ATC201007: Report of the Portfolio Committee on Tourism on the Third And Fourth Quarter Performance Report of the Department of Tourism for the 2019/20 Financial Year, dated 6th October 2020

Tourism

REPORT OF THE PORTFOLIO COMMITTEE ON TOURISM ON THE THIRD AND FOURTH QUARTER PERFORMANCE REPORTOF THE DEPARTMENT OF TOURISM FOR THE 2019/20 FINANCIAL YEAR, DATED 6TH OCTOBER 2020

 

The Portfolio Committee on Tourism, having considered the Third and Fourth Quarter Performance of the Department of Tourism on the 28th July 2020 and the Fourth Quarter performance of South African Tourism on the 25thAugust 2020, reports as follows:

 

1. Introduction

 

On the 28th July 2020 the Committee held a meeting with the Department of Tourism to assess its Third and Fourth Quarter performance for the 2019/20 financial year. The Third and Fourth Quarter performance for the 2019/20 financial year is assessed at a time when the tourism industry worldwide, and South Africa in particular, has been devasted by the advent of the COVID-19 pandemic. The pandemic struck when the Committee had scheduled meetings with the Department of Tourism and South African Tourism to assess their Third and Fourth Quarter performance. The Committee Programme was put in abeyance as focus had to be streamlined to the oversight work geared towards supporting the tourism sector in navigating the impact of the novel corona virus pandemic. The Committee has since overseen a number of initiatives implemented by the government to cushion the sector from total collapse, including the introduction of the R200 million Tourism Relief Fund, the Tourist Guides Relief Fund, and the National Tourism Recovery Plan currently being finalised. The Committee will continue conducting oversight over the implementation of the National Tourism Recovery Plan to ensure that South Africa remains a preferred destination in the post-COVID-19 era. South Africa is poised to recover as it is a destination with unmatched social justice history; big 5 wild animals kept in the pristine natural environments; breath-taking natural scenery; warm and sunny weather throughout the year; and warm, welcoming and diverse people with a kaleidoscope of cultures to share with the world.

The Department of Tourism adjusted appropriation for 2019/20 financial year amounts to R2 397.7 billion. At the end of the fourth quarter, the Department had spent R2 384.4 billion or 99.7 percent of the available budget, mainly towards transfers and subsidies. The actual expenditure for the period under review is 0.35 percent below projected expenditure of R2 392.7 billion.

 

1. Overview and assessment of programme performance

 

The Department executes its mandate through four programmes. An overview of the Department Quarter 3 and Quarter 4 performance for the 2019/20 financial year is provided below.

In Quarter 3, the Department of Tourism (hereafter referred to as “the Department”) achieved 53 (71.62 percent) of the 74 identified targets. Of the 21 targets not achieved, the Department indicates that significant work has been done on six (8.11 percent) of them, whilst the remaining 15 (20.27 percent) require intervention. In terms of financial performance, by the end of Quarter 3, the Department had spent R1.862 billion (78 percent) of the R2.393 billion budget allocated.1

In Quarter 4, the Department achieved 58 (76.32 percent) of the 76 identified targets. Of the 18 targets not achieved, the Department indicates that significant work has been done on four (5.26 percent) of them, whilst the remaining 14 (18.42 percent) require intervention. In terms of financial performance, by the end of the 4th quarter, the Department had spent R2.384 billion (99.7 percent) of the R2.393 billion budget allocated.2 Thus, by the end of the financial year, the Department spent virtually its full budget, whilst only managing to achieve 76 percent of its targets for the year.

The information provided below focusses on the outcomes of the Fourth Quarter Programme performance as follows:

 

1. Programme 1: Administration

The Department achieved seven of its nine targets under this Programme. The Department was able to finalise the targets on the development of an implementation plan (as per the outcomes of the Auditor-General) and to review its internal control measures. The value of this exercise will be established upon the publishing of the Department’s audit outcomes.

