President Cyril Ramaphosa launched the over R1,2 billion Tourism Equity Fund aimed at driving transformation in the sector on Tuesday afternoon. Photo: Elmond Jiyane/GCIS
President Cyril Ramaphosa launched the over R1,2 billion Tourism Equity Fund aimed at driving transformation in the sector on Tuesday afternoon. Photo: Elmond Jiyane/GCIS

Ramaphosa launches Tourism Equity Fund to transform the sector

By Given Majola Time of article published Jan 27, 2021

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DURBAN - President Cyril Ramaphosa said that the country’s tourism sector would recover again as it had done previously.

The president was speaking at a virtual launch of the over R1,2 billion Tourism Equity Fund aimed at driving transformation in the sector on Tuesday afternoon.

“Tourism is important in the economy. It will come back as it has in the past. But we have to ensure that when it returns it cannot be business as usual,” said Ramaphosa.

He said that as the country forged a path towards sustainable recovery, black businesses in the sector needed to benefit and not be marginal by-standers or mere suppliers. Ramaphosa said that the Fund would assist businesses with broad based benefits, transformation and rural and township development which he said had been neglected and pushed to the periphery.

Ramaphosa said the funding which will be in the form of grant-funding or loans would allow black sector businesses to acquire equity for new developments and expanding existing ones. Participants that will be able to access funding would be enabled to increase their impact and be prepared to reach a level of accessing private investment that will enable them to run profitably then procure goods and services locally.

The Tourism Business Council of South Africa (TBCSA) welcomed the launch of the Tourism Equity Fund (TEF) by the Department of Tourism in partnership with the Small Enterprise Finance Agency (SEFA).

TBCSA chief executive Tshifhiwa Tshivhengwa said that inclusivity and growth of the tourism sector had always been a critical priority for them and they believed that this fund would do exactly that, by supporting entrepreneurship and investing in transforming the industry. “The launch of this initiative is a step in the right direction and shows that opening the industry to new players is a prerogative to our government,” said Tshivhengwa.

Tshivhengwa further added that the TBCSA remains hopeful that the Fund will attract new participants to the tourism sector. One of the most important aspects of tourism is sustainability and we know that this fund will inject some sustainability during this critical time for the tourism sector.

Absa Retail and Business Bank Tourism sector specialist Justin Schmidt said that although the direct contribution of the tourism sector to GDP could be considered relatively small, the sector played a vital role with regard to job creation in South Africa.

“Many businesses operating in the sector are SMEs, including accommodation establishments, transport firms, travel agents and restaurants, each combining to contribute significantly to overall employment in the economy,” said Schmidt.

He said that unfortunately, the outbreak of Covid-19 had put many of these businesses under significant pressure, which has resulted in cost cutting and job losses. He added that while it may take some time before the sector recovered amid ongoing lockdown conditions and international travel restrictions in many parts of the world, it was important that South Africa took advantage of the multiplier effect the sector had on the economy while capturing as much of the spending power tourists have to offer. Schmidt said therefore, getting local and international tourists travelling again was the obvious long-term booster the sector needed, and needed to be encouraged as soon as it was safe to do so.

Absa said it welcomed the launch of the TEF, which they believed would play a vital role to bring much needed capital injections to the sector.

“Although this cannot address all the capital needs of the sector, it is a timely reminder of the strategic importance of tourism for South Africa’s economic recovery and the importance of taking a long-term view,” Schmidt said.

Other participants in the webinar was the Minister of Tourism Mmamoloko-Kubayi-Ngubane, Small Business Development minister Khumbudzo Ntshavheni, South African Tourism, Sefa and Black Business Council.

BUSINESS REPORT

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