1. 2014 Adjustment Appropriation
Standing Committee
on Appropriations
11 November 2014
Department of Tourism

2. Table of content Expenditure performance of the department;
Details and motivation of virements;
Declaration of unspent funds: Tourism Incentive Programme; and
Implication of funding shifts.

3. Expenditure performance as at 30 September 2014

4. Details of virements

5. Motivation of virements
The delay in filling vacant posts has realised a savings of R2.8 million under Compensation of Employees.
Reallocation of this amount to Programme 1 to cater for shortfall on equipment and replacement of vehicles.
The R3.7 million allocated to South African Tourism (SAT) was originally budgeted for under goods and services within the International Tourism branch.
The virement of R3.7 million from the International Tourism branch to transfer payments to the Policy and Knowledge Services branch for SAT to procure the translation and distribution of marketing collaterals to the South African missions abroad.

6. Unspent funds – R78.9 million
During the 2014/15 financial year, the Department (Domestic Tourism Management) embarked on a process to design, develop and implement the Tourism Incentive Programme (TIP) aligned to the National Tourism Sector Strategy (NTSS). The overall aim of the programme is to support the growth, development and transformation of the tourism sector.
The Department has adopted a phased-in approach in which specific objectives are prioritised in the development and roll-out of the TIP. In this regard, the initial phases (i.e. during 2014/15) will see the development of programme components that focus on facilitating improved market access for tourism enterprises, and improve the sustainability of tourism products developed under the NDTs Social Responsibility Implementation (SRI) programme.

7. Unspent funds – R78.9 million cont.
It is further envisioned that in subsequent phases (i.e. 2015/16 and beyond), additional and more complex programme components will be added such as retrofitting for resource efficiency (e.g. energy and water), accessible tourism (i.e. universal accessibility), etc. Such a systematic approach will allow the department to build a basket of complimentary incentive programmes over time towards realisation of the strategic objectives of the NTSS.
Significant progress has been made in terms of reviewing existing and previous government incentive programmes, consultations with industry stakeholders, and developing a concept document for the proposed TIP. However, the launch and subsequent implementation of the incentive programmes has been hampered:
- by delays in the appointment of staff; and
- establishment of governance and management structures.

8. Unspent funds – R78.9 million cont.
Following a mid–term operational and risk assessment, it has been determined that the department will not be in a position to utilise the full 2014/15 budget allocated to the TIP for the intended purpose, namely:

9. Unspent funds - cont.

10. Unspent Funds – R78.9 million cont.
Tourism Incentive Programme (TIP)
International Trade Exhibition Assistance Programme
This programme sought to reimburse qualifying tourism enterprises of certain expenses incurred during participation in pre-approved international trade exhibitions. On average the lead times for participation at international trade exhibitions takes about six to eight months. In addition, international trade exhibitions are scheduled at varying times of the year. According to the planned operational plan, applications for support under this programme need to be received by the department seven months prior to the commencement of the targeted trade exhibition. This will allow time for the Department to perform due diligence on received applications and communicate outcomes to applying enterprises. Given the above lead times and associated processes/timeframes, the programme can only be rolled out in the 2015/16 financial year.

11. Unspent funds - cont. International Trade Mission Assistance Programme
Trade missions and road shows are formal and focussed international sales trips to specific strategic tourism source markets to facilitate improved and direct market access to drive growth and revenue. Under this programme, support include a capped contribution towards the cost of selected and pre-determined expenses related to the trip, e.g. airfare, accommodation, local transport, etc. Similarly with the International Trade Exhibition Programme, this programme is subject to lengthy lead times and processes/timeframes, as such implementation is earmarked for 2015/16 financial year.
Domestic Exhibitor Assistance Programme
The domestic exhibitor assistance sub-programme will provide a combination of capacity building and financial support for emerging small and micro enterprises. Following stakeholder consultations, inputs have been received to incorporate an incubation model in the roll out approach. This therefore requires further conceptualisation and amendments of the programme before piloting in the 2015/16 financial year.

12. Unspent funds - cont.
Social Responsibility Implementation: Sustainability Programme
The overall aim of the sustainability ‘aftercare’ programme would be to improve the sustainability of the SRI projects/facility by subsidising certain pre-determined operational costs such as management improvement plans and systems, market development initiatives, training and skills development and other elements of general operations. Two SRI projects have been identified and earmarked for support under this programme in the 2014/15 financial year.
Management of public funds
It is prudent for the department to act responsible with regards to the management of public funds and remains committed to spent the full budget of TIP during 2015/16 to 2017/18 financial years.
Surrendering funds contributed in alleviating fiscal pressure experienced by National Treasury.

13. Implication of budget adjustments on service delivery
Virements
No negative implications perceived.
Unspent funds
Stakeholder engagement plan was implemented.
Road-shows were not undertaken and no calls for applications were made.
Tourism industry expectation has been affected.

14. Thank You