Tourism Minister Patricia de Lille has announced that she will be seeking Cabinet approval for the R1.2 billion Tourism Equity Fund (TEF) next week as her department has revised the qualification criteria after the fund was stalled for more than two years due to litigation.
The TEF was launched in January 2021 by the Department of Tourism to provide a new financial support mechanism to stimulate investment and transformation in the tourism sector.
This was after the tourism sector became one of the biggest casualties of Covid-19 lockdowns, which resulted in hundreds of business closures due to lack of financial support to cushion them from the pandemic.
However, the fund was placed on hold after lobby group AfriForum and trade union Solidarity brought the case before the High Court, contesting the legality and rationality of the 51% black-owner/managed qualification criteria for the fund.
Speaking at the opening of the annual Tourism Leadership Conference in Sun City today, De Lille said the TEF, and the Tourism Master Plan, were matters she was bringing before the Cabinet in their next meeting for consideration.
“I am pleased to report that following the processes within the department and further engagement with the private sector, we are taking the Master Plan to Cabinet next Wednesday, 13 September, to seek concurrence from Cabinet to gazette the Master Plan for public comment,” De Lille said.
“Another important update I can provide is on the Tourism Equity Fund which was stuck as a result of court litigation.
“This matter has now been settled and we are taking the TEF framework to Cabinet for approval next Wednesday, 13 September, to unblock this R1.2bn fund to support transformation and growth in the sector in line with existing legislation.”
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 by black entrepreneurs.
The Department of Tourism will capitalise the fund with an amount of R540 million, which will be matched with a contribution of R120m from the Small Enterprise Finance Agency, and R594m from commercial banks that will be participating in the programme.
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.
The court eventually ruled that the foundation of the TEF was unconstitutional.
However, in April the department proposed to settle the matter and the groups accepted the settlement and withdrew their litigation, thereby unblocking the TEF.
When De Lille reflected on her 100 days in office in June, she said the revised implementation plan was being finalised within the existing B-BBEE legislation and the Tourism B-BBEE Codes.
She said the target was to have the TEF fully disbursed by March 2024 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.