Table Mountain Cable Way is a popular destination for tourists in Cape Town. File
The Department of Tourism, together with the Small Enterprise Finance Agency (Sefa) – an agency within the Department of Small Business Development – has announced the opening of the application process for the Tourism Equity Fund (TEF) from next week.
This follows the Cabinet’s approval in September for the revised fund to be implemented.
The government capitulated to the demand that it reduced the requirements for black ownership to be below 51% in the qualification criteria for the R1.2 billion TEF.
The fund was launched in January 2021 by the department to stimulate investment and transformation in the tourism sector.
The department said this week that it was delighted to announce that the Request for Proposals for funding from the TEF were now open to businesses.
All applicants were encouraged to submit new applications that would align with the new qualifying criteria of TEF.
The R1.2 billion TEF aimed to increase growth and transformation and stimulate more inclusive participation in the tourism sector in line with the targets of the Tourism B-BBEE Sector Codes. The TEF was intended to address the funding challenges faced by Qualifying Small Enterprises and Emerging Micro Enterprises in the tourism sector.
Department of Tourism Minister Patricia de Lille said the funding structure comprised grant funding, and debt financing, to meet the distinct needs of tourism enterprises that were either seeking equity acquisition, investment in new developments, or expansion of their existing businesses.
The TEF is backed by formidable public-private partnerships, which support the participation of private, commercial, and non-commercial banks, and various developmental funding institutions.
“The collaboration between public and private entities serves as a notable example of successful co-operation in advancing a more inclusive and prosperous tourism sector,” De Lille said.
The TEF will be implemented by assessing and scoring applications against jobs to be sustained and/or jobs to be created, location and geographic spread, and targeted groups (youth, women, and people with disabilities).
The department and Sefa, in partnership with banking and/or financial institutions in South Africa, which includes, among others, banks and developmental finance institutions that would offer affordable and tailor-made financial solutions, in an attempt to close funding gaps in the market, through the provision of a blended finance solution.
The disbursing of 80% of the funds to small, medium and micro enterprises enable these businesses to grow. The remaining allocation of 20% is meant for new business.
Sefa would implement, execute, and manage the fund through an agreement with the department, which would support and monitor the implementation of the TEF on a monthly basis.
The TEF placed significant emphasis on providing support to tourism enterprises that met the qualifying criteria, including a minimum of 30% black ownership either before or after the financial support.
The TEF was exclusively dedicated to investing in various sub-sectors within the tourism industry as prescribed in the Tourism B-BBEE Sector Codes.
According to the authors of the BMI South Africa Tourism Report it held a generally strong growth outlook for the South African tourism sector in 2023 and over the forecast period to 2027.
It said the market recovered well from the pandemic shocks in 2022, and a full recovery was envisaged by quarter four 2024. However, it identified a number of challenges to growth, including structural limitations such as transport and infrastructure gaps, power outages, macroeconomic concerns, and security-linked challenges, which could derail long-term.
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