With South Africa’s annual Tourism Month coming to an end, the focus is on the industry and its role in the country’s economy. September is celebrated as Tourism Month, highlighting the country’s heritage and its flourishing tourism sector.
The National Empowerment Fund (NEF) has been at the forefront of transforming South
Africa’s economic landscape. This sector is one of the many that the NEF
earmarked to drive participation of black entrepreneurs. To also drive job creation and geographic spread of economic activities towards township and rural areas.
Fostering growth and resilience in this vital industry
In partnership with the National Department of Tourism, the NEF established the Tourism Transformation Fund (TTF). This fund aims to pursue its commitment to fostering growth and resilience in this vital industry, which contributes 8.6% to South Africa’s economy. It provides 9.2% of total employment across the country.
Established in 2017, the TTF was designed to tackle the specific challenges faced by black
entrepreneurs within the tourism sector. In particular poor access to capital and markets.
With an initial allocation of R120-million, the TTF has successfully approved R104-million in
funding for 27 transactions. These are valued at R338-million. However, the fund is nearing depletion. It only has R15.9-million remaining against a pipeline of R61.3-million in pending projects.
This shortfall highlights the urgent need for continued financial support to sustain and expand its positive impact. The TTF aims to empower black entrepreneurs by providing much-needed capital and mentorship support. This to enable meaningful entry and sustainability in the tourism industry.
Sector’s post-Covid recovery
The empowerment injection is essential for enhancing business viability and stimulating broader economic growth. By investing in tourism ventures, the TTF seeks to accelerate economic activity and contribute to the sector’s recovery. Especially following the
severe disruptions caused by the Covid-19 pandemic.
The focus on post-pandemic recovery is crucial as the tourism sector. It was
significantly impacted. And it has shown veritable signs of returning to pre-pandemic performance levels. The TTF’s role in supporting businesses during this recovery phase is vital. It is ensuring that these enterprises not only survive, but thrive, in a competitive environment.
Moreover, the funding gaps highlighted by the current pipeline underscore the necessity of
addressing these financial shortfalls. Ensuring that the sector receives adequate support is
critical. This is for maintaining momentum and achieving long-term sustainability.
Sector’s evolving needs
The NEF, in collaboration with the department, has refined its funding model to better meet
the sector’s evolving needs. Optimising approaches to ensure that investments are impactful and aligned with industry demands.
As we look to the future, the NEF remains dedicated to addressing the challenges within the sector. To also support its growth. Investments are aimed not just at recovery, but at driving sustainable, long-term development.
Continued support for the TTF and the evolution of funding strategies will be pivotal in achieving these goals.
- Cornelius Mdluli – Acting Fund Manager of Strategic Projects Fund
