ATC220518: Report of the Portfolio Committee on Tourism on Budget Vote No. 38: Tourism, Dated 17 May 2022

Tourism

REPORT OF THE PORTFOLIO COMMITTEE ON TOURISM ON BUDGET VOTE NO. 38: TOURISM, DATED 17 MAY 2022

 

The Portfolio Committee on Tourism, having considered Budget Vote 38: Tourism, together with the 2022/23 - 2024/25 Annual Performance Plan of the Department of Tourism (Department) and the 2022/23 Annual Performance Plan of South African Tourism (SAT) reports as follows:

 

1. INTRODUCTION

 

The Department of Tourism and South African Tourism tabled their 2022/23 Annual Performance Plans and appropriated budget as contained in the Estimates of National Expenditure under a constrained fiscal environment in the country. The National Treasury projects real economic growth of 2.1 percent in 2022. Gross Domestic Product (GDP) growth is expected to average 1.8 percent over the next three years.  The risks to the domestic outlook include new COVID-19 variants leading to new waves of infection, continued interruptions in power supply, rising inflation and borrowing costs, and sizeable fiscal risks. Faster than expected global interest rate increases may also have negative consequences for the economy. The identified risks have a direct bearing on the sustained recovery of the tourism sector and its value chain. Recovery requires an enabling environment for the private sector. This is critical for the sector to emerge past recovery, grow, access new markets, create new products and create employment. In addition, according to National Treasury, the composition of public spending has deteriorated. Spending that supports long-term growth now accounts for a smaller proportion of the total. Debt-service costs consume an increasing share of GDP and revenue.  This has implications for basic service delivery. During this time of uncertainty, it is thus important that both the Department of Tourism and South African Tourism demonstrate that public resources are spent wisely and in accordance with legal prescripts to render quality services.

 

The tourism sector, constrained by the impact of the pandemic more than other economic sectors in the country, is still reeling from the lingering negative impacts. There are also many emerging travel and tourism trends that need to be tracked and planned for accordingly. In addition to difficulties imposed by the pandemic, the situation is worsened by a negative brand image caused by a number of factors, such as the civil unrests, crime and other influences.

 

This budget report therefore considers all the global and national economic and tourism sector specific factors that impact on the financial resources available for both the Department of Tourism and South African Tourism to fulfil their mandates. The report provides a short review of the Department’s expenditure trends and performance during the 2021/22 financial year. It also focusses on the policy priorities and budget allocation to the Department of Tourism (hereafter referred to as the Department), and its Entity, South African Tourism (SAT), as reflected in the Estimates of National Expenditure (ENE) for the 2022/23 financial year.

 

1. COMMITTEE PROCESS

 

The Portfolio Committee on Tourism (Committee) held a meeting with the Department on 3 May 2022 to consider its 2022/23 - 2024/25 Annual Performance Plan. The Committee also convened a meeting with South African Tourism on 10 May 2022 to consider its 2022/23 Annual Performance Plan. The Committee then considered and adopted the report on 17 May 2022.

 

1. DEPARTMENT OF TOURISM

 

The Department derives its core mandate and responsibilities from the Tourism Act (Act No. 3 of 2014) which aims to:

• Promote the practice 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 and development of the tourism sector; and
• Enhance cooperation and coordination between all spheres of government in developing and managing tourism.

The Department’s vision is for South Africa to become a leading sustainable tourism development destination that promotes inclusive economic growth. The Department executes its mandate through the following four key programmes:

1. Programme 1: Administration - the purpose of this programme is to provide strategic leadership, management and support services to the Department.
2. Programme 2: Tourism Research, Policy and International Relations - the purpose of this programme is to enhance the strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations.
3. Programme 3: Destination Development - the purpose of the programme is to facilitate and coordinate tourism destination development.
4. Programme 4: Tourism Sector Services - the purpose of this programme is to enhance transformation, increase skill levels and support the development of the sector to ensure that South Africa is a competitive tourism destination.

 

3.1       Policy mandate

 

The Department derives its mandate from a myriad of government policy prescripts. Chief amongst these is the Constitution of the Republic of South Africa (Act 108 of 1996) and the White Paper on the Development and Promotion of Tourism in South Africa, 1996. Other key policies include the Economic Reconstruction and Recovery Plan (ERRP); National Development Plan (NDP); the National Tourism Sector Strategy (NTSS) and the Medium Term Strategic Framework (MTSF: 2019-2024). The summary of the policy mandate is as follows:

1. Economic Reconstruction and Recovery Plan (ERRP) – sets out a reconstruction and recovery plan for South African economy that is aimed at stimulating equitable and inclusive growth.
2. White Paper on the Development and Promotion of Tourism in South Africa (1996) – provides the framework and guidelines for tourism development and promotion in South Africa.
3. National Development Plan (NDP) – is the 2030 vision for the country. The NDP recognises tourism as one of the main drivers of employment creation and economic growth and envisages the promotion of South Africa as a major tourist and business events destination.
4. National Tourism Sector Strategy (NTSS) – is a blueprint for the tourism sector and sets bold commitments for the sector. The NTSS advocates for a coherent approach to promoting South Africa as a preferred destination of choice.
5. Medium Term Strategic Framework (MTSF: 2019-2024) – is the manifestation of an implementation of the NDP Vision 2030 and the implementation of the electoral mandate of the sixth administration of government. It recognises tourism as a national priority sector that can play a key role in the country’s economic transformation, addressing unemployment challenges and developing a better Africa and world.
6. State of the Nation Address (SoNA) – in the 2022 SoNA the President mentioned a number of interventions that have an impact on tourism. These include, amongst others, overcoming the COVID-19 pandemic; a massive rollout of infrastructure; a substantial increase in local production; an employment stimulus to create jobs and support livelihoods; and the rapid expansion of the country’s energy generation capacity.

 

3.2       Strategic priorities for 2022/23

 

The Department pursues the following priorities in the 2019 – 2024 government Medium Term Strategic Framework:

• Priority 1 - Building a capable, ethical and developmental State;
• Priority 2 - Economic Transformation and Job creation; and
• Priority 7 - A better Africa and world.

 

In line with the MTSF, the work of the Department of Tourism over the medium term will focus on:

• Strengthening capabilities internally to ensure the long-term sustainability of the sector; 
• Enhancing and maintaining core tourism assets and infrastructure, and in so doing creating work opportunities; 
• Supporting historically disadvantaged tourism enterprises; 
• Implementing norms and standards for safe operations across the tourism value chain; and 
• Enhancing tourism safety in collaboration with the South African Police Service.

 

The 2022/23 strategic priorities are clearly depicted in Table 1.

 

Table 1: Strategic priorities for 2022/23

Outcome	MTSF Outcome	MTSF priority supported
Priority 1: Building a capable, ethical and developmental State	Conducting business in a manner that creates public confidence in the state. This requires excellent systems for the management of public resources, ridding the system of any inefficiency and enabling oversight by institutions of the state in the interest of the public.	Achieve good corporate and cooperative governance.
Priority 2: Economic Transformation and Job creation and Priority 7: A better Africa and world	Jobs created, contribution to GDP, and revenue generated from tourism activity. Observing principle of inclusivity to drive tourism-sector transformation.   Increasing tourism’s economic contribution driven by an increase in domestic and international tourist arrivals and tourist spend.	Increase the tourism sector’s contribution to inclusive economic growth.

