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Tourism trajectory pointing in the right direction

30 July 2023

The recovery in the tourism sector post-Covid has helped destinations such as Cape Town and it is hoped that growth
in the sector will boost transformation initiatives.
Image: Mauro Pereira

Tourism, one of the sectors crippled by the pandemic, has recorded an improvement in BEE, according to the Sanlam Transformation Gauge report.

It achieved level 4 recognition in the 2022 and 2023 reports, with enterprise supplier development being the standout performer, climbing to 81.12% of the target from 62% last year. Ownership rose to 85% from 78%, management increased to 68% from 66% and skills development edged up to 86.5% from 86%. 

Lerato Ratsoma, MD at Empowerdex, said the trajectory is pointing in the right direction.

She said the sector has slightly higher BEE targets, such as the ICT sector. 

The industry is recovering and the government has announced initiatives including the tourism equity fund to accelerate sector transformation. 

During the department’s budget speech in May, tourism minister Patricia de Lille said a major initiative was the Tourism Incentive Programme (TIP), a tool to stimulate growth, development and transformation. She said the TIP has been allocated R225.6m this financial year for the implementation of the Market Access Support Programme, the Green Tourism Incentive Programme, the Tourism Transformation Fund (TTF) and the Tourism Grading Support Programme, to name a few. 

There is also the TTF, which offers a combination of grant funding, debt finance and equity contributions to facilitate capital investment in new and expansion projects. This is a multiyear project with R120m available.

Tshifhiwa Tshivhengwa, CEO of the Tourism Business Council of South Africa, told the Sanlam Transformation Gauge that increased attention to the fund bodes well for the long-held issues around ownership. 

“That the minister of tourism is resolving the issue of the fund means there will be money, 80% consisting of loans as well as a grant for those who want to buy equity stakes, put into the market,” he said in the report.

“This then addresses the issue of transformation in terms of the tourism BEE codes and will be highly beneficial in the long term.” 

He also said that given the sector is dominated by small, micro to medium enterprises, “we want to see small businesses that are growing into medium and big businesses. We want to see them transform and continue to be transformed and redefine the next wave of tourism in South Africa.”

The sector is showing strong signs of recovery post-Covid. In the budget speech, De Lille said that between January and December 2022, South Africa saw nearly 5.7 million visitors, with 4 million of these from other countries on the continent — up 152% on the previous year.

In the first quarter of this year, 2.1 million international tourists entered South Africa, a 102.5% increase from the same period in 2022.

Tshifhiwa said in the report that “we’re reigniting international demand by looking at growing new Asian markets while remaining focused on existing growth markets. Tourism recovery, which is happening faster this year, will allow us to see where the industry is standing and where we’re going with transformation, whether recovery is taking the transformation agenda into account and how far we can go with it”.

Another issue raised in the report was ownership.

We want to see small businesses that are growing into medium and big businesses.

Tshifhiwa Tshivhengwa, CEO at the Tourism Business Council of South Africa

Jerry Mabena, CEO of Motsamayi Tourism Group, said in the report that family-owned businesses were still prevalent in the sector, making it difficult for them to relinquish control.

“It, therefore, becomes difficult to sell ‘family jewels’. The whole approach here needs to be rethought so that there is a benefit for the selling family.” 

Moreover, female black ownership is still low.

“The historically male-led tourism industry is often seen as a ‘closed club’, the perception of which needs to change. We need to raise the bar, encourage fair pay, development of business skills and incentivise and support women who are in leadership positions to further encourage ownership.”

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