policy and International Relations; Programme 3: Destination Development; and Programme 4: Tourism Sector Support Services. These four Programmes are interwoven and work collaboratively to deliver on the constitutional mandate of the Department. The following information provides the purpose of each Programme and its associated activities:

1. Programme 1: Corporate Management

The purpose of Programme 1 is to provide strategic leadership, management and support services to the Department. Sub-programmes include Ministry, Management, Corporate Management, Financial Management, and Office Accommodation.

1. Programme 2: Tourism Research, Policy and International Relations

The purpose of Programme 2 is to enhance the strategic policy environment, monitor the tourism sector’s performance and enables stakeholder relations. The sub-programmes for Programme 2 are as follows:

Table 3: Programme 2 Sub-programmes

Sub-Programme	Purpose
Tourism Research, Policy and International Relations Management	Provides strategic direction, on research, and information and knowledge management. Also manages policy development and evaluation, and promotes sector transformation and responsible tourism.
Research and Knowledge Management	Oversees tourism research, knowledge management and impact evaluation of the sector.
Policy Planning and Strategy	Oversees and guides policy and strategy development for the tourism sector, and ensures the efficient and effective management of stakeholder  relations.
South African Tourism	Stimulates sustainable international and domestic demand for South African tourism experiences, and regulates the standard of tourism facilities and services.
International Relations and Cooperation	Drives South Africa’s interests through international relations and cooperation.

Source: NDT Annual Performance Plan 2019/20

Activities in Programme 2 include Public lecture; Tourism Research Seminar; National Tourism Information and Monitoring System (NTIMS); Sharing best practice workshop; Indaba Ministerial Session; Various reports such as ‘State of Tourism’, ‘Evaluation Report on Incubators’, ‘NTSS Implementation Report’, ‘Bilateral Agreements’ etc. 

1. Programme 3: Destination Development

Programme 3 facilitates and coordinates tourism destination development. Activities in this Programme include Draft master plans (coastal and marine tourism); Budget resort initiatives; Support to SANParks sites; Destination Enhancement initiatives; Working for Tourism projects. The sub-programmes for Programme 3 are as follows:

Table 4: Programme 3 Sub-programmes

Sub-Programme	Purpose
Destination Development Management	Provides strategic leadership and administrative support to the programme’s activities.
Tourism Enhancement	Increases the competitiveness of South Africa’s tourism industry.
Destination Planning and Investment Coordination	Ensures that tourism infrastructure supports the current and future growth of the sector.
Working for Tourism	Facilitates the development of tourism infrastructure projects under the expanded public works programme through labour-intensive methods targeted at youth, women, unemployed and disabled people, and small, medium and micro enterprises.

Source: NDT Annual Performance Plan 2019/20

 

1. Programme 4: Tourism Sector Support Services

Programme 4 enhances transformation, increases skill levels and supports the development of the sector to ensure that South Africa is a competitive tourism destination.

Table 5: Programme 4 Sub-programmes

Sub-Programme	Purpose
Tourism Sector Support Services Management	Provides administrative support to the programme’s activities.
Tourism Human Resource Development	Facilitates the efficient management and implementation of human resource development initiatives for the tourism sector.
Enterprise Development and Transformation	Facilitates inclusive participation and sustainability in the tourism sector.
Tourism Incentive Programme	Manages the establishment of capital and non-capital tourism incentives to promote and encourage the development and growth of the tourism sector.

Source: NDT Annual Performance Plan 2019/20

Activities in this programme include Enterprise development incubators; Capacity building programmes; National Tourism Careers Expo; Tourist Guide training programmes; Tourism Incentive Programme initiatives; Tourism Safety Programme.

 

 

1. Budget Analysis for 2019/20 financial year

The Department’s 2019/20 budget allocation amounts to R2,393 billion of which R334,4 million is allocated to fund Compensation of Employees. The Department has reduced its personnel from 488 in 2017/18 to the current 472. National Treasury has imposed a ceiling on Compensation of Employees over the MTEF period and the ceiling amounts are R334,4 million for 2019/20, R360,3 million for 2020/21 and R383,7 million for 2021/22.  An amount of R359,2 million is budgeted for Goods and Services, R1,554 billion for Transfers and Subsidies and R144,6 million for the payments of Capital Assets. Table 6 reflects the allocation of funds per programme.

Table 6: Overall Budget Allocation 2018/19 – 2021/22

Tourism	Budget				Nominal Rand Change	Real Rand Change	Nominal % change	Real % Change
R million	2018/19	2019/20	2020/21	2021/22
Programme					2018/19-2019/20		2018/19-2019/20
Administration	271.4	291.5	304.4	323.1	20.1	5.7	7.41%	2.10%
Tourism Research, Policy and International Relations	1 282.0	1 331.1	1 405.5	1 479.8	49.1	-16.7	3.83%	-1.30%
Destination Development	401.8	463.3	495.7	530.0	61.5	38,6	15.31%	9.61%
Tourism Sector Support Services	306.7	306.8	330.5	315.7	0.1	-15,1	0.03%	-4.91%
TOTAL	2 261.8	2 392.7	2 536.1	2 648.6	130.8	12.5	5.78%	0.55%

Source: National Treasury ENE, 2019/20

 

Table 6 indicates that the overall budget allocation to the Department marginally increased by 0.55 percent in real terms from R2.3 billion in 2018/19 to R2.4 billion in 2019/20. The Department organises its expenditure under four programmes, as follows:

• Programme 1: Administration (R291.5 million);
• Programme 2: Tourism Research, Policy and International Relations (R1 331.1 billion); Programme 3: Destination Development (R463.3 million); and
• Programme 4: Tourism Sector Services (R306.8 million)

The main cost driver under this Vote is Programme 2, which consumes more than half (approximately 56 percent) of the total Vote allocation. This is mainly due to the significant transfer to the Department’s Entity, South African Tourism. Whilst clearly being the priority programme of the Department, programme 2 is one of only two programmes that experienced a decrease in real terms, the other being programme 4. The Committee considers a decrease in these two Programmes as detrimental to achieving the Department’s policy priorities. Another major cost driver under this Vote is Programme 3, the bulk of which the allocation of R371,3 million goes towards the Working for Tourism Expanded Public Works Programme. The above programme allocations are aligned with the Department’s policy priorities aimed at marketing South Africa as a tourism destination, job creation, skills development, destination development and transformation of the tourism sector. The following information provides budget allocation per Programme:

6.1       Programme 1: Administration

The Programme is allocated R291,5 million in the 2019/20 financial year, which equates to 12,2 percent of the overall departmental budget.

