South African Tourism 2020/21 Annual Performance Plan; with Minister and Deputy Minister

Meeting report

Minister’s opening remarks

Ms Mmamoloko Kubayi-Ngubane, Minister of Tourism, said that in line with the President’s call in the State of the Nation Address (SONA), all State-Owned Entities (SOEs) now need to reposition and re-purpose. The entity was in the process of re-positioning and re-purposing, and a report on this would be provided to the Committee in due course. The Cabinet had given SAT two months to do this work. In the process, the Department had to identify whether there was duplication of functions or activities at the entity that were actually contributing to achieving the purpose.

In response to the Committee’s previous concern about the entity’s stability because of its high number of vacancies, the Minister reported there were three vacancies at the entity. Since the last meeting, the Department had also received the resignation of Dr Abba Omar, who had been appointed at the SA National Aids Council SANAC to deal with HIV/AIDs. The Department had made appointments for the three vacancies, and was in the process of finalising these appointments by next week.

The Minister said the recovery of the sector would be the main activity for the Department and the entity in 2020. The Department would be making a media briefing as soon as the regulations were published tomorrow.

South African Tourism: Strategic Plan and Annual Performance Plan

Mr Ravi Nadasen, Interim Chairperson: SAT, said that due to COVID-19, the tourism sector was not operational. Flights were grounded and borders were closed. The lockdown regulations all had implications for the entity, so it was in the process of reviewing and reassessing its short-term business plan for relevance.  

The analysis of the review was based on how industries globally were doing, and hypotheses had been drawn and discussed on how the world was likely to operate after COVID-19. 

Given the huge change in the global tourism sector following COVID-19, South Africa had to face increased competition and a tight budget post-covid 19. The tourism sector needed to increase its efficiency in order to attract tourists post-Covid once travel restrictions were lifted.

He was optimistic that the sector would recover. The sector had been resilient. The entity’s strategic plan was one which was marked by its inclusivity. It included large, medium and small businesses.

On behalf of the board, he gave a commitment that SAT would continue to be the leader within the tourism sector, and would ensure good governance within the entity.

Mr Sisa Ntshona, Chief Executive Officer (CEO): SAT, highlighted the impact of COVID-19 to the sector. The entity’s budget had been decreased significantly, and the focus had been shifted to transitional work to support the sector in its recovery.

He outlined the focus areas of the tourism recovery strategic plan. The supply side needed to be enhanced and looked after to ensure a sustainable business flow when the sector was fully operating. The second part was about re-planning demand. This was to ensure that more information could be known about the capabilities of the sector domestically, regionally and internationally. The last part was building enabling capacity. The entity was using this lockdown time period to do a lot of internal capacity building, such as fixing internal processes, maintaining internal controls, improving accountability, and gearing all offices ready for the eventual return of tourists.

He highlighted the distinctions of the Key Performance Indicators (KPIs) in the Strategic Plan, as they had been changed to align with the pandemic. There were five programmes.

• Programme 1: Corporate Support
• Programme 2: Business Enablement
• Programme 3: Leisure Tourism Marketing
• Programme 4: Business Events
• Programme 5: Tourist Experience

The outcomes, outputs, output indicators and annual targets of these programmes were outlined.

Mr Ntshona said all of the entity’s offices across the globe had been closed as soon as the lockdown had started. The Beijing office had just recently been opened, and the Sydney office would soon follow to resume its business.

He highlighted the digitisation trend in the sector, which the entity was exploring.

Although normal operations could not carry on at the entity due to the lockdown, it had been doing a lot of work to build its capacity and boost its level of readiness to receive tourists when all restrictions were lifted.

ST had made a R439 million budget submission to the National Treasury, and contained priorities that had been designed to allow it some flexibility so that when mid-term came, it would have a better sense of the activities on the ground to readjust its budget.

Minister Kubayi-Ngubane said that the Department’s Director General (DG) needed to attend to the legal issue around the re-opening of restaurants, so he was not able to attend the meeting.

Discussion

Due to bad internet reception, the Chairperson requested Ms L Makhubela-Mashele (ANC) to co-chair the meeting.

Mr M Mmoiemang (ANC, Northern Cape) asked when ST’s offices would reopen, and if had explored more opportunities as South Africa awaited the return of its traditional tourist market.

Ms H Boshoff (DA, Mpumalanga) expressed her frustration at the bad internet reception that caused her to miss almost all of the presentation at the meeting yesterday. In the MS Team Chatroom, she had also expressed her frustration on the failure of MS Team, and requested the House Chairpersons to review the matter.

