Wel­come news for wel­come in­dus­try

In­dus­try gets long over­due recog­ni­tion and sup­port as one of the main driv­ers of the econ­omy as SA con­tin­ues to be a favourite for global trav­ellers

Financial Mail - Investors Monthly - - Budget 2017 - Thabiso Mochiko Mochikot@busi­nesslive.co.za

The tourism in­dus­try is set for a ma­jor boost af­ter trea­sury al­lo­cated an ad­di­tional R494m for tourism pro­mo­tion. The in­dus­try is seen as play­ing a cen­tral role in grow­ing em­ploy­ment and en­sur­ing in­clu­sive eco­nomic growth.

Ac­cord­ing to trea­sury, in 2015, 4.5% of the to­tal work­force was em­ployed in tourism, ac­count­ing for 711,746 peo­ple, and the sec­tor con­trib­uted 3% to GDP.

Tshifhiwa Tshiv­hengwa, CEO of the Fed­er­ated Hos­pi­tal­ity As­so­ci­a­tion of South­ern Africa, wel­comed the fund­ing al­lo­ca­tion, say­ing this would go a long way to get more peo­ple to visit SA and cre­ate more jobs.

“This is long over­due. The in­dus­try has been un­der­funded for years. It is about time that it is recog­nised as one of the eco­nomic driv­ers,” he says. Tshiv­hengwa says tourism sur­passes the min­ing sec­tor in terms of em­ploy­ment and ‘needs to be taken se­ri­ously’.

“Fi­nally, the mes­sage of travel and tourism as a key eco­nomic driver (though not yet re­garded as an eco­nomic sec­tor by the de­part­ment of trade & in­dus­try, which is some­thing we won­der about) is fil­ter­ing through gov­ern­ment speeches and plans,” says Mmatšatši Ra­mawela, CEO of the Tourism Busi­ness Coun­cil of SA (TBCSA).

In terms of the bud­get al­lo­ca­tions the re­al­ity is that fi­nance min­is­ter Pravin Gord­han “did not have much room to ma­noeu­vre,” she says.

How­ever, the TBCSA is pleased that gov­ern­ment was able to source ad­di­tional funds for tourism pro­mo­tion. “This al­lo­ca­tion and the sig­nif­i­cant men­tion of tourism in var­i­ous parts of his [Gord­han’s] speech sends a clear sig­nal that gov­ern­ment is be­gin­ning to em­brace this sec­tor. We now look for­ward to hear­ing from the na­tional tourism min­is­ter on how the in­creased fund­ing will be used in his own bud­get vote later this year,” says Ra­mawela.

Busi­ness Day re­ported last week that in 2016 more than 10m in­ter­na­tional tourists ar­rived in SA‚ 13% more than in 2015, ac­cord­ing to Statis­tics SA. This is well over the world av­er­age growth rate of 3.9% for the same pe­riod.

The UK re­mained the lead­ing source mar­ket for over­seas ar­rivals to SA last year with 447,840 vis­i­tors, fol­lowed by the US with 345,013 and Ger­many at 311,832. China is the lead­ing growth mar­ket‚ with year-on-year growth recorded at 38%. Ar­rivals from In­dia grew by 22%. There was an 11% growth in tourist ar­rivals from Africa, bring­ing the to­tal for 2016 to 7.5m.

Ac­cord­ing to trea­sury, the tourism de­part­ment re­lies on SA Tourism to mar­ket the coun­try. The or­gan­i­sa­tion is man­dated to grow lo­cal and over­seas tourist num­bers and tourist spend­ing, which in turn sup­ports jobs and eco­nomic growth. Ad­di­tional fund­ing of R174m has been al­lo­cated to the or­gan­i­sa­tion over the medium term to in­crease mar­ket­ing in es­tab­lished and emerg­ing mar­kets.

The de­part­ment is set to trans­fer R1.1bn over the medium term to the Work­ing for Tourism project through the ex­panded public works pro­gramme. This is ex­pected to cre­ate 10,629 full­time-equiv­a­lent jobs by 2019/2020. The de­part­ment will also spend a fur­ther R124.8m through the En­ter­prise De­vel­op­ment & Trans­for­ma­tion sub­pro­gramme, which aims to trans­form and in­crease the ge­o­graph­i­cal spread of the tourism sec­tor, to pro­vide de­vel­op­men­tal sup­port to 1,400 ru­ral tourism en­ter­prises over the medium term.

Through the Des­ti­na­tion De­vel­op­ment pro­gramme, the de­part­ment plans to work with mu­nic­i­pal­i­ties and com­mu­ni­ties to de­velop the un­der­used public recre­ation fa­cil­i­ties that they own into tourism des­ti­na­tions. It has al­lo­cated R200m for this ini­tia­tive.

Yud­hvir Seetharam, head of an­a­lyt­ics at FNB, said in a state­ment re­cently that SA has re­mained a pop­u­lar lux­ury des­ti­na­tion for many in­ter­na­tional trav­ellers, es­pe­cially as it of­fers a world-class ex­pe­ri­ence from shop­ping to pris­tine beaches and un­for­get­table sa­faris at a frac­tion of the price.

A weaker rand makes for a favourable ex­change rate for for­eign tourists trav­el­ling to SA. Lo­cals who would have oth­er­wise trav­elled abroad, will most likely travel within the coun­try, cre­at­ing a greater in­come stream for tour op­er­a­tors, trans­port, ho­tels, and bed & break­fasts, ac­cord­ing to Seetharam.

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