Table 7: Programme 1 budget allocation for 2018/19-2019/20

Administration	Budget		Nominal  Increase/ Decrease in 2019/20	Real Increase/ in 2019/20	Nominal % change in 2019/20	Real % Change in 2019/20
R million	2018/19	2019/20
Ministry	23.6	26.4	2.8	1.5	11.868%	6.33%
Management	2.7	3.3	0.6	0.4	22.22%	16.18%
Corporate management	172.7	180.7	8.0	-0.9	4.63%	-0.54%
Financial Management	35.0	40.1	5.1	3.1	14.57%	8.91%
Office Accommodation	37.5	41.0	3.5	1.5	9.33%	3.93%
TOTAL	271.4	291.5	20.1	5.7	7.4%	2.10%

Source: National Treasury ENE 2019/20

Table 7 indicate shows that the budget allocation for Programme 1 increased by 2,1 percent in real terms from R271,4 million in 2018/19 to R291,5 million in 2019/20. Of this amount, R151,010 million (51,8 percent) is for Compensation of Employees. The amount allocated for Office Accommodation for the 2019/20 financial year is R41 million. This is for the payment of the lease for the Department’s Head Office to the Department of Public Works and Infrastructure. There is a significant increase in allocation, by 16,18 percent in real terms, for sub-programme 2. The Committee will follow-up with the Department on this increase in allocation.

6.2       Programme 2: Tourism Research, Policy, and International Relations

The Programme receives a budget allocation of R1,331 billion for 2019/20, of which R1,254 billion is transferred to the Department’s entity, South African Tourism (SAT). This represents 94,2 percent of the Department’s budget allocation. SAT received a baseline budget reduction of R17,378 million in the current financial year. The remaining allocation available for this Programme is R76,879 million, of which R46,925 million is allocated to Compensation of Employees.

The programme objectives entail the following:

• Create an enabling legislative and regulatory environment for tourism development and growth by conducting two tourism facilitation initiatives by March 2020.
• Enhance understanding and awareness of the value of tourism and its opportunities by hosting a public lecture and annual tourism research seminar in each year over the medium term.

• Provide knowledge services to inform policy, planning and decision-making by:

• developing the national tourism information and monitoring system to collect data from tourism sector stakeholders by March 2021.
• collecting and analysing statistics on the state of tourism by March 2021.
• developing the national tourism sector strategy implementation report, the state of tourism report, the evaluation report on incubators in the tourism enterprise development programme, the impact evaluation report on departmental capacity- building programmes, and the report on the facilitation and monitoring implementation of the signed bilateral agreements by March 2020.

• Enhance regional tourism integration by:

• hosting a workshop on sharing best practices by March 2020, targeted at African countries that have tourism agreements with South Africa.
• hosting the indaba ministerial session by March 2021.

Table 8 indicates that the budget allocation for Programme 2 decreased by 1,3 percent in real terms from R1 282,0 billion in 2018/19 to R1 331,1billion in 2019/20. The main cost driver for this sub-programme is the transfer to the Department’s entity, South African Tourism. The budget allocation for sub-programme 1 increases significantly, by 15,82 percent in real terms, while the allocation for sub-programme 5 decreases by 11,91 percent in real terms.

 

 

 

Table 8: Programme 2 budget allocation for 2018/19-2019/20

Tourism	Budget		Nominal Increase / Decrease in 2019/20	Real Rand change in 2019/20	Nominal Percent change in 2019/20	Real Percent change in 2019/20
R million	2018/19	2019/20
Sub- Programme 1: Tourism Research, Policy and International Relations Management	8.7	10.6	1.9	1.4	21.84%	15.82%
Sub-Programme 2: Research and Knowledge Management	26.3	28.1	1.8	04	6.84%	1.56%
Sub-Programme 3: Policy Planning and Strategy	11.7	12.9	1.2	0.6	10.26%	4.81%
Sub-Programme 4: South African Tourism	1 208.0	1 254.2	46.2	-15.8	3.82%	-1.31%
Sub-Programme 5: International Relations and Cooperation	27.3	25.3	-2.0	-3.3	-7.33%	-11.91%
TOTAL	1 282.0	1 33.1	49.1	-16.7	3.8%	-1.30%

Source: Adapted from

1o R205 in 2012om R192 was accounted for in salariesNational Treasury (2019) – Vote 33 Tourism

 

The reasons for sub-programme 1’s budget changes might be attributed to the number of reports that will be produced for the medium term and thus the number of consultant services that will be procured for said projects.  The Committee will follow-up with the Department as this is as significant decrease in sub-programme 5’s allocation to check the implications for the implementation of programme objectives over the medium term.

6.3       Programme 3: Destination Development

The budget for this Programme is R463, 297 million for 2019/20, of which R371, 344 million (80,2 percent) is allocated to the Working for Tourism sub-programme. The Expanded Public Works Incentive programme received a baseline budget increase of R21,153 million in 2019/20. A total of R55,831 million is allocated to Compensation of Employees for the programme.

The programme objectives entail the following:

• Diversify and enhance tourism offerings by:
  • refining and finalising four draft master plans to support coastal and marine tourism by March 2020.
  • supporting five South African National Parks sites through the tourism maintenance programme over the medium term.
  • managing the pipeline of nationally prioritised tourism investment projects and opportunities by March 2020.
  • piloting the ownership and operational/management model and modalities to implement budget resort initiatives in prioritised nodes by March 2020.
  • implementing destination enhancement initiatives at iconic tourism sites.

