The draft broad-based black economic empowerment codes for the tourism sector, which were published last week by Trade and Industry Minister, Rob Davies, are a double blow to the tourism industry and could result in job losses.
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Geordin Hill-Lewis, DA Shadow Minister of Trade and Industry, points out that these come alongside the introduction of new visa regulations by Department of Home Affairs.
Mmatšatši Ramawela, CEO of the Tourism Business Council of South Africa, says while the impact of the codes could be delayed, jobs losses are a possibility as businesses may be forced to close.
The new tourism codes are considerably ‘stricter’ than the generic codes of good practice and have significantly lower revenue thresholds for exempted enterprises. Under the new draft tourism sector codes, an exempted micro enterprise (EMEs) needs to have total revenue of less than R5m per annum compared with R10m under the generic codes. Qualifying small tourism enterprises’ (QSEs) revenues will be between R5m and R45m (compared with between R10m and R50m) while large tourism enterprises will have revenue of over R45m (compared with R50m under the generic codes).
Ramawela points out that the amended codes will see the EMEs’ threshold move from R2,5m to an inflation-linked R5m. “During its consultation with the NDT and Tourism BEE Council in 2014, the TBCSA called for the threshold to be linked to the generic codes of R10m instead of the R5m contained in the gazetted codes.
“We believe that the impact could be a delayed one, which could be attributed to the added compliance burden, especially in the EME category,” says Ramawela. “This, we believe, may lead to certain EME businesses closing shop if the burden gets too much for them to handle considering their sizes.”
The Southern African Vehicle Rental and Leasing Association (Savrala) has also expressed concern that the new codes will undo the transformation gains the sector has made. Savrala CEO Marc Corccoran says these gains include car rental companies increasing their average B-BBEE levels from level 5 to level 3 - a 40% improvement. "Against this positive transformation momentum we are very concerned it will be reversed, in particular, by the new procurement thresholds and requirements which will drop the average car rental B-BBEE levels back to below those of 2009."
"Vehicle purchases from the country’s largest vehicle manufacturers and importers make up the largest proportion of a car rental companies procurement, however, currently under the new generic codes these vehicle manufacturers and importer’s B-BBEE level’s will drop further over the next 18-24 months and, without any influence or control over these suppliers, cause the significant decline in the B-BBEE levels of car rental companies," says Corcoran.
According to Davies, the unique thresholds industry will ensure that more enterprises in the sector contribute towards transformation.
However, Hill-Lewis argues that new codes will “stifle growth and entry into the industry”. “These codes are even more stringent than the already burdensome generic B-BBEE codes, creating additional hurdles that will negatively affect the tourism industry’s ability to create jobs.”
The TBCSA has further expressed concern about the impact on Large Enterprises as well as the section of the industry that depends on imports and has foreign ownership as part of its composition. She says on this point, the TBCSA is an active participant in the on-going BUSA discussions with the Department of Trade and Industry.
Members of the public have sixty days (60) from the date of publication to make inputs and comments before the Draft Tourism B-BBEE Codes is gazetted as a legally binding Sector Code.