Source: Department of Tourism Annual Performance Plan – 2021/22 – 2023/24

 

3.3       Institutional policy reviews

 

The Department is embarking on a process of legislative, policy and strategy review in the MTEF. The policies and strategies due for review within the medium term are:

• White Paper on the Development and Promotion of Tourism in South Africa, 1996.
• Tourism Act, No. 3 of 2014.
• National Grading System.

The review of the White Paper has been awfully delayed. In turn, this is delaying the legislative review process which hinges on the completion of the policy review. This has had a huge impact in effecting 6th Administration Portfolio Committee on Tourism’s priorities, such as introducing a free but compulsory grading system in South Africa.

 

3.4       Budget allocation for 2022/2023

 

The Department receives a total budget of R7.6 billion over the medium term. Transfers to South African Tourism account for an estimated 53.3 percent (R4.1 billion) of this amount over this period. Expenditure is expected to increase at an average annual rate of 0.8 percent, from R2.5 billion in 2021/22 to R2.6 billion in 2024/25. To strengthen capacity within the Department, an additional R92.2 million is reprioritised across goods and services to raise the expenditure ceiling for compensation of employees. This is expected to enable a targeted 37 critical posts to be filled over the MTEF period in corporate services and critical areas of service delivery that entail facilitating the recovery of the industry. 

 

The Department’s 2022/23 budget allocation amounts to R2 491.6 billion, of which R370.8 million is allocated to fund Compensation of Employees. An amount of R550.4 million is budgeted for Goods and Services, R1 565.6 billion for Transfers and Subsidies and R4.8 million for the payment of Capital Assets.

 

Table 2 indicates that the overall budget allocation to the Department decreases by 6.33 percent in real terms when compared to the budget of R2 545.4 billion in 2021/22 to R2 491.6 billion in 2022/23. The Department organises its expenditure under four programmes as follows:

• Programme 1: Administration (R325.1 million);
• Programme 2: Tourism Research, Policy and International Relations (R1 416.0 billion);
• Programme 3: Destination Development (R393.9 million); and
• Programme 4: Tourism Sector Support Services (R356.6 million).

 

The main cost driver under this Vote is Programme 2 (Tourism Research, Policy and International Relations), which consumes more than half (approximately 56.8%) of the total Vote allocation. This is mainly due to the significant transfer to the Department’s Entity, South African Tourism. Programme 3 (Destination Development) experiences a significant decrease of 19.16% in real terms. The major cost driver under Programme 3 is the Working for Tourism, Expanded Public Works Programme, sub-programme. The sub-programme’s allocation also sees a decrease from R377.0 million in 2021/22 to R311.7 million in the current financial year.

 

 

Table 2: Overall Budget Allocation 2019/20 – 2022/23

Tourism   R million	Budget				Nominal Rand Change	Real Rand Change	Nominal percent Change	Real percent Change
Programme	2020/21	2021/2022	2022/2023	2023/24	2021/22-2022/23		2021/22-2022/23
Administration	289.8	309.8	325.1	325.6	15.3	1.3	4.94%	0.42%
Tourism Research, Policy and International Relations	479.5	1 382.7	1 416.0	1 431.4	33.3	-27.7	2.41%	-2%
Destination Development	427.5	466.3	393.9	378.2	-72.4	-89.4	-15.53%	-19.16%
Tourism Sector Support Services	195.4	386.6	356.6	357.1	-30.0	-45.4	-7.76%	-11.73%
TOTAL	1 392.2	2 545.3	2 491.6	2 492.3	-53.8	-161.1	-2.11%	-6.33%

Source: National Treasury ENE, 2022/23

 

The cost driver under programme 4, Tourism Incentive Programme, also sees a decrease for the year from R275.2 million in 2021/22 to R242.0 million in 2022/23. The Committee was concerned about the decrease, in real terms, in allocation for both Programmes 3 and 4 as these have implications for the Department’s policy priorities. The reason for a concern is that Programme 3 (Destination Development), includes activities such as route development projects, destination enhancement initiatives and infrastructure maintenance programmes. These activities are significant as job creators and for destination product development. 

 

3.5       Annual Performance Plan per Programme

 

The Annual Performance Plan (APP) sets out performance indicators and targets for budget programmes and sub-programmes where relevant, to facilitate the Department realising its goals and objectives as set out in the Strategic Plan. The tabled 2022/23 APP covers the departmental activities for the financial year, spanning the MTEF period. This section provides the details of the APP per programme. The Committee is satisfied that the identified projects, targets and performance indicators will be implemented based on the specific, measurable, achievable, relevant and time-bound (SMART) principles.

 

1. Programme 1: Administration

 

The purpose of this programme is to provide strategic leadership, management and support services to the Department. The Programme is allocated R325.1 million in the 2022/23 financial year, which equates to 13 percent of the overall departmental budget. Table 3 shows budget allocation to Programme 1 and its sub-programmes.

 

Table 3: Programme 1 Budget Allocation 2022/23 – 2024/25

Administration	Budget		Nominal Increase/ Decrease in 2021/23	Real Increase/ Decrease in 2022/23	Nominal percent change in 2022/23	Real percent Change in 2022/23
R million	2021/22	2022/23
Ministry	36.6	40.1	3.5	1.8	9.56%	4.84%
Management	3.0	3.3	0.3	0.2	10%	5.26%
Corporate Management	172.5	182.2	9.7	1.9	5.62%	1.07%
Financial Management	52.1	62.3	10.2	7.5	19.58%	14.4%
Office Accommodation	45.5	37.3	-8.2	-9.8	18.02%	-21.55%
TOTAL	309.8	325.1	15.3	1.3	4.9%	0.42%

Source: National Treasury ENE, 2022/23

 

The budget allocation for Programme 1 increased by 4.9 percent in nominal terms from R309.8 million in 2021/22 to R325.1 million in 2022/23. Of this amount, R174.1 million (53.5%) is for Compensation of Employees. The major cost driver under this programme is Corporate Management, with an allocation of R182.2 million for the 2022/23 financial year. The allocation for this sub-programme is in response to the Department seeking to strengthen internal capacity. Over the medium term, the Department is targeting filling 37 critical posts in corporate services. The overall number of funded posts in the Department has increased from 487 in 2021/22 to 508 in 2022/23. For the Administration programme, the number of funded posts increased from 242 in 2021/22 to 266 in 2022/23.

Sub-programme 4 experienced a significant decrease in allocation, by 21.6 percent in real terms. The amount allocated for Office Accommodation is for the payment of the head office building of tourism to the Department of Public Works towards the lease agreement.

 

3.5.2     Programme 2: Tourism Research, Policy and International Relations

 

The purpose of this programme is to enhance the strategic policy environment, monitor the tourism sector’s performance and enable stakeholder relations. The Programme received a budget allocation of R1 416.0 billion for 2022/23, of which R1 329.2 billion is transferred to South African Tourism (SAT). This represents 93.9 percent of the Programme’s budget allocation. The remaining allocation available for this Programme is R86.8 million, of which R57.4 million (66.1%) is allocated to Compensation of Employees. This leaves the programme with just about R29.4 million for the rest of its projects/programmes. Some of the projects under this programme include research partnerships with universities, policy development and evaluation, international relationship management through bilateral agreements and memberships at various fora.