 

As a result of the national lockdown, the Department was only able to achieve 15 percent implementation of the Work Skills Programme (WSP) against a target of 20 percent. The Department reports that the 5 percentof WSP not implemented relates to one skills programme on Analysing Financial Statements, which was scheduled from 23 to 27 March 2020. The date coincided with the declaration of the National State of Disaster and associated national lockdown. The Department continued with its support of small micro medium enterprises (SMMEs), through the procurement of goods and services from these businesses at 59.52 percent of its expenditure.

As at 30 September 2019, the Department had 478 employees, against a headcount target of 471, resulting in a variance of seven. At the end of the financial year, the Department had 496 employees against a headcount target of 471, resulting in a variance of 25. This significant increase in personnel numbers is observed under programme 1: Administration, which had a target of 238 and ended up with 267 personnel, a variance of 29, at the end of the year.

 

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

The Department achieved 10 of its 11 targets under this Programme. The Department indicated that a policy framework for the South African Mission’s tourism promotion and facilitation support was developed. The objectives of the framework are to:

 

• enhance the promotion of South Africa as the preferred tourism destination (destination of choice) through utilising South African Missions;
• facilitate capacity building in the field of tourism for officials in South African Missions abroad;
• facilitate the promotion of tourism as a trade and investment opportunity; and
• support Missions in order to obtain market insights and intelligence relevant to the tourism sector.

 

The Department reported that it has completed the impact evaluation report on its capacity building programmes for the past five years. This is an important report, as it provides findings on the effectiveness and value-add of all the Department’s capacity building programmes aimed at skills development, empowerment of small enterprises and the creation of work opportunities.

 The Department reported that it has finalised two sub-systems for the National Tourism Information and Monitoring System, which include a database of black-owned products and services and an Enterprise Development and Transformation Portal. The database will enable the tourism sector to quantify the size, extent and variety of black-owned tourism businesses, services and products to inform its sector transformation and inclusive economic growth initiatives. The portal will provide a comprehensive online supplier marketplace to channel procurement expenditure to SMMEs in order to promote transformation and job creation within the tourism sector.

 

The target not achieved is the hosting of the annual Tourism Research Seminar. The seminar, which was to be held on 20 March 2020, coincided with the declaration of the National State of Disaster. As a corrective measure, the Department indicates that research webinars will be conducted to disseminate research findings.

 

The Department reported that it was able to complete the Digitalization Framework for the sector. The next step entails stakeholder consultations with the aim to establish digital platforms across the tourism value chain.

 

1. Programme 3: Destination Development

The Department achieved 24 of its 27 targets. The Department reported that Tourism Master Plans for the following destinations have been finalised:

 

• Port Nolloth to Hondeklipbaai (Northern Cape);
• Sutherland to Carnarvon (Northern Cape);
• Orange River Mouth to Vioolsdrif (Northern Cape);
• Port St Johns to Coffee Bay (Eastern Cape)

 

The Department reported that it provided funding for interpretative signage in five national parks:

 

• Kruger National Park;
• Golden Gate Highlands National Park;
• Kgalagadi National Park;
• Marakele National Park; and
• Addo Elephant Park.

The project involved the management, implementation of the design, production and installation of Tourism Interpretation Signage in the identified SANParks properties. The Department reports that a contractor has been appointed for construction work on the Leopard Trail in the Baviaanskloof. However, as a result of the national lockdown regulations construction is on hold. The annual target of appointing a contractor for Shangoni Gate was not achieved. The Department has indicated that this will be addressed in the new financial year.

 

The Department reported that it did not meet its Quarter 4 target for full-time equivalent (FTE) jobs. Instead of the 1 517 FTE jobs to be created, the Department was only able to create 1 255.

 

1. Programme 4: Tourism Sector Support Services

The Department achieved 17 of its 29 targets under this Programme. The Department reports that 32 applications have been approved for the Market Access Support programme, which provides opportunity to local enterprises to showcase their wares at various international trade shows. However, some of the shows were cancelled, postponed or held via virtual platforms as a result of COVID -19.

