The fund was launched by President Cyril Matamela Ramaphosa on Tuesday.
Its key mandate is to help finance black emerging entrepreneurs, particularly in rural/remote areas, and transform the sector.
“The dedicated fund will provide a combination of debt finance and grant funding to facilitate equity acquisition as well as new project development in the tourism sector by black entrepreneurs and more importantly, businesses owned by women and persons with disabilities,” says Pres Ramaphosa.
Over R1.2 billion has been budgeted for the fund.
Ramaphosa said the fund will play a significant part in helping black-owned businesses in the sector to grow and develop.
“We are committed to ensuring that this Fund enables black business to substantially benefit from the tourism economy, not to be roped in by fronting companies, or to be marginal bystanders and small-scale suppliers to larger tourism enterprises,” he said.
Tourism Minister Mamoloko Kubayi- Ngubane says the launch of the Tourism Equity Fund is timely and necessary.
“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 investments and to fully exploit the potential that is still unexplored in our country’s tourism sector.
The outbreak of the COVID-19 pandemic that brought the tourism sector to a grinding halt for most of last year and still continues today, has reduced the number and diversity of tourism attractions. Throughout this period, the sector has experienced great difficulties, however, the sector has also shown admirable resilience,” says Kubayi- Ngubane.
The fund consists of up to R540 million from the Department of Tourism, R594 million from commercial banks and R120 million from the Small Enterprise Financial Agency (SEFA).
Minister of Small Business Development Khumbudzo Ntshaveni, said the fund will focus on the following sub-sectors:
- Accommodation (e.g. Hotels, Lodges, Resorts and Self-catering Units, Backpacker facilities)
- Hospitality and related services
- Travel (and related services, e.g. Tour operators)
- Any other tourism related products and initiatives which support tourism development imperatives and economic impact in terms of job creation, geographic spread and strengthening the tourism offering of the country
Financial support to entrepreneurs will be provided on the following basis:
- Funding to acquire controlling equity in entities in the Tourism sector
- Funding of the assets of existing entities in the Tourism sector for the explicit purpose of setting up a new entity operating in the sector
- Asset finance and working capital that would be required in relation to the acquisition of the Tourism entity for expansion or operational purposes.
“We have committed to position SEFA as a leading government financing support agency for SMMEs in the country. Meaning that beyond the funding responsibilities of SEFA, we have positioned SEFA to mobilise and partner with other SMME funders including commercial banks, as evidenced through the Tourism Equity Fund and our other schemes such as the Spaza Support Scheme, the Fruit and Vegetable Vendors Support amongst others.
Our goal is to leverage government funds to improve access to other funds by SMMEs,” Ntshaveni said.
Supra Mahumapelo, chairperson of the Portfolio Committee on Tourism, welcomed the initiative by emphasising it will seek to help those in far-flung areas of the country, with big ideas but limited resources, also insisting, that this is the time to showcase their abundance of talent and prove to the world that you can do magic.
The tourism sector has undoubtedly been one of the most affected by the devastating impact of the COVID-19 impact. The industry accounts for 2.9% of South Africa’s GDP and supports about 1.5 million jobs.
Other participants in the webinar included South African Tourism, Sefa and Black Business Council.
Some of Soweto Tourism product owners questioned how it will be accessed and who will benefit from it, raising the obvious eye-brows “corruption” amongst others?
For queries send information to tourismequityfund@sefa.org.za
Applications opened on 26 January and forms can be accessed via SEFA’s website. Once completed, these applications forms, with supporting documents, need to be submitted directly to SEFA. Any queries can also be directed to this email address.
Image (Popular Soweto attraction such as the Bungee Towers could benefit from the fund).
