Tourism budget vote speech delivered by Marthinus van Schalkwyk, Minister of Tourism, Old Assembly Chamber, Parliament, Cape Town

Introduction

Chairperson

In 1886, gold was discovered in what is known as Johannesburg today. It turned around the fortunes of a generation of poor, jobless South Africans and within two decades a quarter of worldwide gold production originated from South Africa. It soon became the foundation of the financial system of the industrialised world and it provided one of the most significant injections of foreign direct investment in our history.

Unfortunately, the benefits of gold were quickly exported by European colonialists and the distribution of the accumulated wealth was extremely skewed along racial lines. Two centuries later, gold mining is still a vital pillar of our economy, it remains a critical employment sector and it is as vulnerable to global financial volatility as it was in the 19th century.

Tourism as the “new gold”

Fortunately, two centuries later, it is not the only sector that flourishes in our economy. Increasingly, we are discovering the “new gold” that drives job creation, development and economic growth in South Africa. This “new gold” is tourism. In fact, as a sector, tourism has already overtaken gold in terms of export revenue.

Many of the challenges are the same as 200 years ago. The overriding priorities remain poverty eradication, job creation and development. What is different is that we are now working with an inexhaustible resource. This time around we are the major investors and the drivers of our own destiny. We have a much better understanding of the need for equitable growth to exploit our resources in a way that generates benefits for all our people, with the emphasis on our people. And we have a much better understanding that we must exploit our “new gold” in a sustainable way.

I firmly believe that we have only scratched the surface of truly unlocking the economic and social benefits of the “new gold” in South Africa. We have laid a firm foundation, but I believe hard work lies ahead.

It is in this context that we are very fortunate to be hosting the 2010 FIFA World Cup next year. The World Cup will be one of the most important keys in the short term to help us unlock the opportunities of this new gold. It affords us an once-in-a-lifetime chance to showcase the best we have as a tourism destination; our people, our natural heritage, our world class infrastructure and a sense of place that fills all of us with pride.

Global challenges

As the world grapples with the unprecedented challenges presented by the global economic meltdown, I believe it is also an opportune time to reflect on the burning questions with respect to our tourism industry. Firstly, we should ask how tourism could benefit from the stimulus measures that drive the economic recovery. Secondly, what could be the contribution of tourism to this economic recovery with its associated benefits in terms of infrastructure development, employment creation and poverty eradication?

To fully unlock the potential of tourism, we will need to build on our existing successes; focus on getting the fundamentals right; build greater resilience against external economic shocks and find innovative ways to unlock new opportunities for growth and development. Only then will tourism come fully to its right as a sector that contributes to job creation, as both a driver of infrastructure investment and a beneficiary of large scale public infrastructure investment and as a generator of foreign earnings.

Tourism resilience in South Africa

In South Africa, with over nine and a half million arrivals last year, tourism is one of the major contributors to our gross domestic product. It employs about half a million people directly, whilst creating even more indirect employment opportunities.

The global economic downturn and its consequences need little elaboration. The International Monetary Fund, in its latest World Economic Outlook, forecasts that global Gross Domestic Products (GDP) will shrink by about 1.3 percent in 2009 the first contraction since the Second World War. According to the UN World Tourism Organisation (UNWTO), international tourist arrivals declined to just 2 percent in 2008 from 7 percent 2007, which had been the fourth consecutive year of strong international growth.

This negative trend seems to be worsening as we progress into 2009. Provisional figures from the UNWTO indicate a decline of 8 percent in international arrivals for the first two months of 2009. By year end, the best case scenario would seem to be stagnation, with more realistic forecasts predicting a decline of at least 2 percent.

There is clearly no denying that the marketplace for tourism today looks dramatically different to a year ago. Although this sector is not as hard hit as some others, demand is down and for many the times are tough.

In South Africa our tourism sector has proved to be more resilient than some other economic sectors, but we are not immune to the effects of the economic crisis. Some of the impacts will only become more visible in the next few months as the full consequences of the global economic meltdown trickles down. However, in 2008 we bucked the worldwide negative trend with 5.5 percent growth in foreign arrivals. The latest available data for foreign arrivals show that even in January 2009 we recorded growth of 5.4percent compared to the same month in 2008.

Furthermore, in 2008, foreign direct spend grew by an estimated 23.5 percent, amounting to more than R74 billion. Yet, even though we have thus far been spared the worst impacts and remained in positive territory until the end of 2008, we are not complacent and cannot ignore the fact that our growth could slow down during 2009 as many of our primary markets remain in recession.

