ATC230524: Report of the SC on Trade & Industry, Economic Development, Small Business Development, Tourism, Employment & Labour on Budget Vote 38, SP, 2022/2023 APP of the Department of Tourism and South African Tourism, 23 May 2023

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment And Labour on Budget Vote 38, Strategic Plan, 2022/2023 Annual Performance Plan of the Department of Tourism and South African Tourism, 23 May 2023.

 

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour (Committee) on Budget Vote and Annual Performance Plan 2023/24 of the Department of Tourism – Budget Vote No 38 and the South African Tourism (SA Tourism), dated 18 April 2023.   

 

The Committee having considered Budget Vote: 38 and the Annual Performance Plan 2023/2024 of the Department of Tourism and and the South African Tourism (SA Tourism), reports that the committee met with the department on 18 April 2023, wherein the Department and entity outlined the Budget and Spending Plans.

 

1. Introduction

 

The Committee noted the continued importance of the tourism industry to the overall economy. The Department and its tourism agency -SA Tourism - through their spending plans have recognised that tourism industry is an essential economic sector globally and locally. The tourism industry has the potential to contribute significantly to realise an inclusive economic growth agenda.

 

The Committee identified that the spending plans of the Department and its entity recognise the significance of sustainability of tourism and the digital transformation of the industry. More work needs to be done to fully benefit from the strategic spending plans taking into account the demands of the industry as result of Covid-19. Both global and domestic uncertainties would have an impact to the growth of the tourism industries. The Committee is alive to the intervention measures taken by government to reposition the tourism industry through the Tourism Sector Recovery Plan (TSRP).

 

In terms of constitutional requirements, the tourism industry remains a concurrent functional area that cuts across the three spheres of government (national, provincial and local). The Department further oversees the functional operation of South Africa Tourism, which consumes the bulk of the departmental budget. The 2023 Estimates of National Expenditure articulates that the Tourism Act (2014) mandates South African Tourism to market South Africa internationally and domestically as a preferred tourism and business events destination and monitor and evaluate the performance of the tourism sector. Tourism is largely driven by the private sector, hence partnership initiatives to bolster tourism growth and transformation remains critical to spur inclusive economic growth. It is important that collaborative efforts in terms of resource allocation and distribution should reach all provinces and regions, and partnerships with the private sector should be enhanced.

 

Both the spending plans of the Department and its tourism agency, underscore the need for coordinated responses across government, and to work closely with the private sector. The key challenge is to align provincial and local government tourism development strategies and action plans with the national action plans. The Committee believes if the District Development Model is effectively implemented could address some of the issues faced by provincial and local governments in terms of implementing tourism development plans.   

 

It was emphasised that most of the strategic priorities outlined in the TSRP such as Implement norms and standards for safe operation across the tourism value chain to enable safe travel and rebuild traveller confidence; Stimulate domestic demand through targeted initiatives and campaigns; Strengthening the supply-side through resource mobilisation and investment facilitation. Including strategic priorities namely; Support for the protection of core tourism infrastructure and assets; Execute a global marketing programme to reignite international demand; Tourism regional integration; and Review the tourism policy to provide enhanced support for sector growth and development, would need inter sector and intra sector collaboration and coordination. Safety in the industry remains a challenge. It was reported that the Department working closer in a collaborative manner with the South African Police Service to strengthen and enhance safety measures in the tourism industry.

 

 

The Department highlighted that the 2023 Spending Plans are aligned to TSRP, which is aligned to the Economic Reconstruction and Recovery Plan (ERRP), and the National Development Plan (NDP). Going ahead, it was emphasised that the Department need to accelerate the implementation of the implementation of Tourism Equity Fund (TEF). The TEF must respond to both the transformative policy consideration, and holistic growth of the tourism industry.

 

It was highlighted that the implementation of the Tourism Transformation Fund, an initiative implemented through partnership with the National Empowerment Fund (NEF), should be improved and enhanced. The Committee emphasised a need to leverage spending to attract private investment to spur growth of the industry. Thus spending should be directional to be more inclusive taking sustainability, arts and cultural tourism policy issues.