 

Table 4: Programme 2 Budget Allocation 2021/22 – 2022/23

Administration	Budget		Nominal Increase/ Decrease in 2022/23	Real Increase/ Decrease in 2022/23	Nominal percent change in 2022/23	Real percent Change in 2022/23
R million	2021/22	2022/23
Tourism Research, Policy and International Relations Management	9.0	9.7	0.7	0.3	7.78%	3.14%
Research and knowledge management	33.5	31.4	-2.1	-3.5	-6.27%	-10.30%
Policy Planning and Strategy	14.1	15.6	1.5	0.8	10.64%	5.87%
South African Tourism	1 297.0	1 329.2	95.2	35.2	7.34%	2.72%
International Relations and Cooperation	29.0	30.0	1.0	-0.3	3.45%	-1.01%
TOTAL	1  382.7	1  416.0	33.3	-27.7	2.4%	-2%

Source: National Treasury ENE, 2022/23

 

The budget allocation for Programme 2 increased by 2.4 percent in nominal terms from R1 382.7 billion in 2021/22 to R1 416.0 billion in 2022/23. The main cost driver for this sub-programme is the transfer to the Department’s entity, South African Tourism (SAT). In 2020/21 the transfer to SAT was significantly reduced, at R423.0 million, with the funding allocated towards relief funds for COVID-19. Budget allocation has reverted to 2019 allocations as a result of the lifting of global lockdowns and travel bans and vaccination rollouts. The increase in allocation is aimed at recovery initiatives for the sector. The budget allocation for sub-programme 2 (Research and Knowledge Management) decreased by 10.30 percent in real terms, whilst sub-programme 3 (Policy Planning and Strategy) experiences a real increase of 5.87 percent. Sub-programme 2, oversees tourism research, knowledge management and impact evaluation in the sector. 

 

3.5.3     Programme 3: Destination Development

 

The purpose of the programme is to facilitate and coordinate tourism destination development. The budget for this Programme is R393.9 million for 2022/23, the bulk of which, i.e. R311.7 million (79.1%), is allocated to the Working for Tourism sub-programme. A total of R333.8 million is allocated to Goods and Services for the programme.

 

The programme objectives entail the following:

 

• Implement five destination enhancement and route development projects over the medium term to diversify tourism offerings and enhance visitor experience in identified priority areas by:
  • piloting the budget resort network and brand concept;
  • incorporating prioritised initiatives from tourism spatial master plans in eThekwini metro, and the OR Tambo, Pixley Ka Seme and Namakwa districts;
  • managing a pipeline of nationally prioritised tourism investment opportunities (greenfield projects);
  • managing a database of distressed high‐impact tourism projects (brownfield projects);
  • facilitating four investment‐promotion platforms.
• Support destination enhancement initiatives over the medium term by:
  • implementing infrastructure maintenance programmes in 19 national parks;
  • implementing infrastructure maintenance programmes at identified and prioritised state‐owned assets;
  • supporting the implementation of 30 community‐based tourism projects.
• Create 12 370 work opportunities through Working for Tourism projects over the medium term.

 

Table 5 depicts budget allocation across the projects implemented in the sub-programmes under Programme 3.

 

Table 5: Programme 3 Budget Allocation 2021/22 – 2022/23

Administration	Budget		Nominal Increase/ Decrease in 2022/23	Real Increase/ Decrease in 2022/23	Nominal percent change in 2022/23	Real percent Change in 2022/23
R million	2020122	2022/23
Destination Development	33.3	28.3	-5.0	-6.2	-15.02%	-18.67%
Tourism Enhancement	24.5	23.0	-1.5	-2.5	-6.12%	-10.17%
Destination Planning and Investment Coordination	31.5	30.9	-0.6	-1.9	-1.90%	-6.13%
Working for Tourism	377.0	311.7	-65.3	-78.7	-17.32%	-20.88%
TOTAL	466.3	393.9	-72.4	-89.4	-15.5%	-19.16%

Source: National Treasury ENE, 2022/23

 

The budget allocation for Programme 3 decreases by 19.16 percent in real terms from R466.3 million in 2021/22 to R393.9 million in 2022/23. The main cost driver under this programme, at R311.7 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 12 370 work opportunities over the medium term. However, the budget for this sub-programme substantially decreased for the new financial year by 21 percent in real terms. Another substantive decrease in allocation is experienced in sub-programme 1, Destination Development Management, by 18.67 percent in real terms. Some of the activities under this sub programme include destination enhancement initiatives at the tourism site and supporting South African National Parks sites through infrastructure maintenance programmes. These projects are critical for destination attractiveness, bringing in revenue to destinations and creating employment.

 

3.5.4     Programme 4: Tourism Sector Support Services

 

The purpose of this programme is to enhance transformation, increase skill levels and support the development of the sector to ensure that South Africa is a competitive tourism destination. The Programme is allocated R356.6 million for the 2022/23 financial year. This includes Compensation of Employees with a budget allocation of R79.4 million and the Tourism Incentive Programme (TIP) with a budget allocation of R242.0 million. The projects within TIP include tourism market access, tourism grading support, tourism destination development and energy-efficient projects. The TIP consumes 67.8 percent of the total Programme budget whilst the Enterprise Development and Transformation sub-programme consumes 13.3 percent.

 

The programme objectives entail the following:

 

• Accelerate transformation in the tourism sector by implementing the Tourism Equity Fund and the green tourism incentive programme over the MTEF period.
• Stimulate growth in domestic tourism by implementing the domestic tourism scheme in 2022/23.
• Encourage inclusive economic growth in the tourism sector over the period ahead by increasing the participation of SMMEs through incubation programmes to provide business support and development in areas such as technology, tour operations and food services.
• Implement initiatives in each year to increase the participation of women in the tourism sector through:
  • providing business development and support services to 225 women in 25 women‐owned SMMEs across all provinces through the Women in Tourism programme;
  • facilitating the United Nations Women in Tourism pilot programme in Limpopo’s Vhembe and Mopani districts.
• Enhance visitor service and experience by implementing the service excellence programme in Northern Cape and Limpopo over the medium term.
• Facilitate skills development by implementing 10 capacity‐building programmes across the sector over the MTEF period.

 

Table 6: Programme 4 Budget Allocation 2020/21 – 2022/23

Administration	Budget		Nominal Increase/ Decrease in 2022/23	Real Increase/ Decrease in 2022/23	Nominal percent change in 2022/23	Real percent Change in 2022/23
R million	2021/22	2022/23
Tourism Sector Support Services Management	11.1	11.3	0.2	-0.3	1.8%	-2.58%
Tourism Human Resource Development	28.6	30.3	1.7	0.4	5.94%	1.38%
Enterprise Development and Transformation	49.0	47.6	-1.4	-3.4	-2.86	-7.04
Tourism visitor Services	22.7	25.4	2.7	1.6	11.89%	7.08%
Tourism Incentive Programme	275.2	242.0	-33.2	-43.6	-12.06	-15.85%
TOTAL	386.6	356.6	-30.0	-45.4	-7.8%	-11.73%

Source: National Treasury ENE, 2022/23

 

The budget allocation for Programme 4 decreased by 11.73 percent in real terms from R386.6 million in 2021/22 to R356.6 million in 2022/23. The Tourism Incentive Programme sub programme, at R242.0 million, is the main cost driver in this 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. Initiatives which are in line with the Department’s strategic priorities towards economic transformation and job creation, responsible tourism and transformation of the sector. Allocation to this sub-programme decreased by 15.85 percent in real terms.

