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
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.