The Committee noted the partnership between the Department and the Development Bank of Southern Africa to fast track implementation of the tourism development programmes. It was reported that currently there are 23 projects on the implementation stage.

 

2. Policy Priorities for 2023/24

The tourism sector must deliver on three of the Sustainable Development Goals (SDGs), namely SDG 8 on ‘Decent Work and Economic Growth’, SDG 12 on ‘Responsible Consumption and Production’ and SDG 14 on ‘Life below Water’. The sector also has a direct impact on efforts to achieve other SD Goals, such as eradicating poverty, advancing gender equality and protecting the environment. The value of the sector finds further reflection in Agenda 2063, with tourism recognised as one of the priority areas towards creating transformed economies on the Continent through inclusive growth and sustainable development. At the national level, the National Development Plan (NDP) recognises tourism as one of the main drivers of employment and economic growth and envisages the promotion of South Africa as a major tourist and business event destination.

 

This vision finds further expression in Priority 1 ‘Building a capable, ethical and developmental State’; Priority 2 ‘Economic Transformation and Job creation’; and Priority 7 ‘A better Africa and world’ of Government’s 2019-2024 Medium-Term Strategic Framework (MTSF) and is closely aligned with the work of the Department of Tourism. Over the medium term, the Department will focus on:

 

• Protect and reignite the demand for tourism to ensure tourism’s contribution to economic growth.
• Enhance and maintain core tourism assets and infrastructure and thereby create work opportunities.
• Support historically disadvantaged tourism enterprises.
• Implement spatial planning and infrastructure projects to build capacity in the township and rural economies.

The Department’s medium-term focus areas are in line with the pronouncements of the 2023 State of the Nation Address (SONA). The SONA continues to prioritise the following issues identified in 2022:

• Support to SMMEs towards recovery of the tourism sector and its growth. R715 million has been prioritised over the medium term towards tourism sector support.
• R944.8 million has been prioritised over the medium term to enhance tourism assets and infrastructure projects.
• R4.2 billion will be transferred to South African Tourism over the medium term to reignite demand for tourism in both domestic and international markets.

 

The Department has also allocated R82.7 million over the MTEF period to fund operational expenditure within the Enterprise Development and Transformation sub-programme in the Tourism Sector Support Services programme. This will be to provide developmental support to enterprises while establishing a channel of emerging operators within the tourism sector. The Department aims to implement spatial planning and infrastructure projects over the MTEF period to build capacity in township and rural economies, and is working to maintain infrastructure on properties managed by South African National Parks. These initiatives garner support for community‐based projects and ultimately contribute to tourism development and work opportunities in rural areas. These projects are primarily funded through the Working for Tourism programme, which forms part of the expanded public works programme, to enable the creation of a targeted 12 399 work opportunities over the medium term.

 

 

 

 

 

 

 

3. Overview of the Departmental spending

 

The Department’s main budget allocation decreased to R2 502.4 billion compared to the final allocation of R2 537.8 billion in the 2021/22 financial year. An amount of R381.5 million was allocated to fund Compensation of Employees, an increase from the R337.5 million allocation of the previous year. An amount of R550.4 million was budgeted for Goods and Services; R1 565.6 billion for Transfers and Subsidies; and R4.8 million for the payment of Capital Assets for the 2022/23 financial year.

 

In support of transformation, the Department prioritised an amount of R540 million over the medium term to establish the Tourism Equity Fund (TEF). The fund was aimed at supporting commercially viable black-owned enterprises to acquire shares in tourism enterprises, promote the visibility of small, medium and micro enterprises (SMMEs), and facilitate the development of community assets and ownership patterns. However, the fund did not take off as planned due to an interdict brought against the Department by AfriForum. In April 2021, an order of the High Court against the Department interdicted the processing or making of any payment pursuant to any application for funding from the TEF, pending a review of the Fund’s criteria. Consequently, the roll-out of the TEF continues to be suspended, pending confirmation of the validity of the criteria of the Fund.

