The Constitutional Court has dismissed with costs the Department of Tourism’s (DoT) appeal against a Supreme Court ruling that the inclusion of Broad-Based Black Economic Empowerment (B-BBEE) criteria in determining the beneficiaries of a tourism equity fund was unlawful.
In 2021, the application of B-BBEE criteria for the R1.2 billion (€63m) Tourism Equity Fund (TEF) was ruled as being ‘materially influenced by an error of law’ by the Supreme Court of Appeal, following an application brought by civil rights organisations AfriForum and Solidarity.
The DoT subsequently applied for leave to appeal the matter before the Constitutional Court.
In handing down his ruling on Wednesday, February 8 on whether to grant the appeal, Chief Justice Raymond Zondo said the ConCourt would not be entertaining the matter because it had become moot after the ending of a National State of Disaster.
“It was also pointed out that all money in the tourism relief fund had been paid out and nobody sought to have the money that was paid to SMMEs returned,” Zondo added.
Minister of Tourism, Lindiwe Sisulu, and DoT DG, Victor Tharage, had argued that the matter should still be heard because there was a need for clarity on whether the Department had the power to use B-BBEE selection criteria in future.
Zondo said there were no sound reasons for the court to entertain the appeal, particularly as the court’s workload had expanded after the 17th Constitutional Amendment Act, which allowed the ConCourt to rule on appeals that had significant public importance.
“At some stage in the past this court may have been more inclined to entertain moot matters. It means that, in the future, this court will be likely to be less inclined than before to entertain such matters. This is something practitioners should bear in mind when advising litigants on matters that have become moot,” said Zondo, before dismissing the leave to appeal with costs.
Department urged to restrategise
SATSA co-chair and tourism entrepreneur Oupa Pilane said following the ruling, that the Department should restrategise its approach to transformation.
“The timing of the launch of the fund was wrong, when the tourism sector was in such strife. It was viewed as a relief fund, when its purpose is to drive transformation. Such a fund is necessary to be able to expand the tourism industry,” said Pilane, arguing that the criterion of 51% black ownership did not exclude other races from participating.
Pilane had previously expressed his view to Tourism Update that the criteria of the existing Tourism Transformation Fund were “impossible” for the majority of emerging or prospective tourism businesses to meet.
DA welcomes ruling
In contrast, the Democratic Alliance’s Shadow Minister of Tourism, Manny de Freitas, released a press statement congratulating Afriforum and Solidarity on “dealing the final blow to the Department of Tourism’s discriminatory tourism fund”.
“The DA has long advocated for this fund to be inclusive of all businesses in the tourism sector that have been affected by the economic crisis brought on by the COVID-19 pandemic, and not just those that are 51% black-owned,” said De Freitas.
“The DA welcomes this reversal of government’s irrational racial barriers to relief funding. These barriers exclude South Africans from receiving vital funding to save their livelihoods on the basis of race, forcing their businesses and their employees to join the growing unemployment line and depend on the inconsistent payments of social grants,” De Freitas said.
