National Department of Tourism (NDT) Annual Report 2010/11

Meeting report

Introduction
The Chairperson indicated that some of the Members could not be present as they had been deployed to observe elections in the Democratic Republic of Congo (DRC).

The Director General’s preliminary remarks
Mr Kingsley Makhubela, Director General, National Department of Tourism (NDT) thanked the Members for the support given the Department during the period under review. The support cut across all the political divide of Members from both the Select Committee and the Portfolio Committee.

He mentioned filling of posts of Deputy Director-General: Tourism Growth and Deputy Director-General: Tourism Development filled by Ms Aneme Malan and Ms Morongoa Ramphele respectively.
 
He highlighted that the presentation was similar to the one made to the Portfolio Committee  but he could give an update on two issues which included the laying of three criminal charges in the Limpopo, Eastern Cape, and KwaZulu-Natal stemming from mismanagement of Expanded Public Works Programme (EPWP) Projects, and NDT’s unqualified audit report with no matters of emphasis.

Presentation on the NDT Annual Report 2010/11
Mr Dirk van Schalkwyk, Chief Operations Officer, National Department of Tourism (NDT) briefed Members on the Department’s Annual Report 2010/11. The presentation outlined the comments from the Auditor General. These included that the Department had achieved an unqualified audit with no matters of emphasis. It however indicated that in some instances the NDT did not maintain appropriate controls related to EPWP, for example in regular reporting, submissions of external audit reports, compliance with regular monitoring procedures and assessments of controls.

Mr Van Schalkwyk explained that management had identified the EPWP as an area requiring improvement of internal controls and this had been reviewed throughout the year. The forensic audit investigation initiated by the accounting officer had subsequently resulted in the laying of criminal charges against three companies.

A summary of NDT’s financials was then outlined. According to the budget and expenditure review the Department in four of its major programmes (Administration, Tourism Development, Tourism Growth and Policy, Research, Monitoring and Evaluation had spent 96.6% of the total allocated budget. The key performance area was the Policy, Research, Monitoring and Evaluation programme where the Department utilized all its allocated funds.

An outline of the actual expenditure per programme recorded Tourism Growth as the biggest user of funds at 57%, followed by Tourism Development at 27%, then Administration at 15% and finally Policy, Research, Monitoring and Evaluation at 1%.

The actual expenditure per high level item summarized current payments at 19%, Transfers and subsidies at 80% while Capital Assets were listed at 1%.
 
Mr Van Schalkwyk went on to outline the details of variance in allocated funds. He pointed out that R 19.4 million unspent funds relating to furniture and equipment for the new Tourism Head Office had been requested and successfully approved for roll-over by National Treasury. While the R 20.6 million unspent funds relenting to Expanded Public Works Incentive Programme was returned to Treasury as the Department could not met the criteria for utilization of funds. NDT recorded a saving of R279 000 internally which was returned to Treasury.

Mr Van Schalkwyk then outlined the key performance indicators under each programme indicating the target and the actual performance. Under Administration in the strategic objective aimed at creating a positive image of the Department, NDT had targeted 40% but had achieved 70%. This boast was mainly as result of the World Cup which saw an increase in percentage of its presence in media. Significant performance was also noted under the strategic objective aimed at empowering South Africans through access to tourist information. NDT had reached and exceeded its targets in initiatives aimed at increasing the number of information publication available at existing centres and websites, the number of community based media platforms, number of diverse electronic media platforms, the number of new services accessible through the NDT web portal and percentage compliance to Promotion of Access to Information Act 2000 (PAIA) requirements.

Under performance was reported under the strategic objective aimed at facilitating a conducive global environment that supported growth, development and sustainability of tourism in South Africa. Under this objective, where initiatives aimed at increasing the percentage of negotiated international agreements on tourism growth to a targeted 50%, only 25% was achieved. This was mainly the result of the fact that achievement of these goals was dependent on the cooperation of other countries. This under performance was also noted under the strategic objective aimed at contributing to the strengthening of regional, south- south and south-north and cooperation and integration. The percentage of New Partnership for Africa's Development (NEPAD) tourism action plan initiatives was targeted at 50% and at present nothing had been done, reasons being lack of funding. This trend was also apparent under the strategic objective aimed at ensuring the availability of adequate human capital. The vacancy rate had been targeted at 30% but the actual performance had been 19%.

Over achievement was recorded under the strategic objective aimed at ensuring representation of designated groups in the workplace in its representation of women (50% targeted, 53% achieved), people with disabilities (2% target, 2% achieved) and blacks  (75% target and 91% achieved).