 

4. 2023 Medium Term Spending Outlook

Over the medium term the Department receives a total budget of R7.9 billion. Transfers to South African Tourism account for an estimated 53.3 per cent (R4.2 billion) of this amount over this period. Expenditure is expected to increase at an average annual rate of 3.3 per cent, from R2 502.4 billion in 2022/23 to R2 637.2 billion in 2024/25.

 

The Department’s 2023/24 budget allocation amounts to R2 524.2 billion, of which R374.5 million is allocated to fund Compensation of Employees. An amount of R564.5 million is budgeted for Goods and Services, R1 581.8 billion for Transfers and Subsidies and R3.5 million for the payment of Capital Assets.

 

 

 

The table below reflects the allocation of funds per programme:

Table 1: Overall Budget Allocation 2022/23 – 2025/26

Tourism	Budget				Nominal Rand Change	Real Rand Change	Nominal % change	Real % change
R million	2022/23	2023/24	2024/25	2025/26	2022/23 – 2023/24		2022/23 – 2023/24
Administration	330.2	324.9	338.4	355.1	-5.3	-20.5	-1.61%	-6.20%
Tourism Research, Policy and International Relations	1 417.5	1  435.2	1  499.8	1  567.0	17.7	-49.3	1.25%	-3.48%
Destination Development	395.6	401.1	415.6	433.4	5.5	-13.2	1.39%	-3.35%
Tourism Sector Support Services	359.1	363.0	383.4	399.6	3.9	-13.1	1.09%	-3.64%
TOTAL	2  502.4	2  524.2	2  637.2	2  755.1	21.8	-96.1	0.87%	-3.84%

Source: 2023/24 Estimates of National Expenditure, National Treasury

 

Table 1 indicates that the overall budget allocation to the Department increases by 0.87% in nominal terms when compared to the budget of R2 502.4 billion in 2022/23 to R2 524.2 billion in 2023/24.

 

The Department organises its expenditure under four programmes, these are:

 

4.1 Programme 1: Administration:   The purpose of this programme is to provide strategic leadership, management and support services to the Department. The Programme is allocated R324.9 million in the 2023/24 financial year, which equates to 12.9 per cent of the overall departmental budget.  The budget allocation for Programme 1 decreases by 6.2 per cent in real terms from R330.2 million in 2022/23 to R324.9 million in 2023/24. Of this amount, R169.1 million (52%) is for Compensation of Employees. All the sub-programmes, in real terms, see a decrease in allocation for the financial year. Sub-programme 1, Ministry, experiences a significant decrease in allocation, by 11.93 per cent in real terms. The major cost driver, Corporate Management, sees the second biggest reduction by 6.42  per cent, reducing its allocation from R185.4 million to R182 million for the 2023/24 financial year.

 

4.2 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 receives a budget allocation of R1 435.2 billion for 2023/24, of which R1 344.7 billion is transferred to South African Tourism (SAT). This represents 93.7 per cent of the Programme’s budget allocation. The remaining allocation available for this Programme is R90.6 million, of which R60.8 million (67.1%) is allocated to Compensation of Employees. This leaves the programme with just about R29.8 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. The the budget allocation for Programme 2 increases by 1.2 per cent in nominal terms from R1 417.5 billion in 2022/23 to R1 435.2 billion in 2023/24. However, in real terms, it declines by 3.48 per cent. The main cost driver for this sub-programme is the transfer to the Department’s entity, South African Tourism (SAT), which has, in nominal terms, increased by 1.17 per cent. The Entity is mandated to promote the country as both a leisure and business events destination.

 

4.3 Programme 3: Destination Development: The purpose of the programme is to facilitate and coordinate tourism destination development. The budget for this Programme is R401.1 million for 2023/24, the bulk of which, i.e. R334.8 million (83.5%), is allocated to the Working for Tourism sub-programme. A total of R339.9 million is allocated to Goods and Services for the programme.

 

The programme objectives is to Implement five destination enhancement and route development projects over the medium term to diversify tourism offerings and enhance visitor experience in identified priority areas such as facilitating the implementation of developed tourism concepts in eThekwini metro, and OR Tambo, Pixley Ka Seme and Namakwa districts; implementing the budget resort network and brand concept; managing a pipeline of nationally prioritised greenfield and brownfield tourism investment opportunities.

