1. Transformation Forum 19 th June 2008 Presentation by: BM Mosupye

2. Presentation Objectives Give an update on TECSA’s activities –Gazetting of codes –BEE Conference –Focal Points –MOU action plan status –Sector updates

3. Gazetting of codes –The Minister of the dti has signed off the tourism sector codes for gazetting –60 day public comment period –Action plan drafted to direct activities during this period –A detailed communications plan has been drafted to direct strategic messaging to both the private and public sectors during this period.

4. Transformation is not seen as a priority by the industry – therefore requires government intervention Percentage of respondents Priority of Government Interventions Identified by the Industry Drive promotion of SA as tourism destination in overseas source markets Improve general infrastructure in the country (roads safety & security etc.) Promote tourism generally within SA Improve information and communication infrastructure Promote specialized education and training programs to upgrade tourism workers Strictly enforce government regulations (i.e. standards to protect environment etc) Ensure stability of the exchange rate Increase predictability of government policies Simplify compliance procedures related to government regulations Support particular needs of start-up companies Direct new investment expenditure within the tourism industry Increase funding for special research institutes within the tourism industry Encourage black economic empowerment within the tourism industry Catalyze partnerships among government agencies industry and universities Catalyze collaboration amongst industry participants

5. TECSA Mandate & Objectives The Council is mandated to achieve the following: –Facilitate the communication, popularization and interpretation of the Charter –Facilitate the provision of practical implementation and support to the industry –Facilitate the certification, by dti accredited agencies, of entities complying with the Charter. The Council will, in so doing, facilitate incentives to encourage tourism enterprises to comply and become certified. –Develop a framework as well as capacity for implementation of the Charter –Facilitate implementation of programmes to fast track BBBEE in the sector to ensure a favourable environment for BEE to flourish –Advice the Minister on BEE related legislation and regulatory developments.

6. TECSA Mandate & Objectives Our Goal To encourage private sector to achieve Tourism BEE Charter targets and to report on the sector’s achievements. To influence organs of state to act in accordance with the Tourism BEE Charter and use their buying power to support empowered entities. To ensure that beneficiaries take advantage of an enabling environment brought by the Tourism BEE Charter.

7. TECSA Mandate & Objectives Focus AreaObjective 1.Private Sector EngagementIncrease in the number of private sector stakeholders that comply with the Tourism BEE Charter and Scorecard. 2.Beneficiaries EngagementIncrease in the number of black people that take advantage of an enabling environment created by the Tourism BEE Charter and Scorecard 3.Public Sector LeveragingIncrease number of organs of state who use their lever to drive Transformation 4.Enabling EnvironmentCreate an organisation that provides an enabling environment for delivery against TECSA ’ s objectives 5.Partnership and AlignmentBuild Strategic Partnership and Alignment

8. Status Quo – Stakeholder Compliance

9. Scorecard Targets Factor2009 target (2012)2014 target (2017) Ownership %share of economic benefits as reflected by direct shareholding by black people 21%30% Strategic representation Black People % Board of Directors Black Women % Board of directors Black People % executive management Black Women % executive management 30% 15% 30% 15% 50% 25% 50% 25% Employment Equity Black People % management Black Women % management Black People % supervisors, junior and skilled employees Black Women % supervisors, junior and skilled employees Black People % of total staff Black Women % total staff 31% 18% 45% 23% 53% 28% 50% 25% 65% 35% 75% 40% Skills Development % spend on skills development and on all accredited training % skills development spend on black employees Number of learnerships as a % of total employees Number of black learners as a % of total learners 3% 75% of 3% 2% 80% 3% 75% of 3% 2% 80% Preferential Procurement Spend on BEE compliant companies as total % of procurement spend 40%50% Enterprise Development % spend of post tax profit on enterprise development and % employee time contributed to enterprise development over total employee time. Enhanced revenue and or cost savings and or twinning initiatives facilitated for black owned SMMEs as a % of revenue of the company measured 1% Social Development and Industry Specific % CSI spend on post tax profits on education, community programmes, job creation, training, health, conservation, community tourism and marketing activities to develop black tourist market (or % employee time over total employee time) % of new recruits with no prior work experience Status of Tomsa levy collector 1% 10% Yes 1% 10% Yes

10. State of Transformation by Sub-sector # Element of the Tourism BEE Scorecard [ALL DATA; but excluding the too small businesses] AccommodationHospitalityTravelOverall 1Ownership44.4%45.5%45.6%44.8% 2Strategic Representation39.8%42.0%40.0%40.1% 3Employment Equity49.2%51.8%54.6%50.3% 4Skills Development47.5%49.0%52.2%48.5% 5Procurement58.9%55.6%64.7%59.8% 6Enterprise Development64.2%73.1%79.0%66.5% 7Social Development68.6%64.1%72.4%67.0% AGGREGATE51.9%53.5%57.1%52.7%

11. Aggregate Results

12. Major BB-BEE deals to date Peermont/ MIC buyout83%R7.3 billion City Lodge / Vuwa Inv15%R485 million Tourvest/Guma52%R2 billion Tsogo Sun51% Southern Sun18%

13. What have we achieved to date Development of the self assessment tool Release of benchmark study on tourism transformation Enterprise development case studies Completed study on funding and advisory services Matchmaking database CSI projects database Black talent database Successful alignment of charter scorecard with the dti Codes of Good Practice

