How SA's R1.2 billion Tourism Equity Fund is set to transform the sector
The South African government launched a new R1.2 billion Tourism Equity Fund initiative aimed at creating an inclusive and growing tourism sector.
Speaking at the Virtual Tourism Equity launch, Minister of Tourism Mmamoloko Kubayi-Ngubane said the Tourism Equity Fund is a dedicated fund that 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.
She said the fund will be managed by Small Enterprise Finance Agency (Sefa) on behalf of the Department of Tourism over an initial three-year period.
During the 3 years, the Department of Tourism will capitalise the fund with an amount of R540 million. The funding from the Department will be matched with a contribution of R120 million from sefa and R594 million from commercial banks participating in this programme. This combination will put the value of the Tourism Equity Fund at just over R1.2 billion.
Kubayi-Ngubane said the outbreak of the Covid-19 pandemic brought the tourism sector to a grinding halt and reduced the number and diversity of tourism attractions.
"In responding to this devastation of the sector by the pandemic, government committed that it will contribute to the rejuvenation of the supply side of the tourism market. We believe that to deepen the diversification of the tourist attractions, we also have to pay attention to the diversification and transformation of the sector in terms of ownership and management control," she said.
Kubayi-Ngubane said the fund will help in recovery and the reconstruction of the sector after the devastating impact of the pandemic.
"Some of the objectives of the fund is for it to be commercially viable and sustainable majority Black-owned tourism enterprises with a minimum of 51% black ownership including enterprises in rural areas and townships, to help create jobs, alleviation of poverty, fight inequality and promote growth of black-controlled tourism enterprises. It will also facilitate the participation of targeted groups such as women and youth in the priority tourism sectors as defined by the B-BBEE sector codes."
President Cyril Ramaphosa called it a "ground-breaking venture" and said it will a "speed up transformation in one of the most crucial sectors of our economy."
He said the tourism sector is among those with the greatest potential for long-term sustainable economic growth.
"The industry has responded to Covid-19 with a Tourism Recovery Plan. It entails three strategic themes. Firstly, reigniting demand. Secondly, rejuvenating supply. Thirdly, strengthening enabling capability.
"One of the immediate measures identified in the plan to protect the supply side capacity of the tourism sector is transformation via a Tourism Equity Fund. This fund facilitates the participation of black entrants, but also, more importantly, businesses owned by women and persons with disabilities.
"The Tourism Equity Fund is informed by the recognition that the capital-intensive nature of the industry prevents many black-owned tourism enterprises from growing and developing. By providing access to finance for black-owned commercially viable tourism projects, the Tourism Equity Fund intends to address this challenge," he explained.
He said the partnership between government, public entities and commercial banks is an excellent example of the kind of collaboration that is required to forge a path towards a sustainable economic recovery.
"We are committed to ensuring that this fund enables black business to substantially benefit from the tourism economy, not to be roped in by fronting companies or to be marginal bystanders and small-scale suppliers to larger tourism enterprises.
"Whether it is in a coastal town in the Eastern Cape or a wildlife-rich area in the North West or Limpopo, it is our aim through this fund to actively support black-owned businesses to run profitable and sustainable enterprises. It is also our aim to employ local people, to procure goods and services locally, and to make a real contribution to our economy," he said.