President Ramaphosa announced a few weeks ago that government will be implementing a stimulus package intended to lift South Africa out of the economic doldrums. To this end, he identified boosting agriculture, infrastructure and tourism and addressing high data costs as focal points for turning things around in the short term.
In typical South African style, this announcement was greeted with much fanfare and equally ready criticism, especially as the burning question remains as to how exactly this package will be funded. Ultimately, however, the stimulus plan should be welcomed as the quick fix potentially needed to ignite economic growth, reassure investors and turn the tide on unemployment.
With this in mind, all eyes remain on the Medium Term Budget Policy Statement to be read later this month. This task will fall to newly appointed Finance Minister Tito Mboweni, who was sworn in on Tuesday 9 October. To hear CE Dr Adrian Saville giving his view on this appointment, listen to his radio interview with SAFM (link below).
The map of international tourism receipts shows why tourism could be an easy win for South Africa given our rich natural and cultural heritage. This is especially the case as tourism has been one of the few sectors to consistently show promise and resilience in recent years.
According to the most recent statistics, of the 15.8 million workers employed formally and informally in 2016, 4.4% (or one in every 23 people) were directly employed in the tourism sector. This compares to 3.8% just ten years prior.
The 690,000 people employed in the sector in 2016 outnumber those in mining (444,000) and utilities (118,000). This helps underscore the extent to which tourism has outperformed other key industries in job creation. That same year, the tourism sector directly contributed to 2.9% of South Africa’s gross domestic product (GDP), making the sector larger than agriculture, although still smaller than construction and mining.
But the potential of tourism to stimulate our economy is what is significant and is highlighted by the above graphic. A country such as New Zealand is able to attract $10 billion in tourist receipts and Singapore, a country that is 0.006% the size of South Africa, brings in $20 billion from tourism each year, more than twice that of South Africa. Perhaps of even greater importance is that the cost of the tourism sector stimulus is zero or even negative (i.e. it will free up resources) as we reduce administrative and regulatory requirements. To achieve this, all we have to do is take our thumb off the administrative pipeline that chokes the industry.
To illustrate the point, the industry has been hamstrung for a number of years by unfriendly visa requirements that have negatively impacted the number of tourists entering the country and, in particular, the controversial requirement that visitors travelling with children under the age of 18 years provide their unabridged birth certificates upon entering or exiting.
In his recently announced stimulus package, Ramaphosa noted that the visa-related reforms, which will make it easier for tourists, business people and academics to come to South Africa, should hopefully be gazetted this month. Thankfully, the changes are to include amendments to the regulations for minors visiting South Africa. After an initial bungled response from the Department of Home Affairs, we hope to see a more reasoned set of proposals that will liberate the tourist sector.
Listen to CE Dr Adrian Saville on SAFM discussing the appointment of Tito Mboweni as Finance Minister following Nhlanhla Nene’s resignation on SAFM