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

The Portfolio Committee on Tourism, having considered Budget Vote No. 33: Tourism,

together with the Strategic Plans and Annual Performance Plans of the National Department

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

1. Introduction

The tourism industry is a growing economic sector globally, and South Africa in particular.

Tourism is thus a sunrise sector, and the New Gold of South Africa's economy. The sector

has a wide value chain that stimulates economic activity in other sectors such as services

sector, creative and cultural industries. It is thus commendable that the President retained the

Department of Tourism during his reconfiguration of the government departments for the 6th

Administration. The Committee acknowledges the bold and ambitious target of doubling

tourism figures from 10.5 million in 2018 to 21 million by 2030.

The tourism sector has been affected by a number of factors, including policy uncertainty and

blockages that diminished tourism growth, investment and job creation. To achieve higher

and more inclusive tourism growth and job creation, the Committee will ensure the

rebranding, repositioning, and renewal of the tourism sector. The oversight work will be

driven by the ideals of radical economic transformation to ensure that the sector works for all

South Africans.

In addition, South Africa continues to confront a challenging economic environment in which

global growth is slowing and trade tensions are mounting. The 2019 Budget addresses

immediate risks to the economy and public finances and outlines measures to build the

capacity of the state and renew economic growth. The Annual Performance Plans of the

Department of Tourism and South African Tourism are cognisant of this fiscal reality and

demonstrate that the public resources will be spent wisely and in accordance with the legal

mandate to render quality tourism services.

The purpose of this document, therefore, is to table the Committee report after a close

scrutiny of the budget allocated to Vote 33: Tourism in the 2019 Estimates of National

Expenditure to ensure that it is aligned to national priorities.

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2. The Committee Process

The Committee received and scrutinised the tourism budget allocated to Vote 33 as outlined

in the 2019 Estimates of National Expenditure (ENE) tabled by the Minister of Finance in

Parliament in June 2019. The Speaker of Parliament referred the Annual Performance Plans

of the National Department of Tourism and South African Tourism to the Committee in line

with Rule 338 of the National Assembly. The Committee then carefully examined the

Annual Performance Plans, and associated budgets of the National Department of Tourism

and South African Tourism in terms of Rule 339 of the National Assembly. As part of this

process, the Committee held budget hearings with the National Department of Tourism on 3

July 2019 and South African Tourism on 4 July 2019. The Committee is reporting on the

Annual Performance Plans and the budget allocated to the National Department of Tourism

and South African Tourism for the 2019/20 financial year in terms of Rule 340 of the

National Assembly.

3. Significance of Tourism

In South Africa, the National Development Plan (NDP) recognises tourism as one of the key

drivers of employment and economic growth. The NDP envisages the promotion of South

Africa as a tourist and business events destination. The direct economic impact of the tourism

industry has significant indirect and induced impacts. Table 1 depicts the contribution of the

sector in 2018.

Table 1: Socio-economic contribution of tourism in 2018

Economic indicator ContributionInternational arrivals 10.5 millionDirect jobs 720 000 direct jobsTotal jobs 1.5 million direct and indirect jobs accounting for 4.5 percent total

employment in South AfricaGDP – Direct contribution

R130 billion, accounting for 2.8 percent contribution to the total GDP

GDP – Total contribution R425.5 billion, accounting for 8.6 percent total contribution to the economy

Total Tourism Foreign Direct Spend (TTFDS)

R58.57 billion

Domestic Trips 13 millionTotal Direct Domestic R18.29 billion

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Spend (TDDS)Source: Computed from UNWTO, WTTC, and SA Tourism 2019

As depicted in Table 1, the contribution of tourism to the economy is measured against

economic indicators such as direct contribution to the GDP; total contribution to the GDP;

direct contribution to employment; total contribution to employment; international tourist

arrivals; domestic holiday trips; visitor exports; and travel & tourism investments.

The international arrivals and domestic trips have a direct impact on other economic

indicators such as contributing to the GDP and job creation, and the Committee will be

conducting close oversight on these two indicators in the 2019/20 financial year.

4. Legislative and policy mandate

The following legislative, policy, and strategic frameworks constitute the ambit under which

the Department and SA Tourism execute their core functions and mandate.

4.1 Constitutional mandate

Tourism is listed in Part A of Schedule 4 of the Constitution of the Republic of South Africa

(Act 108 of 1996) as a functional area of concurrent national and provincial legislative

competence, whilst Part B of Schedule 4 lists local tourism as a local government

competency. This classifies tourism as a concurrent function, and the Constitution enjoins

the three spheres of government to perform specific functions to ensure tourism growth and

development.

4.2 Legislative mandate

At a legislative level, the Tourism Act of 2014 (Act No. 3 of 2014) enjoins the Minister of

Tourism to perform specific tasks to drive tourism policy and strategic direction. The Act

seeks to promote practising of responsible tourism for the benefit of the Republic and for the

enjoyment of all its residents and foreign visitors; provide for the effective domestic and

international marketing of South Africa as a tourist destination; promote quality tourism

products and services; promote growth in and development of the tourism sector; and

enhance cooperation and coordination between all spheres of government in developing and

managing tourism.

4.3 Policy mandate3

The mandate of the Department is premised on a number of policies at a country and sector

level. A selected number of policies on which the oversight work of the Committee is

anchored are detailed below:

4.3.1 The National Development Plan

The National Development Plan (NDP) adopted in 2012 serves as the blueprint of

government, and recognises tourism as one of the main drivers of employment and economic

growth. The target of the NDP is to create an additional 11 million jobs by 2030, and tourism

plays a huge role towards attaining that goal. With regard to the tourism sector, the NDP

envisions:

tourism as a major source of revenue and employment for the country through the

investment in infrastructure, product and service development;

rising employment, productivity and incomes as a way to ensure a long-term solution

to achieve a reduction in inequality, an improvement in living standards, and

ensuring a dignified existence for all South Africans.

Notably, the National Development Plan (NDP) does not have a specific chapter dedicated to

the tourism sector. However, the role of tourism in the NDP, and the broad overview of the

sector are directly and implicitly conjugated with various sectors in a number of chapters.

4.3.2 The New Growth Path

Tourism is acknowledged in the New Growth Path (NGP) as one of the six economic pillars

of South Africa. Tourism is recognised as a labour-intensive sector, with a wide value chain

that cuts across various economic sectors. The NGP is intended to address unemployment,

inequality and poverty in a strategy that is principally reliant on creating a significant increase

in the number of new jobs in the economy. The NGP thus envisages tourism as a vehicle to

expedite transformation and inclusive tourism growth that nurtures participation of all South

Africans in the mainstream economy.

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

The White Paper on the Development and Promotion of Tourism in South Africa (1996)

provides the policy direction, framework and guidelines for tourism development in the

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country. The White Paper is a pioneering policy that has provided a strong base for other

policies and the legislative framework in South Africa since the attainment of democracy in

1994. The White Paper recognises that tourism has been inadequately resourced and funded;

a myopic private sector; limited integration of local communities and previously neglected

groups into tourism; inadequate tourism education, training and awareness; inadequate

protection of the environment; poor service; lack of infrastructure, particularly in rural areas;

a ground transportation sector not geared to service tourists; lack of inclusive, effective

national, provincial and local structures for the development, management and promotion of

the tourism sector; and growing levels of crime and violence on visitors. The White Paper

comprehensively addresses sustainable tourism development in South Africa and there is no

urgent need to overhaul it.

