Late payment ‘killing’ small tourism firms
Black business needs more state support, MPs told
Efforts to transform the tourism industry and promote the growth of small and medium enterprises have been held back by the late payment practices of government departments, travel agencies and companies.
This was identified as a major challenge in a presentation to Parliament’s tourism committee by members of the B-BBEE Charter Council on Friday.
Council chairwoman Vuyo Mahlati told MPs that late payments were killing small and medium enterprises.
The government has committed itself to a policy of paying suppliers within 30 days, but many departments are not complying with this, creating severe cash flow difficulties for small and medium suppliers.
Tourvest Duty Free on the Ground CEO Blacky Komani pointed out that SA was probably the only country in the world that allowed accommodation to be paid on a "bill-back" basis, which he argued should be abolished. This system was used by companies and government departments rather than individuals. "In any other country in the world, you stay you pay," he said.
Sometimes the payment delays lasted up to two months and operators had to incur the cost of taking out a loan to keep their businesses going.
Mahlati noted that black operators in the tourism sector did not benefit from the government’s significant expenditure on travel and accommodation because travel agents appointed by it did not book officials into small and medium enterprises owned by black people. "There is a concern that there seems to be some special relationship between tour operators, travel agents and large tourism enterprises which benefits the large groups," Mahlati said.
Black operators in the tourism sector did not benefit from the government’s significant expenditure on travel and accommodation because travel agents appointed by it did not book officials into small and medium enterprises owned by black peopleVuyo Mahlati
Another concern of black operators was that the tourism sector codes for broad-based black economic empowerment were not punitive, which meant no action was taken against those enterprises that were not willing to transform.
Mahlati emphasised the need for more funding for transformation. The R120m over three years allocated to the Department of Tourism was too small, especially considering the contribution tourism made to GDP.
The council plans to establish a tourism transformation fund to support black entrants into the industry as well as existing businesses and intends to mobilise private sector finance to assist.
DA tourism spokesman James Vos proposed that more use should be made of the tourism incentive programme.
The council also plans to develop a transformation strategy that will go beyond simple compliance with the sector code gazetted in November 2015. It will be based on a new baseline study, which is under way at present, to determine the state of transformation in the sector.
Also on the cards is a tourism transformation summit of large and small businesses in October. A roundtable is planned at which executives and captains of the tourism industry and development finance institutions can discuss transformation and the lack of funding for black entrepreneurs.