• Create 12 993 full-time equivalent jobs by implementing tourism projects (Lotlamoreng Dam, Phiphidi Waterfall, Platfontein Game Farm, National Youth Chefs training programme, one sommelier training course, youth hospitality training and one food safety programme) through the Working for Tourism programme over the medium term.

The sub-programmes are as follows:

• Destination Development Management, provides strategic leadership and administrative support to the programme’s activities.
• Tourism Enhancement, increases the competitiveness of South Africa’s tourism industry.
• Destination Planning and Investment Coordination, ensures that tourism infrastructure supports the current and future growth of the sector.
• Working for Tourism, facilitates the development of tourism infrastructure projects under the expanded public works programme through labour-intensive methods targeted at youth, women, unemployed and disabled people, and small, medium and micro enterprises.

Table 9 below reflects the allocation of funds per sub-programme:

Table 9: Programme 3 budget allocation for 2018/19-2019/20

Tourism	Budget		Nominal Increase / Decrease in 2019/20	Real Rand change in 2019/20	Nominal Percent change in 2019/20	Real Percent change in 2019/20
R million	2018/19	2019/20
Sub- Programme 1: Destination Development Management	20.3	39.0	18.7	16.8	92.12%	82.62%
Sub-Programme 2: Tourism Enhancement	19.0	23.3	4.3	3.1	22.63%	16.57%
Sub-Programme 3: Destination Planning and Investment Coordination	27.7	29.7	2.0	0.5	7.22%	1.92%
Sub-Programme 4: Working for Tourism	334.8	371.3	36.5	18.1	10.90%	5.42%
TOTAL	401.8	463.3	61.5	38.6	15.3%	9.61%

Source: Adapted from National Treasury (2019) – Vote 33 Tourism

Table 9 shows that the budget allocation for Programme 3 increased by 9.6 percent in real terms from R401,8 million in 2018/19 to R463,3 million in 2019/20. The main cost driver under this programme, at R371,3 million, is the Working for Tourism expanded public works programme. This sub-programme entails various skills development programmes and tourism projects. Through these the Department plans to create 12 993 full-time equivalent jobs over the medium term. The budget allocation for sub-programme 1 nearly doubled, by 82,62 percent in real terms, for the MTEF period. The Department has indicated a number of activities under this sub-programme such as: destination enhancement initiatives at iconic tourism sites, supporting five South African National Parks sites through the tourism maintenance programme, and refining and finalising four draft master plans to support coastal and marine tourism among others.

The Committee noted the budget increase in this Programme and will monitor implementation of projects.

6.4       Programme 4: Tourism Sector Support Services

The Programme is allocated R306,826 million for the 2019/20 financial year. This includes Compensation of Employees with a budget allocation of R80,606 million and the Tourism Incentive Programme (TIP) with a budget allocation of R189,513 million. The projects within TIP include tourism market access, tourism grading support, tourism destination development and energy efficient projects. The TIP experiences a baseline budget reduction of R15,396 million in 2019/20. The TIP consumes 61,77 percent of the total Programme budget and Compensation of Employees 26, 27 percent.

The programme objectives entail the following:

• Facilitate the development and growth of tourism enterprises to contribute to inclusive economic growth and job creation by implementing six enterprise development incubators by March 2020, an additional two in 2020/21 and another two in 2021/22.
• Facilitate tourism capacity-building programmes by:

• training 640 chefs, 200 learners in the Blue Flag training programme, 250 Sommeliers, 1 500 Food Safety Assurers, 1 500 learners in the Hospitality Youth programme, and 60 learners in the Resource Efficiency training programme by March 2020.
• convening the national tourism careers expo over the medium term.
• training 20 black women at institutions of higher learning through a customised executive development programme by March 2020.
• implementing six programmes to upskill and train tourist guides over the medium term.
• implementing provincial and local government capacity-building programmes by March 2022.

• Accelerate the transformation of the tourism sector over the medium term by:

• implementing the Tourism Incentive Programme (market access, tourism grading, energy efficiency, sector transformation and one additional incentive) in each year over the medium term.
• conducting initiatives to empower women in tourism.
• providing support to tour operators through social tourism schemes.
•  developing one social tourism scheme.

• Ensure integrity and facilitate accurate tourism information by:

• regulating the tourist guide industry on an ongoing basis.
• managing complaints in terms of Chapter 5 of the Tourism Act (2014) over the medium term.
• developing the tourism safety programme in collaboration with partners by March 2021.

The sub-programmes are as follows:

• Tourism Sector Support Services Management, provides administrative support to the programme’s activities.
• Tourism Human Resource Development, facilitates the efficient management and implementation of human resource development initiatives for the tourism sector.
• Enterprise Development and Transformation, facilitates inclusive participation and sustainability in the tourism sector.
• Tourism Visitor Services, ensures the integrity of information and facilitates accurate tourism information.
• Tourism Incentive Programme, manages the establishment of capital and non-capital tourism incentives to promote and encourage the development and growth of the tourism sector.

 

 

Table 10: Programme 4 budget allocation for 2018/18-2019/20

Tourism	Budget		Nominal Increase / Decrease in 2019/20	Real Rand change in 2019/20	Nominal Percent change in 2019/20	Real Percent change in 2019/20
R million	2018/19	2019/20
Sub- Programme 1: Tourism Sector Support Services Management	12.7	11.9	-0.8	-1.4	-6.30%	-10.93%
Sub-Programme 2: Tourism Human Resource Development	22.6	27.9	5.3	3.9	23.45%	17.35%
Sub-Programme 3: Enterprise Development and Transformation	49.7	52.7	3.0	0.4	6.04%	0.79%
Sub-Programme 4: Tourism Visitor Services	22.9	24.9	2.0	0.8	8.73%	3.36%
Sub-Programme 5: Tourism Incentive Programme	198.8	189.5	-9.3	-18.7	-4.68%	-9.39%
TOTAL	306.7	306.8	0.1	-15.1	0.0%	-4.91%

Source: Adapted from

1o R205 in 2012om R192 was accounted for in salariesNational Treasury ENE (2019) – Vote 33 Tourism

 

Table 10 shows that the budget allocation for Programme 4 decreases by 4,9 percent in real terms from R306,7 million in 2018/19 to R306,8 million in 2019/20. The Tourism Incentive Sub-Programme, at R189,5 million, is the main cost driver in this sub-programme. This programme aims to incentivise priority areas, including providing market access support, tourism grading support, implementation of energy efficiency initiatives and funding of transformation initiatives in the tourism sector towards unlocking capital investment by black tourism entrepreneurs. However, the sub-programme experiences a significant decrease in nominal and real terms.

