Declining rand playing havoc with SA's tourism sector

2017-04-06 14:32 - Selene Brophy
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Cape Town - South Africa's tourism industry is faced with mixed fortunes following the appointment of new Cabinet Ministers in the Transport, Home Affairs and Finance portfolios, as well as Tourism in particular - according to the Tourism Business Council of South Africa (TBCSA). 

During 2015 Travel & Tourism investment in South Africa amounted to a total of R63.7bn, or 7.8% of total investment. The World Travel and Tourism Council expects this to rise by 4.1% in 2016. 

It states tourism holds the potential to bring in an estimated R87.7bn per year over the next 10 years, that’s a 2.8% growth on the R63.7bn investment contributed in 2015 alone.

However the rand and SA's economy is being hit from all sides following the charged political climate brought on by the shock cabinet reshuffle by President Jacob Zuma. South Africans from all walks of life are now planning to shut down on Friday 7 April and take to the streets in protest.

SEE: ALERT: What travellers need to know as #CabinetReshuffle protests planned across SA

'Downgrades the biggest anxiety'

According to TBCSA CEO, Mmatšatši Ramawela the issue of credit downgrades for South Africa are “the biggest anxiety element right now”, as the reshuffle has brought an air of negativity into the economy and instability in the society.

The shuffle included the axing of then Tourism Minister, Derek Hanekom, who was replaced by his then Deputy of Tourism Tokozile Xasa as the New Tourism Minister.

'Xasa will provide level of continuity for the travel and tourism'

“Minister Tokozile Xasa has served as Deputy Minister of Tourism since 2009, and is thus familiar with the dynamics and issues in the sector.  During her tenure as Deputy Minister, she amassed the necessary knowledge and experience which should stand her in good stead in her new role,” says Ramawela.

TBCSA says Xasa’s appointment should provide a level of continuity for the travel and tourism industry. 

The council has however highlighted that it remains unclear how changes in other Ministerial portfolios - particularly at National Treasury and the departments of Home Affairs and Transport - will impact the industry overall.

“There is anxiety that the reshuffle is likely to impact engagements and programs that are already underway in collaboration with different role-players within government”, says Ramawela.

Aviation Indaba to determine readiness for open skies policy

Ramawela cited the upcoming airline sector, which in collaboration with the Department of Transport, is preparing to host an Aviation Indaba to determine amongst other matters South Africa’s readiness to implement the ‘open skies’ policy.

SEE: Lucrative Open Skies Lucrative Africa airline industry 88% outsourced to international carriers

The Open Skies policy has long been a hot debate around the issue of air connectivity across Africa  - yet its lucrative potential to boost economies and create much needed jobs has done little to spur on its implementation.

South Africa will be a participant in the planned early implementation of the Yamoussoukro Decision, with IATA’s 2035 forecast for African aviation pegged at 5.1% with growth of 192 million passengers in a market of 303 million.

While its implementation opens up these markets to South African low-cost airlines, conversely though, it also holds the potential to see more airlines entering the domestic market here.

Vat audits for tour operators

“Then there are the VAT issues that are of particular concern to tour operators and travel agents and involve the South African Revenue Services (SARS) and the National Treasury,” says Ramawela.

SARS changed the VAT interpretation section of the VAT Act towards the end of 2016. A Supreme Court of Appeals ruling involving an XO Africa Safaris CC application of the zero-rated VAT on tour packages for overseas tourists calls into question the time of services rendered and whether the tourists or visitors are making use of those services in SA or not at the time of Vat being levied.

Local inbound tour operators will now be subject to an audit in relation to this ruling of standard vs zero vat application to services rendered. 

Child trafficking and travelling minor regulation still high on the agenda

When it comes to Home Affairs, TBCSA is yet to hear the decision of the Immigrations Advisory Board (IAB) on the amendment of the regulation for travelling minors – a matter that will now be handled under the leadership of the new Minister of Home Affairs, Prof Hlengiwe Mkhize. 

 The DHA already upped security at OR Tambo after three children were intercepted by immigration officers at the airport on 29 March. 

Towards the end of March, the SA's Department of Home Affairs released a statement saying that a "male individual was prevented from departing the country with three children with fraudulently acquired travel documents". 

SEE: Easter weekend travelling: OR Tambo leads ports of entry service boost

The DHA has since warned of an increase in immigration security ahead of Easter, saying that a total of 15 cases of human trafficking have been reported this year alone, including the cases which occurred on 29 March. 

According to the Home Affairs minister at the time Malusi Gigaba - who has since been appointed as the new Finance Minister - DHA operations at SA's largest airport hub OR Tambo International Airport "will continue to weed out corrupt elements in our Department, in our Government and indeed, in our society precisely because we are of the firm belief that corruption and fraud have no place in our existence". 

Impact on momentum between government and business

At a broader level, the TBCSA says it is also concerned about the impact of the reshuffle on the goodwill and momentum generated between business and government in the past twelve months.

“In the past year, stakeholders from sectors with significant economic growth potential such as travel and tourism have worked with their respective government departments in a joint effort to redirect the country’s economy towards an accelerated growth path. We hope the reshuffle will add to the positivity that is being reflected in the recent inflation figures, consumer confidence levels, the foreign tourist arrival figures despite the decline in domestic tourism numbers, and by extension our collective efforts, in the interest of our economy and the country”.   

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