Ramaphosa launches Tourism Equity Fund for businesses crippled by lockdown


It is without a doubt that the nature of the pandemic, together with restrictions to protect public health, has dramatically impacted the tourism industry negatively: from the smallest B&B to major hotel chains, from local tour companies to airlines.

However, president Cyril Ramaphosa said that the country’s tourism sector would recover again as it had done previously.

The president was speaking at a virtual launch of the over R1,2 billion Tourism Equity Fund aimed at driving transformation in the sector on Tuesday afternoon.

These calls come after the Unemployed Insurance Fund (UIF) said this week that 578,677 of people who claimed from Ters are newly unemployed. It pointed to an increase of 40% in Section 189 and Section 189A notices, which would add to the country’s unemployment crisis.

The UIF said that the fund paid 1,787,268 beneficiaries more than R10 billion between 26 March 2020 and 19 January 2021.

The most recent Stats SA unemployment numbers for the third quarter of 2020, showed that unemployment increased substantially by 2.2 million (52.1%) to 6.5 million, compared to the second quarter of 2020.

An analysis of the impact of the lockdown measures by economists Mike Schüssler and Phumlani Majozi estimated that one in 12 South Africans will lose their jobs because of the Level 3 restrictions, with almost 1.4 million formal and informal jobs at risk.

Tourism is Africa's 'New Gold' – President Cyril Ramaphosa | Southern &  East African Tourism Update

They said that the Level 3 restrictions could impact millions more who rely on the breadwinner’s wages.

The sectors which they expect will be impacted the most are: travel, tourism, entertainment, leisure, manufacturing, agriculture, and services not classified elsewhere.

Regulations under level three prevents the sale and transportation of alcohol, while businesses in the hospitality industry are faced with reduced operating hours due to the early curfew of 21h00.

David Maynier, who is a member of the Western Cape Provincial Parliament in the finance department, said: “We have received many emails from businesses and individuals, who have held on for the past ten months, but simply can’t continue to sustain their businesses or pay their employees with the current restrictions in place.”

Tourism Equity Fund

President Cyril Ramaphosa on Tuesday launched a R1.2 billion fund aimed at boosting recovery in the tourism industry.

The Tourism Equity Fund will be used in particular to help black entrepreneurs start businesses and projects in the sector, said tourism minister Mmamoloko Kubayi-Ngubane.

The cash, she said, will come from government, lenders and the Pretoria-based Small Enterprise Finance Agency.

The president said that while many jobs in the tourism and associated sectors in the value chain have been shed, and as damaging as this pandemic has been – and continues to be – “we can be certain that as infections are brought under control and more areas of economic activity resume, there will be a gradual recovery”.

Tourism, the president pointed out, directly accounts for 2.9% of South Africa’s GDP and 8.6% indirectly. It supports about one-and-a-half million direct and indirect jobs.

Ramaphosa said that it is one of the economic segments that can play a pivotal role in transforming the economy and contributing to changing patterns of ownership and control.

If the tourism sector is to play its role in aiding the economic recovery in the wake of Covid-19, it must grow and transform, he said.

“As a combination of grant funding, concessionary loans and debt finance, the fund will cater to the specific needs of black-owned businesses to acquire equity, invest in new developments or expand existing developments,” the president said.

Job losses in the travel and tourism sector in the meantime, have continued into 2021, including countless B&Bs, restaurants, and related institutions. Hilton temporarily closed its hotel in Durban in January, having closed one of its hotels in Cape Town CBD in mid 2020.

Brewer Heineken also announced last week that it would lay off 70 employees because of the impact of the alcohol ban.

Similarly, SAB suspended 550 temporary contract workers across its South African operations, because of the ripple effect of the alcohol ban throughout its beer value chain. It also cancelled a second R2.5 billion investment in the country, because of the ban.

Main Image: The South African

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