4.3.4 The National Tourism Sector Strategy

The revised National Tourism Sector Strategy spans a period of ten years (2016 - 2026) and

is based on five strategic pillars, namely, effective marketing; facilitating ease of access; the

visitor experience; destination management; and the broad-based benefits. The vision is to be

a top world responsible tourism destination, a safe, rapidly and inclusively growing tourism

economy that leverages South Africa’s competitive edge in nature, culture and heritage,

underpinned by Ubuntu and supported by innovation and service excellence. However, some

of the issues in the NTSS cannot be addressed at a strategy level and require a legislative

review process to assist with strategy implementation. This strategy covers all the strategic

interventions needed to stimulate tourism growth in the country.

4.3.5 The 2014-2019 Medium Term Strategic Framework

The period 2019/20 is the last financial year that concluded the implementation of the 2014-

2019 Medium Term Strategic Framework (MTSF). The concluding MTSF was grounded on

the National Development Plan and had fourteen core priorities. The Department was

pursuing four as follows, namely Outcome 4: Decent employment through inclusive

economic growth; Outcome 7: Comprehensive rural development; Outcome 11: Creating a

better South Africa, and contributing to a better and safer Africa in a better world; and

Outcome 12: An efficient, effective and development-oriented public service and an

empowered, fair and inclusive citizenship.

4.3.6 The State of the Nation Address

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In the State of the Nation Address, the President outlined new seven government priorities for

the 6th Administration as follows, namely, eeconomic transformation and job creation;

education, skills and health; consolidating the social wage through reliable and quality basic

services; spatial integration, human settlements and local government; social cohesion and

safe communities; a capable, ethical and developmental state; and a better Africa and World.

These pronouncements by the President point to a need for increased collaborations amongst

various government departments, and between the public and private sector in South Africa.

The concrete oversight deliverables for the 6th Parliament will be derived from the new MTSF

to ensure that the country achieves the bold and ambitious target of attracting 21 million

arrivals by 2030.

5. The National Department of Tourism

In line with its vision of complementing the national priorities, the Department identified

objectives that would accelerate the delivery of services in the tourism sector. Table 2

outlines the strategic outcomes of the Department, as stated in the 2015/16 – 2019/20

Strategic Plan, which correlate with Government’s Outcomes.

Table 2: Strategic Outcome-Oriented Goals

Government Outcomes Strategic Outcome-Oriented Goal

Outcome 4: Decent employment through

inclusive economic growth

Improve the impact of tourism on the livelihood

of all South Africans

Outcome 7: Comprehensive rural development

and land reform

Increased contribution of tourism sector to

inclusive economic growth

Outcome 10: Environmental assets and natural

resources that are well protected and continually

enhanced

Improve levels of competitiveness and

sustainability in the sector

Outcome 11: Create a better South Africa and a

better world

Strengthen regional, African and international

collaboration and partnerships

Outcome 12: An efficient and effective, and

development orientated public service and an

empowered fair and inclusive citizenship

Achieve good corporate and cooperative

governance

Source: NDT Annual Performance Plan 2019/20

5.1 Departmental Programmes

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The Department fulfils its mandate through four branches, namely, Programme 1:

administration; Programme 2: Tourism Research, Policy and International Relations;

Programme 3: Destination Development; and Programme 4: Tourism Sector Support

Services. These four Programmes are interwoven and work collaboratively to deliver on the

constitutional mandate of the Department. The following information provides the purpose of

each Programme and its associated activities:

5.1.1 Programme 1: Corporate Management

The purpose of Programme 1 is to provide strategic leadership, management and support

services to the Department. Sub-programmes include Ministry, Management, Corporate

Management, Financial Management, and Office Accommodation.

5.2.2 Programme 2: Tourism Research, Policy and International Relations

The purpose of Programme 2 is to enhance the strategic policy environment, monitor the

tourism sector’s performance and enables stakeholder relations. The sub-programmes for

Programme 2 are as follows:

Table 3: Programme 2 Sub-programmes

Sub-Programme PurposeTourism Research, Policy and International Relations Management

Provides strategic direction, on research, and information and knowledge management. Also manages policy development and evaluation, and promotes sector transformation and responsible tourism.

Research and Knowledge Management

Oversees tourism research, knowledge management and impact evaluation of the sector.

Policy Planning and Strategy Oversees and guides policy and strategy development for the tourism sector, and ensures the efficient and effective management of stakeholder relations.

South African Tourism Stimulates sustainable international and domestic demand for South African tourism experiences, and regulates the standard of tourism facilities and services.

International Relations and Cooperation

Drives South Africa’s interests through international relations and cooperation.

Source: NDT Annual Performance Plan 2019/20

Activities in Programme 2 include Public lecture; Tourism Research Seminar; National

Tourism Information and Monitoring System (NTIMS); Sharing best practice workshop;

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Indaba Ministerial Session; Various reports such as ‘State of Tourism’, ‘Evaluation Report on

Incubators’, ‘NTSS Implementation Report’, ‘Bilateral Agreements’ etc.

5.2.3 Programme 3: Destination Development

Programme 3 facilitates and coordinates tourism destination development. Activities in this

Programme include Draft master plans (coastal and marine tourism); Budget resort

initiatives; Support to SANParks sites; Destination Enhancement initiatives; Working for

Tourism projects. The sub-programmes for Programme 3 are as follows:

Table 4: Programme 3 Sub-programmes

Sub-Programme PurposeDestination Development Management

Provides strategic leadership and administrative support to the programme’s activities.

Tourism Enhancement Increases the competitiveness of South Africa’s tourism industry.

Destination Planning and Investment Coordination

Ensures that tourism infrastructure supports the current and future growth of the sector.

Working for Tourism Facilitates the development of tourism infrastructure projects under the expanded public works programme through labour-intensive methods targeted at youth, women, unemployed and disabled people, and small, medium and micro enterprises.

Source: NDT Annual Performance Plan 2019/20

5.2.4 Programme 4: Tourism Sector Support Services

Programme 4 enhances transformation, increases skill levels and supports the development of

the sector to ensure that South Africa is a competitive tourism destination.

Table 5: Programme 4 Sub-programmes

Sub-Programme PurposeTourism Sector Support Services Management

Provides administrative support to the programme’s activities.

Tourism Human Resource Development

Facilitates the efficient management and implementation of human resource development initiatives for the tourism sector.

Enterprise Development and Transformation

Facilitates inclusive participation and sustainability in the tourism sector.

Tourism Incentive Programme Manages the establishment of capital and non-capital tourism incentives to promote and encourage the development and growth of the tourism sector.

Source: NDT Annual Performance Plan 2019/20

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Activities in this programme include Enterprise development incubators; Capacity building

programmes; National Tourism Careers Expo; Tourist Guide training programmes; Tourism

Incentive Programme initiatives; Tourism Safety Programme.