 

The Department reported that applications for the Tourism Transformation Fund have not been approved as planned for the financial year. According to the Department many of the projects are at different stages of assessment. The Committee will make afollow-up with the Department on the following:

• number of project applicants being assessed;
• what the National Empowerment Fund’s (NEFs) normal response turnaround time is to applicants;
• what are the delays in the efficient finalisation of assessments;
• from its meeting with the NEF executive on 30 March 2020, what corrective measures have been put in place to timeously address these delays and avoid their recurrence.

The following include some of the other targets not achieved for Quarter 4:

• Approval of applications for the Tourism Equity Fund;
• Identification and engagement of provinces for the roll-out and implementation of the Department’s domestic tourism scheme in provincial parks;
• Youth activations aimed at increasing domestic tourism among designated groups;
• Planning of Tourism Month campaign in conjunction with provinces;
• Report for the Tour Operators Incubator;
• Report for the Innovation Incubator;

Development of both feasibility reports and business plans for the development and support of the community based enterprises in communities within the proximity of five national parks.

Some of the initiatives implemented to support Domestic Tourism Growth Strategy:

• Hospitality Youth Programme;
• National Chefs Training Programme;
• Wine Service Training Programme;
• Food Safety Quality Assurance Programme.

 

1. Human Resource Information

 

The workforce representativity as at the end of 31 March 2020 is presented in Table 1 as follows:

Table 1: Workforce representativity

TOTAL ESTABLISHMENT
Race	Number	Percentage
Africans	415	88%
Coloureds	21	4%
Asians	17	4%
Whites	19	4%
TOTAL	472	100%

Source: 2019/20 Quarter 4 Report

 

 

1. Budget and Expenditure as at 31 March 2020

 

The expenditure against the 2019/20 budget appropriated to Vote 38 was at 99 percent as depicted in the table below.

Table 2: Expenditure for 2019/20

Programme	Final Appropriation (R’000)	Expenditure (R’000)	Expenditure as % of Final Appropriation	Variance from Final Appropriation (R’000)	% Variance from final Appropriation
Administration	288 274	287 326	99.7%	948	0.33%
Tourism Research, Policy and International Relations	1 419 142	1 419 060	99.99%	82	0.01%
Destination Development	430 338	430 008	99.9%	330	0.08%
Tourism Sector Support Services	254 916	247 999	97.3%	6 917	2.71%
TOTAL	2 392 670	2 384 393	99.7%	8 277	0.35%

Source: 2019/20 Quarter 4 Report

 

The Programme performance against the appropriated budget was as follows:

 

1. Programme 1: Administration

Programme 1 provides strategic leadership, management and support services to management. Sub-programmes include Ministry, Management, Corporate Management, Financial Management, and Office Accommodation.The underspending in this programme lies under Purchases of Capital Assets which is mainly due to planned replacements of IT servers and which did not materials during the financial year.

 

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

Programme 2 enhances the strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations. The actual expenditure for the fourth quarter amounted to R1 419.1 billion or 99.99 percent of the programme’s total available budget of for the financial year. When actual expenditure is compared to projected expenditure of R1.4 billion, this represents a variance of R82 000 or 0.01 percent. The minor underspending is under compensation of employees due to the reassignment of staff who had previously served in the offices of the former Minister and Deputy Minister, respectively.

4.3       Programme 3: Destination Development

Programme3 facilitates and coordinate destination development.The actual expenditure for the fourth quarter amounted to R430.0 million or 99.9 percent of the programme’s total available budget of R430.3 million for the financial year. When actual expenditure is compared to projected expenditure of R430.3 million, this represents a variance of R330 000 or 0.08 per cent. The minor underspending is primarily due to the processing of additional payments for training and development component of the Expanded Public Works Programme.

 

1.  

Programme 4 enhances transformation of the sector, increase skills levels and support development to ensure that South Africa is a competitive tourism destination.The actual expenditure for the fourth quarter amounted to R247.9 million or 97.3 percent of the programme’s total available budget of R254.9 million for the financial year. When actual expenditure is compared to projected expenditure of R254.9 million, this represents a variance of R6.9 million or 2.17 percent. The underspending was within Compensation of Employeesdue to strict policies adhered to by the Department to reduce expenditure on salaries and wages.

