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TOURISM FUND DRIVES JOBS, EMPOWERS BLACK BUSINESSES

Bizcommunity | 27 May 2024


The Tourism Transformation Fund (TTF), launched in 2017 through a collaboration between the Department of Tourism and the National Empowerment Fund (NEF), is showing positive progress in driving economic transformation and empowerment within South Africa's tourism sector.


Since its inception, the TTF has approved a total of R272.58m in funding for various tourism projects. This investment is translating into tangible results: six projects are operational, another six are under development, and ten more are in various stages of development, with many expected to commence construction soon.


The initiative has also demonstrably contributed to job creation, supporting over 1,047 jobs. Additionally, the TTF is fostering diversity and inclusion within the industry. A remarkable 76% of the 23 funded businesses boast Black women ownership, with a further 27% being youth-owned.


Targeted support to Black businesses in tourism


"Our collaboration with the National Empowerment Fund in establishing the Tourism Transformation Fund has been a key indicator of our commitment to driving inclusive growth in the tourism sector. By providing targeted support to Black-owned enterprises, we aim to create a more equitable and prosperous industry that benefits all South Africans," says Deputy Minister of Tourism, Fish Mahlalela.


NEF acting chief executive officer, Mziwabantu Dayimani says the TTF represents a significant step towards empowering Black entrepreneurs in the tourism sector.


"Administered by the NEF on behalf of the DT, the TTF offers a comprehensive funding solution tailored to the diverse needs of Black-owned enterprises across the tourism value chain. Through a combination of grant funding, debt financing and equity contributions, the TTF facilitates capital investment in tourism projects, empowering entrepreneurs to start new businesses and expand existing enterprises. In this way the TTF aims to catalyse the growth and emergence of a new generation of black-owned tourism enterprises,” says Deputy Minister Mahlalela.


The grant funding provided by the DT is capped at 50% of the total funding required, for up to a maximum of R5m per successful applicant. The balance is made up of debt finance and equity contributions by the NEF or any other Development Finance Institutions (DFIs) as well as the owner’s contribution.


A transformative mandate


The TTF aims to contribute to the transformation of the South African economy through Broad-Based Black Economic Empowerment (B-BBEE) as a fundamental policy alongside imperatives such as the National Development Plan (NDP), the Industrial Policy Action Plan (IPAP) of the country as well as the Economic Reconstruction and Recovery Plan.


Economic transformation through B-BBEE as a priority in the tourism sector is reflected in the Tourism Act (Act no 3 of 2014), the National Tourism Sector Strategy and the Tourism B-BBEE Sector Code amended in 2015.


Slow rate of transformation in tourism


While there has been some growth in the number of new Black-owned small and micro enterprises entering the sector and also some progress made by existing large tourism players to transform, the overall pace and extent of transformation in the tourism sector has been slow. Transformation efforts are yet to sufficiently change the structure of the sector to facilitate equitable growth with sustained positive socio-economic impacts for the people of South Africa.


Need to strengthen transformation programmes


There was thus a need to strengthen the focus of the Department’s sector transformation programmes beyond policy interventions and to consolidate state resources through partnerships to create targeted interventions to facilitate more inclusive growth and economic transformation.


The Department signed a Memorandum of Agreement (MoA) with the NEF at the end of March 2017 to establish and administer the TTF and applications for the pilot phase opened on 17 May 2018.


Review of TTF


Following a review process in 2021, the pilot phase of the TTF has undergone enhancements, including an increase in grant funding for successful applicants.


"The NEF continues to monitor the performance of the various TTF transactions approved for funding to date and to provide mentorship support in the effort to improve business sustainability, growth and the preservation of jobs. To date, application patterns have demonstrated a significant demand for funding among Black entrepreneurs nationwide for tourism-related funding," Dayimani says.


Deputy Minister Mahlalela adds that travel and tourism contribute significantly to South Africa’s economy and is a source of employment across the country.


Dayimani concludes by saying: "There are many untapped opportunities for funding and the continued need for transformation in the tourism sector. The TTF will continue in its pursuit of the quest for economic recovery, inclusive growth, job creation, as well as women and youth empowerment." Dayimani concludes.


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.


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