She enquired if there had be public participation with regard to the programmes discussed in the presentation, and what timeframe would be involved.

She agreed with the presentation’s domestic tourism strategy, saying it would be great for South African tourists to benefit. However, most destinations in the country were out of reach for ordinary South Africans due to the exorbitant fees charged at those places.

She supported the digital operating mode, but wanted to know the concrete plans to make the entity digitally effective. Would there need to be staff reductions as some work functions were digitised? Would outsourced work to consultancy firms be reduced as a result of digitisation? What was the current budget for consultancy fees?

Mr M Dangor (ANC, Gauteng) suggested SAT should review the high-spending areas where they could attract tourists, and develop strategies for them. When he checked the last time, the cost was about $10,000 to $15,000 per person.

Mr E Landsman (ANC, North West) supported the work of the Department and the Minister.

Mr T Brauteseth (DA, KwaZulu-Natal) commented on the predicament faced by many small stakeholders in the tourism sector. As an example to illuminate the lack of communication between the Department, stakeholders and the SAT, he said someone that he was dealing with owned a bed and breakfast (B&B), and the business had been struggling to get the permit for operating at Level 4.

Another issue was a “Catch 22” situation. When guests book for accommodation, they were required to get an SAT tourism reference. Booking agents would not hand over accommodation information before the reference was produced. Unfortunately, it took about two to three days for SAT to produce this reference. By the time the SAT reference was produced, guests had already turned to other options.

Mr Brauteseth disagreed with what had been described as a resilient tourism sector, and pointed out all the red-tape regulations that existed in the current policy framework. He warned the entity and Members that these stakeholders would close down one by one under the pandemic if this red tape was not urgently removed. He encouraged SAT to adopt an activist mindset to reduce red tape for the small stakeholders.

Ms V Mathevula (EFF, Limpopo) submitted her questions in writing, and the Committee Secretary read them out. She asked what plan the Department had in place to promote small towns, townships and villages, with rural tourism being prioritised in the next five years.

She asked if the Department had considered adopting a collaborative approach to working with the Department of Agriculture, Land and Rural Development in promoting rural tourism and economies.

Did the Department have any plan in place to drive transformation in the tourism sector?

What measures were there to ensure that access to tourism information was available to municipalities?

Ms S Xego (ANC) wanted to find out what issues have been discussed and raised following the pandemic in the engagements that the Department of Tourism and SAT had with stakeholders.

She commented that some establishments which were used as quarantine sites had since carried a stigma. It was not fair in her view, and she asked how the Department would address that.

Would the distribution of the R 200 million Tourism Relief Fund work through the Department, or the panel established by the Minister? Could the Department mobilise more resources to help stakeholders being affected by the pandemic?

She emphasised the lesson which South Africa had learnt during the lockdown period -- the importance of boosting its domestic tourism industry, commenting that currently fewer resources had been allocated to domestic tourism because more focus had been placed on international tourism.

She recommended the Department and SAT should do continuous research, given the dynamic environment of COVID-19, as what would happen next was unpredictable.

In the presentation, there had been a lack of focus on tourism in villages and small towns. She asked SAT to be more specific and place more emphasis on small towns and villages in its future presentations.

Mr M de Freitas (DA) recognised the CEO’s webinars with stakeholders, and remarked the issues that they discussed had been interesting, as he had personally attended a few. He observed that there had been talk of a re-emergence of tourism and various conclusions had been provided in those discussions. He wanted to know what data had been used to reach that conclusion.

He remarked on domestic tourism growth strategy in the presentation. In his view, there was an important part about collaboration between the Department and the SAT, working with provincial and local governments, that was missing in the presentation. It would be impossible for the Department to roll out any programme without local governments’ assistance.

He asked how the new markets for tourism had been identified. For instance, why had there only been Nigeria, China and India? There were other markets which were missing.

He asked for more detail on the grading. In his opinion, everyone in the sector should be graded, and the grading should be done for free. The grading fee was a lot to ask a small businessperson in a township to pay.

Mr P Moteka (EFF) reminded Members that the Committee’s principle was that while the existing structure for international tourism and tourism in metropolitan cities should not be abandoned, more focus should go to villages and small towns. He commented that the Department and the SAT were focusing less on townships and villages in their presentations.