The decrease in this Programme will affect the implementation of the Tourism Incentive Programme which fosters transformation in the sector. The Committee will monitor how this decrease affects government projects aimed at inducing transformation of the industry.

 

1. South African Tourism

South African Tourism, through the Tourism Act (No. 3 of 2014), is mandated to market South Africa internationally and domestically as a preferred tourism and business events destination, ensure that tourist facilities and services are of the highest standard and monitor and evaluate the performance of the tourism sector.

 

1. Strategic focus for South African Tourism in the 2019/20 financial year

The Entity has identified the following areas of focus for the 2019/20 financial year:

• Collaboration with government departments
• Strengthening partnerships with the tourism industry
• “We Do Tourism” campaign
• Positioning South African Tourism as a tourism and business events industry leader in market intelligence, insights, and analytics
• Implementing the Events Strategy
• Drive transformation within the tourism industry through enterprise development and supplier development

7.2       Budget Allocation 2019/20 financial year

The budget allocation for South African Tourism in the 2019/20 financial year is R1 497,9 billion, R228,4 million of which is allocated to fund Compensation of Employees. The budget for the Entity comes from various sources as indicated in Table 11.

Table 11: The 2019/20 revenue streams for South African Tourism

Revenue	2018/19	Variance Analysis		2019/20	2020/21	2021/22
(0’000)	Actual	R’000	%	Estimates	Estimates	Estimates
NDT Allocation	1 208 048	-	0%	1 254 161	1 323 456	1 392 808
TOMSA Levies	121 516	-9 299	-7	137 356	144 224	152 156
Indaba, Meetings Africa & other exhibitions	58 999	1 999	4%	60 192	63 503	66 996
Grading fees	21 739	-822	-4%	23 824	25 134	26 516
Sundry Revenue	37 611	16 471	78%	22 324	23 552	24 847
TOTAL	1 447 913	8 349	1%	1 497 857	1 579 869	1 663 323

Source: Adapted from South African Tourism 2019/20 Annual Performance Plan

An amount of R1 255.7 billion is budgeted for Goods and Services and R13,8 million for Depreciation.  The Entity receives 83,7 percent (R4 billion) of its projected revenue over the MTEF period from transfers from the Department of Tourism. The amount of R137.3 million, accounting for 9 percent, comes from the Tourism Marketing South Africa (TOMSA) Levy. The amount of R60.2 million, accounting for 7 percent comes from INDABA and Meetings Africa. The amount of R23.8 million, accounting for 2 percent comes from grading fees, and R22.3 million, accounting for 1 percent from sundry revenue. Table 12 indicates budget allocation to various Programmes used by the Entity to discharge its mandate for the years 2018/19 to 2021/22

Table 12: Overall Budget Allocation 2018/19 – 2021/22

SA Tourism	Budget				Nominal Rand Change	Real Rand Change	Nominal % change	Real % Change
R million	2018/19	2019/20	2020/21	2021/22
Programme					2018/19-2019/20		2018/19-2019/20
Administration	132,3	135,2	140,9	148,4	2,9	- 3,8	2,19%	-2,86%
Business Enablement	85,9	89,7	94,7	99,7	3,8	-0,6	4,42%	-0,74%
Leisure Tourism Marketing	1 026,3	1 066,6	1 130,8	1 190,5	40,3	-12,4	3,93%	-1,21%
Business Events	129,3	137,7	140,9	148,4	8,4	1,6	6,50%	1,23%
Visitor Experience	65,8	68,7	72,5	76,4	2,9	-0,5	4,41%	-0,75%
TOTAL	1  439,6	1  497,9	1  579,8	1  663,4	58,3	-15,7	4,05%	-1,09%

Source: National Treasury ENE, 2019/20

 

For the 2019/20 financial year the budget allocations per programme are as follows:

• Programme 1: Administration is R135.2 million.

• Programme 2: Business Enablement is R89.7 million.
• Programme 3: Leisure Tourism Marketing the is R1 066,6 billion. This programme is the main cost driver for the Entity as its core mandate, which entails marketing initiatives both locally and internationally.
• Programme 4: Business Events is R137.7 million.
• Programme 5: Visitor Experience is R68.7 million.

 

Overall, as depicted in Table 10 the budget allocation to the Entity decreases by 1.1 percent in real terms from R1 439,6 billion in 2018/19 to R1 497,9 billion in 2019/20. From the table all but one, programme 4, programmes experienced real decreases for the medium term. Programme 4 entails the work of the National Convention Bureau, which includes the hosting of business events and submission and securing of event bids. The Committee will monitor how the budget decrease will affect the international and domestic marketing campaigns implemented by the Entity.

 

 

 

1. Expenditure Analysis for 2019/20

The following information links the budget to expenditure of SA Tourism for 2019/20 financial year.

1. International Tourist Arrivals

Global tourism trends indicated substantial growth in international tourist arrivals for the 2018 period, however the same could not be said for South Africa. South African Tourism reported that international tourist arrivals to South Africa decreased by 0.6 percent between April and March 2018/19 compared to the same period in 2017. Against a target of 11.2 million international tourist arrivals, only 10.4 million arrivals were reported for this period.  As part of its effort to boost international tourism, the Entity plans to transfer R751.6 million in 2019/20 to all its international offices to focus on country-specific marketing campaigns for the hosting of international trade-related events, customer relations management, and in-country trade partnerships. These efforts are expected to increase international tourist arrivals from an estimated 11.2 million in 2018/19 to an estimated 14.2 million in 2021/22, and total international tourism revenue from an estimated R81.3 billion in 2018/19 to a projected R118.4 billion in 2021/22.  The Entity will have to capitalise on the opportunities presented by the amended visa regulations and the Chinese and Indian source markets, to improve international arrivals and meet its 5-in-5 strategy targets.

