transformation forum 19 th june 2008 presentation by: bm mosupye

Transformation Forum19th June 2008Presentation by: BM Mosupye

Presentation Objectives

• Give an update on TECSA’s activities– Gazetting of codes– BEE Conference– Focal Points– MOU action plan status– Sector updates

Gazetting of codes

– The Minister of the dti has signed off the tourism sector

codes for gazetting – 60 day public comment period– Action plan drafted to direct activities during

this period– A detailed communications plan has been

drafted to direct strategic messaging to both the private and

public sectors during this period.

65

67

67

70

76

77

77

79

79

81

82

82

82

88

95

96

50 70 90 110

Transformation is not seen as a priority by the industry – therefore requires government intervention

Percentage of respondents

Priority of Government Interventions Identified by the Industry

Drive promotion of SA as tourism destination in overseas source markets

Improve general infrastructure in the country (roads safety & security etc.)

Promote tourism generally within SA

Improve information and communication infrastructure

Promote specialized education and training programs to upgrade tourism workers

Strictly enforce government regulations (i.e. standards to protect environment etc)

Ensure stability of the exchange rate

Increase predictability of government policies

Simplify compliance procedures related to government regulations

Support particular needs of start-up companies

Direct new investment expenditure within the tourism industry

Increase funding for special research institutes within the tourism industry

Encourage black economic empowerment within the tourism industry

Catalyze partnerships among government agencies industry and universities

Catalyze collaboration amongst industry participants

TECSA Mandate & Objectives

The Council is mandated to achieve the following:– Facilitate the communication, popularization and

interpretation of the Charter– Facilitate the provision of practical implementation and

support to the industry– Facilitate the certification, by dti accredited agencies, of

entities complying with the Charter. The Council will, in so doing, facilitate incentives to encourage tourism enterprises to comply and become certified.

– Develop a framework as well as capacity for implementation of the Charter

– Facilitate implementation of programmes to fast track BBBEE in the sector to ensure a favourable environment for BEE to flourish

– Advice the Minister on BEE related legislation and regulatory developments.


Our Goal• To encourage private sector to achieve Tourism BEE

Charter targets and to report on the sector’s achievements.

• To influence organs of state to act in accordance with the Tourism BEE Charter and use their buying power to support empowered entities.

• To ensure that beneficiaries take advantage of an enabling environment brought by the Tourism BEE Charter.


Focus Area Objective1. Private Sector Engagement Increase in the number of private sector stakeholders that

comply with the Tourism BEE Charter and Scorecard.

2. Beneficiaries Engagement Increase in the number of black people that take advantage of an

enabling environment created by the Tourism BEE Charter and Scorecard

3. Public Sector Leveraging Increase number of organs of state who use their lever to drive Transformation

4. Enabling Environment Create an organisation that provides an enabling environment for

delivery against TECSA’s objectives5. Partnership and Alignment Build Strategic Partnership and Alignment

Status Quo – Stakeholder Compliance

Scorecard TargetsFactor 2009 target (2012) 2014 target

(2017)Ownership %share of economic benefits as reflected by direct shareholding by black people

21% 30%

Strategic representationBlack People % Board of DirectorsBlack Women % Board of directorsBlack People % executive managementBlack Women % executive management

30%15%30%15%

50%25%50%25%

Employment EquityBlack People % managementBlack Women % managementBlack People % supervisors, junior and skilled employeesBlack Women % supervisors, junior and skilled employeesBlack People % of total staffBlack Women % total staff

31%18%45%23%53%28%

50%25%65%35%75%40%

Skills Development% spend on skills development and on all accredited training% skills development spend on black employeesNumber of learnerships as a % of total employeesNumber of black learners as a % of total learners

3%75% of 3%2%80%

3%75% of 3%2%80%

Preferential ProcurementSpend on BEE compliant companies as total % of procurement spend

40% 50%

Enterprise Development% spend of post tax profit on enterprise development and % employee time contributed to enterprise development over total employee time.Enhanced revenue and or cost savings and or twinning initiatives facilitated for black owned SMMEs as a % of revenue of the company measured

1%1%

1%1%

Social Development and Industry Specific% CSI spend on post tax profits on education, community programmes, job creation, training, health, conservation, community tourism and marketing activities to develop black tourist market (or % employee time over total employee time)% of new recruits with no prior work experienceStatus of Tomsa levy collector

1%10%Yes

1%10%Yes

State of Transformation by Sub-sector

#

Element of the Tourism BEE Scorecard [ALL

DATA; but excluding the too small businesses]

Accommodation Hospitality Travel Overall

1 Ownership 44.4% 45.5% 45.6% 44.8%

2 Strategic Representation 39.8% 42.0% 40.0% 40.1%

3 Employment Equity 49.2% 51.8% 54.6% 50.3%

4 Skills Development 47.5% 49.0% 52.2% 48.5%

5 Procurement 58.9% 55.6% 64.7% 59.8%

6 Enterprise Development 64.2% 73.1% 79.0% 66.5%

7 Social Development 68.6% 64.1% 72.4% 67.0%

AGGREGATE 51.9% 53.5% 57.1% 52.7%

Aggregate Results

Aggregated Tourism BEE Scorecard (excluding TOO SMALL companies)