6. Budget Analysis for 2019/20 financial year

The Department’s 2019/20 budget allocation amounts to R2,393 billion of which R334,4

million is allocated to fund Compensation of Employees. The Department has reduced its

personnel from 488 in 2017/18 to the current 472. National Treasury has imposed a ceiling on

Compensation of Employees over the MTEF period and the ceiling amounts are R334,4

million for 2019/20, R360,3 million for 2020/21 and R383,7 million for 2021/22. An amount

of R359,2 million is budgeted for Goods and Services, R1,554 billion for Transfers and

Subsidies and R144,6 million for the payments of Capital Assets. Table 6 reflects the

allocation of funds per programme.

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

Rand Change

Real Rand Change

Nominal % change

Real % ChangeR million 2018/19 2019/20 2020/21 2021/22

Programme 2018/19-2019/20 2018/19-2019/20Administration 271.4 291.5 304.4 323.1 20.1 5.7 7.41% 2.10%

Tourism Research, Policy and International Relations

1 282.0 1 331.1 1 405.5 1 479.8 49.1 -16.7 3.83% -1.30%

Destination Development

401.8 463.3 495.7 530.0 61.5 38,6 15.31% 9.61%

Tourism Sector Support Services

306.7 306.8 330.5 315.7 0.1 -15,1 0.03% -4.91%

TOTAL 2 261.8 2 392.7 2 536.1 2 648.6 130.8 12.5 5.78% 0.55%Source: National Treasury ENE, 2019/20

Table 6 indicates that the overall budget allocation to the Department marginally increased by

0.55 percent in real terms from R2.3 billion in 2018/19 to R2.4 billion in 2019/20. The

Department organises its expenditure under four programmes, as follows:

Programme 1: Administration (R291.5 million);

Programme 2: Tourism Research, Policy and International Relations (R1 331.1

billion); Programme 3: Destination Development (R463.3 million); and

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Programme 4: Tourism Sector Services (R306.8 million)

The main cost driver under this Vote is Programme 2, which consumes more than half

(approximately 56 percent) of the total Vote allocation. This is mainly due to the significant

transfer to the Department’s Entity, South African Tourism. Whilst clearly being the priority

programme of the Department, programme 2 is one of only two programmes that experienced

a decrease in real terms, the other being programme 4. The Committee considers a decrease

in these two Programmes as detrimental to achieving the Department’s policy priorities.

Another major cost driver under this Vote is Programme 3, the bulk of which the allocation

of R371,3 million goes towards the Working for Tourism Expanded Public Works

Programme. The above programme allocations are aligned with the Department’s policy

priorities aimed at marketing South Africa as a tourism destination, job creation, skills

development, destination development and transformation of the tourism sector. The

following information provides budget allocation per Programme:

6.1 Programme 1: Administration

The Programme is allocated R291,5 million in the 2019/20 financial year, which equates to

12,2 percent of the overall departmental budget.

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

Increase/

Decrease in 2019/20

Real

Increase/ in

2019/20

Nominal %

change in

2019/20

Real %

Change in

2019/20R million 2018/19 2019/20

Ministry 23.6 26.4 2.8 1.5 11.868% 6.33%

Management 2.7 3.3 0.6 0.4 22.22% 16.18%

Corporate management 172.7 180.7 8.0 -0.9 4.63% -0.54%

Financial Management 35.0 40.1 5.1 3.1 14.57% 8.91%

Office Accommodation 37.5 41.0 3.5 1.5 9.33% 3.93%

TOTAL 271.4 291.5 20.1 5.7 7.4% 2.10%

Source: National Treasury ENE 2019/20

Table 7 indicate shows that the budget allocation for Programme 1 increased by 2,1 percent

in real terms from R271,4 million in 2018/19 to R291,5 million in 2019/20. Of this amount,

R151,010 million (51,8 percent) is for Compensation of Employees. The amount allocated

for Office Accommodation for the 2019/20 financial year is R41 million. This is for the

payment of the lease for the Department’s Head Office to the Department of Public Works

and Infrastructure. There is a significant increase in allocation, by 16,18 percent in real terms,

10

for sub-programme 2. The Committee will follow-up with the Department on this increase in

allocation.

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

The Programme receives a budget allocation of R1,331 billion for 2019/20, of which R1,254

billion is transferred to the Department’s entity, South African Tourism (SAT). This

represents 94,2 percent of the Department’s budget allocation. SAT received a baseline

budget reduction of R17,378 million in the current financial year. The remaining allocation

available for this Programme is R76,879 million, of which R46,925 million is allocated to

Compensation of Employees.

The programme objectives entail the following:

Create an enabling legislative and regulatory environment for tourism development

and growth by conducting two tourism facilitation initiatives by March 2020.

Enhance understanding and awareness of the value of tourism and its opportunities by

hosting a public lecture and annual tourism research seminar in each year over the

medium term.

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

o developing the national tourism information and monitoring system to collect

data from tourism sector stakeholders by March 2021.

o collecting and analysing statistics on the state of tourism by March 2021.

o developing the national tourism sector strategy implementation report, the

state of tourism report, the evaluation report on incubators in the tourism

enterprise development programme, the impact evaluation report on

departmental capacity- building programmes, and the report on the facilitation

and monitoring implementation of the signed bilateral agreements by March

2020.

Enhance regional tourism integration by:

o hosting a workshop on sharing best practices by March 2020, targeted at

African countries that have tourism agreements with South Africa.

o hosting the indaba ministerial session by March 2021.

Table 8 indicates that the budget allocation for Programme 2 decreased by 1,3 percent in real

terms from R1 282,0 billion in 2018/19 to R1 331,1billion in 2019/20. The main cost driver 11

for this sub-programme is the transfer to the Department’s entity, South African Tourism.

The budget allocation for sub-programme 1 increases significantly, by 15,82 percent in real

terms, while the allocation for sub-programme 5 decreases by 11,91 percent in real terms.

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

Increase

/

Decrease

in

2019/20

Real

Rand

change

in

2019/20

Nominal

Percent

change in

2019/20

Real

Percent

change in

2019/20

R million 2018/19 2019/20

Sub- Programme 1: Tourism Research, Policy

and International Relations Management

8.7 10.6 1.9 1.4 21.84% 15.82%

Sub-Programme 2: Research and Knowledge

Management

26.3 28.1 1.8 04 6.84% 1.56%

Sub-Programme 3: Policy Planning and Strategy 11.7 12.9 1.2 0.6 10.26% 4.81%

Sub-Programme 4: South African Tourism 1 208.0 1 254.2 46.2 -15.8 3.82% -1.31%

Sub-Programme 5: International Relations and

Cooperation

27.3 25.3 -2.0 -3.3 -7.33% -11.91%

TOTAL 1 282.0 1 33.1 49.1 -16.7 3.8% -1.30%

Source: Adapted from ) – Vote 33 Tourism

The reasons for sub-programme 1’s budget changes might be attributed to the number of

reports that will be produced for the medium term and thus the number of consultant services

that will be procured for said projects. The Committee will follow-up with the Department as

this is as significant decrease in sub-programme 5’s allocation to check the implications for

the implementation of programme objectives over the medium term.

6.3 Programme 3: Destination Development

The budget for this Programme is R463, 297 million for 2019/20, of which R371, 344 million

(80,2 percent) is allocated to the Working for Tourism sub-programme. The Expanded Public

Works Incentive programme received a baseline budget increase of R21,153 million in

2019/20. A total of R55,831 million is allocated to Compensation of Employees for the

programme.