 

1.   SOUTH AFRICAN TOURISM

 

South African Tourism derives its core mandate and responsibilities from the Tourism Act (No. 3 of 2014), as follows:

• To market South Africa as a domestic and international tourist destination;
• To market South African tourism products and facilities internationally and domestically;
• To develop and implement a marketing strategy for tourism that promotes the objectives of the Act and the National Tourism Sector Strategy (NTSS);
• To advise the Minister on any other matters relating to tourism marketing; and
• To establish a National Convention Bureau to market South Africa as a business destination by:

• Co-ordinating bidding for international conventions; and
• Liaising with other organs of State and suitable bodies to promote South Africa as a Business tourism destination.

 

Additionally, in terms of section 44 of the Act, the Minister assigned the implementation and management of the national grading system for tourism to the Board.

 

The Entity’s vision is to position South Africa as an exceptional tourist and business events destination that offers a value-for-money, quality tourist experience that is diverse and unique. The Entity executes its mandate through the following five key programmes:

• Programme 1: Administration – provides support services to the organisation, as well as ensures compliance with statutory requirements.
• Programme 2: Business Enablement – enhance collaboration with various stakeholders and provide centralised tourism intelligence to support evidence-based decision-making.
• Programme 3: Leisure Tourism Marketing – creates demand through travel acquisition and growing brand equity for South Africa as a leisure and business events destination, in identified markets.
• Programme 4: Business Events – to grow the nation’s business events industry.
• Programme 5: Visitor Experience – ensures the delivery of quality assured tourist/visitor experiences, which are diverse, unique and enriched.

 

4.1       Policy mandates

 

The policy framework that informs the work of the Entity includes the White Paper on the Development and Promotion of Tourism in South Africa, 1996; the National Development Plan (NDP) 2030; the National Tourism Sector Strategy (NTSS); Medium Term Strategic Framework (MTSF: 2019-2024); Tourism Grading Council of South Africa Grading Criteria (2019); and the Tourism Black Economic Empowerment Charter.

 

4.2     Strategic priorities for 2022/23

 

The outbreak of the Coronavirus pandemic (COVID-19) has resulted in a review of the Entity’s projections. In 2017, SAT introduced the 5-in-5 strategy, which sought to increase the base of tourism by five million arrivals during the period 2017 to 2021, translating into four million additional international tourist arrivals and one million more domestic holiday trips. In the June 2019 State of the Nation Address, a challenge was posed to the Entity to increase tourism levels by 21 million additional international tourist arrivals by 2030 to the country. However, according to SAT the current and medium-term outlook for international travel is volatile and will continue to be in constant flux from week to week and month to month as the virus evolves, pandemic trajectories fluctuate and vaccine development and dissemination advances; creating an environment where it is impossible to predict full travel resumption. This has resulted in the Entity revising the 21 million target to 14.8 million as a more realistic target for 2030.

 

In line with its vision of positioning South Africa as an exceptional tourist and business events destination that offers value-for-money, quality tourist experience that is diverse and unique, complementing the national priorities, the Entity identified objectives that would accelerate the delivery of services in the tourism sector. The Entity will contribute to three of the seven priorities of the MTSF. Table 7 outlines the strategic outcomes of the Entity, as stated in its 2020-2025 Strategic Plan, which correlate with the Government’s Priorities, namely:

 

Table 7: Strategic outcomes

MTSF Priority	MTSF Outcome	SAT Outcome
Priority 1: Building a capable, ethical and developmental State	Professional, meritocratic and ethical public administration.	Achieve good corporate and cooperative governance.
Priority 2: Economic Transformation and Job creation	Re-industrialisation of the economy and emergence of globally competitive sectors.	Increase the tourism sector’s contribution to inclusive economic growth.
Priority 7: A better Africa and world	Growth in the tourism sector resulting in economic growth.	Increase the tourism sector’s contribution to inclusive economic growth.

 

Over the medium term, the Entity will seek to revitalise South Africa as a premier tourist and business destination. Accordingly, the number of international business events hosted in South Africa is expected to increase from eight in 2021/22 to 39 in 2024/25 at a projected cost of R289.3 million over the MTEF period. The Entity also plans to support bids to host 339 international and regional business events over this period. Part of the Entity’s revitalisation plan also entails assuring that tourism establishments are of a high standard. As such, it plans to increase the number of graded establishments from 4 707 in 2021/22 to 5 625 in 2024/25 at a projected cost of R161.1 million over the medium term.

 

4.3       Budget allocation for 2022/23

 

The Entity’s 2022/23 budget allocation is R1.45 billion, R236.7 million of which is allocated to fund Compensation of Employees. An amount of R1.2 billion is budgeted for Goods and Services and R10.0 million for Depreciation.  The Entity receives 91.3 percent (R4.1billion) of its projected revenue over the MTEF period from transfers from the Department of Tourism, with the other revenue generated from tourism marketing levies, grading income, and interest on investments and sundry income (from exhibitions such as Africa’s Travel Indaba).

 

The total budget of the Entity comes from multiple sources of revenue that contribute to its total available budget for the year. The revenue sources are as follows:

• Government allocation – the Department of Tourism will transfer R1,329,206, 000.
• TOMSA Levies – collaborative TOMSA Levy from the Tourism Business Council of South Africa will amount to R52,400, 000.
• Indaba, Meetings Africa & other exhibitions – Estimated revenue from the two platforms will be R33,757, 000.
• Grading fees - Estimated revenue from grading fees will be R12,826, 000.
• Sundry revenue – mainly from gained interest will be R27,389,000.

 

Table 7 indicates the expenditure estimates for each programme for the years 2021/222 to 2024/25. For the 2022/23 financial year the budget allocations per programme is as follows:

• Programme 1: Administration is R154.8 million.
• Programme 2: Business Enablement is R84.6 million.
• Programme 3: Leisure Tourism Marketing is R1.07 billion. This programme is the main cost driver for the Entity, as it gives effect to its core mandate, which entails marketing initiatives both locally and internationally.
• Programme 4: Business Events is R92.2 million.
• Programme 5: Visitor Experience is R51.4 million.

 

Table 7: Budget allocation per Programme

SA Tourism	Budget				Nominal Rand Change	Real Rand Change	Nominal percent change	Real percent Change
R Million	2021/22	2022/23	2023/24	2024/25	2021/22 – 2022/23		2021/22 – 2022/23
Programme
Administration	148.1	154.8	161.7	169.0	6.7	0.0	4.52%	0.02%
Business Enablement	81.0	84.6	88.4	92.4	3.6	0.0	4.44%	-0.05%
Leisure Tourism Marketing	1 051.1	1 072.6	1 074.7	1 122.9	21.5	-24.7	2.05%	-2.35%
Business Events	88.3	92.2	96.4	100.7	3.9	-0.1	4.42%	-0.08%
Visitor Experience	49.1	51.4	53.7	56.1	2.3	0.1	4.68%	0.18%
TOTAL	1 417.6	1 455.5	1 474.8	1 541.1	38.0	-24.7	2.68%	-1.74%

Source: National Treasury ENE, 2022/23

 

Overall, as depicted in Table 7, the budget allocation to the Entity increased by 2.68 percent in nominal terms from R1 417.6 billion in 2021/22 to R1 455.6 billion in 2022/23. However, in real terms, it declined by 1.74 percent. Programme 3 (Leisure Tourism Marketing) received an increased allocation, although it represented a real decrease of 2.35 percent. This programme entails one of the core elements of the Entity’s mandate, which is marketing to source markets. A decrease in budget allocation will likely affect the number of marketing initiatives and campaigns targeted at both international and domestic tourism markets.

