Mbuyazwe
Magagula

Destination South Africa

This month, South Africans will recognise the important contribution that tourism makes to the country’s economy. Head of the IDC's Tourism SBU, Mbuyazwe Magagula, shares his thoughts.

Tourism creates opportunities for the establishment of small and micro entrepreneurs in both the formal and informal economies.  It also instils and grows cultural and national pride, as well as greater awareness of the natural environment and its economic value. Most importantly, it creates a heightened sense of ownership with the large number of investment opportunities that it can attract. If managed and enhanced effectively, the sector’s development can ultimately support the elevation of a country into a leading international tourism destination.

We often do not realise how much of a contribution tourism makes to our economy.  It is one of the fastest growing economic sectors. Tourism’s contribution to gross domestic product has risen gradually from 4.6% in 1993 to 8.1% (R159.6 billion) in 2007 and is expected to reach 12% by 2014. According to the World Travel and Tourism Council (WTTC), the direct contribution of the tourism industry to the South African economy is estimated at 3.3% in 2008. The sector also accounts for approximately 7.5% of total employment, with more than 1,1 million people working in tourism-related jobs. It has been earmarked by the government as one of South Africa’s priority growth sectors. 

It is interesting to see why people visit our country.  Eco-tourism, shopping, business and visiting friends and family remain the main reasons for travellers into South Africa with other niche tourism markets such as  adventure, sports, medical and culture and heritage also contributing. For instance, more than 100 000 people travel to South Africa on an annual basis for medical procedures. Apart from the affordability factor, South Africa poses minimal difficulties associated with the travelling to and from surgery, as well as short or no waiting periods and the provision of medical visas that are valid for 90 days. South Africa also provides safe and affordable quality destinations for most medical procedures, with a particular convenience factor for patients from other African countries.

Accommodation and restaurants are amongst the main drivers of tourism in any country.  These include bed and breakfasts, guest houses, country houses and self-catering units.

We need to do more to support emerging black entrepreneurs that own accommodation establishments.  South Africa has some world class hotels and restaurants with a number of leading chains internationally recognised with five South African restaurants ranked in the top 100 restaurants in the world. Emerging SMME entrepreneurs face a range of challenges including difficulty in accessing finance, skills, service levels, marketing and poor support infrastructure such as signage and transport.  Transformation remains a priority in this sector in line with the Tourism Sector Charter.

There are opportunities for the IDC to enhance the country’s tourism potential.  For example, South Africa lacks sufficient accommodation and dining capacity. Hence, the IDC invests in the development of additional hotels and restaurant franchises.  As a development finance institution, we could also invest in the establishment of taxi or cab companies to help address inadequate public transport and in the development of well-branded icons in provinces that lack key attractions. 

...more than 100 000 people travel to South Africa on an annual basis for medical procedures.

South Africa’s various provinces face different challenges when it comes to attracting tourists. We have identified Limpopo, North West, Mpumalanga and the Eastern Cape as provinces where tourist developments are needed. The focus in these areas will largely be in provincial business hubs such as Polokwane, Rustenburg, Mafikeng, Nelspruit, East London and Port Elizabeth. This year saw the opening of the high-end, BEE owned Radisson Hotel in Port Elizabeth and the development of a hotel and convention centre in East London is progressing well.

We have to encourage more South Africans to travel locally.With 78% of beds sold in South Africa bought by South Africans, there remains an untapped potential as this segment contributed only 27% of total tourism receipts in 2006. Economic constraints and other factors such as safety concerns, poor health and time constraints are believed to be some of the main reasons that limit domestic travellers.