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The programme objectives entail the following:

Diversify and enhance tourism offerings by:

o refining and finalising four draft master plans to support coastal and marine

tourism by March 2020.

o supporting five South African National Parks sites through the tourism

maintenance programme over the medium term.

o managing the pipeline of nationally prioritised tourism investment projects

and opportunities by March 2020.

o piloting the ownership and operational/management model and modalities to

implement budget resort initiatives in prioritised nodes by March 2020.

o implementing destination enhancement initiatives at iconic tourism sites.

Create 12 993 full-time equivalent jobs by implementing tourism projects

(Lotlamoreng Dam, Phiphidi Waterfall, Platfontein Game Farm, National Youth

Chefs training programme, one sommelier training course, youth hospitality training

and one food safety programme) through the Working for Tourism programme over

the medium term.

The sub-programmes are as follows:

Destination Development Management, provides strategic leadership and

administrative support to the programme’s activities.

Tourism Enhancement, increases the competitiveness of South Africa’s tourism

industry.

Destination Planning and Investment Coordination, ensures that tourism

infrastructure supports the current and future growth of the sector.

Working for Tourism, facilitates the development of tourism infrastructure projects

under the expanded public works programme through labour-intensive methods

targeted at youth, women, unemployed and disabled people, and small, medium and

micro enterprises.

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

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

Tourism Budget Nominal

Increase /

Real Rand

change in

Nominal

Percent

Real

Percent R million 2018/19 2019/20

13

Decrease

in 2019/20

2019/20 change in

2019/20

change in

2019/20

Sub- Programme 1: Destination

Development Management

20.3 39.0 18.7 16.8 92.12% 82.62%

Sub-Programme 2: Tourism Enhancement 19.0 23.3 4.3 3.1 22.63% 16.57%

Sub-Programme 3: Destination Planning and

Investment Coordination

27.7 29.7 2.0 0.5 7.22% 1.92%

Sub-Programme 4: Working for Tourism 334.8 371.3 36.5 18.1 10.90% 5.42%

TOTAL 401.8 463.3 61.5 38.6 15.3% 9.61%Source: Adapted from National Treasury (2019) – Vote 33 Tourism

Table 9 shows that the budget allocation for Programme 3 increased by 9.6 percent in real

terms from R401,8 million in 2018/19 to R463,3 million in 2019/20. The main cost driver

under this programme, at R371,3 million, is the Working for Tourism expanded public works

programme. This sub-programme entails various skills development programmes and tourism

projects. Through these the Department plans to create 12 993 full-time equivalent jobs over

the medium term. The budget allocation for sub-programme 1 nearly doubled, by 82,62

percent in real terms, for the MTEF period. The Department has indicated a number of

activities under this sub-programme such as: destination enhancement initiatives at iconic

tourism sites, supporting five South African National Parks sites through the tourism

maintenance programme, and refining and finalising four draft master plans to support

coastal and marine tourism among others.

The Committee noted the budget increase in this Programme and will monitor

implementation of projects.

6.4 Programme 4: Tourism Sector Support Services

The Programme is allocated R306,826 million for the 2019/20 financial year. This includes

Compensation of Employees with a budget allocation of R80,606 million and the Tourism

Incentive Programme (TIP) with a budget allocation of R189,513 million. The projects within

TIP include tourism market access, tourism grading support, tourism destination development

and energy efficient projects. The TIP experiences a baseline budget reduction of R15,396

million in 2019/20. The TIP consumes 61,77 percent of the total Programme budget and

Compensation of Employees 26, 27 percent.

The programme objectives entail the following:

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Facilitate the development and growth of tourism enterprises to contribute to inclusive

economic growth and job creation by implementing six enterprise development

incubators by March 2020, an additional two in 2020/21 and another two in 2021/22.

Facilitate tourism capacity-building programmes by:

o training 640 chefs, 200 learners in the Blue Flag training programme, 250

Sommeliers, 1 500 Food Safety Assurers, 1 500 learners in the Hospitality Youth

programme, and 60 learners in the Resource Efficiency training programme by

March 2020.

o convening the national tourism careers expo over the medium term.

o training 20 black women at institutions of higher learning through a customised

executive development programme by March 2020.

o implementing six programmes to upskill and train tourist guides over the medium

term.

o implementing provincial and local government capacity-building programmes by

March 2022.

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

o implementing the Tourism Incentive Programme (market access, tourism grading,

energy efficiency, sector transformation and one additional incentive) in each

year over the medium term.

o conducting initiatives to empower women in tourism.

o providing support to tour operators through social tourism schemes.

o developing one social tourism scheme.

Ensure integrity and facilitate accurate tourism information by:

o regulating the tourist guide industry on an ongoing basis.

o managing complaints in terms of Chapter 5 of the Tourism Act (2014) over the

medium term.

o developing the tourism safety programme in collaboration with partners by March

2021.

The sub-programmes are as follows: Tourism Sector Support Services Management, provides administrative support to the

programme’s activities.

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Tourism Human Resource Development, facilitates the efficient management and

implementation of human resource development initiatives for the tourism sector.

Enterprise Development and Transformation, facilitates inclusive participation and

sustainability in the tourism sector.

Tourism Visitor Services, ensures the integrity of information and facilitates accurate

tourism information.

Tourism Incentive Programme, manages the establishment of capital and non-capital

tourism incentives to promote and encourage the development and growth of the

tourism sector.

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

Source: Adapted from ) – Vote 33 Tourism

Table 10 shows that the budget allocation for Programme 4 decreases by 4,9 percent in real

terms from R306,7 million in 2018/19 to R306,8 million in 2019/20. The Tourism Incentive

Sub-Programme, at R189,5 million, is the main cost driver in this sub-programme. This

programme aims to incentivise priority areas, including providing market access support,

tourism grading support, implementation of energy efficiency initiatives and funding of

transformation initiatives in the tourism sector towards unlocking capital investment by black

tourism entrepreneurs. However, the sub-programme experiences a significant decrease in

nominal and real terms.

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Tourism Budget Nominal

Increase /

Decrease

in 2019/20

Real

Rand

change in

2019/20

Nominal

Percent

change in

2019/20

Real

Percent

change in

2019/20

R million 2018/19 2019/20

Sub- Programme 1: Tourism Sector Support

Services Management

12.7 11.9 -0.8 -1.4 -6.30% -10.93%

Sub-Programme 2: Tourism Human Resource

Development

22.6 27.9 5.3 3.9 23.45% 17.35%

Sub-Programme 3: Enterprise Development

and Transformation

49.7 52.7 3.0 0.4 6.04% 0.79%

Sub-Programme 4: Tourism Visitor Services 22.9 24.9 2.0 0.8 8.73% 3.36%

Sub-Programme 5: Tourism Incentive

Programme

198.8 189.5 -9.3 -18.7 -4.68% -9.39%

TOTAL 306.7 306.8 0.1 -15.1 0.0% -4.91%

The decrease in this Programme will affect the implementation of the Tourism Incentive

Programme which fosters transformation in the sector. The Committee will monitor how this

decrease affects government projects aimed at inducing transformation of the industry.

7. South African Tourism

South African Tourism, through the Tourism Act (No. 3 of 2014), is mandated to market

South Africa internationally and domestically as a preferred tourism and business events

destination, ensure that tourist facilities and services are of the highest standard and monitor

and evaluate the performance of the tourism sector.