Since borders had been closed due to the pandemic, how many jobs within the sector had been lost in terms of gender, race and age? How many people had been paid from the R200 million Tourism Relief Fund so far? He wanted further wanted clarification on who the beneficiaries were, such as the percentage of people in townships and villages. What new transformation strategy had improved tourism in the villages and small towns?

Referring to the ownership of tourism attractions and destinations, he said that black ownership still accounted for less than 48%. Black women’s ownership accounted for less than 10%. How did SAT plan to address this?

He commended the Parliamentary information technology (IT) technicians for the good audio quality today.

Mr K Sithole (IFP) enquired if there was a collaborative strategy between the Department and the SAT with the private sector on international tourism, since now it had been closed till February 2021 which would definitely affect tourism in 2022/23. In response to the close down, did the Department have any stimulus measures available to give the sector a kick start?

He asked if the sector had been using the lockdown period to be ready. What was their level of readiness once the sector reopened for domestic and international tourism? Were there any systems which addressed international tourism?

As people above 60 or 65 years were categorised as a high-risk population group for COVID, what was the SAT’s policy if these people happened to be essential workers who needed to check in to a hotel or a B&B? He had observed that nothing had been said about the sanisation of properties such as hotels and B&Bs in the presentation.

He also criticised the presentation’s failure to engage with the tourism sectors in villages and small towns.

Ms M Gomba (ANC) wanted the Department and SAT to clarify the monitoring and evaluation (M&E) system, to ensure that the 28 KPIs were met. Without an M&E system, there would always be non-performance.

She asked if SAT had any formalised appraisal system for performance management policy. Would it pay bonuses to individuals who did not perform?  She was of the view that one did not deserve a bonus if one did not perform. She wanted to see performance and commitment from the 189 SAT staff members.

She also referred tp the lack of attention which the tourism industry in townships received.

Mr H Gumbi (DA) emphasised the importance of imagining the sector post-Covid. He asked the Department and the entity to indicate their levels of readiness once all international travel resumed. He warned that there may be a rising flights costs which airline companies may use to recoup some of their losses during the lockdown period. He thus asked if the Department had liaised with major airline companies to agree on a coordinated approach to reduce flight cost to attract tourists to come to South Africa.

He fully agreed with the presentation’s vision on digital space, appreciating the huge role it could play in the sector. Did SAT have any well thought out plan how selling South Africa to tourists could be digitalised? COVID-19 had unexpectedly offered SA an opportunity to think about this question and to plan accordingly.

He commented on the cause of the DG’s absence, questioning the rationale behind the fact that restaurants could not re-open, but the religious sector was allowed to be back in business. He wanted an indication from the Minister on when restaurants could fully operate. For instance, franchise restaurant chains such as Spur had said they could not operate unless they were allowed to sell alcohol.

With regard to grading, the fact that it was so expensive was a sentiment from an earlier Committee meeting. In his view, grading should be free but compulsory. It was a lot for a small business to fork out R500 to R1 000. He reminded the Department of the benefits of grading, as it could then build a comprehensive database which included the grading of places, so that more tourists could be better informed.

Ms L Makhubela-Mashele (ANC) appreciated that Members’ inputs had been included in the SATS presentation and APP. The Committee now needed to ensure that it would revise targets which would be realistic under COVID.

She emphasised the need for the Department and the entity to review its policy to ensure that grading became both compulsory and free. The benefits of grading could be seen through the engagement with Members. She also pointed out that if it was free, more establishments would be graded.

She recommended that the Department and SATS should review their pollicies to include more establishments and tourism products paying into Tourism Marketing South Africa (TOMSA) levies. The purpose was to ensure that more small stakeholders in rural and villages areas could benefit through this scheme from its subsidies.

The Chairperson said that the pandemic offered South Africa an opportunity for its tourism industry to get ready. As the entire world was under lockdown, tourists would not be able to see which country was safer than others. After lockdown restrictions were lifted, there were only two things that tourists would be thinking of:

• what was a country doing now to deal with COVID-19; and
• what was the country’s plan post-COVID.

He commended the fact that the presentation had details which addressed both of these. However, the key question was how the Department and SAT could communicate this message consistently, and vigorously implement safety measures to minimise the risk to tourists post-Covid.

Since many major airlines were in a state of collapse, he remarked that this was an opportunity for South Africa to reflect and take action to strengthen and boost its domestic tourism.

He asked whether the Department and SAT had utilised the resources within their budget to promote South Africa, and suggested they needed to engage with the Department of International Relations and South African consulates overseas to attract international tourists.

