Department of Tourism Annual Report 2021/22; with Deputy Minister

Meeting report

The Chairperson remarked that the Deputy Minister had been with the Department for a very long time and understood the importance of the Department and of the Committee. It was not acceptable that other things should be prioritised at the expense of the Committee. The meeting was the first physical meeting since the COVID-19 pandemic.

Commenting on the killing of a tourist at the Kruger National Park, she said there should be awareness of the problems caused by crime and the negative impact on South Africa. She said it was unfortunate that the Minister had decided not to attend the Committee meeting. The Department should indicate if its interim board had full powers just like other boards.

The Deputy Minister of Tourism, Mr Fish Mahlalela, commented that the Department’s annual performance plans were confirmed during the time of the COVID pandemic when South Africa was not a safe destination for tourists. A ruling by National Treasury on procurement had had a negative impact on service delivery.

Referring to the murder of the tourist in Mpumalanga, he said the Department was aware of the challenges of crime in the area. There had been a stakeholder meeting about creating a safer environment on that route. Tourism safety monitors were deployed at the entrances to the Kruger National Park. The area had good potential to create jobs. The Department was working with the SA Police Service (SAPS) to ensure the route was safe. He also pointed out tension between communities and traditional authorities about development issues. The Department was trying to engage the communities to see how the tension could be reduced. The Department was awaiting a report on what actually happened on the day the tourist was murdered.

Department of Tourism Annual Report 2021/22
Mr Victor Tharage, Director-General, Department of Tourism, presented an overview of the performance of the Department's branches. The corporate management branch achieved 87.50 percent of its targets. The tourism research, policy and international relations portfolio achieved 91.67 percent. The programme for tourism sector support services achieved 61.11 percent. No applications to the Tourism Equity Fund were approved because of legal challenges. However, the Department had made sure the fund was capitalised so that implementation could happen once the legal challenges were resolved. The destination development programme achieved 100 percent of its targets. The total expenditure by the Department amounted to 99.7 percent of its allocated budget. There were no cases of irregular expenditure during the current financial year. The only areas that required improvement were compliance with human resources management, supply chain prescripts and financial record-keeping.

Ms Rhulani Ngwenya, Deputy Director-General: Corporate Management, said the Department’s current staff complement was 461. There was an under-representation of females in senior management due to natural attrition at this level and the impact of the National Treasury’s baseline reduction for compensation of employees. The attraction and retention of women at senior management level would be facilitated and equity positions would be identified and ring-fenced. The vacancy rate had been maintained at 10 percent of the funded establishment as at 31 March 2022. The representation of people with disabilities was 4.6 percent as at 31 march 2022. The Department achieved 100 percent of expenditure on procurement from enterprises at BBBEE status levels one to five. One hundred percent of the annual internal audit plan had been implemented.

Ms Shamilla Chettiar, Deputy Director-General: Destination Development, said 11 of the 12 targets had been achieved. The one that was not achieved was a Green Paper on Tourism. Public consultations on the paper would be conducted in November 2022. The finalisation of the Green Paper required sign off by the executive authority. The sign off was still being processed. An integrated tourism knowledge system had been implemented. Four reports on governance and performance of SA Tourism had been developed for oversight purposes. Nine targets for destination development have been achieved.

Ms Mmaditonki Setwaba, Deputy Director-General: Tourism Sector Support Services, reported that five targets had been fully achieved. Tourism Equity Fund (TEF) applications were not approved in 2021/22. The planned four adjudication meetings were not held. A court interdict had halted the processing and adjudication of TEF applications. The Department had ensured that the facility remained capitalised in order to expedite implementation once the legal challenges were resolved. Six out of seven elements of an incubation programme to support tourism SMMEs were implemented. A total of 181 women had benefited from the Women in Tourism development programme, against a target of 225. Programmes to capacitate tourist guides were implemented in North West, Northern Cape and Free State provinces in line with project plans. The Chef/Professional Cookery programme was implemented in two provinces. A programme for training on norms and standards for safe tourism operations, including COVID-19 protocols, was implemented in the Free State and Northern Cape provinces, targeting 300 unemployed and retrenched youth. Twenty women were enrolled in the Women in Tourism executive development programme.