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

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

Collaboration with government departments

Strengthening partnerships with the tourism industry

“We Do Tourism” campaign

Positioning South African Tourism as a tourism and business events industry leader in

market intelligence, insights, and analytics

Implementing the Events Strategy

Drive transformation within the tourism industry through enterprise development and

supplier development

7.2 Budget Allocation 2019/20 financial year

The budget allocation for South African Tourism in the 2019/20 financial year is R1 497,9

billion, R228,4 million of which is allocated to fund Compensation of Employees. The

budget for the Entity comes from various sources as indicated in Table 11.

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

Revenue 2018/19 Variance Analysis 2019/20 2020/21 2021/22

(0’000) Actual R’000 % Estimates Estimates Estimates

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NDT Allocation 1 208 048 - 0% 1 254 161 1 323 456 1 392 808

TOMSA Levies 121 516 -9 299 -7 137 356 144 224 152 156

Indaba, Meetings Africa &

other exhibitions

58 999 1 999 4% 60 192 63 503 66 996

Grading fees 21 739 -822 -4% 23 824 25 134 26 516

Sundry Revenue 37 611 16 471 78% 22 324 23 552 24 847

TOTAL 1 447 913 8 349 1% 1 497 857 1 579 869 1 663 323

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

An amount of R1 255.7 billion is budgeted for Goods and Services and R13,8 million for

Depreciation. The Entity receives 83,7 percent (R4 billion) of its projected revenue over the

MTEF period from transfers from the Department of Tourism. The amount of R137.3

million, accounting for 9 percent, comes from the Tourism Marketing South Africa

(TOMSA) Levy. The amount of R60.2 million, accounting for 7 percent comes from

INDABA and Meetings Africa. The amount of R23.8 million, accounting for 2 percent comes

from grading fees, and R22.3 million, accounting for 1 percent from sundry revenue. Table

12 indicates budget allocation to various Programmes used by the Entity to discharge its

mandate for the years 2018/19 to 2021/22

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

Rand Change

Real Rand Change

Nominal % change

Real % ChangeR million 2018/19 2019/20 2020/21 2021/22

Programme 2018/19-2019/20 2018/19-2019/20Administration 132,3 135,2 140,9 148,4 2,9 - 3,8 2,19% -2,86%Business Enablement

85,9 89,7 94,7 99,7 3,8 -0,6 4,42% -0,74%

Leisure Tourism Marketing

1 026,3 1 066,6 1 130,8 1 190,5 40,3 -12,4 3,93% -1,21%

Business Events 129,3 137,7 140,9 148,4 8,4 1,6 6,50% 1,23%Visitor Experience

65,8 68,7 72,5 76,4 2,9 -0,5 4,41% -0,75%

TOTAL 1  439,6 1  497,9 1  579,8 1  663,4 58,3 -15,7 4,05% -1,09%Source: National Treasury ENE, 2019/20

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

Programme 1: Administration is R135.2 million.

Programme 2: Business Enablement is R89.7 million.

Programme 3: Leisure Tourism Marketing the is R1 066,6 billion. This

programme is the main cost driver for the Entity as its core mandate, which

entails marketing initiatives both locally and internationally.

Programme 4: Business Events is R137.7 million.

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Programme 5: Visitor Experience is R68.7 million.

Overall, as depicted in Table 10 the budget allocation to the Entity decreases by 1.1 percent

in real terms from R1 439,6 billion in 2018/19 to R1 497,9 billion in 2019/20. From the table

all but one, programme 4, programmes experienced real decreases for the medium term.

Programme 4 entails the work of the National Convention Bureau, which includes the hosting

of business events and submission and securing of event bids. The Committee will monitor

how the budget decrease will affect the international and domestic marketing campaigns

implemented by the Entity.

7.2 Expenditure Analysis for 2019/20

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

financial year.

7.2.1 International Tourist Arrivals

Global tourism trends indicated substantial growth in international tourist arrivals for the

2018 period, however the same could not be said for South Africa. South African Tourism

reported that international tourist arrivals to South Africa decreased by 0.6 percent between

April and March 2018/19 compared to the same period in 2017. Against a target of 11.2

million international tourist arrivals, only 10.4 million arrivals were reported for this period.

As part of its effort to boost international tourism, the Entity plans to transfer R751.6 million

in 2019/20 to all its international offices to focus on country-specific marketing campaigns

for the hosting of international trade-related events, customer relations management, and in-

country trade partnerships. These efforts are expected to increase international tourist arrivals

from an estimated 11.2 million in 2018/19 to an estimated 14.2 million in 2021/22, and total

international tourism revenue from an estimated R81.3 billion in 2018/19 to a projected

R118.4 billion in 2021/22. The Entity will have to capitalise on the opportunities presented

by the amended visa regulations and the Chinese and Indian source markets, to improve

international arrivals and meet its 5-in-5 strategy targets.

7.2.2 Domestic Tourism19

Domestic travel saw an improvement in performance for the period April-March 2018/19.

Domestic holiday trips accounted for 3.0 million (12.8 percent) of total domestic trips against

a target of 3.1 million. This represents an increase of 14.8 percent from the same period in

2017. The Entity plans to increase the number of local holiday trips from 3.2 million in

2018/19 to 3.6 million in 2021/22. To this end, R165.5 million has been set aside over the

medium term to entrench a culture of domestic travel among South Africans by, among other

things, devising programmes to encourage local holidaymakers to visit various destinations in

the country. Some of the challenges pertaining to domestic travel include a tough economic

climate, struggles in converting Visiting Friends and Relatives (VFR) travellers into leisure

tourists and unclear marketing campaigns. The issue of affordability continues to affect

tourism as a priority in domestic households. In addition, concerns have been raised by the

Committee about the vagueness of commissioned domestic marketing campaigns. During the

2018/19 period, domestic marketing campaigns such as Shot’ Left were vague in directing

travellers to specific destinations. The Entity is therefore faced with the opportunity of

finding innovative means of converting VFR travellers into leisure tourists and increasing

domestic holiday trips over the medium term.

7.2.3 Business Events

The number of business events hosted in South Africa increased from 125 in 2016/17 to 206

in 2017/18, with 91 740 international delegates attending business events in 2017/18. To

increase the number of delegates to 99 500 in 2021/22, and to increase the number of bids to

host events supported from an estimated 105 in 2018/19 to a projected 138 in 2021/22, R427

million has been set aside over the medium term. Business events, also referred to as the

MICE industry (meetings, incentives, conferencing and exhibitions), are a critical component

of the tourism sector. The MICE industry is a multi-billion-dollar industry that is growing

globally and is estimated to reach US$1.2 trillion by 2023. In 2017, the Entity estimated a

R2.2 billion economic contribution from this industry to the South African economy. The

industry thus poses significant opportunities for economic transformation and employment

creation. However, it is important to recognise that the growth of this industry does not solely

rest on SAT but is rather a country effort. It is critical for both the Entity and the Department

to engage with sister departments and their relevant entities (such as Home Affairs, Transport

etc.) on how best to optimise on this opportunity as a country. Issues around destination

access (e.g. visas/infrastructure/airlift), facility development, and safety require collaborative

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partnerships between key stakeholders. It is also of value for the Committee to engage with

the National Convention Bureau on their strategy for the next five years on growing the

MICE market in South Africa.

