Department of Tourism 2020/21 Quarter 1 performance; with Minister and Deputy

Meeting report

Introductory remarks

The Chairperson welcomed the Minister and Deputy Minister of Tourism to the meeting, as well as Members of the Portfolio Committee and officials of the Department of Tourism, and the public following the meeting via various social media platforms.  He referred to the rains that were being experienced in various parts of South Africa, stating that he hoped that they would not affect the connectivity of the meeting, since it was a virtual meeting.

Minister’s overview

Ms Mmamoloko Kubayi-Ngubane, Minister of Tourism, said that due to the lockdown which the government had imposed, there had been an issue with regard to visas, since all free-entry countries were banned entry into the country. Hard copy letters had been sent to different destinations and missions, and when the lockdown was lifted, these letters needed to be retracted so that the new order could be implemented. The retraction had been done in time to implement the lifting of the lockdown.

As South Africa was lifting the lockdown, their key source markets were going into a serious lockdown, which would make trade difficult. However, the government could take advantage of the untapped markets within Africa, especially in West Africa. This was because South Africa’s key source markets, the USA and Europe, were under heavy lockdown currently. This was hindering trade, especially in terms of tourism, because of quarantine provisions for those seeking a short-term holiday.

2020/21 Department of Tourism Quarter One Performance

Programme One: Service delivery environment

Referring to the service delivery environment, she said that since imposing the lockdown in March 2020, the Department had developed COVID-19 protocols and measures to ensure service delivery. Several aspects had been looked into, like the review and adaptation of internal business processes, systems to stop the spread of the virus among the employees and those visiting the site. Additionally, ways to save vulnerable businesses in tourism had been considered in order to stop them from crumbling. During this time, psycho-social support had also been provided to the employees.

Two surveys had been conducted in April and June on tourism businesses. The results showed that 99% of the businesses were affected, 67% were optimistic about business survival, and 75% had closed because their revenues had dwindled. 43% of the enterprises had indicated that they had kept their staff and put none on redundancy, due to support from the Unemployment Insurance Fund (UIF). Most of the businesses were considering defaulting rather than canceling the bookings, which was a system that the Department also wanted to adopt).

There had been budget reprioritisation aimed at the establishment of the R200 million Relief Fund for SMMEs and R30 million to support tourist guides. To support the pandemic, the government had cut R1 billion from the tourism portfolio. Criteria for granting relief fund to tourist guides included that one had to be a freelancer and be registered with the Tourist Guide Registrar. 4 415 tourist guides had been granted R1 500 for three months from the relief fund.

The Department had also proposed ten measures to support South Africa’s tourism recovery through a combination of supply and demand-side intervention. In terms of target achievement, 76.19% was achieved by the Department from all that had been planned.

Programme Two: Tourism research, policy and international relations

The Department had 17 targets for the programme, and 16 (94%) were achieved. It had planned to develop nine monitoring and evaluation reports to be released in quarter one. The National Tourism Sector Strategy (NTSS) had been achieved. Three initiatives were implemented to create an enabling policy and regulatory environment for tourism growth and development. First was a policy review on the quality assurance framework, second was the consultation on the national tourism information and monitoring system (NTIMS), and last was a draft review of the development and promotion of tourism in South Africa.

Program 3: Destination development

The Department had nine targets, where it looked at physical spaces and places, and all these targets were achieved despite the lockdown. No work opportunities had been created in the first quarter because this was not part of the target.

Program 4: Tourism sector support services

This program had 20 targets, and only nine were achieved. The reason for non-achievement was because quarter one was mainly about creating concepts, and there were delays in the planning instruments. One of the initiatives was to increase the participation of women in tourism. There were two initiatives on this, but they were not achieved because of a delay in securing partnerships.

Program I: Corporate management

Although many targets were achieved under this programme, one that was not achieved was the initiative aimed at increasing women’s representation at the senior management service (SMS) level from 45.7% to 50%.  Representation of people with disabilities had risen from the initial 3% to 4.5%. Suppliers had been paid on time, as prescribed, within 30 days.

Financial information

R2.4 billion was the initial funding allocated to the Department. However, as a way to help fight COVID-19, R1 billion had been returned to the revenue fund. There had been under-spending on tourism research, policy and international relations and destination development due to the lockdown.

Discussion

Mr H Gumbi (DA) referred to the survey conducted on tourism businesses, and pointed out that the survey report showed serious damage to the businesses due to COVID-19. However, he questioned whether the restrictions on countries entering South Africa were not further affecting their resilience.

