Tourism minister says she will defend equity fund in court
AfriForum and Solidarity are contesting the legality and rationality of the qualification criteria
The government will contest an application by lobby group AfriForum and trade union Solidarity regarding the lawfulness of the criteria it adopted to pay recipients from the R1.2bn Tourism Equity Fund.
The fund was established with the Small Enterprise Finance Agency (Sefa) and was tailored to provide a combination of debt finance and grants to facilitate equity acquisition and new project development in the tourism sector by black entrepreneurs.
It was announced by President Cyril Ramaphosa as part of the government’s economic reconstruction and recovery plan in response to the coronavirus pandemic last year.
“Since the launch, our effort as government to transform the tourism sector has been frustrated by a court challenge brought by AfriForum and Solidarity. Today we announce our intentions to defend the main case in court regarding the constitutionality of the criteria, which is part B of the court application,” tourism minister Mmamoloko Kubayi-Ngubane told a media briefing on Monday.
AfriForum and Solidarity are contesting the legality and rationality of the 51% black owner/managed qualification criteria for the fund.
“Our mission is to get the matter through the court processes. We are hopeful that given the nature of the urgency of the matter, Solidarity and AfriForum will agree to an expedited mechanism so as not to disadvantage the thousands of people who have applied since the launch.”
The ministry said the legal process had negatively affected the livelihoods of black entrepreneurs. Before the interdict, the ministry reported it had processed applications that qualified for final adjudication and stood at about R5.6bn.
“We must re-emphasise that our efforts to transform the sector remain steadfast. We have instructed our legal representatives to proceed with our defence to stop attempts by AfriForum and Solidarity to oppose and render the criteria unconstitutional,” she said.
“It must be noted upfront that the delays in implementing the fund will negatively affect black businesses which have already negotiated deals and applied for the funding.”
Solidarity and AfriForum obtained an interdict in April which prevented the government from processing any applications or making any payments from the fund pending the main court application.
Among other concerns, they argued it was unfair for black entrepreneurs to be given priority when other businesses suffered equally and some were even forced to close.
They also suggested the fund deviated materially from the Broad-Based Black Economic Empowerment (BBBEE) Act, read with the Tourism Code.
Kubayi-Ngubane has defended the rationality of the fund, arguing it was to aid transformation in the sector.
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