 

1. Domestic Tourism

Domestic travel saw an improvement in performance for the period April-March 2018/19. Domestic holiday trips accounted for 3.0 million (12.8 percent) of total domestic trips against a target of 3.1 million. This represents an increase of 14.8 percent from the same period in 2017.  The Entity plans to increase the number of local holiday trips from 3.2 million in 2018/19 to 3.6 million in 2021/22. To this end, R165.5 million has been set aside over the medium term to entrench a culture of domestic travel among South Africans by, among other things, devising programmes to encourage local holidaymakers to visit various destinations in the country.  Some of the challenges pertaining to domestic travel include a tough economic climate, struggles in converting Visiting Friends and Relatives (VFR) travellers into leisure tourists and unclear marketing campaigns. The issue of affordability continues to affect tourism as a priority in domestic households. In addition, concerns have been raised by the Committee about the vagueness of commissioned domestic marketing campaigns. During the 2018/19 period, domestic marketing campaigns such as Shot’ Left were vague in directing travellers to specific destinations. The Entity is therefore faced with the opportunity of finding innovative means of converting VFR travellers into leisure tourists and increasing domestic holiday trips over the medium term.

 

1. Business Events

The number of business events hosted in South Africa increased from 125 in 2016/17 to 206 in 2017/18, with 91 740 international delegates attending business events in 2017/18.  To increase the number of delegates to 99 500 in 2021/22, and to increase the number of bids to host events supported from an estimated 105 in 2018/19 to a projected 138 in 2021/22, R427 million has been set aside over the medium term.  Business events, also referred to as the MICE industry (meetings, incentives, conferencing and exhibitions), are a critical component of the tourism sector. The MICE industry is a multi-billion-dollar industry that is growing globally and is estimated to reach US$1.2 trillion by 2023.   In 2017, the Entity estimated a R2.2 billion economic contribution from this industry to the South African economy.  The industry thus poses significant opportunities for economic transformation and employment creation. However, it is important to recognise that the growth of this industry does not solely rest on SAT but is rather a country effort. It is critical for both the Entity and the Department to engage with sister departments and their relevant entities (such as Home Affairs, Transport etc.) on how best to optimise on this opportunity as a country. Issues around destination access (e.g. visas/infrastructure/airlift), facility development, and safety require collaborative partnerships between key stakeholders. It is also of value for the Committee to engage with the National Convention Bureau on their strategy for the next five years on growing the MICE market in South Africa.

 

1. Quality Assurance

The Entity plans to spend R3.4 billion over the medium term to build the South African tourism brand. Of this amount, R255.4 million is set aside in 2019/20 for electronic and print media and marketing material, including producing above the line live footage, and public relations and marketing campaigns.  The Entity also plans to spend R220.2 million over the MTEF period on assessor fees and training for tourism grading, seminars and workshops; and integrated marketing and communications campaigns, which include the promotion of the new tourism grading criteria. This is expected to increase the number of graded establishments from 5 175 in 2018/19 to 6 100 in 2021/22.  The grading of tourism facilities and products is critical for quality assurance in the sector. At the end of the 2018/19 financial year, the Entity had only graded 5 147 facilities against a target of 6 229.

 

In the 2017/18 financial year, only 5058 accommodation establishments were graded against the targeted 5 932, resulting in only 118 497 graded rooms instead of the targeted 128 821.  The Entity cited the following as some of the reasons for the decline in membership numbers: affordability, changing business models (from overnight rooms to long-term rentals) and perceived lack of value of grading. The recurring under-performance under this target has overall implications for the Tourism Grading Council’s performance in the five-year period of 2017-2021. The Committee will continue to monitor the performance of this indicator and the outcomes of the new grading criteria.

 

1. Committee observations

After a careful scrutiny and examination of the Departmental and South African Tourism Annual Performance Plans and allocated budgets for the 2019/20 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:

8.1       Budget

The tourism sector has been identified as one of the economic pillars of the country with a potential to create labour-intensive jobs. However, The Tourism Vote remains underfunded by the National Treasury. The Department transferred R1.254 billion of its R2.392 billion to South African Tourism, which is 53 percent of the budget appropriated to Vote 33: Tourism. This leaves little budget for the Department to fulfil its mandate as a huge portion of the budget is used for marketing.

In linking budget to expenditure for the 2019/20 financial year, the Committee noted the following:

• The National Treasury has imposed a ceiling on Compensation of Employees over the Medium-Term Expenditure Framework (MTEF). The Committee will monitor that the Department reviews its staff establishment to stay within the Compensation of Employees ceiling.

 

• There have been baseline increases for the Expanded Public Work Programme Incentives. The implications for oversight is how the Department ensures effective implementation of EPWP funding as this is critical for the creation of the Full-Time Equivalent jobs.

 

• The Department has always struggled with the proper implementation of the Working for Tourism Projects, particularly infrastructure projects. The Department appointed the Government Technical Advisory Centre (GTAC) which has assisted with a comprehensive review of its infrastructure projects. This review included an assessment of selected individual projects as well as the internal systems for managing these projects. The Department is now in the process of systematically implementing these recommendations. The oversight implication for the Committee is to follow up on the implementation process of the recommendations of GTAC.

 

• There have been baseline reductions for the Tourism Incentive Programme. The Tourism Incentive Programme is important for driving transformation programmes. The Committee will monitor that the Department intensifies initiatives that promote transformation and scrutinise how the Department reprioritises budget for transformation purposes.