 

4.4       Annual Performance Plan per Programme

 

The APP sets out SAT’s planning for the 2022/23 financial year. The implementation projects, targets and performance indicators were analysed to determine whether they are specific, measurable, achievable, relevant and time-bound (SMART), and the Committee is satisfied that they are compliant.

 

4.4.1     Programme 1: Administration

 

The purpose of this Programme is to provide support services to the organisation, as well as ensure compliance with statutory requirements. The business division comprises:

• The Office of the Chief Executive Officer and Strategic Planning, Evaluation and Programme Management;
• The Governance, Risk, Compliance and Company Secretariat;
• Human Capital;
• Finance and Supply Chain Management;
• Information Communication and Technology (ICT).

 

The Programme is allocated R154.8 million in the 2022/23 financial year, when, considering inflation, this allocation only increased by 0.02 percent from the previous financial year’s allocation of R148.1 million.

 

4.4.2           Programme 2: Business Enablement

 

The purpose of this programme is to enhance collaboration with various stakeholders and to provide centralised tourism intelligence to support evidence-based decision-making. The business division comprises:

• The Office of the Chief Executive Officer and Strategic Planning, Evaluation and Programme Management;
• Digitech;
• Analytics and Insights.

The Programme has a budget allocation of R84.6 million for the 2022/23 financial year. The Programme’s budget allocation increases by 4.4 percent in nominal terms for the new financial period.

 

4.4.3     Programme 3: Leisure Tourism Marketing

 

The purpose of the programme is to create demand through travel acquisition and growing brand equity for South Africa as a leisure and business events destination in identified markets. The budget for this Programme is R1.07 billion for the 2022/23 financial year. This Programme is the main cost driver for the Entity. Budget allocation to the Programme, which executes the core mandate of the Entity decreased by 2.35 percent in real terms.

 

4.4.4     Programme 4: Business Events

 

The purpose of this programme is to grow South Africa’s business events industry. The South African National Convention Bureau (SANCB) includes the following business units: Business Development and Support Services; MICE Sales; and Strategic Events and Platforms. The Programme is allocated R92.2 million for the 2022/23 financial year. Budget allocation to the programme experiences an increase of 4.42 percent in nominal terms and a 0.08 percent decrease in real terms. COVID-19 has had a devastating impact on the events industry. The industry finds itself in a position of having to re-imagine its offerings under these restrictive times. Event organisers are looking at creative ways to host meetings and attract both exhibitors and attendees. SAT is also challenged to lead by example in these changing times. Organisers need to continue to be innovative with their offerings; hybrid offerings (integrated virtual and in-person events) are being embraced by the sector and the future will see a more blended approach to event hosting.

 

SANCB continues in its bidding for future events to be hosted across the country. An indicator of the recovery of the meetings, incentives, conferences and exhibitions (MICE) sector is SANCB’s tentative increase of bid submissions from 77 in 2021/22 to 93 in the current financial year. The Entity has also responded to the Committee’s challenge of extending meetings and events to villages, townships and small dorpies (VTSDs). As a result, the Entity will be piloting five national events in some of these areas. Parliamentary programme allowing, the Committee will attend some of these events and assess their implementation, to continue the lobbying of VTSDs as valuable events destinations for South Africa’s tourism offering.

 

4.4.5     Programme 5: Tourist Experience

 

The purpose of this Programme is to ensure the delivery of quality assured tourist/visitor experiences, which are diverse, unique and enriched. The business division comprises:

• Quality Assurance and Development;
• Visitor Experience;
• Brand Experience;
• Global Trade.

 

The Programme is allocated R51.4 million for the 2022/23 financial year. Taking inflation into consideration, the budget allocation for this programme increased by 0.18 percent from the 2021/22 allocation of R49.1 million.

 

1. COMMITTEE OBSERVATIONS

 

Having carefully scrutinised the Department of Tourism’s 2022/23 - 2024/25 and South African Tourism’s 2022/23 Annual Performance Plans, the Committee made a number of organisation-specific and sector-wide observations as follows:

 

5.1       Observations with regard to the Department of Tourism

 

5.1.1     Budget allocation

 

The Committee noted the following salient issues with regard to the allocated budget in the MTEF period and the 2022/23 financial year in particular:

 

1. Available budget – Vote 38 is allocated R2 491 580 000 in the 2022/23 financial year. The Department will receive a total budget of R7.6 billion over MTEF period. Expenditure will increase at an average annual rate of 0.8 percent, from R2.5 billion in 2021/22 to R2.6 billion in 2024/25. 

 

The available budget implications are as follows:

 

• The allocated budget is inadequate to address the current needs of the portfolio and the Department does not have enough funds to facilitate sector recovery to deal with the impact of COVID-19 to the industry.
• The Department will particularly not have any financial incentives to facilitate the recovery of tourism SMMEs that were devasted by COVID-19.
• The little gains for transformation will be reversed as the big players will continue to dominate the sector.

 

(b)        Filling of vacant posts – Compensation of Employees is allocated R370.8 million, accounting for 14.88 percent of the allocated budget. The Department has reprioritised an additional R92.2 million across goods and services to raise the expenditure ceiling for compensation of employees. This will enable the Department to fill 37 critical posts over the MTEF period.

 

Implications for Compensation of Employees budget is as follows:

 

• Funds initially earmarked for goods and services/ meant for tourism development have been reprioritised to Compensation of Employees.
• The Department will not be able to employ all the personnel in the staff establishment, albeit critical posts will be filled.
• The budget allocated to Compensation of Employees means that the Department has to prioritise posts to be filled in the 2022/23 financial year as some posts in the establishment will not be funded.

 

(c)        Goods and services – of the allocated R2.491 billion, only R550.4 million will go towards goods and services in the Department. This means that the amount available for service delivery in the Department is only 22.08 percent of the allocated budget.

 

Implications of the budget available for goods and services:

 

• The 22.08 percent of budget available for goods and services means that the Department will not be able to achieve much service delivery on tourism development as a huge chunk of the budget goes towards transfers.
• The Department should conceptualise high impact projects that achieve more with less to achieve high Return on Investment and high value for money.
• This calls for the Committee to constantly conduct oversight geared towards determining value for money for projects implemented by the Department.
• The Committee’s role will also be to ensure tight oversight on the funds available for goods and services so that no funds are returned to the National Treasury due to non-implementation of projects.

 

(d)        Transfers – the Department transfers R1.6 billion which accounts for 62.8 percent of its allocated budget. A total of 53.34 percent of the budget goes to South African Tourism.

 

Implications of the budget put on transfers include

 

The Committee will conduct strict oversight on all transfers. This applies more to oversight over South African Tourism as an average of 53.3 percent of the entire budget is allocated to marketing activities annually.

 

(e)        Capital assets – the Department allocated R4.8 million to capital assets, accounting for 0.2 percent of the total budget.

 

(f)         Working for Tourism projects – this budget funds both the skills and infrastructure development projects.

• The Working for Tourism (WfT) Expanded Public Works Programme (EPWP) budget has been reduced by R81,579 million since 2020/21.
• The ENE budget allocation in 2020/21 was R363,057 million and it was reduced to R281,478 million in 2022/23.
• The budgets for 2023/24 and 2024/25 are R282,944 million and R292,058 million respectively over the MTEF period.

 

Implications for a decrease in Working for Tourism budget:

 

• The decreased budget results in a reduction in the number of Work Opportunities that the Department can support through the Expanded Public Works Programme.
• The Department’s impact on reducing poverty in the country has been reduced.