7.2.4 Quality Assurance

The Entity plans to spend R3.4 billion over the medium term to build the South African

tourism brand. Of this amount, R255.4 million is set aside in 2019/20 for electronic and print

media and marketing material, including producing above the line live footage, and public

relations and marketing campaigns. The Entity also plans to spend R220.2 million over the

MTEF period on assessor fees and training for tourism grading, seminars and workshops; and

integrated marketing and communications campaigns, which include the promotion of the

new tourism grading criteria. This is expected to increase the number of graded

establishments from 5 175 in 2018/19 to 6 100 in 2021/22. The grading of tourism facilities

and products is critical for quality assurance in the sector. At the end of the 2018/19 financial

year, the Entity had only graded 5 147 facilities against a target of 6 229.

In the 2017/18 financial year, only 5058 accommodation establishments were graded against

the targeted 5 932, resulting in only 118 497 graded rooms instead of the targeted 128 821.

The Entity cited the following as some of the reasons for the decline in membership numbers:

affordability, changing business models (from overnight rooms to long-term rentals) and

perceived lack of value of grading. The recurring under-performance under this target has

overall implications for the Tourism Grading Council’s performance in the five-year period

of 2017-2021. The Committee will continue to monitor the performance of this indicator and

the outcomes of the new grading criteria.

8. Committee observations

After a careful scrutiny and examination of the Departmental and South African Tourism

Annual Performance Plans and allocated budgets for the 2019/20 financial year, the

Committee made the following observations:

Observations with regard to the National Department of Tourism

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The Committee made the following specific observations with regard to the National

Department of Tourism:

8.1 Budget

The tourism sector has been identified as one of the economic pillars of the country with a

potential to create labour-intensive jobs. However, The Tourism Vote remains underfunded

by the National Treasury. The Department transferred R1.254 billion of its R2.392 billion to

South African Tourism, which is 53 percent of the budget appropriated to Vote 33: Tourism.

This leaves little budget for the Department to fulfil its mandate as a huge portion of the

budget is used for marketing.

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

following:

• The National Treasury has imposed a ceiling on Compensation of Employees over the

Medium-Term Expenditure Framework (MTEF). The Committee will monitor that

the Department reviews its staff establishment to stay within the Compensation of

Employees ceiling.

• There have been baseline increases for the Expanded Public Work Programme

Incentives. The implications for oversight is how the Department ensures effective

implementation of EPWP funding as this is critical for the creation of the Full-Time

Equivalent jobs.

• The Department has always struggled with the proper implementation of the Working

for Tourism Projects, particularly infrastructure projects. The Department appointed

the Government Technical Advisory Centre (GTAC) which has assisted with a

comprehensive review of its infrastructure projects. This review included an

assessment of selected individual projects as well as the internal systems for managing

these projects. The Department is now in the process of systematically implementing

these recommendations. The oversight implication for the Committee is to follow up

on the implementation process of the recommendations of GTAC.

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• There have been baseline reductions for the Tourism Incentive Programme. The

Tourism Incentive Programme is important for driving transformation programmes.

The Committee will monitor that the Department intensifies initiatives that promote

transformation and scrutinise how the Department reprioritises budget for

transformation purposes.

• There have been baseline reductions for the Tourism Incentive Programme and for

transfers to South African Tourism. The Committee will monitor all the funding

streams for SA Tourism, including contributions from the TOMSA Levy.

• The Department undertook destination planning in the 2017/18 and 2018/19 financial

year. These culminated in the destination planning manual and the Coastal and marine

Tourism Plan. The oversight implication for the Committee is to ensure that the

Department implements the Key Flagship Initiatives in Tourism Nodes as identified

for Coastal and Marine Tourism (Oceans Economy), Rural and Township areas,

upscaling through pilot projects and models. The Committee will monitor that the

department emphasises the consumption of authentic and locally produced cultural

products, events and experiences for increased tourist consumption, revenue

generation, job creation and enterprise development. These should generally focus on

the development of products of origin, enabling market access for these products,

leveraging on maintenance programmes in Parks and Heritage Sites to enhance visitor

experience.

• The department will increase the Enterprise Development Programme and

Transformation Programme. As part of this initiative, a total of 10 Incubators will be

implemented over the MTEF period. However, these are virtual platforms aimed at

facilitating the provision of remote business interventions to SMMEs in the sector.

The Committee noted that the Department has implemented at least three physical

business incubators with a capacity for walk-in type of physical interventions for

SMMEs. The virtual Incubators, will provide assistance remotely. The Department

has indicated before that the virtual Incubators are cost-effective and can provide

assistance to a variety of business types and reach a number of end users. The

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Committee will monitor the proposed virtual incubators to ascertain that they serve

the same purpose of the current method of physical in situ incubators.

• South African Tourism has projected to appropriate R4 billion, which accounts for

52.4 percent of departmental budget in the MTEF. Of this, R1.25 billion is for the

2019/20 financial year. The Committee noted that the Transfers to SA Tourism has

always been hovering around 53 percent of the departmental budget over the past 5

years. The Entity has been implementing the 5-in-5 Strategy that targets 5 million

tourists in 5 years, comprising 4 million international visitors and 1 million domestic

tourists. However, the Entity has not been able to meet its targets as projected in its

5-in-5 strategy implemented since 2017. The oversight implications for the

Committee is to ensure South African Tourism effectively implements the Super

Charge 5-in-5 turnaround strategy.

8.2 Legislative and policy environment

The Department is responsible for providing legislative, policy, and strategy direction for the

tourism industry in South Africa. The Committee noted that the Minister of Tourism had

published a Tourism Amendment Bill for public comments. The Committee agreed to

prioritise processing the Tourism Amendment Bill once it is formally tabled by the Minister

in Parliament. The Committee also noted that the sector is sufficiently covered by the 1996

White Paper on the Development and Promotion of Tourism in South Africa. However, there

are some aspects of the policy that need fresh scrutiny.

8.3 Job creation

The Committee noted the tourism industry currently contributes 720 000 direct jobs and 1.5

million indirect jobs in South Africa, equivalent to 9.2 percent of total employment. This

includes employment by hotels, travel agents, airlines and other passenger transportation

services (excluding commuter services), the activities of the restaurant and leisure industries

directly supported by tourists. At a government level, the Department will create 4331 Full

Time Equivalent jobs in the 2019/20 financial year. The Committee expressed a need for the

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Department to clearly make a distinction between the full time jobs and the job opportunities

implemented through the EPWP Programme as part of poverty alleviation.

8.4 Coordination amongst the three spheres of government

The Committee noted that the Department does not own tourism products and attractions.

The Department implements projects and programmes at a provincial and local government

level. The Committee wants a seamless coordination, collaboration and partnerships between

government departments, spheres of government, and between the government and the

private sector.

8.5 Drop out in projects implemented by the Department

The Committee noted that there are dropouts in the projects implemented by the Department,

especially in the Northern Cape. This led to the Department discontinuing the projects. This

is seen as a disservice to the people of Northern Cape and an urgent solution is needed to

address this matter.