The presentation had highlighted the implementation of international biosecurity protocols which had put in place to curb the spread of the virus, and to ensure safe travel and rebuild travellers’ confidence. However, his questions were on how effective these measures were, since there was another higher committee – the World Travel and Tourism Council (WTCC) -- which was responsible for making decisions about air travel.

Mr P Moteka (EFF) commented that the survey which had been done in June must be done again now to see if those businesses which were struggling then had revived, and to establish how much COVID had affected the economy. He asked the Minister about the R130 million for the tour guides, and whether she was sure that that was whole amount allocated for such a purpose. It had been reported that R200 million had been allocated for tourist refunds, and that the whole amount had been spent -- was there nothing left from that amount? He was asking this because he did not want the Minister to give excuses when the reports came out on how the money was spent. Additionally, were not these figures affected by the corruption pandemic? There was a need for assurance.

Mr K Sithole (IFP) said that during the lockdown, some initiative programmes had been removed, like trading programmes. How had these programmes now been resumed, since trading was crucial to the local municipalities and the Department? Secondly, how many countries were now allowed to travel to South Africa? In the first quarter the Department had targeted 17 objectives in programme one, but had achieved only 14, so how would they achieve the remaining three? Fourthly, as the compensation to employees had resulted in under-spending, would the Department employ more people so that the budget could be achieved? His last question was on the R1 billion budget adjustment for quarter one -- did they have any problems with that?

Mr T Khalipha (ANC) acknowledged that good work had been done by the Minister on the roadshow, but it had to include the townships. This programme should always support the rural areas. He asked also for an improvement in communication from the Department. As the economy was opening up, there must be weekly briefings because people were not sure whether they could travel to certain areas or not. The country had lost more than two million jobs, so the economy must reopen.

Ms P Mpushe (ANC) applauded the Minister and the Department for the good work done during COVID-19. She asked whether the challenges faced by sister departments could be resolved by holding joint portfolio meetings to see how best to take advantage of the relaxed COVID measures. The Department should come up with a full report on how South Africa could mitigate the spread of the virus from the outside.  She asked about the unqualified audit report, and said that the Department must prioritise women. She applauded the 4% achievement for the employment of people with disabilities, and for the 100% on-time payment of invoices.

She suggested that the Department should provide a list of tourism properties owned by the government, and that a report should be drafted to explain which businesses had not benefited from COVID funding, and on what basis their applications had been turned down.

Mr G Krumbock (DA) said that fewer than 7 300 applications had been made to the relief fund. And asked what these applications constituted as a percentage of all the tourism businesses or enterprises in a country that could have applied.

Secondly, at the end of July, the reports had stated that 4 000 businesses had received their grants, of which 2 071 black-owned businesses had got back into business. What criteria were used to deny grants to the non-black-owned businesses that were in the same category?

Thirdly, how would the a COVID vaccine be rolled out after health workers and the vulnerable had received it, as social distancing did not work in tourism as it was a face-to-face kind of work for people like tour guides. Would tourism be a prioritised sector?

Ms M Gomba (ANC) said that the presentation showed three phases for South Africa’s tourism recovery, which was a good proposal. However, it had to show when the phases would start and end for the purpose of monitoring and evaluation, according to the timeframes established after the implementation of the recovery plans. The issue of unemployment during COVID had affected every sector, and how many of the privately-owned enterprises had applied for UIF to pay their employees? Was there a plan to ensure that South Africa benefited from tourism through job creation, because tourism should be a driving force to improve the economy of the country?

Mr M de Freitas (DA) asked how the training and empowerment programmes ensure the participants that jobs would be obtained? How was the training measured against actual jobs obtained? Why had there been any delays, as some training programmes could have still taken place despite the lockdown? The latest entry regulations required COVID negative test results, so why should one have to be quarantined upon entry? What were the criteria used to ascertain high and medium-risk countries, since the new cases and deaths did not match on the list? For example, Italy had more cases, yet it was not on the list, unlike Peru which was on the list.

Ms L Makhubela-Mashele (ANC) said that since the economy was recovering and the government was talking about an economic recovery plan, and tourism was among the economy-enhancing Departments, how would the Department work towards a recovery plan without relying on funding, but just backed by its resources? The Department should explain in detail what the strategy was.

The Chairperson thanked the Minister for always showing up at meeting or providing apologies when she was unable to attend. He said the Minister had been detailed in her reports regarding the programmes, their successes and failures, without concealing anything.