In the strategic goal aimed at maximizing the allocation of financial resources the Department had exceeded its targeted 95% and had spent a total of 96.6% in the 2010/11 financial year.

A 100% performance was reported under the strategic objectives aimed at ensuring alignment and cooperation with entities and ensuring public accountability and transparency.

Under the second programme on tourism development, under performance was recorded under the strategic objective aimed at contributing to job creation through the use of labour-intensive methods targeting the unemployed, youth, women , the disabled and small, medium and micro enterprises (SMMEs). The number of full time equivalent jobs created from the Medium- Term Expenditure Framework (MTEF) Baseline Budget was targeted at 9 861 while 8 090 was the actual performance. Under Social Responsibility Implementation (SRI) of the targeted 4 287, 1 864 were achieved. The total numbers of full time equivalent jobs created from the MTEF EPWP Wage Incentive Budget were targeted at 1 069 but 51 were actually achieved.

A significant under performance was also recorded on the strategic objective aimed at ensuring demographic representatively within the tourism sector. The Department had expected the number of black women in executive positions and ownership of businesses to increase by 20.  However to date this had not been achieved. The actual performance had not been quantified but the following incentives had been initiated which included the Tourism Enterprise Partnership (TEP) for the mentoring of women, which sought to see women being allocated international mentors to support them in the development and implementation of their business plans. The interim report on the BEE study had been released providing insights on the participation of women in the sector. The mentorship programme scheduled for March 2011 was postponed due to clashing schedules.

Under performance was noted under the strategy to address the imbalanced geographic spread and seasonality of tourists and visitors. The initiative to increase the number of accommodation and conferencing facilities upgraded in less visited provinces was targeted at four but the actual performance was at two.

Initiatives to increase the number of Culture, Heritage and Social History Tourism products were identified, developed and packaged resulting in the signing of a draft Memorandum of Understanding (MoU) between NDT and the Department of Arts and Culture. The Heritage Monument project had also been completed, while a draft Culture and Heritage Tourism Strategy had been developed.

Mr Van Schalkwyk noted that the Niche Tourism framework was in place in order to reach the targeted three from education tourism, shopping tourism, home stays and cruise tourism.

Under the strategic objective to ensure the involvement of rural communities the targeted five were to be achieved through the drafting of the rural tourism strategy in the form of a Memorandum of Understanding (MoU) between the Department and the Department of Rural Development and Land Reform (DRDLR).

As to the strategic objective to entrench a culture of travel amongst South Africans, the number of social tourism programmes projects in place target was one. The actual performance was that the Social Tourism concept document had been finalized.

The third programme Tourism Growth, under the strategic objective aimed at providing decent work within the tourism the “Decent Work Framework” was in place. In addition a consultative workshop was conducted on 03 March  2011 in partnership with International Labour Organisation (ILO), Department of Labour, Tourism Business Council of South Africa, Tourism, and the Hospitality Education and Training Authority attended by 114 delegates.

The number of educators placed within the tourism sector for experiential learning was targeted at ten but the target was not achieved.

Under the strategic goal aimed at providing young people within the sector with training significant achievements were achieved. For example, the number of tourism graduates places for experiential learning was targeted at 50 and the number had grown to 300. This was a case similar to that of the number of school leavers who registered for tourism qualifications at higher learning institutions which was targeted at 200 but  had increased to 7 557. This was also the case with the number of young people trained as Chefs which  was targeted at 150 while the actual number had increased to 176.

Under the strategic objective of ensuring competitiveness of the tourism sector the number of participants on service excellence training programme was set at 250 000 and the actual performance was 14 000 frontline staff trained for the FIFA 2010 World Cup.

The fourth programme outlined was the Policy, Research, Monitoring and Evaluation Programme. Under the strategic objective aimed at informing tourism planning and decision making with timeous and relevant tourist information, the Department had achieved the targeted impact evaluation reports for the tourism sector.

The strategic goal to ensure uniformity and functionality of tourism sector’s Monitoring and Evaluation system was to be achieved through the draft Monitoring and Evaluation framework for the National Tourism Sector Strategy (NTSS).

In order to reach the targeted three districts and local municipalities supported in the development of tourism plans, strategies and programmes, NDT clustered the districts per provinces. All districts in three provinces (Limpopo, Eastern Cape and Free State) were supported on the use of the Local Government Tourism toolkit and draft NTTS.

The Department under the strategic goal aimed at managing and conducting tourism research to inform tourism growth and development had accomplished all three targeted tourism research projects and developed three baseline indicators against two targeted. Furthermore the National Tourism Research Framework had been developed.