 

5.1.2     Impact of the National Treasury issued notice on the constitutional court judgment regarding preferential procurement regulations of 2017

 

The Committee noted that on 22 February 2022 the National Treasury issued a notice based on the constitutional court judgment regarding preferential procurement regulations of 2017. The notice stipulates that:

• tenders advertised before 16 February 2022 be finalised in terms of the 2017 Regulations;
• tenders advertised on or after 16 February 2022 be held in abeyance; and
• no new tenders be advertised (available on NT’s website).

 

This has serious implications for the implementation of the 2022/23 Annual Performance Plan. The Department intends implementing 30 community based tourism projects worth R573 460 000. The Department also intends appointing service providers to implement a number of other projects in the APP, including training interventions. Implementation of these projects may be affected by the National Treasury Note as the Department will not be able to appoint service providers until the notice has been withdrawn.  The huge impact will also be felt on the implementation of the 30 community based projects, training projects and other departmental programmes if the decision by the National Treasury is not rescinded.

 

 

 

5.1.3     Tourism policy review

 

The Department is currently reviewing the White Paper on the Development and Promotion of Tourism in South Africa which was adopted in 1996. The process has taken too long to be finalised due to a number of factors, including changes at an Executive level in the Department. The erstwhile Minister of Tourism appointed a panel which is currently reviewing the policy. The Committee noted that the Department has planned that the White Paper on the Development and Promotion of Tourism in South Africa will only be submitted for approval in the fourth quarter of the 2022/23 financial year. It was noted that the Policy Review Panel had submitted policy proposals to the Minister and that she was applying her mind to determine which proposals will be published as a Green Paper for public comments. After the consolidation of the public comments, the document will go through the cluster process before it is tabled for Cabinet decision.

 

5.1.4     Internal controls and repeat findings

 

The Committee was concerned about the possible repeat findings on the matters that have been raised by the Auditor-General previously. The Committee, however, noted the plans that have been put in place to address repeat findings, including holding weekly meetings to ascertain that all risks are addressed on time and adequately. With regard to Supply Chain Management, the Department is also continuously improving on addressing findings. As such, the Department has taken a decision that the head of supply chain will now be signatory on documents to tighten controls.

 

5.1.5     Recovery of the tourism sector

 

The Committee acknowledges that the Department is a custodian of the Tourism Sector Recovery Plan (TSRP) meant to take the industry out of the COVID-19 doldrums. Other than the Norms and Standards for the Safe Operation of the Tourism Sector, the Department is implementing other 11 interventions geared towards sector recovery. The Committee is cognisant that the interventions meant to implement the TSRP mostly depend on other government departments. This calls for intensive intersectoral coordination.

 

 

5.1.6     Tourism statistics

 

It was noted that the Department is planning to develop a report on state and availability of key tourism statistics and resources at Provincial level. The issue of availability of reliable tourism statistics at a provincial level has been a challenge over a number of years. The country has reliable statistics at a national level available through the national Tourism Satellite Account. The challenge is with tourism statistics as a sub-national/ provincial level. Statistics South Africa only produces the national statistics. The challenge is also at a United Nations World Tourism Organisations level where there is no clear guidance on computing the tourism economic account at a sub-national or provincial level. The Committee is cognisant that the availability of tourism statistics at a provincial and local level will assist with planning and elevating the status of tourism in municipalities.

 

5.1.7     Linking departmental work to other government interventions

 

In the 2022 State of the Nation Address, the President announced a number of measures that will be undertaken by government to expedite economic recovery. The APP has not clearly expressed how the Department has incorporated these policy announcements in its plans. The Department is expected to link its plans to broader government plans and interventions announced by the President during the State of the Nation Address.

 

5.1.8     Court orders and transformation

 

The Committee was concerned that most transformation interventions are still in abeyance due to the court interdict on the Tourism Equity Fund. The Department will continue implementing soft transformation programmes through training and SMME support. However, the funding programmes meant to be game changers in the transformation of the sector remain in abeyance.

 

5.1.9     Impact of floods in KwaZulu-Natal, Northern Eastern Cape and North West

 

The province of KwaZulu-Natal has been hard hit by the floods that devastated the province in the recent past. The Minister has been quoted as saying the floods will cost the tourism industry hundreds of jobs and millions in revenue. Having alluded to this, the Department of Tourism has not come up with tangible interventions as other government departments that have provided solid responses. The Committee noted that the Department had not finalised quantification of the damage to tourism facilities. This was mainly caused by the fact that while the Department was busy with Eastern Cape and KwaZulu-Natal floods, North West came into the fold as well and expanded the scope of work.    The Committee is cognisant of the fact that currently, South Africa does not have necessary technology to detect and foretell natural disasters of the magnitude recently experienced in the three provinces.

 

5.1.10   Impact of delayed response to urgent tourism matters

 

The Committee has noted that the Department of Tourism has not always responded with a sense of urgency on matters affecting the tourism industry. This lack of quick response can be traced back to a number of issues such as the requirement for unabridged birth certificates; visa issues; open skies policy; and now the impact of delays in issuing operating licences to tour operators by the National Public Transport Regulator (NPTR). The Committee has been informed by SATSA that they were considering lodging a court case against the NPTR as there was no intervention from government authorities, including the Department of Tourism. The Committee acknowledges that the NPTR is an entity of the Department of Transport and thus the Minister of Tourism has no direct influence to its activities. However, the Minister of Tourism can intervene on the NPTR matter at a Cabinet level in favour of the tourism industry.

 

5.1.11   Implementation of the District Development Model

 

The Committee noted the departmental intention to incorporate its projects in District Development Model. However, it is not clear how the Department will do this in all the district municipalities in the country. The recent oversight visit to the Limpopo province highlighted a glaring lack of coordination between the spheres of government in relation to the implementation of tourism infrastructure projects. In one project at Ngovhe Lodge, the Committee learned that the Member of Executive Council (MEC) and the Portfolio Committee responsible for the Limpopo Economic Development, Environment and Tourism portfolio were not aware that the Department of Tourism was implementing the infrastructure project at Ngovhe Lodge. The Committee also learned that it was for the first time that the district and the local municipalities were visiting the project during the site visit scheduled by the Committee. This is a cause for serious concern as it depicts poor intergovernmental relations and lack of conscientious efforts to coordinate tourism development amongst the three spheres of government. The Committee was not even sure whether the project was incorporated into the district and local Intergraded Development Plans (IDPs). It was noted that in the 2022/23 financial year, the Department plans to finalise prioritised tourism concepts and initiatives to support DDM One Plans for OR Tambo District; eThekwini Metro; Pixley Ka Seme District and Namakwa District.

 

5.1.12   Appointment of Chief Financial Officer

 

The Department reported previously that the process of appointing the Chief Financial Officer (CFO) was at an advanced stage. The Committee noted an update by the Department that interviews had been concluded and suitable candidates identified. The process was at a verification stage. This is a positive development as the CFO will be appointed early in the financial year, helping the Department to prevent financial related findings by the Auditor-General.

