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R1.2bn Tourism Equity Fund launched to bolster transformation

New funding source for black-owned small businesses and entrepreneurs in an industry hard-hit by Covid-19.
President Cyril Ramaphosa announced plans to launch the fund in his State of the Nation Address last February, before the pandemic dealt a severe blow to both established and emerging participants in the sector. Image: Dwayne Senior, Bloomberg

In a move to bolster transformation within South Africa’s embattled tourism and hospitality industry, the departments of tourism and small business development have joined forces and on Tuesday launched the R1.2 billion Tourism Equity Fund (TEF) to assist new black entrants into the sector.

While the economic fallout from the Covid-19 pandemic and lockdowns continues to have an especially devastating impact on the tourism industry at large, a lack of transformation in the sector has been a bugbear for government and organised black business bodies for years.

At the virtual launch of the TEF, President Cyril Ramaphosa and Black Business Council head Sandile Zungu backed the initiative.

Initial funding

Initial seed money for the new fund, totalling R540 million, will come out of the Department of Tourism’s budget over the next three years, topped up with financial backing from the Small Enterprise Finance Agency (Sefa) and commercial banks.

“The TEF 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,” Tourism Minister Mmamoloko Kubayi-Ngubane said during the launch.

She noted that the fund would be managed by Sefa on behalf of her department over the initial three-year period, after which its success will be evaluated to improve the fund.

Read: R1bn budget cut for tourism department

“During this three-year period, the Department of Tourism will capitalise the fund with an amount of R540 million,” Kubayi-Ngubane said, adding that Sefa would make an additional contribution of R120 million.

“Around R594 million will come from commercial banks that will be participating in this programme.… This will put the value of the Tourism Equity Fund at just over R1.2 billion.”

‘Rejuvenation’

She said that in the wake of the devastation to the sector caused by the Covid-19 pandemic, government is committed to contributing towards 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.

“Broadening participation in the tourism sector to South Africans of all races, ages and genders can only enrich the tourism sector to be more competitive and sustainable in the long run.”

Kubayi-Ngubane said the launch of the TEF is timely and necessary.

“Though the conceptualisation of the fund preceded the pandemic, as it was announced by the president in the 2020 State of the Nation Address, the fund is timely in that it will be instrumental in helping in the recovery and the reconstruction of the sector after the devastating impact of the pandemic,” she noted.

“It is necessary because not only will this fund help us to crowd-in private sector investment in the rejuvenation of the supply side of the tourism market, but it will also help to transform the sector.”

Ground-breaking, says Ramaphosa

Speaking during the virtual launch, Ramaphosa described the fund as a ground-breaking venture that would help “speed up transformation in one of the most crucial sectors” in the South African economy.

“This launch is taking place when the SA tourism industry is admittedly facing severe challenges due to Covid-19,” he conceded.

However, he also noted that the global travel industry was being impacted.

“It is important to remember that in all of this we are not alone,” said Ramaphosa.

“The pandemic has had a profound impact on the tourism sector globally. Nearly every country in the world has been affected.

“The World Travel and Tourism Council 2020 recovery scenarios project that global travel and tourism will have experienced losses of over $2 billion [R30.1 billion] in the best-case scenario, and as much as $5.5 billion [R82.9 billion] in a worst-case scenario.

“Many jobs in the tourism and associated sectors in the value chain have been lost,” he added.

Sector ‘can rebound’

Ramaphosa stressed that the tourism sector, which directly accounts for around 2.9% of South Africa’s GDP and 8.6% indirectly, is resilient and “can rebound from periods of crisis”.

Read:

“Growing, developing and transforming tourism is one of the priorities of the Economic Reconstruction and Recovery Plan that I announced late last year,” he noted.

“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,” he noted.

Ramaphosa said the establishment of the fund was “informed by the recognition that the capital-intensive nature of the tourism industry prevents many black-owned tourism enterprises from growing and developing”.