 

1. Virements

 

National Treasury, in terms of section 43 of the Public Finance Management Act (PFMA), approved the shifting of R100 million to Departmental Agencies and Accounts in order to fund the Tourism Relief Fund to be administered by South African Tourism in response to the economic impact of the COVID-19 outbreak.

 

1. Compensation of Employees

 

Compensation of employees’ budget for 2019/20 amounts to R334.4 million. As at end of the fourth quarter, cumulative spending on compensation of employees amounted to R329.4 million, against projected spending of R334.4 million. This translates into a variance of R5 million or 1.5 percent due to the implementation of human resource reduction strategies and stricter measures to adhere to the compensation ceiling.

 

1. South African Tourism

 

7.1       Organisational performance overview

The South African Tourism executes its mandate through five programmes, i.e. Corporate Support, Business Enablement, Leisure Tourism Marketing, Business Events and Tourist Experience. In Quarter 4 of the 2019/20 financial year, the Entity was able to achieve 20 of the 37 identified KPIs, with significant progress made in four and 13 not achieved.

 

1. Programme 1 – Corporate Support

The Entity achieved four of the set six targets and overspent on its budget by R22 167 million (17 percent). In its reporting, the Entity indicates that the overspending results from unrealised Forex earnings. One of the targets not achieved in this programme relates to the maintenance of the vacancy rate.

 

Achievement of the vacancy rate was affected by resignations and delays in recruitment due to legal processes. The Committee will continue to monitor the Entity’s B-BBEE level score, which was substantially reduced in the previous reporting period. From a Level 4 status, the Entity regressed to Level 8. This was as a result of the Entity scoring poorly on the socio-economic development requirement, which is ascribed to a change in the calculation for social responsibility initiatives.

 

1. Programme 2 - Business Enablement

The Entity achieved its target on the number of quarterly stakeholder meetings attended. This is important, as these platforms allowed the Entity to align its strategic plan with those of relevant stakeholders in the sector. Another target achieved is on the publishing of four quarterly market insight reports, which are available on the Entity’s website. In terms of expenditure, the Entity spent 98 percent of its budget allocation under this programme and achieved all set targets

 

1. Programme 3 – Leisure Tourism Marketing

The Entity only achieved eight (50 percent) of its planned 16 targets under this programme, whilst spending 94 percent of its allocated budget.

 

The Entity was unable to meet its targets on both international tourist arrivals and foreign direct spend. With regard to the number of international tourist arrivals, the Entity targeted 3.0 million arrivals, whilst only 2.4 million tourists came into the country during the Quarter 4 period. In addition to the previous quarter’s performance on this target, the annual target of 11.4 million tourists was unmet, at 10.0 million arrivals. The outbreak of the COVID-19 pandemic and the resulting lockdown led to a decline in arrivals from high spending markets. In Quarter 4, the Entity was not able to meet its target for total tourist foreign direct spend (TTFDS), at R19.4 billion against a target of R24.9 billion.

 

The Entity met its Quarter 4 target on impressions from digital channels, which entails distributing media information through digital channels.

 

One of the targets not achieved relates to increasing the geographic spread of international arrivals. This was as a result of a decrease in inbound arrivals. However, the Entity reported that it will continue to work and collaborate with provincial authorities with the aim of improving geographic spread.

 

The Entity also reported that the targets on brand positivity and brand awareness were not achieved. This was as a result of a change in brand communication agencies. The exploration of digital platforms for brand awareness activities might provide the Entity with alternative opportunities in addressing this challenge.

 

The number of domestic holiday trips for Quarter 4 increased significantly at 1.3 million, with the annual target exceeded at 7.3 million. Domestic spend also increased significantly to R18.8 million against the target of R8.1 million. It will be of interest to see how COVID-19 and a contracting local economic climate will affect the travel patterns of this market for the remainder of the year.

