Recovery of SA economy vital for tourism – Basa
THE recovery of the South African economy was critical for the improved bankability of the country’s tourism businesses, the Banking Association of South Africa (Basa) said yesterday.
In a presentation to Parliament’s portfolio committee on tourism yesterday, Basa said the recovery of the tourism sector was linked to the government’s administration of the Covid-19 vaccine roll-out, because this would stimulate the demand that would drive the sector.
The portfolio committee had invited Basa to speak about the banking sector’s funding facilities available to small, medium and micro enterprises (SMMEs) in the tourism sector; the qualifying criteria for these funding facilities; and the challenges experienced by tourism SMMEs in accessing the available funding.
Basa also dealt with the assistance provided by the banks to enable SMMEs to meet the funding requirements, and its suggestions on improving the funding of tourism SMMEs.
The association’s managing director, Bongi Kunene, said tourism SMMEs faced challenges because of reduced tourist activity, due to the continued lockdowns, the coronavirus variants that were negatively affecting international tourism, and the difficulty in preparing the business documentation required by finance providers.
Basa said that the lack of collateral and mitigants to solve banking risk in funding, low awareness of the funding opportunities available to SMMEs, and the lack of access to markets affected the revenue of tourism SMMEs and therefore their profitability.
Basa said tourism enterprises should diversify their income streams by extending beyond “the usual” one-product offering, such as by not merely focusing on leisure travel, but also on business travellers.
“They should also revisit their business models, (as) for instance, a stronger digital presence will be critical going forward.”
Basa said the assistance provided by the banks included administering the South African Future Trust, which processed 9 656 loans to SMMEs totalling R1.04 billion, to support 92 993 employees.
The other assistance was the Covid19 Loan Guarantee Scheme (with the South African Reserve Bank and the National Treasury), payment holidays and moratoriums, and R33.6bn in payment relief from April to September last year. The relief was for 2.7 million individual credit agreements and 135 540 business.
In its suggestions on how to improve the sector, Basa said the country should stimulate local demand and focus on local travel and safety.
It said the opening up of travel globally would provide the tourism sector with a boost in the long-term.
The association said that government support was key to galvanising SMMEs after the Covid-19 crisis. It said this could be in the form of relaxed levies, providing training and grants, and creating a synergy of government support initiatives through agencies such as the Small Enterprise Finance Agency and the Small Enterprise Development Agency.
Corporates could enable SMMEs by focusing their supplier development for long-term scale and competitiveness.
In its suggestions in how to grow tourism, Basa said assistance to SMMEs should focus on providing sector-specific support for SMEs now and after the crisis, driving innovation, research and development, and investing in the skills and capabilities that SMMEs needed, as well as boosting the national entrepreneurship ecosystem.
Basa said tourism was a critical sector of the economy. It provided 1.5 million indirect jobs and 740 000 direct jobs, and contributed R425bn to the country’s gross domestic product.
About 80 percent of businesses in the sector were small businesses.
Tourism portfolio committee chairperson Supra Mahumapelo said South Africa was undergoing a painful process of dealing with and managing the effects of the Covid-19 pandemic.
He urged everyone to do what was possible to ameliorate the consequences of the pandemic, whose effects will be felt by the current generation for the rest of their lives.