He added: “By providing access to finance for black-owned commercially viable tourism projects, the TEF intends to address this challenge. A vital element of the operation of the fund is the involvement of commercial banks, which will ensure that participants are able to access further loan financing.”

He said this would significantly increase the impact and reach of the initiative, which would increase the level of private investment in the industry.

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Can anyone tell me how this kind of racism (favouring people with a certain melanin count) is ok in the 21st century? In addition, when has BEE helped anyone except the crooked friends of the ANC?

The ANC needs to sunset race baced policy

Helping black owned businesses when white owned businesses are retrenching staff (black people) in their droves due to the harsh regulations?

Saving existing with a life line businesses irrespective of who owns them should be as much a priority as helping emerging businesses

How, in any event do you help new business when the entire industry us collapsing

My word, the mentality of the ANC is always under question..it’s like trying to catch fish with a snooker stick knowing quite well it’s a stupid thing to do

Fish where the fish are ANC..It’s about saving jobs, not trying to create new ones at this point in the economy..

Maybe the idea is to snap up “white owned” hospitality businesses while the owners are struggling to keep afloat and are most probably prepared to sell their business before getting any further into debt.

This is blatant RACISM!!

Jip and puts their ridiculous beach rules in a new light

Would Kolisi be a springbok if he did attend a prestigious Grey school? No

He was given an opportunity that black kids are not afforded. In the same way , view this fund as a scholarship for those that are deserving.

There is a sunset clause of3 years . So I say may the administrators be honest and transparent . May the candidates be deserving candidates and not families of
A connected few.

Agreed.

And most CURRENTLY disadvantaged kids don’t go to Grey either. So why is there a need for CURRENTLY disadvantaged small enterprises to be discriminated against??

Is it perhaps that there is a notion that PREVIOUSLY disadvantaged enterprises can not compete?? That’s the only conclusion I can come to.

That would mean that the intention is to build weak enterprises that will never be able to compete if not protected..

That’s wrong and racist and weak and backward and doomed to fail.

I will be checking ownership very carefully for all my future holiday bookings. The beneficiaries of the taxpayers money will never get my support.

Maybe Afriforum can challenge this in the courts? Admittedly hard to swallow such blatant racism.

Blatantly racist.

Its will achieve the success it deserves.

Much like SAA.

What a great time to “fund” a tourism endeavor. The money will be “eaten” while we are still on level 3. Guess he is just giving some free stuff away.

A clear demonstration that our leader has a deprived capability in distinguishing between good and bad not to mention right and wrong.

All of you,get it into your thick heads,The ANC is not a RACIST organization, it blatantly says so in their freedom charter….go and check it out if you don’t believe and Carl Niehous also is still there.

What they say and what they practice is vastly different between the two. They should practice what they preach.

Oh boy, another route to plunder taxpayers’ money!

I am willing to predict what will happen to the R1,2 billion. It makes me think of a certain asbestos project in the Free state where R255 million was spent to remove dangerous asbestos roof sheets from the homes of the poor. In the end, not one single roof sheet was removed but the Bentley, Ferrari and Porsche garages did very well from the project.

The 540m grant portion should be spent on vaccines or there will not be any need for a department of tourism at all.

Jip — And no money for a vaccine !!!Lekka ne !!!

Right now at the moment we don’t need any of these vanity projects. The aggregated debt burden of SA and the Vaccine is more important.

Spend the money on fighting corruption instead.

Get the foundation right first, before building the house.

Ramaphosa said the establishment of the fund was “informed by the recognition that the capital-intensive nature of the tourism industry prevents many black-owned tourism enterprises from growing and developing”.

Does he really believe it only prevents black owned tourism enterprises from growing?

If the tourism enterprise is so viable there should be investors lining up to invest their money.

“It is important to remember that in all of this we are not alone,” said Ramaphosa.

If you’re black that is, if you’re white you’re on your own mate.

If the intention to save Tourism businesses was genuine, it would have come in the form of tax breaks. This clearly shows the government is set on pushing their agenda rather than trying to save the industry.