NDT exceeded its targets under the strategic goal aimed at integrating of tourism priorities into Provincial and Local Government Planning. This was seen in the establishment of the nine Provincial Growth and Development strategies (PGDS) integrating tourism priorities.

The presentation ended with a demographic presentation of the workforce representation as of end of 2010/11 financial year. The total staff members were 310. Africans numbered 257 (83%), Coloureds 19 (6%), Indians 9 (3%) and whites 25 (8%). Mr Schalkwyk noted that a total of 28 people had left the organization. Finally a summary was given on the occupational bands according to sex and races.

Mr Makhubela noted that while the Department had experienced challenges in the implementation of a NEPAD programme. NDT found value in working with the neighboring countries in forming a bilateral strategy. For example the Department had worked with the Namibian Government to ease movement of tourists and tour operators from the Northern Cape, who previously required licenses. A partnership with Lesotho had the potential to subsequently result in the building road infrastructure to connect with South African.  The bilateral agreement with Mozambique by the Minister led to an agreement in the establishment of a standard grading system in the two countries. Similar processes were to take place with and Swaziland and Botswana.

Mr Makhubela noted that the Department was working on a 100% performance appraisal.
 
Discussion
The Chairperson commented that he had thought the targets were designed for reacting to key performance areas and end of year bonus.

Mr Makhubela noted that with regard to the target for black owned tourism enterprise the challenges were in implementation as most of these companies were privately owned and the Department did not have the influence or leverage to ensure that they complied.

Mr Makhubela explained that some of the under achievements were as a results of oversights made by NDT. For example the targeted four establishments in less visited areas had not factored in the economic viability of such a plan, resulting in the Department establishing only two. This was also similar in the case of social tourism as the Department had overlooked defining it as a concept, what it was, how it was to be implemented and funded.
 
Mr Makhubela mentioned that research done around EPWP had revealed that an entanglement had occurred in the planning and implementation process of the project. This had affected the overall performance of the Department as it had resolved to dedicate this year to planning and implement next year.

Ms E van Lingen (DA, Eastern Cape) asked how the Department had ensured BEE compliance of smaller accommodation establishments.

Mr Makhubela noted that it was difficult to ensure compliance of family owned small business entities. However, on the whole the rest of the players were keen on the results of the report commissioned to find out the extent of BEE in the sector. It was generally agreed that the industry was not sustainable and was concentrated in the hands of a few individuals.

Ms Van Lingen asked if the 98% target of Parliamentary questions was answered within the 10 days period.

Mr Van Schalkwyk replied that the responses made were within the time-frame allocated by the Committee. In instances where more research was required NDT requested an extension through the Committee Secretary.

Ms Van Lingen commented sarcastically that the Department had noted their under-spending as a savings.

Ms Van Lingen asked what the Department was doing to promote Municipal Tourism.

Mr Victor Tharage, Deputy Director-General: Policy Research, National Department of Tourism, replied that the NDT had developed a Local Government Capacity Framework working with the municipalities. Instead of targeting individual municipalities NDT targeted district municipalities which could in time trickle down to the lower levels.
 
Ms Van Lingen asked what the EPWP entailed. In the case of the Eastern Cape what had gone wrong with the project?

Ms Van Lingen corrected NDT’s reference to '10' Provinces targeted where Universal Accessibility Awareness Campaigns targeting Tourism Associations were conducted.

Ms Aneme Malan, Deputy Director General: Tourism Growth, National Department of Tourism, replied that it was an error in reporting. What NDT meant was that two campaigns had been conducted in the same Province making the total ten campaigns in nine provinces.

Ms Van Lingen asked how the Department had been so off target with the World Cup Training 14 000 versus 250 000.

Mr Makhubela noted that it had been an overestimation on the Department’s part as an oversight had been made on the fact that the process was long, beginning with the selection of the individuals, streamlining them, the development of the facilities and finally the training.

Mr K Sinclair (COPE, Northern Cape) noted that the report was a good report.

Mr Sinclair said that the title of Mr Makhubela as Ambassador in the Annual Report was not appropriate as it was not a title one carried forever.

Mr Makhubela noted that according to protocol he was an Ambassador for life as he still remained with plenipotentiary responsibilities.

Mr Sinclair noted that in the Audit Report there were two similar surnames and asked if these individuals were related. If there were, was this not a conflict of interest?

Mr Van Schalkwyk replied that the two were father and daughter. The father specialised in finance , the daughter in risk management.  The issue had been raised with the Auditor-General and Committee; it was concluded that no conflict of interest existed.