The Department received an unqualified audit for the 2021/22 financial year.

Discussion

The Chairperson said that even though the Department was excited about the audit improvements, it baffled her when the DG reported there had been no irregular expenditure while it kept reoccurring. The irregular expenditure was highlighted in the 2021 annual report of the Department. It included financial misstatements which had become a norm. The matter has been reported in the current report. The validity of beneficiaries was not a new matter. It had been raised before, but no conclusive decision had been taken. There was no report from the Department on consequence management in these matters. The Department needed to do more and not be carried away by the opinion of the Auditor General (AG), because it suggested nothing. The presentation on the upliftment programme was glossy, but it was contrary to what the AG had presented. The Department had partially achieved targets for transformation in the tourism sector involving youth and women. Hospitality programmes were not done in six provinces. There was no achievement in the youth tourism programme, and nothing had been achieved in community-based programmes to support women in tourism, especially those in rural areas.

Ms Setwaba said the COVID-19 mitigation efforts had included retrenched youth in the tourism industry. Their employers were given stipends so that they did not lose their jobs and could continue in the industry while they were being upskilled. This increased their chances of employment, especially those with an appetite for running their own sustainable businesses. There was also an executive development programme. The Department was partnering with tertiary institutions to enable women to participate fully in the tourism industry. It had supported 40 women during the past year, and only two could not finish their courses. The participants were being given senior positions by their employers. Selected community-based projects would be implemented during the year. The Phalaborwa incubation project has been completed. Incubation would be kick-started as soon as procurement processes were finalised. Regarding youth, women and transformative aspects, the Department had two programmes. UN World Tourism Organisation (UNWTO) programmes have been launched in Vhembe and Mopane. Currently, an incubation programme is being opened up to remove barriers and ensure meaningful participation of women. The target of the Women in Tourism programme was 252 participants, but in the end, there were138, because many of them could not attend virtual meetings. This was an ongoing project. In addition, the Department was currently negotiating with accommodation associations and the Department of Labour on where to place the youth graduating from the programmes. Their names would be stored in a database to further their participation in the industry.

The Deputy Minister said the Department would develop a comprehensive report for the Committee on strategies for students to secure employment in the tourism industry.

Ms H Winkler (DA) wanted to know why the Department was saying there had been improvements in the audit outcomes when they had received an unqualified opinion with findings. Would preventative controls in the procurement and supply chain processes be implemented? Why was the quality of financial statements flagged by the AG? What kind of skills and capacity building were beneficiaries gaining from the Working for Tourism Programme? How would the beneficiaries of the Expanded Public Works Programme (EPWP) be given a chance to work in the closed tourism hotspots in KwaZulu-Natal?

Ms Setwaba explained that the skills development programme was linked to the EPWP. Recruited beneficiaries would be given accredited training and would do practical work in parks. The Department was making arrangements with their employers for practical training.

Mr Mohith Maharaj, Chief Financial Officer, Department of Tourism, said the reason for the improvement in the audit outcomes was that there was no new irregular expenditure. The Department had dealt with 92 percent of the identified action plans. The Department was leading the process of appointing investigators and providing information concerning the internal audit team. On the financial statements, there were findings regarding the moveable assets, software, procurement and notes that were not correctly completed. Those were the major reasons for shortcomings in the financial statements identified by the AG. The Department submitted quarterly financial statements for review by the AG. There was constant engagement with the AG to close the gaps.

Ms S Maneli (ANC) wanted to know the timelines for signing the Green Paper on Tourism. She asked if the Department had engaged with its counterparts on the Small Enterprise Finance Agency (SEFA) because processes had to be finalised by December 2023. She asked for clarity on irregular expenditure in which a tender was not awarded to the bidder with the highest points. Why were three quotes not requested for a bid? What strategies were in place to address rising air travel prices? She asked for clarity on leave entitlements and Unemployment Insurance Fund (UIF) cases and why the Department could not measure long-term service awards.

Mr Maharaj said the irregular expenditure involving three quotes was an old matter that was the subject of investigation. There was a policy on leave entitlement. People were allocated a number of days depending on their years of service. Most people took their leave in January and April. They could take their leave entitlement in January. This was not irregular or abnormal. A total of 139 UIF cases had been identified for recovery, of which 111 had been written off. Ten cases were being paid off in instalments.

