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- A tourism capital fund of more than 1.2 billion rand will provide a combination of debt financing and grants.
- The goal is to accelerate the pace to achieve our transformation goals, according to President Cyril Ramaphosa.
- Ramaphosa encouraged qualified companies not to hesitate and to apply as soon as possible.
On Tuesday, the government launched a tourism capital fund worth more than 1.2 billion rand.
It was created by the Department of Tourism, in association with the Small Business Finance Agency, which reports to the Department of Small Business Development. The fund will provide a combination of debt financing and grant financing to facilitate equity acquisitions, as well as the development of new projects in the tourism sector by black entrepreneurs.
President Cyril Ramaphosa said during the virtual launch that the fund is a pioneering venture that will accelerate transformation in one of the most crucial sectors of South Africa’s economy, especially during a time when the industry is challenged by the impact of the pandemic. of coronavirus. .
“There will be a recovery. Our task is not simply to get back to normal, but to accelerate the pace to achieve our transformation goals,” Ramaphosa said.
“We want to make sure this fund helps black companies benefit substantially from the tourism industry, not [just] be tied to the front or simply being small-scale providers. “
He encouraged eligible companies not to wait, but to make sure they apply for funds as soon as possible.
Tourism Minister Mmamoloko Kubayi-Ngubane said the fund’s launch was a major milestone in the tourism sector.
“The tourism sector in South Africa is largely privately owned and driven, and its contribution to the South African economy has grown tremendously since the democratic advance of 1994,” he said.
“The private sector has done an excellent job in developing and investing in the sector to turn our natural endowments into economic assets for the country. However, much remains to be done to stimulate new investment and take full advantage of the potential that is still unexplored. in the tourism sector of our country “.
In his view, the fund is necessary because it will not only help “attract” private sector investment in rejuvenating the supply side of the tourism market, but will also help transform the sector in terms of ownership and make the sector more inclusive.
The fund is expected to seek to finance commercially viable and sustainable black majority-owned tourism businesses with a minimum of 51% black ownership, including businesses in rural areas and municipalities, to help create jobs, alleviate poverty, fight against inequality and promote growth. Black-controlled tourism businesses.
It will also eliminate the risk of financing provided to tourism businesses through patient capital that will facilitate the debt repayment capacity of black-controlled businesses and facilitate the participation of targeted groups, such as women and youth, in priority tourism sectors. as defined by BBBEE sectoral codes. .
Lee-Anne Bac, director of the specialized tourism unit at international consultancy BDO, said such a fund is far behind in the tourism industry.
“The government is looking to make a significant difference in ownership of the tourism industry. Black companies have struggled to enter the industry. Large companies have transformed and there are many small micro-businesses, but the problem is for medium-sized companies.” . Bac explains.
“This fund will go a long way in getting those companies off the ground. I also like the market access and other types of support that are part of the funding process. I know a lot of white companies feel threatened, but the government doesn’t say companies don’t. they can operate. We just have to all work together to make it a truly transformed sector. And the more tourism transforms, the more the government gets involved. “