Mr Sinclair asked for clarification on the plan of action to replace the Tourism Enterprise programme.

Mr Makhubela replied that at the moment the project was a 50/50 agreement in terms of funding. After it had come to an end in the next two years then the Department of Tradtional Affairs (DTA) could take over the programme.

Mr Sinclair commented on the inefficiency of the EPWP programme. He stated the programme was not adding value in comparison to the money poured into it and therefore an alternative should be found to better exposing the allocated 238 million.

Ms B Abrahams (DA, Guateng) asked how sustainable the EPWP programme was.

Mr Makhubela agreed with the sentiments of Members about the viability of EPWP, as some of the projects initiated had been abandoned, run down or dilapidated. He made reference to a project in Mpumalanga where an agreement had been made with an independent private company to run the facilities in order to avoid mismanagement. The community could then own dividends which could be recapitalized to build community infrastructure such as schools, hospitals coupled with the alleviation of poverty. Furthermore, the viability of these projects could be possible if politicians did not intervene and the basis of the selection criteria could remain economic viability and proper scoping of the project. He added that the benefits of most of these projects could only be seen in the long term.

Ms Lerato Matlakala, Chief Director: Social Responsibility Implementation (SRI), National Department of Tourism, replied that under achievements in job creation was mainly as a result of lack of clarity over the suitable projects to undertake during the financial year to generate these jobs. Therefore, the first six months dedicated to the identification of the projects while next year could be allocated for their implementation, making the process more effective. The yields of this planning had started producing desirable outcomes.

Mr Sinclair inquired how valid was the correspondence informing him that a new phrase of banding had began to replace “South Africa Alive with possibility”.

Mr Tharage replied that NDT had not been informed of through any formal or informal correspondence about changes in the Brand.

Mr Sinclair asked what NDT was doing about the Lake Gariep initiative in the Eastern Cape.

Ms Matlakala replied that Lake Gariep and Qwa Qwa were part of the projects handed over after the split with the Department of Environmental Affairs as part of a report on projects. NDT was involved with the updating of its database for most part this year and could dedicate next year to auditing of all contracts and evaluating if there was merit in completing the outstanding projects. In the case of Lake Gariep the service provider had approached the NDT for assistance in the completion of the project and the Department was going to look into the matter.

Mr Sinclair added that he could submit a formal request to the Minister to have the Department send a delegation to the area as it had important potential.

Mr Sinclair asked what NDT was doing about Robben Island as problems such as workers striking gave a negative impression on South African Tourism.

Mr Makhubela replied that Robbin Island did not fall under the mandate of NDT. He added that cooperation depended on the interaction with the other line entities on how NDT could intervene without creating tensions. The road shows to the provincial governments explaining the strategic development plan was intended to enable the other players to have an idea what was NDT’s vision.  He acknowledged suspicions within the provincial and local government structures, and sometimes private structures, that NDT intentions were to take over.
 
Ms Abrahams asked for clarification for the occupational bands in which of the 53% of women employed were black while the other races where not represented.

Mr Schalkwyk replied was that the reality in the workplace was that more than 99% who applied were black.

Mr Makhubela added that the papers which NDT advertised automatically excluded certain individuals as they were not part of the readership. This was being addressed to gain a wider audience.

Mr F Adams (ANC, Western Cape) commented about NDT’s clean audit. He expressed satisfaction that the Director- General had begun his first financial year on a good note and hoped that the benchmark performance could be maintained in coming years.

Mr Adams asked why NDT had not established PPP Partnerships which were crucial for expanding the sector, in particular with reference with the small scale operators with a specific target of informal tourists.

Mr Tharage replied that NDT did not have the PPP in terms of the Treasury definition that related to infrastructure development. Strong partnerships existed in terms of the implementation of the National Tourism Sector Strategy composing of labour, education, knowledge groups and medical focus groups. This was evident during the World Cup when accommodation establishments came together to create a database and give guarantees as requested by FIFA. PPP existed in terms of products such as in the case of South African National Parks (SANParks) and NDT.

Mr Adams asked for the background around the social responsibility target and why had the Department under achieved on its targets.

Mr Adams asked if NDT had expanded the new chef programme currently running at Protea and Southern Sun Hotels to other hotels and establishments such as bed and breakfast establishments.

Ms Malan replied that the aim of the initiative was to spread the benefits of the chefs across the provinces in different brands and accommodation. However, at the moment the programme was still confined to hotels but the matter could be looked into further.

