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National tourism department's budget cut by R1bn as Covid-19 bites

22 July 2020 - 14:01 By Kgaugelo Masweneng
Tourism minister Mmamoloko Kubayi-Ngubane said the sector faces a potential 75% revenue reduction in 2020, putting 438,000 jobs at risk.
Tourism minister Mmamoloko Kubayi-Ngubane said the sector faces a potential 75% revenue reduction in 2020, putting 438,000 jobs at risk.

The department of tourism's budget allocation for the 2020/21 year has been drastically cut amid the suspension of activities in the industry as a consequence of the Covid-19 pandemic.

On Wednesday tourism minister Mmamoloko Kubayi-Ngubane said before the Covid-19 crisis, the budget allocation was R2.48bn, of which R1.3bn was for transfers and subsidies.

“The department’s revised budget allocation for 2020/21 is R1.48bn, of which R505m is for transfers and subsidies. The department has had a total budget reduction of R1bn, with SA Tourism taking the biggest cut due to the suspension of most marketing activities."

Kunayi-Ngubane highlighted that a report by the United Nations Conference on Trade and Development (UNCTAD) has listed SA as one of the top 15 countries worst affected by the near-closure of the international travel industry during the pandemic.

UNCTAD predicts that tourism in SA is going to lose 3% in GDP contribution, and the loss of unskilled jobs in the sector could be as high as 12% if the virus is contained in the next eight months.

“It is estimated that R54.2bn in output may already have been lost between mid-March and the end of May this year. The sector now faces a potential 75% revenue reduction in 2020, putting a further R149.7bn in output, 438,000 jobs and R80.2bn in foreign receipts at risk,” said the minister.

“Our recent economic challenges have, in addition to increasing unemployment, thrown into sharp relief the enormous inequality in terms of income, assets and opportunity among our people. It is mainly women and youths who find themselves in the margins of society,” she said.

Kubayi-Ngubane said the government has intervened to support businesses in distress through the Covid-19 loan guarantee scheme, worth R200bn, and this is still accessible to many businesses, including those in the tourism sector.

The Unemployment Insurance Fund's Temporary Employee/Employer Relief Scheme (Ters) “has so far disbursed R34bn in 7.4-million payments since March this year, and the announcement by employment and labour minister Thulas Nxesi of the extension until  August 15 goes a long way as we are one of the sectors that made requests for the extension.

“For our part, we redirected R200m which assisted 4,000 businesses through the Tourism Relief Fund. We ensured the benefit is spread geographically across the country to even cover businesses in small dorpies and townships, as per discussions in the portfolio committee,” she said.

The minister said the relief fund came under scrutiny and led to a court challenge due to the use of the government adopted policy of BBBEE.

“Unfortunately, the noise of the naysayers confused and discouraged even those who qualified for the grant not to apply because they were being told the relief was specifically for black people. This was not true.”