The Portfolio Committee on Tourism today met with the National Empowerment Fund (NEF) and the Small Enterprise Finance Agency (SEFA) to discuss the different tourism development programmes the two entities are implementing on behalf of the Department of Tourism.

The NEF gave an update on the Transformation Fund, a funding initiative targeting tourism businesses in previously disadvantaged communities. The entity’s Acting Chief Executive Officer, Mr Mzwamadoda Dayimani, explained that the partnership and co-funding arrangement between NEF and the department applies to all transactions supported under the programme.

“The department funds through a grant, limited to R5 million per transaction and if a transaction value is more than R10 million, the NEF funds the excess. The NEF portion is funded through a repayable loan,” Mr Dayimani said.

A number of the projects supported through this Fund are still in the development stage and servicing their loans. After paying off the loans, the projects are expected to be self-sustainable and create more jobs. The funding also comes with post-investment support to ensure they meet their financial targets and repay the loans.

SEFA Acting CEO, Mr Nkosikhona Mbatha, presented a progress report on the Tourism Equity Fund (TEF) to the committee. This Fund seeks to increase growth and transformation and stimulate more inclusive participation in the tourism sector in line with the Tourism BBBEE Sector Codes. It also addresses funding challenges faced by enterprises in the tourism sector.

TEF’s core funding activities focus on accommodation, hospitality and related services, travel and related services, and tourism-related products that support the development of the tourism sector in South Africa.

The committee Chairperson, Ms Lungi Mnganga-Gcabashe, said the department should provide additional funding for the programme to accommodate increasing demand, implement awareness programmes, and strengthen post-funding support to ensure the funded projects are sustainable.

“NEF must also increase its own funding because it is clear that there is a demand for this support and should consider stretching the repayment period because tourism projects take long to break even,” said the Chairperson.

Commenting on the SEFA presentation, Ms Mnganga-Gcabashe, said the entity should expedite processing applications for funding as there seems to be slow progress.
She also advised the two agencies and the department to consider the quality of jobs created through these programmes versus the quantity of menial jobs.

“We also need to ensure equitable geographical share of the programmes. Instead of approving projects in more developed areas, we must spread to previously disadvantaged communities,” she said.