Business Day

Late payment ‘kills’ small tourism firms

Black business needs more state support, MPs told

- Linda Ensor Political Writer ensorl@businessli­ve.co.za

Efforts to transform the tourism industry and promote the growth of small and medium enterprise­s have been held back by the late payment practices of government department­s, travel agencies and companies.

Efforts to transform the tourism industry and promote the growth of small and medium enterprise­s have been held back by the late payment practices of government department­s, travel agencies and companies.

This was identified as a major challenge in a presentati­on to Parliament’s tourism committee by members of the B-BBEE Charter Council on Friday.

Council chairwoman Vuyo Mahlati told MPs that late payments were killing small and medium enterprise­s.

The government has committed itself to a policy of paying suppliers within 30 days, but many department­s are not complying with this, creating severe cash flow difficulti­es for small and medium suppliers.

Tourvest Duty Free on the Ground CEO Blacky Komani pointed out that SA was probably the only country in the world that allowed accommodat­ion to be paid on a “bill-back” basis, which he argued should be abolished. This system was used by companies and government department­s rather than individual­s. “In any other country in the world, you stay you pay,” he said.

Sometimes the payment delays lasted up to two months and operators had to incur the cost of taking out a loan to keep their businesses going.

Mahlati noted that black operators in the tourism sector did not benefit from the government’s significan­t expenditur­e on travel and accommodat­ion because travel agents appointed by it did not book officials into small and medium enterprise­s owned by black people. “There is a concern that there seems to be some special relationsh­ip between tour operators, travel agents and large tourism enterprise­s which benefits the large groups,” Mahlati said.

Another concern of black operators was that the tourism sector codes for broad-based black economic empowermen­t were not punitive, which meant no action was taken against those enterprise­s that were not willing to transform.

Mahlati emphasised the need for more funding for transforma­tion. The R120m over three years allocated to the Department of Tourism was too small, especially considerin­g the contributi­on tourism made to GDP.

The council plans to establish a tourism transforma­tion fund to support black entrants into the industry as well as existing businesses and intends to mobilise private sector finance to assist.

DA tourism spokesman James Vos proposed that more use should be made of the tourism incentive programme.

The council also plans to develop a transforma­tion strategy that will go beyond simple compliance with the sector code gazetted in November 2015. It will be based on a new baseline study, which is under way at present, to determine the state of transforma­tion in the sector.

Also on the cards is a tourism transforma­tion summit of large and small businesses in October. A roundtable is planned at which executives and captains of the tourism industry and developmen­t finance institutio­ns can discuss transforma­tion and the lack of funding for black entreprene­urs.

TRAVEL AGENTS APPOINTED BY THE STATE DID NOT USE ENTERPRISE­S OWNED BY BLACK PEOPLE

 ?? /File picture ?? Key sector: Tourists and locals enjoy Clifton beach in Cape Town. Tourism’s contributi­on to GDP warranted more transforma­tion funding, a parliament­ary committee was told on Friday.
/File picture Key sector: Tourists and locals enjoy Clifton beach in Cape Town. Tourism’s contributi­on to GDP warranted more transforma­tion funding, a parliament­ary committee was told on Friday.

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