 

SAT was unable to achieve its target on the number of Small Medium Enterprises (SMEs) participating in its hosting activities for Quarter 4. The target for the quarter under review was not met due to most hosting activities cancelled in March, as a result of the COVID-19 outbreak. However, the overall annual target was exceeded due to the focus on increasing the number of provinces featured per hosting and for each province with a minimum of one SME product/experience featured.

 

1. Programme 4 – Business Events

The Entity only achieved three (43%) of its planned seven targets but spent 99% of its budget for the programme. The Entity reports that it was not able to achieve its quarterly target on the number of qualified leads generated. This was as a result of the effect of COVID-19 on the business events space. However, the overall annual target was achieved, with 388 leads generated versus the 345 targeted. The target on the number of business events and delegates hosted was exceeded. This was one of the targets highlighted by the previous Auditor-General’s report, where the Entity was required to provide evidence of the accuracy on the number of events and delegates hosted.The target on the number of meetings held at Meetings Africa 2020 was not achieved, due to non-attendance of certain delegates resulting from the outbreak of COVID-19. The target on the number of meetings held at Indaba 2019 was also not met, resulting from date changes and reduction in the number of exhibitors and buyers who attended the event.

 

1. Programme 5 – Tourist Experience

The Entity only achieved one (25 percent) of its planned four targets and spent 75 percent of its budget for the programme. Performance under this programme, specifically on grading, has posed a challenge for the Entity over the past three years, with it consistently failing to meet its targets relating to this indicator. The key challenge has been increasing the number of graded establishments and, in turn, graded rooms. Both the quarterly and annual targets for grading were not met as a result of cancellations, lack of demand and affordability of grading fees. In both Quarter 2 and 3 of the 2019/20 financial year, the Entity did not meet its targets for grading. In Quarter 4, against a target of 1 496, the Grading Council was only able to grade 1 187 accommodation establishments. This in turn affected meeting the target for the number of graded rooms.

 

The Entity was unable to meet its Quarter 4 target on training officials on the Welcome campaign, as a result of the COVID-19 pandemic. The training was scheduled for mid-March. The project focusses on building the capacity of officials at prioritised touchpoints to deliver service excellence. The Entity has partnered with the Department of Home Affairs, other departments involved in land border operations and Airports Company South Africa (ACSA), with the aim of enhancing visitors’ experience at the ports of entry into the country.

 

7.2       Financial performance

The Entity has spent R1 435 727 billion (96 percent) of its budget of R1 498 298 billion for the 2019/20 financial year. Yet, to date, the Entity has only managed to achieve 54 percent of set targets. There was a discrepancy in the calculationsfor the percentages of expenditure on total budget.

 

1. Committee observations

 

The Committee noted with concern that, despite having been urged to improve on the identified deficiencies, the Department and South African Tourism continued to experience similar challenges that lead to unsatisfactory performance.The Committee made the following observations in relation to financial and non-financial performance for Quarter 3 and Quarter 4 of the 2019/20 financial year:

 

Observations with regard to the Department of Tourism

1. Budget expenditure against achievement of predetermined objectives

In Quarter 3, the Department achieved 53 (71.62 percent) of the 74 identified targets but had spent R1.862 billion (78 percent) of the R2.393 billion budget allocated. In Quarter 4, the Department achieved 58 (76.32 percent) of the 76 identified targets but had spent R2.384 billion (99.7 percent) of the R2.393 billion budget allocated.  This indicates that by the end of the financial year, the Department spent virtually its full budget, whilst only managing to achieve 76 of its targets for the year. This is a cause for concern as the Department spent all the budget whilst notfully  achieving what the budget was appropriated for.

 

1. Poor project planning and implementation

The Department continues to experience challenges resulting from poor planning. Poor planning culminates in challenges during project implementation. Consequently, these project planning induced challenges lead to poor performance against the non-financial predetermined objectives and budget expenditure.