14. Current challenges Challenges Cost of verification agencies especially for SMME’s who are the majority and the face of the industry Access to finance by black entrepreneurs – current BEE funding models unsustainable Black SMME’s lack access to preferential procurement information to take advantage of it Lack of information to quantify the full impact of affirmative procurement

15. Current challenges Challenges SALGA is hindered by lack of capacity – tourism not a strategic priority Provincial governments: Strategies not coordinated and do not take tourism sector codes into consideration Skills shortage leading to difficulty in sourcing and retaining qualified BEE candidates Finding BEE and senior executive partners. Lack of alignment between PPPFA and COGP

16. Solutions

17. Tourism codes The gazetting of the industry code of good practice will be a catalyst toward compliance To encourage EME’s to be part of the solution to the challenge of transformation, Council took a decision to recognize compliance at level 3 for EME’s QSE’s need only implement 4 out of the 7 elements thus addressing the ownership and strategic representation challenges with this group

18. Solutions Government Intervention Alignment of PPPFA with COGP will render public sector spending as a lever more effective Skills – Theta to deliver on skills mandate Provide incentives for black business to invest in the industry Transformation as a key priority for government should be driven across all tiers of government.

19. Solutions Private Sector Annual reporting on BEE status Preferential procurement – actively seek empowered suppliers and encourage existing suppliers to comply with dti COGP Engage and facilitate partnership with beneficiaries across the spectra on skills development, enterprise development, CSI etc

20. Solutions Beneficiaries Actively market themselves as business partners Proactively engage private sector on the business supply and employment opportunities that exist Establish collaborative marketing agreements with private sector Organise into clusters or associations to enable lobbying Engage government on investment opportunities Engage THETA on setting direction for skills

21. Solutions TECSA Matchmaking database Black Talent Database Database of CSI projects Enterprise Development Case Studies Recognition Systems and Framework Verification System to enable annual reporting Self Assessment tool

22. Funding & Advisory Research Results

23. Research Objective To assess and report on the financial resources and advisory options available to tourism related enterprises to support the implementation of the Tourism BEE Charter Sample Size Total sample = 110* Demand side (Financial and Advisory) = 45 Supply side (Financial and Advisory) = 55 Sample spread across type of organisations and geography –SUPPLY: Parastatals (e.g. IDC), public sector (e.g. Seda, Apex, NEF, Khula), private sector (e.g. banks, Business Partner), development organisations (e.g. GEDA, GEP), NGO’s, District and Local municipalities –DEMAND: Micro, small and medium businesses spread across hospitality, accommodation and travel –Across all 9 provinces

24. Funding & Advisory Research Results Funding Gaps One of the major gaps identified in the study is the tourism industry’s lack of a consistent and well-communicated definition of the industry. Key Barriers to Funding Services: –Capital intensity in setup costs –Early negative cash flows –Risk Considerations –Real versus Perceived Demand for Funding Services –Obstacles to Optimising Funding & Advisory Demand –Lack of Transparent Approval Criteria Banks have adequate capital but low disbursements Innovative funding for weak cash-flow of start-ups

25. Funding & Advisory Research Results Advisory Services Challenges Packaging deals for successful funding. Assisting entrepreneurs meet criteria from funders that guarantee automatic approval of applications. Offer Advisory services in a holistic manner a keen to incubator turnkey support. Assist in keeping expectations of tourism businesses moderate to avoid over excitement with industry

26. Funding & Advisory Research Results Key Recommendations Establish a TECSA task team on Funding ; Advisory and Incentives (idea endorsed by Steercom members) Definition of Tourism Industry for funding purposes Improve quality of data on tourism lending from institutions Commitment to certain tourism general & tourism specific BEE funding products to be created Commit to guaranteed funding criteria & feedback communication

27. Funding & Advisory Research Results TECSA’s Role Lobby government for relevant grants and very soft loans which make funding easier for tourism businesses; Address problem of reporting by engaging Financial Services Charter to: oProvide input into and feedback from the formation of South Africa’s Tourism Satellite Account and its role in the economy; oLead in reducing Red Tape and corresponding compliance costs in the sector

28. The year ahead

29. The year ahead - Projects Gazetting of codes – engage private and public sector Hosting of 2 nd annual BEE conference – CT Call to industry to report on the BB-BEE status Activation of the Recognition and Incentives framework Continue to market council tools in addressing some of the identified challenges

30. Year ahead - Public sector Key goal Use public sector spend on tourism products to influence and encourage transformation Activities Leverage provincial focal point forum to measure government compliance at provincial and local government level Engage SALGA and dplg on accessing municipalities Monitor 2010 spent through cluster participation and host city engagement

31. Year ahead – Stakeholder Relations Key goal Encourage private sector to comply with the tourism codes and create an enabling environment for the beneficiaries to take up opportunities arising from the compliance of private sector and public sector compliance. Activities Activation of the MOU action plans signed with 10 key industry associations with the aim of unlocking the value of transformation programmes especially focusing on skills development and SMME’s Engage and facilitate beneficiary development through skills and enterprise development programmes Conscientize private sector across industry on preferential procurement and the tourism BB-BEE scorecard

32. Thank You