 

• There have been baseline reductions for the Tourism Incentive Programme and for transfers to South African Tourism. The Committee will monitor all the funding streams for SA Tourism, including contributions from the TOMSA Levy.

 

• The Department undertook destination planning in the 2017/18 and 2018/19 financial year. These culminated in the destination planning manual and the Coastal and marine Tourism Plan. The oversight implication for the Committee is to ensure that the Department implements the Key Flagship Initiatives in Tourism Nodes as identified for Coastal and Marine Tourism (Oceans Economy), Rural and Township areas, upscaling through pilot projects and models. The Committee will monitor that the department emphasises the consumption of authentic and locally produced cultural products, events and experiences for increased tourist consumption, revenue generation, job creation and enterprise development. These should generally focus on the development of products of origin, enabling market access for these products, leveraging on maintenance programmes in Parks and Heritage Sites to enhance visitor experience.

 

• The department will increase the Enterprise Development Programme and Transformation Programme. As part of this initiative, a total of 10 Incubators will be implemented over the MTEF period. However, these are virtual platforms aimed at facilitating the provision of remote business interventions to SMMEs in the sector. The Committee noted that the Department has implemented at least three physical business incubators with a capacity for walk-in type of physical interventions for SMMEs. The virtual Incubators, will provide assistance remotely. The Department has indicated before that the virtual Incubators are cost-effective and can provide assistance to a variety of business types and reach a number of end users. The Committee will monitor the proposed virtual incubators to ascertain that they serve the same purpose of the current method of physical in situ incubators.

 

• South African Tourism has projected to appropriate R4 billion, which accounts for 52.4 percent of departmental budget in the MTEF. Of this, R1.25 billion is for the 2019/20 financial year. The Committee noted that the Transfers to SA Tourism has always been hovering around 53 percent of the departmental budget over the past 5 years. The Entity has been implementing the 5-in-5 Strategy that targets 5 million tourists in 5 years, comprising 4 million international visitors and 1 million domestic tourists.   However, the Entity has not been able to meet its targets as projected in its 5-in-5 strategy implemented since 2017. The oversight implications for the Committee is to ensure South African Tourism effectively implements the Super Charge 5-in-5 turnaround strategy.

                               

 

 

8.2       Legislative and policy environment

The Department is responsible for providing legislative, policy, and strategy direction for the tourism industry in South Africa. The Committee noted that the Minister of Tourism had published a Tourism Amendment Bill for public comments. The Committee agreed to prioritise processing the Tourism Amendment Bill once it is formally tabled by the Minister in Parliament. The Committee also noted that the sector is sufficiently covered by the 1996 White Paper on the Development and Promotion of Tourism in South Africa. However, there are some aspects of the policy that need fresh scrutiny.

8.3       Job creation

The Committee noted the tourism industry currently contributes 720 000 direct jobs and 1.5 million indirect jobs in South Africa, equivalent to 9.2 percent of total employment. This includes employment by hotels, travel agents, airlines and other passenger transportation services (excluding commuter services), the activities of the restaurant and leisure industries directly supported by tourists. At a government level, the Department will create 4331 Full Time Equivalent jobs in the 2019/20 financial year. The Committee expressed a need for the Department to clearly make a distinction between the full time jobs and the job opportunities implemented through the EPWP Programme as part of poverty alleviation.

8.4       Coordination amongst the three spheres of government

The Committee noted that the Department does not own tourism products and attractions. The Department implements projects and programmes at a provincial and local government level. The Committee wants a seamless coordination, collaboration and partnerships between government departments, spheres of government, and between the government and the private sector.

8.5       Drop out in projects implemented by the Department

The Committee noted that there are dropouts in the projects implemented by the Department, especially in the Northern Cape. This led to the Department discontinuing the projects. This is seen as a disservice to the people of Northern Cape and an urgent solution is needed to address this matter.

 

8.6       Rural and township tourism

The Committee expressed a concern that tourism growth is still skewed in South Africa, with the three major cities, namely, Johannesburg, Durban, and Cape Town, accruing more benefits. The Committee views this as a consequence of the tourism development and marketing activities that focus more on urban areas at the expense of small towns and “dorpies”.

8.7       Nelson Mandela Capture Site

The Committee applauded the Department for finally erecting the sign directing tourists to the Nelson Mandela Capture Site in Howick. This has been an outstanding matter for a number of years, and the implementation of this project indicates the effectiveness of Committee work and the inter-party collaboration in the work of the Committee.

The Committee also noted that the Howick Falls in the vicinity of the Mandela Capture Site is in a continuous state of decline with regard to its maintenance which has led to local businesses closing down. The Committee also noted that there is a general lack of maintenance in many tourism sites across the country. This needs urgent attention by the Department.

8.8       Blue Flag Beaches

The Committee noted that some provinces, such as KwaZulu-Natal, particularly the City of EThekwini, are struggling with enrolling beaches in their coastline in the Blue Flag Beaches Programme. This initiative is regarded as crucial for marketing beach tourism.

Observations with regard to South African Tourism

The following observations were made with regard to South African Tourism:

8.9       Budget

It was noted that the R1.5 billion budget of South African Tourism comes from a number of revenue sources. A big portion of this budget, amounting to R1.3 billion is an allocation from the National Department of Tourism, and accounts for 84 percent of the Entity’s budget. The amount of R137.4 million, accounting for 9 percent, comes from the Tourism Marketing South Africa (TOMSA) Levy. The amount of R60.2 million, accounting for 7 percent comes from INDABA and Meetings Africa. The amount of R23.8 million, accounting for 2 percent comes from grading fees, and R22.3 million, accounting for 1 percent from sundry revenue. The Committee appreciated the voluntary contribution of R 137.4 million by the private sector trough the TOMSA Levy.