Mr Tharage said the Department had had a discussion with the relevant Deputy Director-General about the SEFA. The Department’s contract with SEFA would remain valid. SA Tourism had a unit that dealt with air travel matters. Work was being done in the background to increase capacity and look at the spiking prices. On supply chain matters, the Department had serious issues pertaining to bids. This was an unfortunate occurrence. There were disasters and certain internal committees could not meet to finalise the procurement processes. Things were done virtually. As a result, the Department initiated a dashboard on procurement processes for chief directors. Bids above R500 000 should be on open tender. Those below R500 000 would require three quotes. Quality reviews on audit action plans gave the department assurance that it would not be repeating errors. The Department had decided to look at databases of other departments to identify best bidders and to curb attempts by department officials to do business with the state.

Deputy Minister Mahlalela added that air travel was driven by supply and demand. The Competition Commission would monitor the issue of the cost of airline tickets.

Mr A Matumba (EFF) commented that the Department had done nothing to empower previously disadvantaged individuals due to the COVID pandemic. Nothing had been done in the incubation programme. The informal sector was growing while investment in the formal sector had shrunk during the pandemic. It stood to reason that the informal sector should be empowered because it would never leave the country. He remarked that departments were not focusing on their core business but were busy chasing clean audits. He wanted to know whether security guards were full-time employees or contracted and which form of employment was less costly.

Ms Ngwenya explained that the organisational structure set norms and standards. The structure for programme one had to meet the norms and standards and budget allocated. The Department was not in a position to accommodate cleaners and security personnel.

Mr Tharage said the Department was playing a big role in economic diplomacy. It had to grow both the international market and domestic market. Foreign currency helped to ensure that the country could sustain itself. He also indicated that the Department was preoccupied with things that needed to be done by the end of the year. It was trying to catch up in areas in which it was lagging.

The Deputy Minister said tourism was about international and national markets. The destination development programme aimed to ensure inclusivity and beneficiation. He also pointed out that the maintenance programme was mainly for the national parks, not the provincial parks. Provinces prioritised their own parks and the national Department would render support when a province submitted its priority list.

Ms L Makhubela-Mashele (ANC) asked whether there would be amendments to the Tourism Act. Amendments had been pending since the previous term and there had been no movement. What were the bottlenecks of the Green Paper on Tourism? The work had been finalised but the signature of the executive authority was pending. She suggested that tourism police be stationed in the tourism hotspots, just as the metros provided law enforcement officers to work with the SAPS. The country was to blame for exposing tourists to criminals, because safety officers were not empowered and were placed only at the entrances to parks. The SAPS was constrained at times and it was not possible for it to be visible along the routes. People who visited South Africa had money to spend. That was why they were targeted by criminals.

Ms Setwaba stated that it was regrettable that a tourist had been murdered in South Africa. There were interventions in place. Tourism monitors were being placed in the parks. A memorandum of understanding had been signed with the SAPS. The Department was looking at the viability of using police reservists. The SAPS was involved in the training of the tourism monitors. The creation of a dedicated unit was being considered.

Mr Tharage attributed bottlenecks in the Green Paper to the committee that was given the task of dealing with it. He was not in a position to say whether the Green Paper would lead to a change in policy. It was a matter that needed to be considered by the executive authority.

Deputy Minister Mahlalela added that there had been changes in the executive. The new Minister had to update herself. The process took time. The policy review would be finalised to close the gaps. It would not be possible for the Department to provide for the establishment of a tourism police force. The SAPS was governed by the constitution. The SAPS had been doing a study and would report on the feasibility of establishing a unit with a special focus on tourism. Criminals continued to target tourists on the routes, but not at the access points. There was a need for a unit that could focus on protecting the routes. Communities must be mobilised to see value in the tourism sector.

Ms M Gomba (ANC) advised the Department to take note of the Committee’s concerns about the safety of tourists. If they were not safe it would hinder the economic development of the country. The EPWP should be extended to provide safety for tourists. She wanted to know the cause of the recurring financial misstatements in the past two financial years. She asked why the 98 percent budget expenditure under the Presidential Employment Stimulus Programme (PESP) had achieved only 75 percent of the job creation target.