 

The programme also support destination enhancement initiatives over the medium term by implementing infrastructure maintenance programmes in 18 national parks; implementing infrastructure maintenance and beautification programmes in four provincial state‐owned attractions and support the implementation of 30 community‐based tourism projects. Lastly it creates 12 399 work opportunities through Working for Tourism projects over the medium term.

 

The budget allocation for Programme 3 increases by 1.4 per cent, in nominal terms, from R395.6 million in 2022/23 to R401.1 million in 2023/24. The main cost driver under this programme, at R334.8 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 12 399 work opportunities over the medium term. This is an increase of work opportunities, from the previous indication of 12 370, which is evidenced by the increased budget allocation of the sub-programme by 2.16 per cent in real terms.

 

A substantive decrease in allocation is experienced in sub-programme 1, Destination Development Management, by 62.19 per cent in nominal terms. The decrease in this sub-programmes’ allocation appears to be an ongoing trend, as its allocation was decreased by 18.67 per cent, in real terms, in the previous financial year. Some of the activities under this sub-programme include destination enhancement initiatives at tourism sites 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.

 

4.4 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 R363 million for the 2023/24   financial year. This includes Compensation of Employees with a budget allocation of R83.4 million and the Tourism Incentive Programme (TIP) with a budget allocation of R243.1 million. The projects within TIP include tourism market access, tourism grading support, tourism destination development and energy-efficient projects. The TIP consumes 66.9 per cent of the total Programme budget whilst the Enterprise Development and Transformation sub-programme consumes 13.8 per cent.

 

5. 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 medium term.
• Stimulate growth in domestic tourism by implementing four domestic tourism awareness programmes over the medium term.
• Encourage inclusive economic growth in the tourism sector 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 over the medium term.
• Implement initiatives in each year of the medium term to increase the participation of women in the tourism sector by facilitating the United Nations Women in Tourism pilot programme in Limpopo’s Vhembe and Mopani districts.
• Enhance visitor service and experience over the medium term by implementing the service excellence standard, focusing on identified improvement initiatives and structured support.
• Facilitate skills development by implementing five capacity‐building programmes across the sector over the medium term.

 

The budget allocation for Programme 4 increases by 1.1 per cent, in nominal terms, from R359.1 million in 2022/23 to R363 million in 2023/24. The Tourism Incentive Programme sub-programme, at R243.1 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 decreases by 4.55 per cent in real terms.

 

 

 

 

 

 

6. South African Tourism

 

The South African Tourism presented their Annual Performance Plan for 2023 financial year. In terms of the legislative mandate the South African Tourism (SA Tourism) Board is a Schedule 3A public entity established in terms of Section 9 of the Tourism Act, Act 3 of 2014

 

In terms of impact on policy mandates, SAT reported that the Economic Reconstruction and Recovery Plan (ERRP), which came into operation in October 2020, is the country’s plan for the overall recovery of the economy following the impact of the COVID-19 pandemic. Support for tourism recovery and growth is one of the eight priority interventions in the ERRP, emphasizing reigniting demand, rejuvenating supply and building enabling capability across the tourism sector.

 

Following the ERRP, the Tourism Sector Recovery Plan (TSRP) was adopted by Cabinet in April 2021. The role for SA Tourism as per the TSRP is to stimulate domestic demand through targeted initiatives and campaigns and to execute a global marketing programme to reignite international demand. SA Tourism’s policy mandate and in particular this Annual Performance Plan, has been aligned to the implementation requirements of the TSRP. The committee notes the South African Tourism partnerships with the tourism industry and developed a Marketing Prioritisation and Investment Framework (MPIF) that focuses on identifying markets, optimizing marketing investments across the identified target markets and distributing resources to help meet the set objectives.

 

The South African Tourism’s budget allocation was increased from R1 275.9 billion to R1 455.6 billion in the 2022/23 financial year. This resulted in an increase of the Entity’s marketing budget and activities from R909.4 million in 2021/22 to R1 072.6 billion in 2022/23.

