Ramaphosa launches R1.2 billion Tourism Equity Fund
President Cyril Ramaphosa said the Tourism Equity Fund will give the sector a much-needed boost - particularly as it recovers from the economic impact of the COVID-19 pandemic
President Cyril Ramaphosa has launched the Tourism Equity Fund, which is aimed at helping to finance black entrepreneurs in 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.
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.
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.
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)
Ramaphosa further said the sector is among those with the greatest potential for long-term sustainable economic growth.
How will the Tourism Equity Fund work?
According to the Minister of Small Business Development Khumbudzo Ntshaveni, 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.