Tourism minister Mmamoloko Kubayi-Ngubane has reiterated her department’s stance to defend the Tourism Equity Fund (TEF), which is at the centre of a court challenge brought by lobby groups Solidarity and AfriForum.

“For our part as the department of tourism, we have announced our intention to defend the Tourism Equity Fund against AfriForum and Solidarity, who have brought a court application challenging the legality and rationality of using 51% black ownership/managed qualification criteria for the fund and saying it’s unconstitutional,” said Kubayi-Ngubane at the Black Business Summit held in Johannesburg on Wednesday.

Solidarity and AfriForum approached the Pretoria high court arguing that the fund, set up in January, is discriminatory because it targets majority black-owned businesses, disqualifying companies, many of which are small players without a large investor base, from accessing funding to help deal with the affect of the Covid-19 outbreak.

The tourism department has argued that the fund has nothing to do with the Covid-19 pandemic and was set up to facilitate transformation. The court has interdicted the processing of applications until the case is finalised.

“It must be noted upfront that the delays in implementing the TEF will negatively affect black businesses which have already negotiated deals and applied for the funding through Sefa [the Small Enterprise Finance Agency],” Kubayi-Ngubane said.

She said the government’s transformative efforts, which include the equity fund, were to ensure that black business played a much more meaningful role in the economy.

“Our economy will only experience sustainable and inclusive growth if, in its quest to grow the economy and pursue more profit, it draws on the entrepreneurial spirit that exists in South Africans of all races,” she said.

“You will remember that the economy grew by 1.5% in the fourth quarter, following a revised 13.7% rise in economic activity recorded in the third quarter of 2020.

“However, the positive growth recorded in the third and fourth quarters was not enough to offset the devastating impact of Covid-19 in the second quarter, when lockdown restrictions were at their most stringent.”

Economic activity decreased by 7% in 2020 compared with 2019, she said.

According to the minister, before the pandemic hit, SA’s economy was not growing at a sufficient rate to respond to the country’s needs. The pandemic has worsened this situation.

“Broadly, we are working on aligning industrial incentives and the infrastructure programme, including services, so that we can boost investor confidence.

“According to Stats SA, our GDP per capita peaked in 2014 and has since been declining. This means that economic growth has been struggling to keep up with population growth. GDP per capita decreased in 2020 to a level last seen in 2005.”

She said the tourism industry, like any other labour-intensive sector, had been devastated by the Covid-19 pandemic.

“The vastness of the tourism value chain means that its devastation has a significant impact on the services of the economy as a whole. The slow recovery the sector is experiencing is another reason for the declining job opportunities.”

According to the minister, the volume of tourists decreased by 72.6%, from 10.2 million in 2019 to 2.8 million in 2020.

“The distribution of tourists by region of residence shows that 74.8% of the tourists who arrived in SA in 2020 were residents of the Southern African Development Community (Sadc) countries, and 1.5% were from ‘other’ African countries.”

Kubayi-Ngubane said for the country’s economy to get back on track, the following needed to be done:

• create jobs, primarily through aggressive infrastructure investment and mass employment programmes;
• reindustrialise our economy, focusing on growing small businesses;
• accelerate economic reforms to unlock investment and growth;
• fight crime and corruption; and
• improve the capability of the state.

“These objectives can only be achieved if all social partners commit to the implementation of what has been agreed to. Black business in particular has an important role to play in ensuring that economic recovery and reconstruction happens with the expansion and strengthening of a black capitalist class.”

TimesLIVE