Tourism relief fund must be increased and extended, OECD says
The international policy organisation also said SMEs in the sector should be protected, and more done at a local level to improve tourism growth
A leading international policy-formulation organisation has recommended that the government increase the amount of the Covid-19 tourism relief fund and extend it until mid-2021 to support the recovery of the sector.
This would be particularly important if there were a renewed outbreak of Covid-19 later in the year, the Organisation for Economic Co-operation and Development (OECD) said in a section devoted to the tourism sector in its 2020 economic survey of SA released on Friday.
The report emphasised the potential of the tourism industry, with its job-creation strengths, to foster economic growth in SA. Before the onset of the pandemic, tourism contributed an estimated 8.6% to GDP and employed about 1.5-million people directly and indirectly. The sector has been identified as a priority growth sector by the government.
The R200m Tourism Relief Fund was extremely limited in size relative to the need felt by financially distressed businesses, and has already been exhausted.
Tourism minister Mmamoloko Kubayi-Ngubane said at a media briefing on Thursday that of the 7,284 valid applications only 4,000 small and medium businesses were paid out. Each received R50,000.
Writing in the latest Thabo Mbeki Foundation newsletter, the minister noted that the sector now faces a 75% revenue reduction in 2020 putting a further R149.7bn in output, 438,000 jobs and R80.2bn in foreign receipts at risk. It was estimated that R54.2bn in output may already have been lost between mid-March and the end of May.
“The sustainability of small, micro and medium enterprises in the tourism value chain is particularly affected during and after the implementation of the government measures to curb the spread of Covid-19,” the OECD said.
“Although the recent coronavirus (Covid-19) pandemic and resulting containment measures have hit the economy and, in particular, tourism, the sector has good potential to support the SA economy and contribute to employment growth post-Covid-19.”
The sector was brought to its knees by the lockdown and has pleaded for the relaxation of restrictions to enable it to operate. The minister went a small way to accommodate this by shifting the start of the curfew from 9pm to 10pm and allowing intra-provincial leisure travel.
Other recommendations made by the OECD were the need to introduce electronic visas on a large scale to overcome the obstacles inhibiting the growth of international tourism. The number of countries falling under visa-waiver agreements should be increased and SA should join Sadc’s visa agreement to facilitate regional travel and the flow of visitors.
“Tourism in SA is concentrated in few regions and does not spread into remoter areas. Investments in transport and tourism infrastructure have to be aligned to connect tourists to places,” the report said.
Also, red-tape and regulatory burdens need to be reduced for entrepreneurs and small enterprises as there are multiple licences required in different administrations to open a small tourism unit.
To address foreign perceptions of a high crime rate and lack of security, the OECD suggests that perceptions of safety could be improved through higher visibility of safety personnel in prime tourist spots and by collecting and disseminating indicators of crimes related to tourists.
Local level planning
Domestic tourism had not achieved its full potential and its development should be supported to counter the seasonality of international tourism by diversifying products and pricing mechanisms.
Provincial and local governments also need more financial support to promote tourism the OECD said. “Budget allocations for tourism at the provincial and local level are often insufficient as the sector is competing with policy fields that are of higher importance to the local population.”
It suggested that frameworks governing infrastructure and other conditional grants be created to provide additional revenues to sub-national budgets and to provide a dedicated financial source for local tourism development, marketing and maintaining natural and cultural tourism resources.
“Despite their legislative mandate to plan for and drive tourism development, planning for tourism by local governments risks falling short of achieving its full potential due to the sheer volume of responsibilities in service delivery — especially in distressed regions,” the report concluded, saying that national government should ensure that local level governments have sufficient capacity to support planning for sustainable tourism.
The OECD noted that policy strategies in relation to tourism were often developed in silos and did not take into account their interconnectedness with other policy sectors. It recommended that a co-ordination mechanism, possibly in the office of the presidency, be established to ensure a holistic government approach to tourism.
For instance, local supply chains should be developed so that accommodation establishments source their supply of fresh fruit and vegetables from small local suppliers rather than from distant urban wholesale markets.
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