0% 20% 40% 60% 80% 100%

Ownership

Strategic Representation

Employment Equity

Skills Development

Preferential Procurement

Enterprise Development

Social Development

% of Target

Major BB-BEE deals to date

• Peermont/ MIC buyout 83% R7.3 billion• City Lodge / Vuwa Inv 15% R485 million• Tourvest/ Guma 52% R2

billion• Tsogo Sun 51%• Southern Sun 18%

What have we achieved to date

• Development of the self assessment tool• Release of benchmark study on tourism

transformation• Enterprise development case studies• Completed study on funding and advisory

services• Matchmaking database• CSI projects database• Black talent database• Successful alignment of charter scorecard with

the dti Codes of Good Practice

Current challenges

Challenges• Cost of verification agencies especially for

SMME’s who are the majority and the face of the industry

• Access to finance by black entrepreneurs – current BEE funding models unsustainable

• Black SMME’s lack access to preferential procurement information to take advantage of it

• Lack of information to quantify the full impact of affirmative procurement

Current challenges

Challenges• SALGA is hindered by lack of capacity –

tourism not a strategic priority• Provincial governments: Strategies not

coordinated and do not take tourism sector codes into consideration

• Skills shortage leading to difficulty in sourcing and retaining qualified BEE candidates

• Finding BEE and senior executive partners.• Lack of alignment between PPPFA and

COGP

Solutions

Solutions

Tourism codes• The gazetting of the industry code of good

practice will be a catalyst toward compliance• To encourage EME’s to be part of the solution to

the challenge of transformation, Council took a decision to recognize compliance at level 3 for EME’s

• QSE’s need only implement 4 out of the 7 elements thus addressing the ownership and strategic representation challenges with this group

Solutions

Government Intervention• Alignment of PPPFA with COGP will render public sector

spending as a lever more effective

• Skills – Theta to deliver on skills mandate• Provide incentives for black business to invest in

the industry• Transformation as a key priority for government

should be driven across all tiers of government.

Solutions

Private Sector• Annual reporting on BEE status• Preferential procurement – actively seek

empowered suppliers and encourage existing suppliers to comply with dti COGP

• Engage and facilitate partnership with beneficiaries across the spectra on skills development, enterprise development, CSI etc

Solutions

Beneficiaries• Actively market themselves as business partners• Proactively engage private sector on the business

supply and employment opportunities that exist• Establish collaborative marketing agreements with

private sector• Organise into clusters or associations to enable

lobbying• Engage government on investment opportunities• Engage THETA on setting direction for skills

Solutions

TECSA• Matchmaking database• Black Talent Database• Database of CSI projects• Enterprise Development Case Studies• Recognition Systems and Framework• Verification System to enable annual reporting• Self Assessment tool

Funding & Advisory Research Results


Research Objective• To assess and report on the financial resources and advisory options

available to tourism related enterprises to support the implementation of the Tourism BEE Charter

Sample Size• Total sample = 110*• Demand side (Financial and Advisory) = 45• Supply side (Financial and Advisory) = 55• Sample spread across type of organisations and geography

– SUPPLY: Parastatals (e.g. IDC), public sector (e.g. Seda, Apex, NEF, Khula), private sector (e.g. banks, Business Partner), development organisations (e.g. GEDA, GEP), NGO’s, District and Local municipalities

– DEMAND: Micro, small and medium businesses spread across hospitality, accommodation and travel

– Across all 9 provinces


Funding GapsOne of the major gaps identified in the study is the tourism industry’s lack of a consistent and well-communicated definition of the industry.

Key Barriers to Funding Services:– Capital intensity in setup costs– Early negative cash flows – Risk Considerations– Real versus Perceived Demand for Funding Services– Obstacles to Optimising Funding & Advisory Demand – Lack of Transparent Approval Criteria

Banks have adequate capital but low disbursementsInnovative funding for weak cash-flow of start-ups


Advisory Services Challenges• Packaging deals for successful funding. • Assisting entrepreneurs meet criteria from funders

that guarantee automatic approval of applications. • Offer Advisory services in a holistic manner a keen to

incubator turnkey support. • Assist in keeping expectations of tourism businesses

moderate to avoid over excitement with industry


Key Recommendations• Establish a TECSA task team on Funding ; Advisory

and Incentives (idea endorsed by Steercom members)• Definition of Tourism Industry for funding purposes• Improve quality of data on tourism lending from

institutions • Commitment to certain tourism general & tourism

specific BEE funding products to be created• Commit to guaranteed funding criteria & feedback

communication


TECSA’s Role• Lobby government for relevant grants and very soft

loans which make funding easier for tourism businesses;

• Address problem of reporting by engaging Financial Services Charter to:

o Provide input into and feedback from the formation of South Africa’s Tourism Satellite Account and its role in the economy;

o Lead in reducing Red Tape and corresponding compliance costs in the sector

The year ahead

The year ahead - Projects

• Gazetting of codes – engage private and public sector

• Hosting of 2nd annual BEE conference – CT• Call to industry to report on the BB-BEE

status• Activation of the Recognition and

Incentives framework• Continue to market council tools in

addressing some of the identified challenges

Year ahead - Public sector

Key goalUse public sector spend on tourism products to influence and encourage transformation

Activities• Leverage provincial focal point forum to measure

government compliance at provincial and local government level

• Engage SALGA and dplg on accessing municipalities• Monitor 2010 spent through cluster participation and host

city engagement

Year ahead – Stakeholder Relations

Key goalEncourage private sector to comply with the tourism codes and create an enabling environment for the beneficiaries to take up opportunities arising from the compliance of private sector and public sector compliance.

Activities• Activation of the MOU action plans signed with 10 key industry

associations with the aim of unlocking the value of transformation programmes especially focusing on skills development and SMME’s

• Engage and facilitate beneficiary development through skills and enterprise development programmes

• Conscientize private sector across industry on preferential procurement and the tourism BB-BEE scorecard

Thank You

transformation forum 19 th june 2008 presentation by: bm mosupye

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