The economic cake has to be GROWN for SA to lift us out of the unemployment swamp. Doesn’t have to be divided. No place for politics in SA anymore. We are spiraling downwards

These communists tax viable businesses into extinction to support non-viable businesses. They handicap the competitive entrepreneur to enable the noncompetitive parasite. They remove the competitive advantage of those who add value to society to protect those who consume value. Capital formation is a sign of competency. They punish competence and reward incompetence. This is a certain recipe to bankrupt a nation. This is how a nation embraces the destruction caused by the hyperinflation of the currency.

If you want to know the thinking behind doomed projects like this, then read Mashele & Mzukisi’s book: The Fall of the ANC: What Next? It explains how the ANC use warranted concepts (like BEE) to hide their true intent (which, surprise, surprise is not upliftment of the people), nicely. Be warned it is a somewhat depressing read for the peoples of SA, as it also gives a hint of what will happen to the money that is earmarked for this project.

Well peeps at least it did not take the ANC Gauvament long to start the roll out of its wealth and industry redistribution program.
Clearly their “lockdown [read breaking down]” rules have been designed to cripple the middle layer of whats left of any white owned tourism business and redistribute same to “now entitled black tourism tendrepeneurs”.
This is so sickening it beggers belief.

So now I wonder to myself – what is the next industry they are going to target to redistribute to newly minted and entitled blacks only business’s??

Using COVID and this Fund to discriminate is so disgusting, shameful, and disgraceful I do not have the words to properly express my anger. I hope Black people in this country have a sense of this – racism act that would make the Apartheid Government proud.

No concern for the black staff working for white-owned businesses who lose their jobs? This makes little to no sense.

ha ha haa! and to think it comes from our tax blood money……nothing left to give to the PEP lay by scheme…sorry sotte!

With just over half coming from commercial banks it would be good to know which banks those are and how they are positioning their involvement.
Would also be good to see positive action from banks on corruption. After years of burdening us with govt. imposed FICA requirements how is it that so few beneficiaries of corruption seem to be caught by financial institutions that should be checking the source of funds their customers receive?

Is it just me or are the ANC taking advantage of the pandemic to destroy white south african business in favour of black south african businesses.

To be clear I would completely be in favour of supporting any south africans in need of help, but most definitely not disadvantaging one in favour of the other

This was an exact same comment I made earlier on today which the trolls at Moneyweb deemed to be censorship worthy. The lockdown (or teardown) of the middle income small business owner is just a redistribution of socialism and wealth program. Take from the producers and value adders to give to the plodders unable to make a start after nearly 30 years of running the show.
So when all the business have been redeployed and it all goes belly up I wonder what will be next – repo our own possession and redistribute to said entitled!!!

Another tradgedy in the making.
The race issue just shows the ANC for what it is;

As anyone in the hospitality business will confirm, IF dilligent and IF adequately skilled, it can still take years to make a profit. Issues like 911, SARS virus and now COVID do happen, they knock projections for a loop and extend these time frames.

Providing free / cheap funding at the lowest point in the industry will result in many failures.

IF the ANC truly wanted to improve the lot of a particular skin colour, they would have embarked on a partnering/mentoring/skills transfer programme that would have been a win win.

It stinks.

I wonder if it was not a grand scheme of the ANC to flatten the economy of the Western Cape and now only black people may apply for help thus hoping to take Western Cape away from the DA.

Make sure of resorts owners before you book !!!

R1,2 Billion to destroy yet another industry !!!
No doubt ANC Cadres are all suddenly Tourism Entrepreneurs !!!

Lol. Some minister or two can’t afford their 20th BMW so El Presidente made a new “fund.”

Don’t be naive people, this “fund” is choked filled with buzz words like “transformation,” “diversification,” these are ANC code words for them setting up a new petty cash for them to draw upon.

Transformation has been such a success story for South Africa. See how unemployment has been eradicated and poverty eliminated. Not.

End of comments.

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