 

1. Appointment of service providers

The Department continues to experience delays in appointing service providers toimplement the planned projects. This is more prevalent with projects implemented with third parties. This results in the delays that could have been avoided had the Department conducted proper project planning.

 

1. Contract management

The Committee noted that the Department experiences challenges with contract management. This is prevalent in instances where service providers fail to deliver on projects awarded to them for implementation. The Committee was concerned that what seems as a failure on the Department to deliver is sometimes the failure of service providers to fulfil their contractual obligations. The Committee raised concerns about the steadfastness of the Department in enforcing the dispute resolution clauses to resolve any conflict that may arise between service providers and the Department as a client. In this regard, the Committee insists that in situations where there are serious problems on the part of the service provider, an action should be taken to reclaim funds. Where there are cases of negligence or criminality, the department should always lay charges against those service providers. When service providers are found by the court of law to be negligent, they should be blacklisted from the supply chain databases.

 

8.5       Implementation of Working for Tourism Programme

The Committee noted thatsome projects in the Fourth Quarter of the 2020/21 financial year were largely impacted by COVID-19 and the risk-adjusted strategy. In particular, the infrastructure and training projects, under the Expanded Works Programme, implemented as Working for Tourism by the Department were negatively impacted. This happened as the Department has applied cautious principles around commencing the projects that require staff to be in a workplace environment and to be actively training beneficiaries. It is, however, commendable that the Department had relooked at their programmes and have commenced with online training where that is applicable. The Committee noted that some programmes have been suspended where it is not safe to commence training. Those that are not able to continue with training at the moment, the Department will ensure that they catch up in the next four years left of the term.   

 

8.6       Training and placement

The Committee commends the Department for the training programmes in various sector skills. The Committee noted that the departmental training programmes include experiential learning. The private sector is commended for offering onsite placement for experiential training.It was also noted with appreciation that the training programmes have created job opportunities for at least 70 percent of the beneficiaries who have gone through the training programmes, with some having found opportunities in the sector, others self-employed, and others having found international employment opportunities.It was noted that the employment absorption is high and that the main focus is on giving graduates skills they may use in any other sector, not only for absorption by the tourism industry.

 

8.7       Model to determine employment trends

It was noted that the COVID-19 pandemic had an indelible impact of the tourism jobs. The Department had conducted a scan of the industry to get a sense of the impact of the pandemic on the tourism jobs. The Committee noted that the Department had found that most companies had not yet laid off people since the Department assisted approximately 50 000 businesses through the Temporary Employee/Employer Relief Scheme (TERS), which means they were able to assist about 600 000 employees due to relief fund.

The Committee noted that the Department mainly uses the World Travel & Tourism Council (WTTC) to model future potential growth on jobs, GDP and other variables. This model yields 10 years’ projection and can assist South Africa in determining the impact on the future of the jobs in the tourism industry.

 

8.8       Budget Resorts and transformation

It was noted that there are over 700 budget resort products across the country. These resorts have a potential to be used as a catalyst to enhance and expedite transformation. The Committee noted that it will, however, not be possible from a resource point of view to intervene in each of them. These products could be commercially operated and communities assisted to make them profitable. The budget resort brand concept could be used to leverage support. The support mechanism should be such that these products are operated in a sustainable manner that ensures financial sustainability and proper structural maintenance to avoid dilapidation, and offer acceptable services and experiences.

 

8.9       The Tourism Equity Fund

The Committee was concerned about the processing of the Tourism Equity Fund and the missed opportunity to advance transformation through this facility. It was noted that the Department had completed the pilot plan in the last financial year. However, the launch was affected by the COVID-19 restrictions. This culminated in the Department being unable to open the window for applications.The Committee noted that the Department considering ways of how the Tourism Equity fund will be implemented in future.

 

8.10      Lodgement of complaints

The Committee noted the number of complaints lodged with the Department and raised concerns about the speed at which these were being processed. The several platforms in which people can use to lodge complaints were noted, albeit being not effectively communicated to the stakeholders.

