Briefing by the Department of Tourism on its 2021/22 Annual Report

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

22 November 2022
Chairperson: Mr M Rayi (ANC, Eastern Cape)
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Meeting Summary



The Department of Tourism briefed the Select Committee on its 2021/22 Annual Report. The Department had fully achieved 45 out of 55 performance targets, partially achieved eight and not achieved two. Seven of the ten targets not fully achieved had been in the tourism sector support services programme. The Department had spent R2.528bn of its R2.545bn budget (99.7%). It had received an unqualified audit from the Auditor-General of South Africa (AGSA) and there had been no new irregular expenditure in 2021/22.

The briefing also included an update on the Platfontein project to which the Select Committee had paid an oversight visit. It had emerged that many of the problems with the building there had been a result of soil movement. The Department hoped to put out a tender early in 2023.

Members of the Committee asked about consequence management for irregular expenditure from previous years, plans to resolve outstanding fruitless and wasteful expenditure, the impact of and the Department’s response to the murder of a German tourist near the Kruger National Park, employment equity, vacancies, the compensation budget, maintenance of tourist sites and related infrastructure, and the progress of ongoing litigation related to the Tourism Equity Fund.

Meeting report

The Chairperson invited Ms Shamilla Chettiar, Deputy Director-General (DDG): Destination Development, Department of Tourism, to deliver the Department’s presentation.

Department of Tourism 2021/22 Annual report
Ms Chettiar introduced the delegation from the Department. She explained that the financial section of the presentation would be done by Mr Mohith Maharaj, who had been acting Chief Financial Officer (CFO) during the year under review. The Department had fully achieved 45 out of 55 performance targets, partially achieved eight and not achieved two. Seven of the ten targets not fully achieved had been in the tourism sector support services programme.

Mr Maharaj said that the Department had spent R2.528bn of its R2.545bn budget (99.7%). He broke down the Department’s spending by programme and economic classification. The bulk of underspending had been on compensation of employees (due to the Department’s strict adherence to policies aimed at reducing spending on salaries and wages) and goods and services (due to COVID-19-related restrictions on travel and subsistence and unconcluded Expanded Public Works Programme (EPWP) projects). The Department had received an unqualified audit from the Auditor-General of South Africa (AGSA) and there had been no new irregular expenditure in 2021/22.

Ms Rhulani Ngwenya, DDG: Corporate Management, Department of Tourism, summarised the Department’s performance in its corporate management programme and discussed employment demographics.

Ms Aneme Malan, DDG: Tourism Research, Department of Tourism, summarised the Department’s performance in its tourism research, policy and international relations programme.

Ms Chettiar summarised the Department’s performance in its destination development programme.

Ms Mmaditonki Setwaba, DDG, Tourism Sector Support Services, Department of Tourism, summarised the Department’s performance in its tourism sector support services programme, drawing attention to several initiatives that had not been successfully achieved.

Ms Chettiar provided an update on the Platfontein project, as requested by the Committee after its oversight visit. It had emerged that many of the problems with the building there had been a result of soil movement. The Department was considering the report of the technical team, and possible solutions would then need to be matched with the available budget, after which discussions could be held to determine where all of this left the stakeholders in the community. The Department hoped to put out a tender early in 2023.

See attached for full presentation

Mr M Mmoiemang (ANC, Northern Cape) commended the Department for receiving an unqualified audit, but asked for assurance that the Department knew what had led to some errors in the financial statements. Was it possible that the same errors could re-occur? Had consequence management been carried out for incurring irregular expenditure? Had the murder of the German tourist near the Kruger National Park had an impact on bookings? What had the Department done to mitigate its impact? Had the World Economic Forum’s Travel and Tourism Development Index (TTDI) been embedded into the Department’s planning activities? What had been the implications of budget cuts for compensation of employees on employment equity targets? What plans were in place to ensure that 50% of senior management were women? What were the plans to ensure that vacancies were filled? Had there been any engagement on mitigating the impact that the problems at South African Airways were having on tourism? Another concern was the issue of leave entitlements, which were currently sitting at R21.6m. He asked for an update on the suspension of the DDG for corporate management. Had it been resolved? Had the policy review process been finalised?

Mr T Apleni (EFF, Eastern Cape) was a bit worried about the treatment of interns, who went through training with the Department but were then not considered when vacancies appeared. He said that many tourist attractions were poorly maintained, such as Qunu. Efforts must be made to ensure that these places were maintained so they could continue to attract tourists, as tourism was one of the most effective sectors that could contribute towards the country's economy.

The Chairperson said that Mr Apleni raised a good point about maintaining tourist attractions. He added that the Department could investigate partnering with other stakeholders such as the Department of Transport to fix the roads leading to tourist attractions, for example, and generally make use of the district development model to ensure that tourism assets were well maintained. How did the Department plan to resolve outstanding fruitless and wasteful expenditure of R194m? He asked for an update on the legal dispute around the Tourism Equity Fund (TEF), which had been going on since 2020 but was still not resolved, and for an update on safety security in the wake of the death of the German tourist.