He supported the Members’ view that grading must be free, and that there must be incentives so that people could voluntarily apply to be graded. Since the Department was busy with its White Paper, he felt that the Department and SAT needed to take into account of the grading issue, because they were cognisant of the reality on the ground. 

He emphasised that there was a need for directing tourism funding towards black people, and encouraged the Minister to do so. In order to build a better society, black South Africans needed support because of their prior lack of access to resources. He suggested collaboration and coordination between the Department and the Department of Small Business Development.

It had been agreed at the previous meeting of the Committee that the Department would release a report in September this year on the transformation of the sector. The committees were looking forward to the tabling of a report that had to take into account the development of a non-racial and non-sexist tourism sector, for the realisation of the dream of a prosperous and harmonious South Africa. There was a misconception in South Africa that when an issue around transformation was addressed, some sectors of the population felt that it was a concerted effort to push them to the periphery, but this was not the truth. The whole of society should work out a way to rethink how transformation policies could be implemented, without certain people going to court because of this misinformation.

Department’s response

Given the time constraint, the Chairperson allotted the delegation 35 minutes to respond to all Members’ questions.

Mr Ntshona indicated to the SAT team that because of the tight schedule, every team member had only five minutes to respond.

Mr Darryl Erasmus, Chief Quality Assurance Officer: SAT, responded to Mr Brauteseth’s question, and said that certificates for essential services were handled by the Companies and Intellectual Property Commission (CIPC), not by the Department of Tourism.

Regarding the high costs for grading, he understood that it was widely agreed that post-covid many establishments in the sector would find cash flow a challenge. SAT had therefore been engaging with the Department on tourism incentive programmes which were looking at offering discounts for grading, with the possibility of offering a discount of up to 100%.

Ms Sthembiso Dlamini, Chief Operating Officer: SAT, said the effect of digitisation on job losses had not been experienced in the entity yet. It was dedicated to driving digitisation, and there were several key programmes which indicated the operational models that could adequately respond to changes in South Africa at the moment. Digitisation in the sector was also a global trend. SAT was currently doing its financial analysis in order to determine the optimal way to harness digitisation, but had not yet get to the part of analysis that touched on staff composition. However, she warned that there was evidence to show there would be consolidation of services. SAT would report to the Committee about that. Job losses would usually start in the support service area, to reduce a company’s operational costs and to increase efficiency.

SAT was reviewing its capability for M&E. It also had a function which looked at enterprise planning, and evaluated the implementation of the APP on a quarterly basis. It had also created an enterprise programme management capability to ensure that all performances were subject to monitoring and evaluation. 

ST used Oracle for its appraisal system. The usual process was that performance contracts would be drafted following the APP, with each performance’s KPIs specified in the contracts. The remuneration policy was approved by the Ministers of Tourism and Finance. As the entity was re-purposing, it would review its KPIs to ensure alignment between performance and organisational purpose.

Ms Nombulelo Guliwe, Chief Financial Officer: SAT, responded that fees paid to consultancy firms accounted for 9% of the entity’s budget, which amounted to R35 million. The IT maintenance function was outsourced, which accounted for 5% of the entity’s budget.

Mr Themba Khumalo, Chief Marketing Officer, SAT, explained digital marketing to the Committee. There was a comprehensive strategy which focused on shifting classical advertising to digital advertising. In the process, the entity was also consolidating all the digital accounts internationally to control spending, in order to improve cost-effectiveness. This had been approved by the board.

He corroborated the CFO’s response on the amount spent on outsourcing, and assured the Committee that SAT was now using the time to build capacity internally. This was in contrast to the past, where marketing had been heavily dependent on outsourced companies. Through building capacity, the entity hoped to reduce its reliance on external suppliers.

Ms Amanda Kotze, Chief Conventions Bureau Officer: SAT, said that SAT had been engaging in regular contact with provincial convention bureaus in the provinces. They were working on a strategy which needed them to plan collectively together so that smaller towns were ready for hosting conferences in the future.

Mr Ntshona said he appreciated the Members’ questions, and remarked that it showed a very high level of engagement.

He agreed with the Committee that South African Development Community (SADC) countries formed a major source of tourists for South Africa. Prior to COVID-19, tourists from the continent accounted for 76% of total arrivals. However, he asked the Committee to be mindful of the importance which people’s confidence post-COVID played when making decisions to travel. It was a gradual process, as people would need to adjust first to feeling comfortable doing two to three-hour road trips, before flying.