8.10     Analysis of international arrivals

The Committee noted that at least three quarters of the international arrivals come from the SADC countries and that much of these arrivals classified as tourism is actually shopping. This phenomenon caused the metric used to calculate international tourists to cloud the figure of international arrivals in the country. However, the sizeable amount of the tourists spend comes from the northern hemisphere markets. It is therefore evident that the country is experiencing a decline in these lucrative markets that contribute a huge portion of tourism spend to the GDP, including India and China. Given the weakness of the country’s currency, South Africa is losing on the windfall gains that could be accruing from the tourism economy if the core markets were growing. This needs fresh thinking in the 6th Administration of how South African Tourism will leverage on the core markets.

8.11     Implementation of the 5-in-5 Strategy

The Committee noted that South African Tourism is in the third year of implementing the 5-in-5 Strategy the Entity adopted in 2017 to drive its international and domestic marketing activities. This is the enhanced strategy for growth, which aims to add four million more international arrivals and one million domestic holiday trips within five years, ending in 2021. The Committee noted with concern that the Entity is struggling to meet its own targets projected in this strategy. The underachievement in the 5-in-5 strategy pose a risk for not achieving the 21 million arrivals by 2030 as announced by the President in the State of the National Address. However, the Entity has developed a Super Charge 5-in-5 as a turnaround strategy to drive arrivals. The Committee was, however, pleased to learn that South African Tourism is currently working on a 2030 strategy that will link tourism marketing activities to the 2030 vision of the National Development Plan.

8.12     Decrease in international arrivals

The Committee observed with concern that the International tourist arrivals to South Africa declined by -0.6 percent, only recording 10.5 million arrivals in the 2018/19 compared to the same period in 2017. A slight growth was recorded from Africa, Central & South America and North America, whilst the rest of the regions recorded declines in tourist arrivals. This is a cause for concern given that the global average performance was at 6 percent, above the projected 4.5 percent for 2018. The Committee noted that this decline was directly linked to a number of policy/regulatory and brand perception about the country.

8.13     Staffing

The Committee noted that the CEO of South African Tourism has been on precautionary suspension since April 2019 without being charged. This was seen as gross mishandling of the matter that needs urgent attention of the Minister. However, the Committee was pleased that the Minister had instructed the Board to expedite the matter and put it to finality as soon as possible. An undertaking was made that the matter would be finalised soon as the Board had concluded its investigation and report was ready to be handed to the Minister. The Committee also observed with concern that there were numerous acting positions in the organisation, including those of the Chief Marketing Officer and the Chief Financial Officer. It was also noted with concern that the staff morale at South African Tourism is not conducive for maximum organisational performance.

8.14     Transformation

The Committee noted that South African Tourism implements some transformation projects, albeit their limited reach to rural areas and townships. It was noted that for the 2019/20 financial year, the Entity has developed an Enterprise and Supplier Development Framework that guides its efforts in providing support for the advancement of tourism enterprises, especially emerging black owned enterprises.  The programme also assists in further enhancement of tourism enterprises and suppliers to improve their capability to enhance destination offerings. This was however, viewed as insufficient. A need was expressed for the Entity to conceptualise and implement more transformation programmes targeting the rural and urban areas.

8.15     Visa processing issues

The Committee noted challenges relating to the processing of visas, include limited in-country capacity, delays and red tape. This is a cause for concern as these visa challenges have caused declines in key source markets of China, India, Nigeria, Ghana, Ethiopia, and New Zealand. In India, visa processing delays continue to be a hindrance in the minds of Indian trade who are very cautious in taking bookings. Tourist arrivals from New Zealand continued to decline due to worsening visa processing challenges. The Committee raised serious concerns, particularly with India and China as these form part of the BRICS block countries and they form a huge portion of the emerging markets globally. The Committee noted that the ideal visa regime for South Africa is to introduce E-Visa and visa on arrival.

8.16     Safety and security concerns

The safety and security concerns were seen as one of the serious issues contributing to declining scores on brand positivity and the number of international arrivals in South Africa. The country experienced numerous incidents and reports of crime against tourists which created the perception amongst international markets that South Africa is not a welcoming destination. The negative reports led to some European governments, such as Australia, advising their citizens about the risks of travelling to the country.

8.17     Water crisis

The Committee was concerned that the water crisis experienced in Cape Town had added to the negative perceptions about South Africa. In most markets, the travel bookings that were expected for the 2018 Easter period did not materialise. This gave advantage to the destination’s competitors such as USA, Turkey and Kenya who gained from forward bookings of 2018 as most consumers either changed or postponed their trips to 2019 and or 2020.

8.18     Inappropriate wildlife interaction

The Committee noted that wildlife interactions and canned hunting have negatively impacted the country’s brand as a champion of wildlife conservation. Activists and wildlife enthusiasts are often expressing their views on traditional and social media platforms, and most times displaying graphic imagery of animals such as elephants, lions and other Big 5 animals resulting in a public outcry.

8.19     Concerns about land expropriation without compensation

The Committee noted with concern that the land expropriation debate in the country was wrongly portrayed on several social media platforms in the USA and Australia. This created negative publicity for the destination globally. In Australia, from mid-February 2018 (post State of the Nation Address of 16 February 2018), there was negative coverage of South Africa on the issue. The Committee expressed an ardent opinion that this perception needs to be managed carefully as expropriation of land without compensation is peaceful and a constitutional debate about addressing the legacy of the past.

8.20     Domestic tourism

The Committee noted that the country continues to face challenges with regard to domestic tourism. Of the 17.6 million domestic trips achieved in 2018, 78 percent was from Visiting Friends and Relatives. This is the bulk of domestic trips which have not been converted into leisure trips. The key factor affecting domestic tourism is affordability. It was also noted that the Limpopo province is the highest in domestic tourism due to religious tourism. However, the Committee is concerned that the Entity has no full understanding of the VFR market and how to drive conversion of this market into domestic leisure tourism.

8.21     Implementing the Events Strategy

It was observed that South African Tourism has developed an Events Strategy that, amongst other things, addresses, geographical spread and the reduction of seasonality in the country. The Entity has indicated that the strategy will focus on key events countrywide that will be implemented through partnerships with established event partners such as Cricket South Africa, Standard Bank Joy of Jazz, Soweto Marathon, Cape Town Jazz Festival, and National Arts Festival. The Committee also noted that the Entity uses these events as a hook to some markets in the African continent, such as the Durban July that is used to attract tourists from West Africa, including Nigeria.