Minister’s response

Minister Kubayi-Ngubane, responding to questions raised by Members during the discussion, said the details all of the 4 000 enterprises that benefited from the relief grant had been published on the website for the public accountability.

The question about priority for the tourism sector when a vaccine became available was a matter for the Minister of Health, so she was not able to give a substantial answer.

Of the 4 000 enterprises that had received grants, six companies had been paid late because their accounts had problems

Regarding the personal protective equipment (PPE) scandal, the Department had ensured that there would be publication of its activities for public review. This included the list of businesses that had received the grant, and the Department’s spending.

Regarding visa issues, the restrictions applied to both exit and entry specifically for those countries most affected, like Hong Kong, China, India, Thailand and Israel. However, no person would be quarantined if their COVID test results were negative within 72 hours after the test.

Regarding the risk-adjusted strategy, there would be a step-by-step implementation of opening up South Africa as a way to curb the resurgence of the pandemic. Its progress would be observed after two weeks.

About the opening of South Africa’s borders, she said that this had been based on the advisory of the World Health Organisation (WHO), as published on its website. The WHO had a guideline on the opening of international travel which South Africa had adopted.

Deputy Minister of Tourism, Mr Fish Mahlalela, responded on the point raised by Mr Krumbock, that owners of “white” companies were restricted from obtaining relief funding. The selection process for the social relief programme was soundly based on the black empowerment equity policy, which balanced all races, so the 3 000 companies which had been disqualified was because of other issues in which race did not play a role. He also pointed out that companies that qualified were not 100 percent perfect.

An official of the Department supported the remarks by the Deputy Minister, and said that during the selection process, all applicants were given reference numbers (called TRF numbers), which were loaded on to the system in order to track the applications. Unofficially, there were about 30 000 businesses that had been targeted, and for the 3 000 companies that were disqualified, it would have been for one of the following reasons:

• The Department had used the triple Bs code to select SMEs, where the targeted businesses had a turnover of not more than R5 million;
• They also looked at the BEE levels, where the target was level one to four. Level one was for 100 percent black-owned businesses, level two for approximately 51 percent black-owned businesses, level three for a business that did not have a black owner, but qualified after verification of the elements that were stated in the scorecard (for example, supply development), and level four for a business that did not get beyond the R5 million mark.
• Some businesses did not receive the relief because of the shortage of funds.
• Some were disqualified because their businesses were not related to tourism

Deputy Minister Mahlalela responded to Mr Khalipha’s concern on rural and township tourism. He said that the Department adhered to the viewpoint made by the Committee to not neglect township tourism development by taking advantage of the tourism month, which was themed “Tourism and Rural development” to reach out to rural areas.

The official of the Department said that the reduced funding would present a challenge. However, he suggested that they should maximise the finances allocated to tourism, and could also leverage on partnerships, including in government itself, by innovating the use of technology.

Regarding the amount of training conducted, he said the programmes were closely reviewed and monitored to make the necessary improvements. For the Youth Development Programme, there had been up to 60 to 70 percent absorption of businesses into the market which were owned by the individuals who had been beneficiaries of the programme.  He stressed that because the programme emphasized job training, unlike other institutions, the skills gained through the training boosted the confidence of individuals to own businesses locally, and even to find international job opportunities. The feedback had also indicated an improvement in trainees’ quality of life.

The Executive Development Programme directed towards women was in partnership with various industries, to train junior/entry-level officers. A number of the trainees got promoted to general manager positions after completing the training. Therefore, the programme should continue because of the real impacts on junior officers.

Ms Aneme Malan, DDG: Tourism Research, Policy and International Relations, Department of Tourism, referred to the monitoring and evaluation (M&E) of the programme, and said they conducted various services as part of their M&E program, and assisted departments like Home Affairs and the Reserve Bank to align their programmes to the specifics of overseas organisations.

A black economic empowerment (BEE) survey had indicated that there had been about 32 000 SMEs, but using their indicators before Covid-19, they had noticed a boom that had seen SMEs increasing to approximately 40 to 45 thousand. Due to the Covid-19 pandemic which might have had an impact on SMEs, they had engaged in another survey, and they would have official and verified information upon the completion of the data collection.

Committee Report and Minutes

The Committee adopted its Report on the third and fourth quarter performance of the Department of Tourism for the 2019/20 financial year

The Committee also adopted the minutes without amendments.

The meeting was adjourned.