Tourism associations are divided over Cabinet’s decision to approve reducing B-BBEE ownership requirements for the hotly-debated Tourism Equity Fund (TEF), from the originally proposed 51% black ownership to 30%.

On September 13, Cabinet was updated on the settlement reached on the implementation of the fund, which had been delayed due to court action brought by civil rights organisations AfriForum and Solidarity.

“Cabinet was updated on the actions taken to implement the settlement agreement and the changes to the TEF effected based on the settlement agreement. Accordingly, the TEF will be implemented in line with existing Tourism Sector Code targets of minimum 30% black ownership instead of the 51% originally proposed TEF targets,” said Minister in the Presidency Khumbudzo Ntshaveni in a media briefing following the meeting, saying that Cabinet supported the TEF’s implementation. Application dates for the fund have yet to be announced.

The R1.2 billion (€59m) fund will provide a combination of debt finance and grant funding to facilitate equity acquisition and new project development in the tourism sector by black entrepreneurs.

The South African Township and Village Tourism Association (SATOVITO) – representing around 1 700 tourism products across the country – was a key stakeholder in interprovincial deliberations around the TEF. 

SATOVITO National Co-ordinator, Thato Mothopeng, applauded Cabinet’s decision to approve the fund, which he described as a crucial mechanism in driving transformation and small business development in the tourism sector.

“The court action taken to try and halt the fund severely affected the tourism industry and therefore delayed the country’s economic growth. We firstly need to congratulate the Department of Tourism for working tirelessly to have the issue resolved and get the TEF back in play. We also support the new terms of the fund in allowing a wider spread of SMMEs to access the financial support they need,” said Mothopeng.

He urged government to reduce unnecessary red tape in the application and approval process.

“We learned from the Tourism Transformation Fund that excessive red tape was a major barrier. It can take significant investment for a small business to compile audited financial statements, for example, and then be told that they still have a number of other complex requirements to fulfil.”

Still not equitable?

Oupa Pilane, Chair of SATSA, said he had hoped the TEF would be settled with 50% black ownership criteria in order to tangibly address inequality issues within the tourism industry.  

“We have not reached equity parity and the 30% black ownership may exacerbate this. While getting the TEF approved will be a positive move to get new players into the economy, there is a risk that it may not deal with the issues of poverty, unemployment and skewed ownership,” said Pilane.

He called for the Department of Tourism to up their engagements with tourism stakeholders before embarking on major decisions.

“In any such heated issues, we need to further engage with all stakeholders and come to a consensus that avoids delays to crucial programmes. We are willing to come on board as the private sector to assist in reaching such a consensus,” Pilane said. 

Government ‘saving face’?

Despite acknowledging that the revised terms would assist the tourism sector Manny de Freitas, Democratic Alliance Shadow Minister for Tourism, voiced his opinion that the move was “nothing more than a veiled admission that B-BBEE simply is not working”.

“If government is serious about ensuring that our travel and tourism sectors flourish, these requirements must be scrapped completely,” said De Freitas.

“I will be submitting official questions to the Tourism Minister Patricia de Lille on this matter and ask whether she is considering completely scrapping this requirement in future so that all players in the sector can grow and develop without hindrance.”

Department of Tourism Spokesperson Zara Nicholson said that the fund would be implemented, executed and managed through the Small Enterprise Finance Agency. 

"The Department will support and monitor the implementation of the TEF every month," Nicholson added.