Mr Makhubela concurred with Ms Malan that the main limitation was financial resources. He added that of the R1.2 billion allocated to NDT, R700 million went directly to South Africa Tourism (SAT). This left the Department with a limited operational budget. He noted that this year NDT had been hoping for more funding from Treasury; however, it had not been forthcoming.

Mr Adams asked about regulation of the grading system.

Mr Makhubela replied that SAT could confirm that marked improvements had been made in the grading systems. The criteria had expanded to include environmentally friendly hotels and accessibility to people with disabilities. 

Mr Adams inquired about the fixing of prices in order to promote domestic tourism.

Mr Makhubela noted that the issue of pricing remained a challenge as the industry had hiked the prices when the Rand was low; however, when the Rand stabilized changes were not affected.

The Chairperson noted that there should be uniform branding across the three spheres of Government.

The Chairperson commented that he had a problem with doubling of targets as these had cost implications.

The Chairperson requested the Department to present a breakdown indicating in which province the initiative had taken place. This enabled the Committee to make follow up oversight visits.

The Chairperson commented that NDT was the first Department to achieve the 2% allocated to people with disabilities.

Mr Makhubela replied that currently the NDT had increased the percentage to 3% and was looking to expand and set up facilities which were disability friendly.

The Chairperson asked for examples of initiatives done under social responsibility.

The Chairperson stated that he had an issue with the concept of black majority ownership as it often neglected to mention who controlled the establishment. Ownership and control were different and therefore there was a need to go deeper in the research.

The Chairperson asked if the Department was working with other departments on the Heritage Cultural and Social History.

Ms Morongoa Ramphele, Deputy Director-General, National Department  of Tourism, replied that a MoU had been signed by the two Departments in the Heritage Tourism Strategy communicated with their partners. Furthermore, the road shows to the provinces could bring them all partners on board.

The Chairperson expressed satisfaction that niche  tourism had been brought to NDT.

Ms Van Lingen asked if NDT had followed proper procedure in laying criminal charges against the three companies.

Mr Makhubela replied that a detailed investigation by senior officers was being carried out to ensure that the companies were not let off on technicalities. NDT had also followed legal advice and recommendations given by state law advisors.

Mr Adams asked for clarification as to what NDT was doing to address the issue of medical tourists.

Mr Makhubela replied that a medical tourism strategy plan had been developed; however, loopholes could be identified in the framework as shown in the case of the insurance company that was sued for organ trafficking to the Brazilians and Israel. Discussions were in place with the Department of Health to ensure that this legislative framework was not abused.

Mr M Dikgale (ANC, Limpopo) asked for clarification of the race classification.

Mr Makhubela replied that it was a constitutional requirement to represent the demography of South Africa. It was also established in the public service regulations to identify which race the applicant came from.
 
Mr Sinclair asked how NDT could address the issue of high flight prices to domestic destinations.

Mr Adams replied that an invitation was to be given to the aviation group to enable them to come and discuss how this issue could be resolved.

The Chairperson noted that this should also include tour operators in which complaints had been brought to his attention of alleged monopoly in the industry.

Mr Makhubela noted that the lack of cheap public transport was a hindrance in promoting domestic tourism. He made reference to the Chinese Government that had overcome this challenge by linking the country through bullet trains resulting in significant growth of its domestic tourism to 3.1 billion trips annually.

Mr Adams referred to the incidence in the Western Cape in which conflict between the provincial, city and other authorities resulted in the Heineken Cup being played in England and not Cape Town. This resulted in the City losing out on tourists.

Mr Makhubela noted that the challenge of coordinating all spheres of Government was common in all Government departments. It was more pronounced in the case of the Western Cape which had 16 tourist authorities, which did not communication with each other in the coordination of their activities. He made reference to the Garden Route Exhibition in London that did not have the support of the other authorities and hence was not successful. Furthermore, research conducted by NDT indicated that there was a lot of duplication and “courting” of the same clients as there was no coordination between the key players.

Ms Van Lingen asked what the Department was doing to restore lighthouses which had historical significance and were tourist attractions.

Mr Makhubela replied that all these initiatives rested upon how NDT’s interaction with the line departments and the need to manage the tensions of fear of NDT’s encroachment into other entities' responsibilities. Therefore, the Department in most cases remained to be invited. He made reference of the Free State and the discovery of dinosaur eggs; the Department’s engagement was dependent on the cooperation of the Department of Environmental Affairs as it did not have ownership over the project.

Mr Makhubela added that NDT tried to remain with what it could adequately handle.

The Chairperson indicated that it was the last Committee Meeting and correspondence could be made concerning the study visit to Malaysia and India between 14 and 27 January 2012.

The meeting was adjourned.