 

5.1.13   Commendation on the sterling work done by the Department

 

Notwithstanding a number of challenges facing the Department, the Committee would like to commend the Department and South African Tourism on the sterling work accomplished in the midst of the pummelling effects of COVID-19 and interventions in the KZN floods. The following achievements are noteworthy:

 

1. The work of the Department in addressing the impact of COVID-19 on the tourism sector has been recognised globally. In this context, the Minister has been invited in a number of international platforms to share best practices from South Africa in shielding the tourism sector from the devastation by the pandemic. In these platforms, South Africa has been lauded for its cutting edge work by scientists in discovering variants such as Omicron. The work of the country’s scientists helped the world to understand and combat the pandemic.

 

1. Interventions in the KwaZulu-Natal floods – the Committee commends the Department of Tourism to be amongst the first responders in the aftermath of the floods in that devastated KwaZulu-Natal. The Department was on the ground and assisted with handing food parcels and cleaning the beach as it is an important tourist destination.

 

1. Collaboration with the private sector - the interaction with the private sector has created a war room that deals with troubleshooting specific issues that affect the travel and tourism sector. The coordination and collaboration with the private sector led to the adoption of Norms and standards for safe reopening of the tourism sector. With the help of the private sector, the Department has also been able to push back on a number of restrictions put by government on the tourism industry, including the COVID-19 related restrictions.

 

5.2       Observations with regard to South African Tourism

 

5.2.1     Sources of revenue

 

The Committee noted various streams of revenue that contribute to the R1.45 billion budget available for South African Tourism in the 2022/23financial year. It was noted that the transfer from the Department of Tourism remains the highest contributor and accounts for 53 percent of Vote 38 in the Estimates of National Expenditure. The continued support and commitment of the private sector through TOMSA Levy is commendable. The Committee will conduct close oversight over budget expenditure to get value for money from the departmental transfers and prevent repeat findings on TOMSA Levy expenditure.

 

5.2.2     Fiscal constraints

 

The Committee noted that the budget available for South African Tourism is inadequate to undertake the huge mandate of marketing the country. Sector recovery depends on South Africa being recognised again by the global markets as a safe destination that offers value for money. Due to fiscal constraints, the Committee encourages South African Tourism to work with other government entities such as Brand SA and Department of International Relations and Cooperation missions abroad to stretch the available budget.

 

 

 

5.2.3     Critical vacant positions at South African Tourism

 

It was noted that a huge number of senior positions at South African Tourism are vacant, with personnel in acting positions. These positions include the Chief Executive Officer, Chief Quality Assurance Officer, Chief Operations Officer and Chief Strategy Officer. It was reported previously to the Committee that the Board has lifted the moratorium on appointments and that they were going on a recruitment drive. However, the critical positions at an executive management level remain vacant. The non-filling of these posts has a potential of derailing the Entity from executing its mandate optimally. It was a cause for concern that some executive personnel, are doubling up in different positions, such as the Chief Conventions Bureau Officer who is also acting as a Chief Quality Assurance Officer.  It was, however, noted with optimism that recruitment of staff to these positions had started, and for some, was at an advanced stage with imminent appointments.

 

5.2.4     Sector recovery and the “new normal”

 

The Committee noted that the tourism sector will remain constrained for the foreseeable future. The sector that was once a pillar of hope as a labour intensive industry that provided opportunities for addressing the triple challenge of poverty, unemployment and inequality has almost been decimated. It was noted that there is glimmer of hope for sector recovery as the international market is starting to open, international arrivals are starting to pick up, airlines are coming back to South Africa and business tourism is returning. The Committee also noted that South African Tourism is implementing the Tourism Sector Recovery Plan geared towards sector recovery. The reality, however, is that the sector remains heavily constrained and will take a while before the situation returns to ‘normality’. The reality is that there is a new normal for the tourism sector, and this should be reflected in the current and future plans for South African Tourism. South African Tourism should demonstrate how South Africa is being prepared for the new normal in the tourism sector.

 

5.2.5     Marketing Prioritisation and Investment Framework

 

The Committee recalled that in 2020, South African Tourism revised its Marketing Prioritisation and Investment Framework, based on the 2019 revision. This prioritised 24 markets that were further segmented into 16 Growth and 8 Defend markets, with other markets identified as Watchlist markets. It was noted that 92 percent of the 24 markets are in the international market. The Committee also noted that due to COVID-19, a lot has happened since this Market Prioritisation and Investment framework was developed. The Committee was of the view that South African Tourism should conduct further marketing and investment prioritisation based on the current reality imposed by the impact of COVID-19.

 

5.2.6     Brand tracking

 

The Committee was pleased that SAT is tracking its brand strength and benchmarking with the country’s competitors. The sentiment tracking of what people are saying about South Africa is seen as an important interim measure to keep the brand alive. However, a fully-fledged brand tracking mechanism is needed to be continuously ahead of the competitors.

 

5.2.7     Decrease in international arrivals and importance of the African market

 

The Committee was concerned that the pandemic has set South Africa backwards by four years to return to 10.3 million international arrivals recorded in 2019. The Committee noted that South Africa experienced a 73 percent decline in international arrivals in 2021. The country only received 1.7 million visitors as opposed to 2.5 million in 2020. Of the 1.5 million who came, a total of 85 percent was from the African continent. The Committee is of the view that South African Tourism should quantify the absolute value of the African market, especially the regional market. This will become important in tailor-making packages for the African and regional market as these are not entirely affected by travel bans and other economic shocks in the world.

 

5.2.8   Need to reimagine domestic tourism

 

The Committee noted that in 2021 a total 48.5 million trips were taken in South Africa between January and September. This indicated a decline of 40.5 percent compared to 2020. In spite of the decline, domestic tourism continued to show that it can play an important role in anchoring the sector in South Africa. As most matured tourism destinations depend on domestic tourism, so should be the case in South Africa. The tourism sector will weather the storm of international shocks such as travel bans if domestic tourism is reimagined and properly packaged for the domestic market. The Committee noted that South African products and packages are priced outside the affordability of the domestic market as the target has always been the international market. COVID-19 has bolstered the case for reimagining domestic tourism and developing affordable packages that target the domestic market. However, it brought confidence that SAT was aware of the domestic tourism imperatives and was working on plans to improve. The issue of dual pricing in favour of domestic tourists was noted as a policy matter that is being addressed in the policy review process. The Committee awaits the policy proposals on this matter.

 

5.2.9     Revision of 2030 targets

 

The Committee recalled that the econometric forecast by South African Tourism, based on the Oxford Economics had projected that South Africa will receive 16.5 million tourist arrivals by 2030. The Committee had also considered the more than double target of 21 additional tourists by 2030 which is a policy statement announced by the President in 2019 State of the Nation Address before the onset of COVID-19 pandemic. The National Tourism Sector Strategy also has targets for 2026. COVID-19 has altered the delivery environment immensely and the pre-COVID-19 projections have been nullified. The Committee is of the view that 2030 targets for the tourism sector should be revised and a new realistic target set in line with the available resources.

 

5.2.10   Poor communication and travel bans

 

The world imposed travel bans to and from South Africa based on the discovery of various strains of the corona virus in the country. The Committee noted that the travel bans were unscientific but based on fear mongering by the media and government of various countries. This should have taught South Africa a valuable lesson on how the country should handle its communication in future. The Committee noted that, for example, when the Omicron variant was discovered in South Africa, the information was communicated to the world. This led to travel bans to South Africa. However, other countries had the same virus strain but handled their communication differently. The Committee is of the view that South African Tourism should be in the forefront of information dissemination into markets. It was a cause for concern that South African Tourism was reactive and faced with a serious challenge of correcting brand information after the government had already issued detrimental statements. It is, however, heartening that the world is lifting travel restrictions and international tourists are starting to travel to South Africa again.

