New tourism fund but ‘a drop in the ocean’ of what is needed for industry

The newly launched R1.2 billion Tourism Equity Fund (TEF) is a drop in the ocean for the largely untransformed industry with an annual turnover of more than R400 billion, according to the Tourism Business Council of South Africa.

Potential new entrants to the market will not only find that it is a tough and competitive industry, but will also have to bring unique offerings to the industry which has been decimated by the Covid-19 pandemic.

The council’s chief executive Tshifhiwa Tshivhengwa believes there was no better time than now to begin a transformation process for the industry as the initiative was a culmination of transformation plans prior to the pandemic.

Tshivhengwa said transformation was a legacy issue of which tourism has an abundance, saying as much as SA was in the middle of a pandemic, these issues have to be addressed.

“I do not think there is a better time. Yes the tourism industry is not doing well at the moment. By the way it is a small fund, we are talking about R1.2 billion in an industry that is worth over R400 billion. It is a small amount of money,” Tshivhengwa said.

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He said the equity fund was in the pipeline since 2019, before Covid-19, and that it had been announced now.

Tshivhengwa warned that those looking to benefit from the fund could find it easy to break into the tourism industry but would soon learn that it will take more than just money to succeed.

“Money is one thing but success is another. For us it [the equity fund] is an important initiative as it may enhance the industry in terms of getting new players but tourism is going through a difficult time at the moment where there is hardly any income…it is tougher for all the businesses in the industry, especially the small businesses that have no access to loans to keep afloat,” he said.

According to Tshivhengwa, those interested in entering the tourism space must bring unique ideas, be resilient and deeper understanding of the industry.

“As much as tourism has no barriers to entry, it is not an easy industry. It is a relationship based industry. Anyone can have a kombi and start transporting tourists but people have to trust you to get into the kombi and go with you so…” he said.

This week President Cyril Ramaphosa launched the fund aimed at reviving the coronavirus-hit tourism sector and promoting transformation.

The fund, established by the Department of Tourism and the Small Enterprise Finance Agency, will provide a combination of debt finance and grant funding to facilitate equity acquisition and new project development in the tourism sector by black entrepreneurs.

More than R1.7 billion has been budgeted for the initiative, which the DA’s tourism spokesperson Manny de Freitas said could not happen at the expense of the entire industry, particularly when the industry was on its knees.

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