He agreed with the Members’ view that the role of domestic tourism was more important than ever, and the sector should use the opportunity to promote it. The tourism sector, which was predominantly private sector driven, had always been focusing on the hard currencies like euros, dollars and pounds. COVID had taught this sector that once the country’s borders were shut, they were soon losing huge amounts of their revenues. Instead, domestic tourism needed to be promoted because it was always available within the country.

He said SAT had a market investment framework which was a form of data-led methodology, which took into account factors such as airlines, activities, gross domestic product (GDP) spend, and visa entries. Each factor was then converted into a quantitative score to identify the tourism markets for South Africa. The entity was aware that the framework should be adaptive and responsive to the external environment, so it was working on that.

Mr Ntshona assured the Committee that there was cooperation across the SAT board to promote rural tourism. This was particularly relevant in a Covid environment, where people were looking for less populated outdoor spaces in rural areas. He believed that this was an advantage which the rural tourism industry could harness and use to its favour. 

The entity was keeping a close watch on the former quarantine sites to address the associated stigma. The strategy which the entity was adopting was to re-profile and celebrate these sites as heroes, instead of disease-burdened and tarnished establishments. There was agreement that renaming these facilities and replacing the word “quarantine” would be a good public relations (PR) strategy. He asked the Committee to be mindful that there were still some in society who believed it was tourists who had brought the coronavirus into the country, which was why they were antagonistic towards tourism. SAT was looking to mitigate such stigmas.

He had got the impression that there had been a high level of uncertainty after the engagements on Webinar. People were seeking clarity around questions such as when normal business operations could resume, the use of technology to deliver service, as well as some complaints about the high cost of doing business through intermediaries’ booking platforms, since many of them were overseas based. This was a signal that South Africa needed to develop its own local booking system so that it could save businesses some money.

SAT had looked at different projections models, ranging from the worst scenario to the best scenario. Although the entity was unable to provide an answer on when tourism would resume back to normal, it was certain that it would be back to normal eventually. He warned that when the sector opened, it was going to be overwhelming. Globally, countries such as New Zealand and Australia had taken the initiative to travel to each other. However, this all depended on whether South Africa had the confidence in the tourist-sourcing country’s handling of the coronavirus.

He said very few businesses in the sector paid the TOMSA levy. SAT would of course like to see it grow.

Ministers’ comments

Mr Fish Mahlalela, Deputy Minister of Tourism, highlighted the issue of domestic tourism and the need for an acceleration of transformation. The Department agreed with the view that diversification was the key to drive tourism. COVID-19 had certainly shed light on that. He reaffirmed that the sector had great potential to drive economic growth and create jobs. He emphasised that the sector needed to work very closely with municipalities in the district model to ensure adequate infrastructure and basic services were available for tourism in a cost-effective way. Domestic tourists would come more quickly than international tourists.

Minister Kubayi-Ngubane agreed with Mr Brauteseth on the issue of communication. She advised B&B establishments to write to the Department for operational permits. The person to contact was Mr Paul Masemola, and his contact information was available on the Department’s website. After receiving letter from an establishment, the Minister would issue the letter. There was no need to get a certificate from the CIPC, and no reference number was required. The letter would be issued within 24 hours. The Department would send a guideline to the Committee to assist Members to know what was expected and what would be permitted under Level 3.

She said the claim about people over the age group of 60 to 65 not being allowed into hotels was untrue. As long as one was an essential service worker and possessed the permits, one could book into accommodation. The wording which the guideline used was “advised” -- the government did not say “must not.”

She assured the Committee that there had been ongoing engagements between the Department and the provinces and local governments to ensure consistency of information in the sector.

The issue about allowing sit-downs in the restaurant industry had not been concluded. Currently what was allowed at Level 4 was to pick up, delivery, or drive through, but not sit down.

The TOMSA levy was a work in progress with the National Treasury, and the Department was still awaiting instructions from the Treasury.

The Minister said that the Department’s APP contained quite a large section which specifically addressed villages and rural areas. Those programmes were aligned with what the Committee had suggested.

The issue of grading was being reviewed by the Department, and it would report back to the Committee within this financial year

The Department was undertaking an assessment on the extent to which the tourism sector had been transformed, and would be sharing the findings with the Committee.

The Chairperson, in his closing remarks, emphasised the need to prioritise tourism in villages and small towns.

The meeting was adjourned