Challenges and future strategy

Fortunately, in the face of these challenges, we understand the importance of planning better and getting the fundamentals right. Let me refer to two inter-related challenges.

The first challenge is to build greater resilience against future external economic shocks. From a risk management perspective we will continue to build, in a balanced way, our domestic, regional and long haul markets. We will build on our stringent quality control regime that ensures value for money and the unique selling points of our natural heritage.

The number of graded establishments in South Africa almost doubled from 4 604 in 2005 to 8 544 in 2009 and at the moment there are nearly 100 000 graded rooms in the country. But let me also signal a warning to the tourism industry, do not price you out of the market, especially during 2010. And do not become lax on quality and service delivery in the face of tough economic conditions. Our grading must meet stringent standards and we will not hesitate to strip establishments of their stars if they no longer make the grade.

To further build resilience, we understand that we can do even more through improved market analysis, product diversification and people and skills development. Further steps include the reduction of tourism channel restrictions like long visa processing times, maintaining and expanding affordable and more competitive air access, developing rural tourism infrastructure and sound long term policy.

The second challenge is to ensure that the tourism sector benefits from economic stimulus measures and large scale infrastructure investment. 2010 has provided tourism in South Africa with a springboard to capitalise on new investment. Together with improved, more focused marketing and brand alignment both globally and domestically the opportunities created by 2010 will undoubtedly stimulate the more rapid recovery of foreign tourism demand in our region.

Tourism growth and investment

Our tourism slogan for the 2010 World Cup is “ke nako” or “celebrating Africa's Humanity.” It encapsulates the essence of what 2010 means to us, namely an invitation to the world to come and share our energy and passion and celebrate South Africa and Africa as a superb destination. Although we already have world class physical infrastructure and access, we will be taking this to new heights in the next 12 months.

As we prepare to host the first ever African Soccer World Cup and the biggest sporting spectacular in the world, we are witnessing not only huge public sector investment, but also massive new investment by the tourism industry itself. Our government is investing more than R26 billion in stadiums and precinct development, transport and ports of entry infrastructure.

In addition, our department has allocated more than R936 million of our Expanded Public Works (EPW) allocation for 2009 to 2012 to further develop the tourism sector. Here, special emphasis will be placed on the development of rural tourism. This will create job opportunities and develop skills that will increase the employability of the participants in the programme.

Through our tourism enterprise partnership programme we have already given a major boost to the fast-tracked development of small and medium-sized tourism enterprises. Since the inception of this programme in 2000, we have facilitated transactions worth more than R4 billion and assisted more than 5 500 enterprises.

To ensure a more equitable geographic spread of the benefits of tourism, we will in the next few months be finalising a toolkit to assist local government with tourism development. We are also working closely with provinces to finalise the tourism growth strategy, which will help us formulate our response to the global economic recession, revitalise domestic tourism marketing and implement the sector skills plan.

To ensure that this new growth is shared in an equitable way, we also understand that we have to transform the sector to address historical imbalances. To this end, the Department of Trade and Industry (DTI) has recently published our final sector Codes of Good Practice. This is a milestone in the process of achieving real and measurable transformation in the tourism sector.

Following the establishment of an independent Department of Tourism last month, we are now in the process of formulating a strategic vision and defining our key deliverables. We are building a re-energised tourism department with a renewed focus on sustainable tourism growth to the benefit of all South Africans.

Conclusion

Chairperson, in short, we understand both the threats to and the immense potential of tourism. We are confident that we will ride out the global recessionary storm and emerge on the other side stronger and better positioned to address the many developmental challenges that we as a continent, country and people face.

In conclusion, chairperson, I would also like to take the opportunity to welcome our new Deputy Minister, Thokozile Xasa, who will address you later in this debate. I also wish to thank all our colleagues for the work that has been done in every part of our country in the tourism sector. To the chairperson and members of our portfolio committee you have the appreciation of our department.

I would like to thank our management team, led by the Director-General, Nosipho Ncgaba and each and every member of staff in the department for the privilege of working with such a dynamic team. Furthermore, we are fortunate to have a well run and extremely efficient marketing agency in South African Tourism and excellent partners in the Tourism Grading Council and Tourism Empowerment Council.

I look forward to joining hands with an enthusiastic new department, stakeholders in the South African tourism industry and each and every South African in promoting our country as one of the most special tourism destinations on the planet. I know that millions of South Africans share our pride in our unique country and cannot wait to showcase it to the world.

I thank you.

Enquiries:
Ronel Bester
Cell: 083 242 7763
Tel: 021 465 7240
E-mail: rbester@deat.gov.za

Issued by: Department of Tourism
18 June 2009

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