Ms Chettiar explained the PESP target was 79 percent. The Department planned to implement the programme over the full financial year. The approval for the funding came in September and the Department was left with only six months to implement the programme. It had been agreed to transfer the funding to the implementing agent to continue with the implementation. As at March 2022, 72 percent of the target had been achieved.

The Chairperson remarked that there was no sense of urgency in reviewing the policy on tourism. The policy was outdated. The Tourism Review Panel’s term of office would expire at the end of the current year. The matter should be treated with urgency. It was hindering the work of Members as lawmakers.

The Department should familiarise itself with the report of the AG so that it is able to implement the recommendations of the AG. The report of the AG stated the Department had not achieved 11 targets. The Department had not stated its challenges in meeting the 11 targets, but came to the Committee singing, “Hallelujah and Ntyilo-ntyilo”. The Committee was supposed to walk with the Department in trying to meet its challenges. It wanted to know what the Department would be doing about the AG’s recommendations. If the Department was challenging the report of the AG, that should be stated to the Committee.

She asked how the MOU with the SAPS would help the country. She wondered if it would be possible for the SAPS to give young people basic training in policing and first aid for them to man the entrances and routes to the parks.

Mr Maharaj said the hospitality programme would provide learnerships and would be implemented in all provinces. On the policy issue, he apologised for being misunderstood. The matter would be speeded up.

Ms Maneli asked for clarity on leave entitlements because the financial statements spoke of millions of rands, not thousands. She asked whether this had played a part in suspensions.

Mr Tharage explained that suspensions had nothing to do with the leave entitlements. The legal provision was that a suspension was permitted for 60 days. Once that was exhausted or was at the stage of a disciplinary hearing, the employee could request an extension. The Department was avoiding a situation in which a person earned a salary while not at work.

Mr Maharaj said the actual note on leave entitlements was R21.069 million. 

Mr Matumba commented that there were destination areas that ordinary people could not access because they did not have the money. That was why incubation projects should be implemented. There had been no consequence management for procurement processes that were not followed. The Department was not doing what it was supposed to do. He pointed out that cleaners and security guards did not have unions and were abused by service providers. He asked if there was a policy in place to protect them.

Mr Tharage said there was no government policy on in-sourcing of security personnel.

Ms Gomba asked if irregular expenditure could be defined. The Department was proud of not having new irregular expenditure. Irregular expenditure was money spent contravention of the Public Finance Management Act (PFMA). Accounting officers were the ones who were supposed to fight irregular expenditure.

Mr Tharage said the Department had taken note of the matter relating to irregular expenditure, and he read to the Committee what the AG had indicated about irregular expenditure.

Mr Maharaj added that the report of the AG stated there was no new irregular expenditure, but there were irregularities in terms of procurement. That was not irregular expenditure. The AG declared irregularities in terms of procurement. An irregular expenditure and an irregularity did not mean the same thing.

Ms Winkler asked how much had been recouped for the Tourism Fund because it appeared R171 000 had come from state employees and the UIF. She asked if it would be possible to deploy individuals from the EPWP to the closed parks in KZN.

Mr Maharaj explained the Department was dealing with R150 000 in UIF payments. It had reached out to individuals. One person agreed to pay R2 000 over 25 months. Only one payment was made. That was why there was a process of recovery. Most of the challenges were in the Western Cape and Gauteng. Most provinces had been able to provide the Department with verifications. The Department had written to accounting officers to deal with all anomalies. When it came to ward committee members, there would be no recovery because they were not salaried employees of the state. He further stated that there had been a duplicate payment of R174 000 and that some amounts were written off. Unfortunately, he did not have figures in front of him. The legal opinion was that to recover R4000, you would need to spend R15 000, which is why some amounts were written off.

The Chairperson suggested the Department should present to the Committee a comprehensive report on the suspension matters raised by Ms Maneli.

Mr Tharage, in his closing remarks, commented there were challenges the Department needed to pay special attention to, more especially on supply chain management. 

The meeting was adjourned.