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AfriForum and Solidarity’s battle with tourism fund’s BEE criteria still on despite SA reducing requirements

Visitors take in the sights of Cape Town’s Table Mountain from an open-topped tour bus. Picture: Reuters

Visitors take in the sights of Cape Town’s Table Mountain from an open-topped tour bus. Picture: Reuters

Published Sep 15, 2023


AfriForum and Solidarity have vowed to continue challenging the race-based laws in relation to the government’s measures in the relief fund set up to ease the impact of Covid-19 on the tourism industry.

This comes after Cabinet approved the Department of Tourism’s request to reduce the requirements for black ownership from 51% to 30% in the qualification criteria for the R1.2 billion Tourism Equity Fund (TEF) yesterday.

The department launched the TEF in January 2021 to provide a new financial support mechanism to stimulate investment and transformation in the tourism sector.

The two groups, who challenged the implementation of the TEF in court, suggested that it deviated materially from the Broad-Based Black Economic Empowerment (B-BBEE) Act, read with the Tourism Code.

However, the fund was placed on hold after AfriForum and Solidarity brought the case before the high court, contesting the legality and rationality of the 51% black-owned/managed qualification criteria for the fund.

AfriForum spokesperson Ernst van Zyl told Business Report yesterday that there was a settlement reached that the government would withdraw its gazette requiring 51% black ownership to qualify for funding.

Instead, Van Zyl said the government had then chosen to have the fund contained under the existing BEE legislation.

“In this aspect, AfriForum and Solidarity are still opposed to race requirements, but we are going to have to use other legal instruments to tackle this particular incarnation of garden variety racially discriminatory legislation that the South African government has become known for, seeing as this is existing and established legislation and not heat-of-the-moment gazettes,” Van Zyl said.

“The fight against race laws in South Africa continues.”

Speaking during the post-Cabinet media briefing yesterday, Minister in the Presidency, Khumbudzo Ntshavheni, said Cabinet was updated on the settlement reached on the implementation of the TEF as a result of the court case brought by AfriForum and Solidarity.

Ntshavheni said the government had decided to settle out of court with AfriForum and Solidarity as the case was delaying the implementation of the TEF.

“Accordingly, the TEF will be implemented in line with existing Tourism Sector Code targets of minimum 30% black ownership instead of the 51% (in the) originally proposed TEF targets. Cabinet supported the implementation of the TEF,” she said.

Solidarity spokesperson Pieter Jordaan said they were still not happy with the new iteration of the TEF.

“It is not true that Solidarity settled for a reduced 30% ownership. What is presumably being referred to is the government’s withdrawal, with costs, of a gazette proposing 51% ownership requirement for access to the Covid-19 relief fund,” Jordaan said.

“We opposed it as it was discriminatory and unlawful. It now seems that the Covid-19 relief fund is being included into existing BEE legislation, which might be where the 30% comes from. Our position on BEE remains clear. We are opposed to it. But that is a fight for another day.”

The fund will provide a combination of debt finance and grant funding to facilitate equity acquisition as well as new project development in the tourism sector.

The Department of Tourism will capitalise the fund with an amount of R540 million, which will be matched by a contribution of R120m from the Small Enterprise Finance Agency, and R594m from commercial banks that will be participating in the programme.

Last week, Tourism Minister Patricia de Lille said the target was to have the TEF fully disbursed by March next year and to develop and implement mechanisms to unlock the implementation of the TEF to ensure black ownership within the confines of the law and support small to medium enterprises in the tourism sector.