By Simon Nare
The Portfolio Committee on Tourism has instructed the Tourism Department to increase funding for previously disadvantaged businesspeople and strengthen post-funding of their projects to ensure those projects are sustainable.
The instruction was issued during a sitting of the committee in the National Assembly where the department’s entities, the National Empowerment Fund (NEF) and the Small Enterprises Finance Agency (Sefa), appeared to account for different tourism development programmes they are responsible for implementing.
Committee chairperson Lungi Mngannga-Gcabashe told the entities that the department should provide additional funding in line with increasing demand and implement awareness programmes.
“NEF must also increase its own funding because it is clear that there is a demand for this support and should consider stretching the repayment period because tourism projects take long to break even,” the chairperson said.
On the Sefa presentation, Mnganga-Gcabashe said the entity should speed up processing of applications for funding as there appeared to be slow progress.
She also advised the two agencies and the department to consider the quality of jobs created through these programmes versus the quantity of menial jobs.
“We also need to ensure equitable geographical share of the programmes. Instead of approving projects in more developed areas, we must spread to previously disadvantaged communities,” she said
Sefa acting CEO Nkosikhona Mbatha presented a progress report on the Tourism Equity Fund (TEF) to the committee.
The fund seeks to increase growth and transformation and stimulate more inclusive participation in the tourism sector in line with the Tourism B-BBEE Sector Codes. It also addresses funding challenges faced by enterprises in the tourism sector.
TEF’s core funding activities focus on accommodation, hospitality and related services, travel and related services, and tourism-related products that support the development of the tourism sector in South Africa.
The NEF also gave an update on the Transformation Fund, a funding initiative targeting tourism businesses in previously disadvantaged communities.
NEF acting CEO Mzwamadoda Dayimani told the committee the partnership and co- funding arrangement between the NEF and the department applied to all transactions supported under the programme.
“The department funds through a grant, limited to R5 million per transaction, and if a transaction value is more than R10 million, the NEF funds the excess. The NEF portion is funded through a repayable loan,” Dayimani said.
He revealed that a number of the projects supported through this initiative were still in the development stage and servicing their loans. After paying off the loans, the projects would be expected to be self-sustainable and create more jobs.
Dayimanti said the funding also came with post-investment support to ensure they met their financial targets and repay the loans.
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