THE newly launched Tourism Equity Fund (TEF) has been welcomed with mix feelings by tourism business entrepreneurs. The fund, which is a collaboration between the Department of Tourism and the Small Enterprise Finance Agency (Sefa), was launched by president Cyril Ramaphosa in an online even this week.
While primarily meant to transform the tourism sector, the fund is seen as a potential shot in the arm for the sector that has been devastated by travel restrictions and lockdowns due to Covid-19, for the past year.
Despite the TEF, there is lingering concern that the sector could remain subdued until businesses can operate as normal. In addition, a large portion of tourism businesses remains excluded due to the high value of projects that qualify for the fund.
The tourism department said TEF would provide access to grant funding and loans for qualifying black-owned tourism businesses to acquire equity, expand or buy assets.
“The minimum project value for TEF applications is R10-million. The funding provided to a successful applicant will include a grant up to a maximum of R 20-million, a concessionary loan, a Sefa loan up to a maximum of R15-million and the balance to be covered by a loan from a commercial bank,” said tourism minister Mmamoloko Kubayi-Ngubane.
She added that eligibility and scoring criteria for applicants, places significant weight on majority black ownership (>51%) and level of black management control, as critical developmental factors.
Imonti Tours owner Velile Ndlumbini said the fund will go a long way to revive the tourism sector post Covid19. “Most tourism businesses are about to shut down or have shut down. Many of us have gone through debt, some have had cars repossessed and lost workers. So, it will help us kickstart again,” said Ndlumbini. He added that the tourism sector can truly get back to normal once a vaccine is found and proven to work.
“Eastern Cape has been severely affected by the second wave,” said Ndlumbini, who East London-based Imonti Tours founder. “About 90% of our business come from international tourists, so until travel is safe and vaccine works, people won’t come. I have been talking to some of my overseas clients and what’s clear is that people will wait and see. For now, they are afraid to travel to SA. In addition to that beaches have been closed. No one wants to travel all the way to the Eastern Cape from Germany or London and not go to the beach.”
Owner of Park Place Boutique Hotel and Guesthouse, Lizelle Maurice said many businesses will remain excluded. “Whenever they say the tourism entity must be tax compliant, that excludes the majority because how would they have generated income to pay taxes during lockdown? Covid came to wreck a sector that was already on its knees because the economy was weak in the last two quarters of 2019. Now it is worse because there is a lockdown and beaches were closed, so we faced a lot of cancellations. A lot of smaller B&Bs will be excluded anyway because the minimum (project value to apply) is R10-million,” said Maurice, adding that she hoped the fund will be managed well and not be mired in nepotism and corruption.
Ramaphosa admitted that the tourism industry was severely affected by the Covid-19 pandemic, which disrupted tourism activity across the economy. He added that TEF was “an opportunity for us to build back differently and better”.
“Countries like ours, which rely heavily on the income generated by tourism have suffered immensely. The task before us now is to ensure that we do not simply return to business as usual, but that we focus on accelerating the pace towards achieving our transformation goals.
Ramaphosa added that the tourism sector directly accounts for 2.9% of South Africa’s GDP and 8.6% indirectly and supports about one-and-a-half million direct and indirect jobs.
“South Africa’s tourism sector that is labour-intensive and therefore has immense job creation potential. If the tourism sector is to play its role in aiding the economic recovery in the wake of COVID-19, it must grow and transform. This effort is going to contribute to this sector growing, but at the same time it must transform.”
For more details and to download forms for the TEF, go to the Sefa website: www.sefa.org.za .
CAPTION: A group of tourists at Hole-In-The-Wall on Eastern Cape's Wild Coast in South Africa.
CAPTION: Elephants are one of Eastern Cape's tourist attaction, seen here at a watering hole. Pictures supplied by Imonti Tours
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