8.6 Rural and township tourism

The Committee expressed a concern that tourism growth is still skewed in South Africa, with

the three major cities, namely, Johannesburg, Durban, and Cape Town, accruing more

benefits. The Committee views this as a consequence of the tourism development and

marketing activities that focus more on urban areas at the expense of small towns and

“dorpies”.

8.7 Nelson Mandela Capture Site

The Committee applauded the Department for finally erecting the sign directing tourists to

the Nelson Mandela Capture Site in Howick. This has been an outstanding matter for a

number of years, and the implementation of this project indicates the effectiveness of

Committee work and the inter-party collaboration in the work of the Committee.

The Committee also noted that the Howick Falls in the vicinity of the Mandela Capture Site

is in a continuous state of decline with regard to its maintenance which has led to local

businesses closing down. The Committee also noted that there is a general lack of

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maintenance in many tourism sites across the country. This needs urgent attention by the

Department.

8.8 Blue Flag Beaches

The Committee noted that some provinces, such as KwaZulu-Natal, particularly the City of

EThekwini, are struggling with enrolling beaches in their coastline in the Blue Flag Beaches

Programme. This initiative is regarded as crucial for marketing beach tourism.

Observations with regard to South African Tourism

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

8.9 Budget

It was noted that the R1.5 billion budget of South African Tourism comes from a number of

revenue sources. A big portion of this budget, amounting to R1.3 billion is an allocation from

the National Department of Tourism, and accounts for 84 percent of the Entity’s budget. The

amount of R137.4 million, accounting for 9 percent, comes from the Tourism Marketing

South Africa (TOMSA) Levy. The amount of R60.2 million, accounting for 7 percent comes

from INDABA and Meetings Africa. The amount of R23.8 million, accounting for 2 percent

comes from grading fees, and R22.3 million, accounting for 1 percent from sundry revenue.

The Committee appreciated the voluntary contribution of R 137.4 million by the private

sector trough the TOMSA Levy.

8.10 Analysis of international arrivals

The Committee noted that at least three quarters of the international arrivals come from the

SADC countries and that much of these arrivals classified as tourism is actually shopping.

This phenomenon caused the metric used to calculate international tourists to cloud the figure

of international arrivals in the country. However, the sizeable amount of the tourists spend

comes from the northern hemisphere markets. It is therefore evident that the country is

experiencing a decline in these lucrative markets that contribute a huge portion of tourism

spend to the GDP, including India and China. Given the weakness of the country’s currency,

South Africa is losing on the windfall gains that could be accruing from the tourism economy

if the core markets were growing. This needs fresh thinking in the 6 th Administration of how

South African Tourism will leverage on the core markets.

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8.11 Implementation of the 5-in-5 Strategy

The Committee noted that South African Tourism is in the third year of implementing the 5-

in-5 Strategy the Entity adopted in 2017 to drive its international and domestic marketing

activities. This is the enhanced strategy for growth, which aims to add four million more

international arrivals and one million domestic holiday trips within five years, ending in

2021. The Committee noted with concern that the Entity is struggling to meet its own targets

projected in this strategy. The underachievement in the 5-in-5 strategy pose a risk for not

achieving the 21 million arrivals by 2030 as announced by the President in the State of the

National Address. However, the Entity has developed a Super Charge 5-in-5 as a turnaround

strategy to drive arrivals. The Committee was, however, pleased to learn that South African

Tourism is currently working on a 2030 strategy that will link tourism marketing activities to

the 2030 vision of the National Development Plan.

8.12 Decrease in international arrivals

The Committee observed with concern that the International tourist arrivals to South Africa

declined by -0.6 percent, only recording 10.5 million arrivals in the 2018/19 compared to the

same period in 2017. A slight growth was recorded from Africa, Central & South America

and North America, whilst the rest of the regions recorded declines in tourist arrivals. This is

a cause for concern given that the global average performance was at 6 percent, above the

projected 4.5 percent for 2018. The Committee noted that this decline was directly linked to a

number of policy/regulatory and brand perception about the country.

8.13 Staffing

The Committee noted that the CEO of South African Tourism has been on precautionary

suspension since April 2019 without being charged. This was seen as gross mishandling of

the matter that needs urgent attention of the Minister. However, the Committee was pleased

that the Minister had instructed the Board to expedite the matter and put it to finality as soon

as possible. An undertaking was made that the matter would be finalised soon as the Board

had concluded its investigation and report was ready to be handed to the Minister. The

Committee also observed with concern that there were numerous acting positions in the

organisation, including those of the Chief Marketing Officer and the Chief Financial Officer.

It was also noted with concern that the staff morale at South African Tourism is not

conducive for maximum organisational performance.

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8.14 Transformation

The Committee noted that South African Tourism implements some transformation projects,

albeit their limited reach to rural areas and townships. It was noted that for the 2019/20

financial year, the Entity has developed an Enterprise and Supplier Development Framework

that guides its efforts in providing support for the advancement of tourism enterprises,

especially emerging black owned enterprises. The programme also assists in further

enhancement of tourism enterprises and suppliers to improve their capability to enhance

destination offerings. This was however, viewed as insufficient. A need was expressed for the

Entity to conceptualise and implement more transformation programmes targeting the rural

and urban areas.

8.15 Visa processing issues

The Committee noted challenges relating to the processing of visas, include limited in-

country capacity, delays and red tape. This is a cause for concern as these visa challenges

have caused declines in key source markets of China, India, Nigeria, Ghana, Ethiopia, and

New Zealand. In India, visa processing delays continue to be a hindrance in the minds of

Indian trade who are very cautious in taking bookings. Tourist arrivals from New Zealand

continued to decline due to worsening visa processing challenges. The Committee raised

serious concerns, particularly with India and China as these form part of the BRICS block

countries and they form a huge portion of the emerging markets globally. The Committee

noted that the ideal visa regime for South Africa is to introduce E-Visa and visa on arrival.

8.16 Safety and security concerns

The safety and security concerns were seen as one of the serious issues contributing to

declining scores on brand positivity and the number of international arrivals in South Africa.

The country experienced numerous incidents and reports of crime against tourists which

created the perception amongst international markets that South Africa is not a welcoming

destination. The negative reports led to some European governments, such as Australia,

advising their citizens about the risks of travelling to the country.

8.17 Water crisis

The Committee was concerned that the water crisis experienced in Cape Town had added to

the negative perceptions about South Africa. In most markets, the travel bookings that were

28

expected for the 2018 Easter period did not materialise. This gave advantage to the

destination’s competitors such as USA, Turkey and Kenya who gained from forward

bookings of 2018 as most consumers either changed or postponed their trips to 2019 and or

2020.

8.18 Inappropriate wildlife interaction

The Committee noted that wildlife interactions and canned hunting have negatively impacted

the country’s brand as a champion of wildlife conservation. Activists and wildlife enthusiasts

are often expressing their views on traditional and social media platforms, and most times

displaying graphic imagery of animals such as elephants, lions and other Big 5 animals

resulting in a public outcry.

8.19 Concerns about land expropriation without compensation

The Committee noted with concern that the land expropriation debate in the country was

wrongly portrayed on several social media platforms in the USA and Australia. This created

negative publicity for the destination globally. In Australia, from mid-February 2018 (post

State of the Nation Address of 16 February 2018), there was negative coverage of South

Africa on the issue. The Committee expressed an ardent opinion that this perception needs to

be managed carefully as expropriation of land without compensation is peaceful and a

constitutional debate about addressing the legacy of the past.