 

The Entity continued in its efforts to increase both international and domestic travel, post the COVID-19 pandemic. International arrivals showed robust performance in January-September 2022, with arrivals reaching 63 per cent of pre-pandemic levels in the first nine months of the year. For this period, the majority of arrivals into the country were from Africa Land at 2.8 million; followed by Europe at 571 536 and the Americas at 226 047. Overall international arrivals into the country were 3.9 million, an increase of 164.7 per cent over the same time in 2021.

 

The UNWTO forecasts global recovery to 2019 levels for the sector beyond 2024. The Entity is faced with the task of reaching 14.8 million international arrivals by 2030. Overall, domestic travel reached 23.9 million trips, 138.6 per cent over the same period in 2021. About 6 million of these trips were for holiday purposes and 10.3 million were for visiting friends and relatives (VFR) trips. While domestic tourism continues to be key for recovery and growth, the constrained local economy continues to pose a risk to the disposable income of potential travellers.

 

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

 

Over the medium term, the Entity will focus on efforts to bid to host events such as business meetings, conferences and exhibitions in rural areas and (small) towns to boost the tourism industry in six focal sectors: mining and minerals, manufacturing, travel and tourism, agriculture, finance, and wholesale and retail trade. For this work, R303 million is allocated for research and R278 million for analytics. The Entity also plans to support bids to host 380 international and regional business events over the period ahead through an additional allocation of R303 million.

 

Ensuring that visitors enjoy their experience is a key component of the Entity’s work, and part of SAT’s revitalisation plan entails assuring that tourism establishments are of a high standard. As such, the number of graded establishments is expected to increase from 5 355 in 2022/23 to 5 805 in 2025/26 at a projected cost of R168.5 million over the medium term. The Entity is set to derive 94.9 per cent (R4.4 billion) of its revenue over the period ahead through transfers from the Department and the remainder through voluntary levies collected from the private sector, income from grading fees, exhibitions and interest from investments.

 

 

 

 

7. Budget Allocation 2023/24

 

The Entity’s 2023/24 budget allocation is R1 474.8 billion, R246.2 million of which is allocated to fund Compensation of Employees. An amount of R1 218.2 billion is budgeted for Goods and Services and R10.4 million for Depreciation. The Entity receives 94.9 per cent (R4.4 billion) 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, interest from investments and sundry income (from exhibitions such as Africa’s Travel Indaba). The table below reflects the allocation of funds per programme:

 

Overall Budget Allocation 2022/23 – 2025/26

SA Tourism   R million	Budget				Nominal Rand Change	Real Rand Change	Nominal % change	Real % Change
Programme	2022/23	2023/24	2024/25	2025/26	2022/23 – 2023/24		2022/23 – 2023/24
Administration	154.8	161.7	169.0	177.1	6.9	-0.7	4.46%	-0.42%
Business Enablement	84.6	88.4	92.4	96.8	3.8	-0.3	4.49%	-0.39%
Leisure Tourism Marketing	1 072.6	1 074.7	1 122.9	1 172.3	2.1	-48.1	0.20%	-4.48%
Business Events	92.2	96.4	100.7	105.5	4.2	-0.3	4.56%	-0.33%
Visitor Experience	51.4	53.7	56.1	58.8	2.3	-0.2	4.47%	-0.41%
TOTAL	1  455.6	1  474.9	1  541.1	1 610.5	19.3	-49.6	1.33%	-3.41%

Source: 2023 Estimates of National Expenditure, National Treasury

 

 

 

 

The table indicates the expenditure estimates for each programme for the years 2022/23 to 2025/26.  For the 2023/24 financial year the budget allocations per programme are as follows:

• Programme 1: Administration is R161.7 million.
• Programme 2: Business Enablement is R88.4 million.
• Programme 3: Leisure Tourism Marketing is R1 074.7 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 R96.4 million.
• Programme 5: Visitor Experience is R53.7 million.

 

The overall budget allocation to the Entity increases by 1.33% in nominal terms from R1 455.6 billion in 2022/23 to R1 474.9 billion in 2023/24. However, in real terms, it declines by 3.41 per cent. In real terms, all the programmes experience a decline in allocation, with Programme 3 (Leisure Tourism Marketing) being the hardest hit at -4.48 per cent.  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.