Ms Chettiar confirmed that the DDG for corporate management had been suspended, but she had now returned to work and was back at her desk.

Mr Maharaj said that the emphasis of the matter in AGSA’s report was due to intangible assets that were incorrectly stated, largely relating to software licenses. The two cases of irregular expenditure were investigated. Recommendations had not yet been communicated to the Department as a whole and consequence management had not yet been implemented. There was some confusion about leave entitlement and leave liability. The actual figure for leave liability was R125 000, not R125m. This amount referred to leave taken in advance, before it had strictly accrued to the employee. The R194m fruitless and wasteful expenditure had been incurred in 2018/19. It had been investigated and the relevant labour relations issues were now unfolding. Once these had been concluded, the R194m would be dealt with. In 2021/22, meanwhile, fruitless and wasteful expenditure of R104 000 had to be written off.

Ms Malan recalled that the Department had not been able to finalise the policy review process in the previous year. It was currently in the consultation phase and was pushing very hard to have a draft white paper ready to present to both the Select and Portfolio Committee before the end of 2022/23. Regarding the airlift strategy, she said that re-establishing its own airlift capacity was part of the tourism sector’s recovery plan. The sector was working hard with the Department to ensure that it maintained existing capacity, regained lost capacity, and spread capacity across the country. Recently there was an announcement of more airlift capacity between Cape Town, Durban and the Kruger National Park.

Ms Setwaba said that she was not aware of any survey to determine the impact of the German tourist’s murder on bookings but she could talk about the measures taken to mitigate the effects. The Department had dispatched officials to meet the other members of the victim’s touring party to provide support. The Minister of Tourism had met the victim’s widow, along with the German ambassador, who had confirmed in a media briefing that South Africa was still considered a safe country and the incident was seen as isolated. The Minister had also met with the Minister of Police, who had addressed the public. The Mpumalanga Member of the Executive Committee (MEC) for economic development and tourism had also been present. Business people and members of the community had shown strongly that they condemned the incident. She believed that the measures taken had minimised the negative effects. The Department continued to engage with relevant partners to ensure that South Africa remained a safe destination. She admitted that the TEF case had been going on for a long time. The Department had requested its counsel to provide advice, firstly on the prospects of success in the litigation and secondly, on the process to restart the implementation of the TEF. Once this advice was received, the Department would be able to decide on the way forward.

Ms Ngwenya said that National Treasury budget cuts for compensation of employees were implemented in the 2021/22 financial year. However, the Department had requested permission to reprioritise funds towards compensation. The request had been approved, resulting in an injection of R33m for compensation for 2022/23. This allowed the Department to prioritise 48 positions, and in March 2022, top management approved a recruitment plan for the 2022/23 financial year. To date, over 50% of the positions have been finalised and the current vacancy rate is now sitting at 7.9%. The Department has since achieved the target of 50% women in senior management representation. Beyond this, more senior management positions had been ring-fenced for filling by women so that one or two terminations would not result in a missed target. She admitted that the Department had not achieved its intentions concerning interns but was paying attention to the issue and would be able to provide statistics on how many interns were appointed at the next meeting.

Ms Chettiar added that both the Minister and the Deputy Minister had personally been engaging on matters of safety and security both for communities and tourists. They had been working closely with their German counterparts on the murder. The ambassador of Germany had expressed his appreciation for the caring nature of the South African government in response to the incident. The German market remained confident. A German leisure carrier ran flights directly from Frankfurt to the Kruger National Park. These flights were set to bring in 30 000 people directly to the park annually. The Department did take TTDI into consideration. South Africa ranked 61st out of 140 countries in 2019, second in Sub-Saharan Africa after Mauritius. In terms of natural resources, it was ranked 15th. In terms of World Heritage Sites, it was ranked 16th, and in terms of cultural resources and business travel, it was 23rd. The issue of safety and security remained a concern however. The TTDI was certainly taken into account in the Department’s planning. The Department agreed that maintaining tourism assets was a critically important area of work. It had recently expanded its maintenance work into provincially-owned tourism assets. The Department was incorporating maintenance in tourism precincts into its work as part of the district development model. It was looking to ensure that maintenance and development of tourism precincts and tourism products was incorporated into the planning of all spheres of government, including district municipalities.

Closing remarks
The Chairperson noted that there were not enough Committee Members present for minutes to be adopted. He recalled that the Committee had identified China, Indonesia and Singapore as potential destinations for its international study tour. He reported that there had been delays in getting responses from these countries. China had since responded, indicating that the delegation would have to undergo a ten-day quarantine and if any delegate tested positive for COVID-19, the entire delegation would have to leave. South Korea had been considered as an alternative to China but it had indicated that it had two other delegations coming and so would not be able to accommodate South Africa, while Indonesia and Singapore had been unable to accommodate the delegation because their parliaments would be in recess at the planned time for the tour. As a result, the Committee would not be undertaking a study tour in January.

The meeting was adjourned


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