8.20 Domestic tourism

The Committee noted that the country continues to face challenges with regard to domestic

tourism. Of the 17.6 million domestic trips achieved in 2018, 78 percent was from Visiting

Friends and Relatives. This is the bulk of domestic trips which have not been converted into

leisure trips. The key factor affecting domestic tourism is affordability. It was also noted that

the Limpopo province is the highest in domestic tourism due to religious tourism. However,

the Committee is concerned that the Entity has no full understanding of the VFR market and

how to drive conversion of this market into domestic leisure tourism.

8.21 Implementing the Events Strategy

It was observed that South African Tourism has developed an Events Strategy that, amongst

other things, addresses, geographical spread and the reduction of seasonality in the country.

The Entity has indicated that the strategy will focus on key events countrywide that will be

29

implemented through partnerships with established event partners such as Cricket South

Africa, Standard Bank Joy of Jazz, Soweto Marathon, Cape Town Jazz Festival, and National

Arts Festival. The Committee also noted that the Entity uses these events as a hook to some

markets in the African continent, such as the Durban July that is used to attract tourists from

West Africa, including Nigeria.

8.22 Grading

The Committee observed several issues with regard to the grading system in South Africa.

These include benefits accruing to graded establishments, a decline in the number of graded

establishments in provinces such as KwaZulu-Natal, and the need for a shift in policy from a

voluntary paid system to a compulsory but free grading system.

9. Recommendations

Having made a number of observations based on the analysis of the Annual Performance

Plans and Budgets for the 2019/20 financial year, the Committee recommends that the

Minister of Tourism:

Recommendations with regard to the National Department of Tourism

9.1 Ensures that the Department and South African Tourism adopt judicious methods of

budgeting and spending the limited resources through applying effective, efficient,

and economic budgeting principles that will allow the achievement of more outcomes

with less budget.

9.2 Ensures that the Department and South African Tourism develop a strong philosophy

and adopt bias towards rural and township/Ekasi tourism when developing the 2019 -

2024 Medium-Term Expenditure Framework for the 6th Administration.

9.3 Ensures that the Department develops strategies to mitigate dropouts from the training

programmes implemented by the Department and assists provinces such as Northern

Cape to enrol an acceptable number in these programmes.

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9.4 Minister develops an awareness programme to encourage and assist aspirant and

emerging tourism entrepreneurs when they apply for funding incentives in the

Department, and follow up on those who have failed to qualify with a view to assist

them to qualify.

9.5 Minister argues the case for tourism in government and influence all her colleagues in

the Economic Cluster and other relevant government departments to collaborate on

the “We Do Tourism” campaign in making tourism a whole government approach.

This is to ensure that tourism enabling programmes and projects are reflected in the

relevant Annual Performance Plans of departments that should assist in facilitating

tourism growth.

9.6 Ensures that all the Masterplans developed by the Department under the Destination

Development Programme are timeously implemented.

9.7 The Minister prioritises tourism development in villages, small towns and dorpies to

ensure that tourism benefits accrue to these communities, especially those around key

attraction sites, for example villages surrounding National Parks.

9.8 Works with relevant organisations such as Statistics South Africa to determine the

number of villages in South Africa, the potential of tourism in each of the villages,

tourism interplay between these villages and small towns/dorpies, and state what

plans will be put in place to develop and promote tourism in all villages with the

tourism potential.

9.9 Develop a tourism entrepreneurship programme within the Department, identify

citizens with a passion for establishing tourism businesses as SMMEs, and facilitate

entrants of new business players within the mainstream tourism industry to expedite

transformation of the sector.

9.10 Strengthens intergovernmental-relations with all relevant government departments,

provinces and their tourism authorities, and municipalities, to coordinate tourism

development and marketing activities, ensure maintenance of tourism attraction sites,

and provide the Committee with a concrete implementation plan with milestones and

timeframes.

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Recommendations with regard to South African Tourism

9.11 Continues to engage the Minister of Home Affairs to introduce a fully-fledged E-Visa

and visa on arrival regime in South Africa to facilitate tourist movement.

9.12 Works closely with the Department of International Relations and Cooperation and

Brand South Africa in involving the embassies in mitigating the impact of negative

perceptions about the country abroad, and engage the Department of Police to include

places that are not affected by crime when releasing crime statistics to change the

narrative about crime in South Africa and abroad.

9.13 Involves the media houses in lobbying for a patriotic reporting on incidents taking

place on the South African soil, including balanced messages about crime, land

expropriation without compensation, drought and others to portray a positive picture

of South Africa without compromising media freedom.

9.14 South African Tourism adopts a mind shift and fresh strategies to leverage on the

weakness of the South African currency through implementing targeted marketing

campaigns in the core markets, including India and China given that these countries

only constitute a quarter of international arrivals but are the ones driving tourist spend

numbers in the country.

9.15 South Africa Tourism quantifies the effect of the barriers and perceptions of South

Africa by international markets to tourism growth, including safety and security

concerns, water crisis, inappropriate wildlife interaction, land expropriation without

compensation, visa processing issues, and others, indicating which of these are the

main drivers of negative perceptions, and provide concrete solutions to each of them.

9.16 South African Tourism provides a qualitative analysis of whether the barriers and

factors causing negative perceptions of South Africa in international markets are

under control, growing, declining or evenly spread amongst these factors, to get a feel

moving forward of what are the big drivers that affect brand positivity, and determine

a desired action, including enhanced collaboration with other Portfolio Committees

and government departments.

32

9.17 Revise the policy on grading and ensure that the benefits of grading are tangible to the

graded establishments to ensure that more business enrol and stay within the grading

scheme.

9.18 Ensures that the South African Tourism Board finalises the case against the suspended

Chief Executive Officer; expedites filling positions of the Chief Marketing Officer

and the Chief Financial Officer; improve the remuneration package of the Chief

Marketing Officer to attract appropriate skills; and improves staff morale within the

Entity to drive effective domestic and international marketing within the 2019/20

financial year.

9.19 Engage Statistics South Africa to improve data collection and show inter-provincial

movement to ascertain domestic tourism movement patterns.

9.20 Conducts a study to determine the impact of currency fluctuations in the sector with a

view to develop appropriate interventions to mitigate the impact of currency

fluctuations on one hand, and maximise benefits of currency fluctuations on the other

hand.

10. Conclusion

The tourism sector will continue playing an important role in the economy of South Africa,

and the 2019/20 Annual Performance Plans for the Department and South African Tourism

have aptly captured this mandate. The Programmes, key performance indicators, projects are

all perfectly aligned to proposed budget. The budget of the Tourism Vote as presented in the

2019 Estimates of National Expenditure still shows that tourism continues to be underfunded

in the country. The Committee is however encouraged by the number of progressive projects

implemented by the Department using limited budget resources. The Minister of Tourism is

urged to seriously and carefully implement the recommendations contained in this report as

they are a game changer and a turning-point in the way the Department has been conducting

its business in the past, particularly with regard to intergovernmental coordination, tourism

entrepreneurship, rural, and township tourism. The Committee supports the budget

appropriated to Vote 33: Tourism.

Report to be considered

33