 

5.2.11   The MICE Sector

 

The Committee acknowledges that Meetings, Exhibitions, Conventions and Incentives (MICE) sector is critical for the growth and recovery of tourism in South Africa. The Committee noted that Meetings Africa and Africa’s Travel Indaba that were suspended over the past two years had been brought back into physical events in 2022. This was an important undertaking as it showed the world that South Africa is a safe destination that is open for tourism.  The Committee wants the South African National Conventions Bureau to reimagine and restructure the MICE sector to adapt to the new imperatives imposed by COVID-19.

 

5.2.12   Emergence of new travel trends

 

The Committee is cognisant of the emergence of new travel trends that have been necessitated by the impact of COVID-19. The pandemic has given rise to new travel trends and accelerated trends that were already emerging, albeit slowly before the advent of the novel corona virus. These include, amongst others, prioritisation of hygiene and safety; a greater focus on leisure travel; emphasis on local (vs. international); wider adoption of contactless payments; the power of virtual reality; voice control technology; voice search travel; personalisation of experiences; recognition technology; robots; local experience; artificial intelligence (AI); internet of things (IoT); eco travel; augmented reality; healthy and organic food (food and wellness tourism);  customer experience; vaccine tourism; hybrid meetings in the MICE sector and many other new forms of travel with “innovative” names such as bleisure travel. South African Tourism should be abreast of all these new trends. The Committee wants SAT to get deeper insights into these trends and plan for them accordingly.

 

1. RECOMMENDATIONS

 

The Committee makes the following recommendations to the Minister of Tourism for a response no later than 30 August 2022:

 

 

Recommendations in relation to the Department of Tourism

 

It is recommended that the Minister of Tourism:

 

1. With regard to policy review:

 

1. Expedites the policy review process to allow the commencement of the legislative review process.

(ii) Includes the provision of the Department to provide necessary support to businesses that may be affected by future natural disasters.

 

1. Impresses on the Cabinet to work on repealing and rescinding the Treasury Note issued on 25 February 2022 that put appointment of new service providers in abeyance as this has serious implications in the implementation of the 2022/23 Annual Performance Plan.

 

1. Adopts a zero tolerance attitude to officials who commit fraudulent activities and apply serious consequence management to prevent any future financial maleficence.

 

1. Encourages the Department to implement fewer but impactful projects and programmes to maximise the service delivery based on the available budget.

 

1. With regard to implementation of infrastructure projects:

 

1. Ensures that the Memorandum of Understanding signed with DBSA provides a turnkey solution where all infrastructure projects will be handed over to the Department and operating entities in a fully operational state.

(ii) Ensures that the Department develops internal capacity for future implementation of tourism infrastructure projects.

 

1. Provides clarity on the relief and recovery interventions the Department will implement in assisting tourism establishments that were affected by the floods in KwaZulu-Natal, northern Eastern Cape and North West provinces.

 

1. With regard to court interdict on the implementation of the Tourism Equity Fund:

 

1. Follows up on the court interdict against the Tourism Equity Fund and engages relevant stakeholders to understand the transformation imperative in the tourism sector.

(ii) Adopts a counteroffensive strategy to push-back all and any malicious attempt by civil society organisations to derail the implementation of tourism transformation programmes.

 

1. Enhances intergovernmental and intersectoral collaboration among various stakeholders to leverage resources for tourism development and marketing.

 

1. Intensifies intersectoral coordination with the Department of Cooperative Governance and Traditional Affairs on infrastructure maintenance at a local level and Department of Police on dealing with crime related matters.

 

1. Addresses issues that need urgent attention in the sector to assist with tourism development and avoid affected parties taking court actions against the Department or the state.

 

1.  With regard to tourism and climate change:

 

1. Encourages the Department to invest in research related to tourism and climate change for the country to be ready for the imminent future negative impacts to the sector.

 

(ii)   Ensures that the Department implements broad and far reaching programmes that will elevate the response to the current continuous inclement weather and future impacts of climate change on coastal and inland tourism attractions.

 

6.12     Engages the Minister in the Department of Labour and Employment to rectify the employment patterns in the tourism sector to ensure that foreign nationals are not employed on non-critical tourism jobs that can be occupied by South Africans.

 

Recommendations in relation to South African Tourism

 

It is recommended that the Minister of Tourism impresses on the Board of South African Tourism to:

 

6.13   Strengthen internal controls and intensify risk management work to avoid repeat audit findings.

 

1. Continuously reposition the work of the Entity to adapt to constantly emerging international trends for timeless brand and destination relevance.

 

1. In Section 9 of the Tourism Act (Act No. 3 of 20214), change the requirement of the Board of South African Tourism from being Accounting Authority to Executive Authority since the Board is not permanent and does not deal with daily operations of the Entity.

 

1. Provide equitable budget for leisure tourism and business tourism to leverage more from both.

 

1. Strengthen domestic tourism trough repacking affordable deals for citizens and concretise this strategy through a dual pricing policy in favour of the locals.

 

1. Strengthen the marketing mix activities to ensure that the brand stature work yields more conversion and that there is correlation between direct marketing work and sales.

 

1. Engage the Department of Health in understanding the process of health passports and their possible future application in South Africa.

 

1. Investigate new travel trends and plan accordingly to ensure that South Africa as a destination is not left behind global trends.

 

1. Investigate the new 2030 international arrivals target against the 21 million additional arrivals announced by the President as a policy statement in the 2019 State of the Nation Address.
2. Intensify strategic partnerships with other stakeholders to stretch the available budget for domestic and international marketing.

 

1. Ascertain value for money for the funds allocated to all the programmes of the Entity to ensure high return on investment.

 

1. Engage the Office of the President of the Republic of South Africa to relocate Brand South Africa from the Presidency to be the entity of the Department of Tourism to align marketing and brand work of the country.

 

1. Investigate the Chinese model of the “charity begins at home principle” for domestic tourism in:

 

1.  promoting local attractions, keeping accurate statistics for planning purposes and tracking the contribution of domestic tourism to the country’s Gross Domestic Product.

 

1. Identification of local tourism attractions in rural communities and including these in promoting domestic tourism.

 

1. Identify local attractions in rural areas, develop and adequately market these to realise the potential of heritage tourism and rural tourism routes.

 

1. Intensify airlift troubleshooting work to ensure that South Africa regains the routes and airlines that were lost due to the impact of the pandemic.

 

1. CONCLUSION

 

The Committee is generally satisfied with the Annual Performance Plans and related programmes that will be implemented in spending the allocated budgets for the 2022/23 financial year. It is however clear that the huge constitutional mandate of the Department will not be adequately fulfilled due to constrained financial resources. The assessment of the APPs for both the Department and South African Tourism has revealed to the Committee that serious forward planning and rationalisation of resource allocation were conducted in developing these documents. The Department and SAT are commended for conceptualising the programmes and projects to be implemented with the limited available budget.   

The tourism sector will remain in the doldrums for the foreseeable future and the 2022/23 APP is a welcome stepping stone towards sector recovery. The programmes and projects tabled by both the Department and the Entity, combined with the sterling work done by the private sector, will assist in efforts for sector recovery. The court ruling against the implementation of the Tourism Equity Fund, coupled with the National Treasury moratorium on the appointment of service providers present an untenable situation that may derail the implementation of departmental programmes geared towards sector recovery and transformation. The Committee will keep a close eye on the developments in this regard.

 

Report to be considered.