South Africa’s 2016 budget speech demonstrated that Government is beginning to fully appreciate the meaningful role that the travel and tourism sector plays in the economy, writes Kagiso Mosue.
In his 2016 budget speech delivered on Wednesday 24 February, the Minister of Finance, Hon. Pravin Gordhan made mention of measures taken to strengthen the travel and tourism sector and the overall recognition of its economic contribution. The Tourism Business Council of South Africa (“TBCSA”) is pleased to note the Minister’s comments regarding Government’s initiative to provide policy certainty and to ‘address institutional and regulatory barriers to business investment and growth’. Travel and tourism is one of the key areas wherein the country has a definite competitive advantage and the TBCSA believes that collaboration is critical to ensure that the country ultimately reaps the benefits that many countries have reaped by supporting their travel and tourism sector.
Against the backdrop of low economic growth, high unemployment and drought, TBCSA acknowledges the tough juggling act that the Minister has had to achieve in order to deliver a ‘balanced’ budget which goes some way to respond to these and many other challenges the country is facing.
Proposals on various elements highlighted in the speech present a number of challenges as well as opportunities for the travel and tourism sector:
Investment and Sustainable Growth
With the increased funding allocation for the Industrial Development Corporation (IDC), the Council looks forward to the IDC expanding its involvement in the travel and tourism sector, not only in the hospitality sphere, but also other segments which require also infrastructural investment such as business tourism. In addition, the New Development Bank, presents another avenue for businesses in the sector – particularly those with interests in other parts of regional Africa – to source funding for further investment.
Going forward, TBCSA plans to align itself with other organised business formations, to urge Government to do more to inject some positive energy in the economy, which will further stimulate private sector investment.
TBCSA recognises the urgent need for Government to curtail expenditure, amid a slowdown in revenue and a growing budget deficit. However, it remains concerned about the potential negative implications that expenditure cuts in Government procurement of travel, accommodation and conferencing services are likely to have on the sector. The Council wishes for an opportunity to engage with Treasury on the proposed national travel and accommodation policy and instructions on conference costs to ensure minimal negative impact on trade.
With rising inflation, we are all likely to feel the effects of the proposed tax proposals. However, from a sector perspective, hospitality and tourism transport (particularly small businesses) are likely to be the hardest hit by the increases in the fuel levy, the introduction of a sugar tax and tyre levy amongst other taxes which are already in place. Despite these inflationary pressures, the TBCSA hopes the tax relief in personal income will go some way in putting some money back in the pocket of the travel consumer.
In the Minister’s own words, State-Owned Entities have important roles to play in boosting growth and development. It is with this in mind that the travel and tourism private sector welcomes plans to create a more operationally efficient airline. As a national carrier, TBCSA believes that SAA should play a more significant role and be a major partner to our sector in driving travel and tourism locally, regionally and internationally.
As highlighted in the speech, much work needs to be done to contain public sector spending and to improve the efficiencies at many of the SOEs. In this regard, the travel and tourism is anxiously hoping that through NERSA, the Government will review the increment requested by Eskom for electricity in the country as it will add to the woes that are already cumbersome to business and the public.
Overall, TBCSA is encouraged by the Minister Gordhan’s budget speech, particularly the inclusion of travel and tourism in Government’s action plans going forward. As a sector that touches every facet of the economy, this renewed focus on the sector is set to go a long way in helping the country to achieve its economic imperatives of creating jobs and creating a viable environment for business to thrive.
About the author: Ms. Kagiso Mosue is the Corporate Communications Manager at the Tourism Business Council of South Africa (TBCSA) – a member-based organisation made up of Tourism Associations as well as leading businesses operating in the Travel and Tourism sector. TBCSA seeks to ensure that the industry is unified and speaks with one voice when engaging relevant stakeholders on macro-economic issues affecting the sector. For more information visit www.tbcsa.travel