 

 8. Observations

 

1. The Committee recognises the role of Tourism in terms of generating foreign exchange, including boosting local economic development. Further, Tourism plays a significant role in terms of job creation, and its potential to boost rural incomes, and stimulating growth and expansion of businesses.
2. Further, the Committee highlighted a need to aggressively invest in infrastructure such as roads, energy, water and sanitation and ICT infrastructure to support growth of tourism industry across the country.
3. The Committee emphasised that at all levels of government there is a need for a co-ordinated way in implementing development projects. There is a need for an integrated tourism action plan to accelerate implementation of tourism infrastructure.
4. The Committee underscored a need to leverage public spending to attract private sector investment to tackle transformation objectives, and expansion of the tourism industry in both urban and rural economies.
5. The Committee highlighted the need to lift cultural tourism, and open opportunities in wildlife tourism to contribute to the great of rural economies including small towns and local communities. Collaborative initiatives between the Ministry of Tourism and other Ministries responsible for Arts, Cultural, and Environment should be build and enhanced to support growth of the tourism industry.
6. Further, the Committee identified a need for the Department of Tourism to establish a robust monitoring and evaluation mechanism to monitor the implementation of Tourism Sector Recovery Plan. Spending tracking should cover funds allocated to each strategic focus area.
7. The Committee notes the concern raised by the Industry players about the need to strengthen the resilience of the tourism economy, to address structural weaknesses, accelerate economic transformation, and encouraging more sustainable models of tourism development, and improving competitiveness.
8. It was further noted that overall, the South African economy is not performing as expected. Although domestic economic performance mirrors the global economic picture, which is dominated with high inflation, geopolitical conflicts (Russia-Ukraine war) and with national reserve banks increasing interest rates with direct impact to consumer spending. In South Africa, the electricity crisis has impacted on the overall economy, and this also finds expression to the overall performance of SMMEs in the tourism industry.
9. The concern was raised that the current economic situation marked by high inflation, will have an effect to domestic tourism. Reduced household disposable income will have an effect on expenditure including tourism related expenditure.
10. In terms of the high crime rate in South Africa, this has also impacted on tourism safety. However, coordination with the South African Police Service remains a challenge. Resource allocation, and partnerships with the private sector, need to be enhanced to tackle tourism safety.
11. There is a need for the Department to develop a tourism investment, attraction and promotion strategy to boost capital formation in the tourism industry, and contribute to economic transformation.
12. The public investment in the tourism industry should be taken in light of boosting employment, and increasing investment in the tourism industry (capital formation covering both public and private) expressing domestic and foreign investment in the industry.
13. The major goal for the Department and its agency is to increase domestic and international tourist arrivals including an increase in tourist spend. The Committee recognised the decision taken by the Minister to dissolve the Board of SA Tourism.  It was highlighted that the governance issues presented a reputational and operational risk for the agency. This has the potential to affect organisational health, thus inhibiting the agency to meet its operational goals.

9. Policy Recommendations

1. Investments should reach rural communities, exploit and build cultural and heritage assets, and sporting events including wildlife. To this end, the Committee recommended that over the 2023 medium term, the Minister through the support of the Department, should craft an action plan that will incorporate arts, culture, sport, wildlife and gaming as critical components to tourism industry. The action plan should emphasise collaboration with the ministers responsible for arts, cultural, sport and environment. 
2. The Committee reiterated that the Minister through the Department, needs to fast track the review and development of the Tourism White Paper, 1996; the Tourism Act, 2014; the National Tourism Sector Strategy, 2016, and the National Grading System. This will assist to provide policy and strategic direction to grow and expand tourism taking into account new developments such as sustainability consideration, and digitalisation policy consideration, over the medium term. 
3. The Committee recommends that the Minister before the end of the 2023 medium term, with the support of the Department, apart from existing funds, should create a dedicated Tourism Development Fund to support the tourism industry with a specific focus on regions lagging behind in terms of economic development. Further, private sector financing should be leveraged to broaden access to funding and financing for SMMEs in the tourism industry. To this end, the role of National Treasury is essential.

 

    

Report to be considered