There is a dedicated email which can be found in the gazette. There is also a departmental call centre where people can call and lodge complaints. Furthermore, the Department is collaborating well with other government complaints mechanisms, such as, the Department of Trade and Industry complaints mechanism accredited in terms of the Consumer Protection Act. Complaints received with bearing on tourism, are always aimed to give amicable solutions.

 

8.11      Incorporation of Missions into the departmental business

The Committee holds the view that South African missions abroad are underutilised. It was noted that the Department has engaged the Department of International Relations and Cooperation (DIRCO) on how to expand the tourism reach using the South African missions abroad. The Committee is of the view that there are countries that South Africa has yet not invest into with regard to tourism. It was noted with appreciation that the Department will be implementing the policy framework that has already been developed to support SA missions for tourism development and growth. It is of paramount importance that this framework be implemented in consultation with DIRCO and South African Tourism, particularly on marketing.

 

8.12      Intergovernmental cooperation

The Committee maintains that the work of the Department will be enhanced through improved intergovernmental cooperation. The Department confirmed that it has good working relationships with other sister departments, including the South African Local Government Association (Salga) and the Department of Cooperative Governance and Traditional Affairs (Cogta) on their work on economic regeneration and other programmes they are implementing on the District Development Model. In relation to the World Heritage Sites, the Department works seamlessly with the Department of Arts and Culture, and the Department of Environmental Affairs. The Department also works closely with the Department of Transport on all transport related matters pertaining to unlocking tourism development. However, the Committee is of the view that the Department should continue to enhance its working relationship with other departments at they play a paramount role in tourism development.

 

Observations with regard to South African Tourism

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

 

8.13      Effect of COVID-19 and economic factors on the Entity’s performace

The performance for the quarter is being assessed at the time the service delivery environment is mired in the difficult conditions, including the corona virus pandemic and the economic decline in the country. It should be noted that the economic situation in South Africa was already in dire straits before the corona virus added its impact during Quarter 4 of the 2019/20 financial year. The ratings agency Moody’s moved South Africa to junk status on the 27thMarch 2020 due to a slowdown in economic growth and rising debt burden. This, coupled with the declaration of the national lockdown from the 26thMarch 2020 signalled the beginning of the demise of the tourism industry in South Africa. The nationwide lockdown was necessary to balance saving lives and livelihoods. The tourism industry was already struggling with international tourism and domestic tourism was just beginning to show signs of growth. These growth prospects have been thwarted by the corona virus.

The Committee was concerned that South Africa is in the top 5 of the global list of on the corona virus infection rate. This means the country must focus on domestic tourism. If the country remains number 5 on global infections, the destination image will continue to suffer and the country will not be amongst the first to recover on international tourism.  

 

8.14      Collaboration with provinces

The Committee observed that Sout African Tourism has heedd a call to engaged all Provinces to diversify their products and attend to transformation issues. The engagengementsare done through the Chief Executive Officers (CEOs) and the Chief MarkertingOfficers (CMOs)fora for a better coordination.This will includes Provinces identifying rural experiences for selling the destination. This is aligned to the Committees’s objective of developing and marketing tourism in Villages, Townships and Small Dorpies.

 

8.15      Domestic Tourism

The Committee appreaciates that the Entity will be paying a special focus on domestic tourism  nowthat it is opening as the country has been put on Level 2 Alert of the Risk-Adjusted Strategy. The Entity has estimated that about 10 percent of the budget will channelled to domestic tourism to stimulate demand.  The small enterprises will also be included in a “Shot’ Left” like campaign to facilitate visibility and transactions. However, the issue of high prices for domestic tourism remains a deterrent. The Committee will conduct a stringent oversight over the stimulation of domestic tourism.

 

8.16      Scenarios for recovery

The Committee noted the status quo on the various scenarios for recovery.  The Entity indicated that various scenarios and permutations in the Northern Hemisphere have shown that those countries that have opened international tourism are issuing travel advisories to their citizens. Travel advisories are also issued against countries that are deemed as high risk, this will include South Africa as well.  The Committee will closely follow the developments on tourism recovery in source markets and South Africa in particular.