8.22     Grading

The Committee observed several issues with regard to the grading system in South Africa. These include benefits accruing to graded establishments, a decline in the number of graded establishments in provinces such as KwaZulu-Natal, and the need for a shift in policy from a voluntary paid system to a compulsory but free grading system.

 

1. Recommendations

Having made a number of observations based on the analysis of the Annual Performance Plans and Budgets for the 2019/20 financial year, the Committee recommends that the Minister of Tourism:

 

 

Recommendations with regard to the National Department of Tourism

9.1       Ensures that the Department and South African Tourism adopt judicious methods of budgeting and spending the limited resources through applying effective, efficient, and economic budgeting principles that will allow the achievement of more outcomes with less budget.

9.2       Ensures that the Department and South African Tourism develop a strong philosophy and adopt bias towards rural and township/Ekasi tourism when developing the 2019 - 2024 Medium-Term Expenditure Framework for the 6th Administration.

9.3       Ensures that the Department develops strategies to mitigate dropouts from the training programmes implemented by the Department and assists provinces such as Northern Cape to enrol an acceptable number in these programmes.

9.4       Minister develops an awareness programme to encourage and assist aspirant and emerging tourism entrepreneurs when they apply for funding incentives in the Department, and follow up on those who have failed to qualify with a view to assist them to qualify.

9.5       Minister argues the case for tourism in government and influence all her colleagues in the Economic Cluster and other relevant government departments to collaborate on the “We Do Tourism” campaign in making tourism a whole government approach. This is to ensure that tourism enabling programmes and projects are reflected in the relevant Annual Performance Plans of departments that should assist in facilitating tourism growth.

9.6       Ensures that all the Masterplans developed by the Department under the Destination Development Programme are timeously implemented.

9.7       The Minister prioritises tourism development in villages, small towns and dorpies to ensure that tourism benefits accrue to these communities, especially those around key attraction sites, for example villages surrounding National Parks.

9.8       Works with relevant organisations such as Statistics South Africa to determine the number of villages in South Africa, the potential of tourism in each of the villages, tourism interplay between these villages and small towns/dorpies, and state what plans will be put in place to develop and promote tourism in all villages with the tourism potential.

9.9       Develop a tourism entrepreneurship programme within the Department, identify citizens with a passion for establishing tourism businesses as SMMEs, and facilitate entrants of new business players within the mainstream tourism industry to expedite transformation of the sector.

9.10     Strengthens intergovernmental-relations with all relevant government departments, provinces and their tourism authorities, and municipalities, to coordinate tourism development and marketing activities, ensure maintenance of tourism attraction sites, and provide the Committee with a concrete implementation plan with milestones and timeframes.

 

Recommendations with regard to South African Tourism

9.11     Continues to engage the Minister of Home Affairs to introduce a fully-fledged E-Visa and visa on arrival regime in South Africa to facilitate tourist movement.

9.12     Works closely with the Department of International Relations and Cooperation and Brand South Africa in involving the embassies in mitigating the impact of negative perceptions about the country abroad, and engage the Department of Police to include places that are not affected by crime when releasing crime statistics to change the narrative about crime in South Africa and abroad.

9.13     Involves the media houses in lobbying for a patriotic reporting on incidents taking place on the South African soil, including balanced messages about crime, land expropriation without compensation, drought and others to portray a positive picture of South Africa without compromising media freedom. 

9.14     South African Tourism adopts a mind shift and fresh strategies to leverage on the weakness of the South African currency through implementing targeted marketing campaigns in the core markets, including India and China given that these countries only constitute a quarter of international arrivals but are the ones driving tourist spend numbers in the country.

9.15     South Africa Tourism quantifies the effect of the barriers and perceptions of South Africa by international markets to tourism growth, including safety and security concerns, water crisis, inappropriate wildlife interaction, land expropriation without compensation, visa processing issues, and others, indicating which of these are the main drivers of negative perceptions, and provide concrete solutions to each of them.

9.16     South African Tourism provides a qualitative analysis of whether the barriers and factors causing negative perceptions of South Africa in international markets are under control, growing, declining or evenly spread amongst these factors, to get a feel moving forward of what are the big drivers that affect brand positivity, and determine a desired action, including enhanced collaboration with other Portfolio Committees and government departments.

9.17     Revise the policy on grading and ensure that the benefits of grading are tangible to the graded establishments to ensure that more business enrol and stay within the grading scheme.

9.18     Ensures that the South African Tourism Board finalises the case against the suspended Chief Executive Officer; expedites filling positions of the Chief Marketing Officer and the Chief Financial Officer; improve the remuneration package of the Chief Marketing Officer to attract appropriate skills; and improves staff morale within the Entity to drive effective domestic and international marketing within the 2019/20 financial year.

9.19     Engage Statistics South Africa to improve data collection and show inter-provincial movement to ascertain domestic tourism movement patterns.

9.20     Conducts a study to determine the impact of currency fluctuations in the sector with a view to develop appropriate interventions to mitigate the impact of currency fluctuations on one hand, and maximise benefits of currency fluctuations on the other hand.

 

10.       Conclusion

The tourism sector will continue playing an important role in the economy of South Africa, and the 2019/20 Annual Performance Plans for the Department and South African Tourism have aptly captured this mandate. The Programmes, key performance indicators, projects are all perfectly aligned to proposed budget. The budget of the Tourism Vote as presented in the 2019 Estimates of National Expenditure still shows that tourism continues to be underfunded in the country. The Committee is however encouraged by the number of progressive projects implemented by the Department using limited budget resources. The Minister of Tourism is urged to seriously and carefully implement the recommendations contained in this report as they are a game changer and a turning-point in the way the Department has been conducting its business in the past, particularly with regard to intergovernmental coordination, tourism entrepreneurship, rural, and township tourism. The Committee supports the budget appropriated to Vote 33: Tourism.

Report to be considered