Following a protracted legal battle and eventual settlement, the Department of Tourism – in conjunction with the Small Enterprise Finance Agency (Sefa), an agency within the Department of Small Business Development – will open the application process for the Tourism Equity Fund (TEF) on Monday, November 6.

This follows Cabinet’s approval in September for the revised TEF to be implemented.

The R1.2 billion (€61m) TEF aims to increase growth and transformation, and stimulate more inclusive participation in the tourism sector in line with the targets of the Tourism B-BBEE Sector Codes.

The TEF is intended to address the funding challenges faced by Qualifying Small Enterprises and Emerging Micro Enterprises in the tourism sector.

The TEF will be implemented by:

• Assessing and scoring applications against jobs to be sustained and/or jobs to be created, location and geographic spread, and targeted groups (youth, women, and people with disabilities).

• Department of Tourism and Sefa, in partnership with banking and/or financial institutions in the Republic of South Africa – which includes, amongst others, banks and developmental finance institutions that will offer affordable and tailor-made financial solutions – in an attempt to close funding gaps in the market, through the provision of a blended finance solution.

• Disbursing 80% of the TEF funds to existing Small Medium, and Micro Enterprises in the market to enable these businesses to grow. The remaining allocation of 20% of the funds will be disbursed to new businesses.

Fund Management Agreement

Sefa will implement, execute, and manage the fund through a Fund Management Agreement signed with the Department of Tourism. The Department will support and monitor the implementation of the TEF every month.

The TEF places significant emphasis on supporting tourism enterprises that meet the qualifying criteria, including a minimum of 30% Black ownership before or after the financial support.

The Fund is exclusively dedicated to investing in various sub-sectors within the tourism industry as prescribed in the Tourism B-BBEE Sector Codes.

The Department of Tourism is committed to enhancing transformation in the tourism sector, and the TEF aims to contribute towards achieving transformation goals in this important sector of the economy.

 “The funding structure comprises grant funding, and debt financing, to meet the distinct needs of tourism enterprises that are either seeking equity acquisition, investment in new developments, or expansion of their existing businesses,” said Minister of Tourism, Patricia de Lille.

‘Formidable public-private partnerships

According to her, the TEF is backed by formidable public-private partnerships, which support the participation of private, commercial, and non-commercial banks, and various developmental funding institutions.

“The collaboration between public and private entities serves as a notable example of successful co-operation in advancing a more inclusive and prosperous tourism sector,” said De Lille.

“As stated before, the Department of Tourism remains committed to advancing the transformation agenda through creating equitable opportunities to realise an inclusive and revived tourism economy.”

All applicants (including previous applicants) are encouraged to submit new applications that will align with the new qualifying criteria of TEF. For more information on the Tourism Equity Fund and the application process, please visit the Department of Tourism's website.