 

8.17      The grading system

The Committee reiterated its policy position on the grading system in the country. The Committee maintains that the grading system in the country should be compulsory but free. The Entity stated it will take all comments into consideration as the matter was currently being handled by the Department of Tourism through the White Paper and the legislative review processes. Quality issues had to be adhered to across the board. There is a need to standardise the quality of products and services and basic qualification criteria. 

 

 

1. Recommendations

Having considered the third quarter and fourth quarter financial and non-financial performance, the Committee recommends that the Minister of Tourism should:

 

Recommendations with regard to the Department of Tourism

1. Ensure that the expenditure of the budget appropriated to the Department is always commensurate to the achievement of predetermined objectives.

 

1. Initiate a process of assisting municipalities to operate and maintain the budget resorts as commercial entities that benefit local communities.

 

1. Ensure value for money to improve on contract management through the identification and categorisation of projects that were poorly implemented by service providers, determination of the value of projects awarded, money spent, and defaulting service providers on awarded projects.

 

1. Engage the National Treasury to blacklist all service providers who default on their contracts.

 

1. Improve on enforcing the default/ breach of contract clauses to ensure that the Department gets value for money.

 

1. Improve on project planning and contract management to eliminate delays in the implementation of projects, thus enhancing the achievement of quarterly targets.

 

1. Publish the list of all tourism businesses that benefitted from the Tourism Relief Fund to ensure transparency in the expenditure of the COVID-19 related government interventions.

 

1. Furnish the Committee with the responses to the report on the oversight visit conducted in KwaZulu-Natal to Howick and Mpophomeni in September 2019.

 

1. Improve on the implementation of the Working for Tourism projects to create more job opportunities and enhance placements for trained beneficiaries.

 

1. Conduct a proper enquiry into the number of jobs that will be impacted by COVID-19 using a model that will yield insight into future employment trends in the tourism sector.

 

1. Improve communication to tourism stakeholders about various mechanisms available at their disposal to lodge tourism related complaints.

 

1. Expedite the incorporation of the South African Missions abroad in expanding the marketing reach for the country across international markets.

 

Recommendations with regard to South African Tourism

1. Study the international tourism recovery trends, adopt the best practices and adapt the strategies for recovery of the South African tourism industry.

 

1. Develop practical strategies to drive domestic tourism.

 

1. Engage the private sector to lower the prices, align tour packages and experiences for the domestic tourism.

 

1. Effectively and efficiently utilise international offices for better coordination of the recovery strategies.

 

1. Continue working with provinces to craft and implementstrategies for recovery.

 

1. Ensure that there are special programmes developed for the emerging tourism enterprises and enterprises in Villages, Townships and Small Dorpies.

 

1. Ensure that the compulsory but free grading system is incorporated in the White Paper on the Development and Promotion of Tourism in South Africa and the Tourism Amendment Bill.

 

 

1. Conclusion

The Committee welcomes the departmental financial and non-financial reports for Quarter 3 and Quarter 4,and Quarter 4 performance of South African Tourism for the 2019/20 financial year. The Committee is satisfied with the transparency through which the Department and South African Tourism explained the variances in performance against the pre-determined objectives. The impact of COVID-19 is also acknowledged as a contributing factor to the non-achievement of some Quarter 4 targets. The Department and South African Tourism are urged to improve on their performance against the planned targets. It is concerning that, despite COVID-19, the reasons for non-achievement are based on the recurring issues that have been raised by the Committee in previous engagements.  The Department and South African Tourism are also urged to seriously consider the other sector-wide observations and recommendations made by the Committee to enhance the achievement of its legislated  mandate.

The Committee has noted that during the period of reporting, the National Tourism Recovery Plan has been published for public comments. The outcome of public consultations and a final recovery plan is therefore eagerly awaited to pull the tourism sector out of the doldrums.

 

Report to be considered.