Tourism could reboot SA in no time at all; it’s time it was allowed to

Written by Ciaran Ryan. Posted in Journalism

It would take some minor changes, such as easier visa access. From Moneyweb.

Tourism’s contribution to the South African economy has been declining. Picture: Mike Hutchings, Reuters

Tourism’s contribution to the South African economy has been declining. Picture: Mike Hutchings, Reuters

With relatively little effort, tourism could add a percentage or two to economic growth. With a bit more effort it could add another percentage point or two on top of that. All it would require initially is making it easier for foreigners to get visas. Astonishingly simple, yet it hasn’t happened despite years of pounding on the doors at key government departments.

Part of the problem is that government doesn’t recognise tourism as an ‘industry’ in its own right, so it ends up a creature of bureaucratic inertia. The tourism infrastructure in SA is among the best in the world, and there is spare capacity. It needs hardly any new investment to add another million or two visitors to last year’s count of 10.7 million. Just make it easier for them to get in.

Read: Why tourism is the quick fix SA needs

President Cyril Ramaphosa wants to see a doubling in tourism arrivals to 21 million over the next decade. That’s eminently doable according to industry analysts. It would boost employment numbers by two million, and trigger downstream investment in manufacturing and agriculture to accommodate the need for additional buses, car, food, accommodation and the like.

Tourism worldwide accounts for roughly 10% of GDP, and 8.6% in SA. The SA figure should be around 12% or even 15%. Tourism’s contribution to the economy has grown impressively over the last two decades, but has been declining in recent years. In SA, the sector employs 726 000 directly, with a further 1.5 million employed indirectly in downstream services such as food supply, retail and security.

Read: The South African disaster: No businesses for the unemployed

Tourism’s potential to change the economic contours of the country has been discussed for decades, so why hasn’t it happened?

Grant Thornton prepared the graph below showing how tourism arrivals responded to key events such as the Soccer World Cup, the Cape Town drought and the introduction of tougher visa requirements for countries such as China.

Source: Grant Thornton (UBC: Unabridged birth certificate requirement for minors). Graph shows percentage growth or decline in arrivals.

It’s clear tourism is a victim of SA’s capacity for scoring own goals.

In the supposed interests of national security, former home affairs minister Malusi Gigaba in 2016 decided prospective visitors from countries such as China had to apply in person at our consulate offices in those countries. That wiped more than R1 billion from tourism revenues over the next six months. Those restrictions have since been eased, with nine visa processing centres opened in China. But still SA attracted just 90 000 from each of China and India last year – a fraction of what it could be with a more sensible visa programme.

SA barely features on the travel itinerary for Chinese travellers, who are expected to number 300 million by 2030. Since most countries fear being flooded with illegal immigrants from China and India, they too require visas for visitors from these countries – yet somehow manage to attract vastly greater numbers from these key outbound tourism markets. Last year Australia attracted 1.4 million Chinese visitors, all of them requiring visas, largely by making it easy to apply online in their own language.

SA’s rigid visa policy towards India and China is costing us billions of rands a year in lost revenue.

There has been some reprieve. Parents visiting SA are no longer required to carry birth certificates for their children, as was the case.

Opportunities

Another problem is that SA is a long-haul destination for moneyed tourists from North America, Europe and Asia. Yet one could say the same of Thailand, where tourism historically ranges as high as 17% of GDP, or Vietnam (9.4%). Other long-haul destinations are clearly doing some things to attract visitors that SA is not. Most of them offer low-cost charter packages covering flight and accommodation, something that SA has yet to fully exploit.

Consider that France attracted 90 million visitors last year, equivalent to 130% of its population. In the UK and Thailand, visitor numbers are equal to roughly 60% of their respective populations. The equivalent figure in SA is 18%.

A tourism growth strategy published by the Tourism Business Council outlines a number of steps that could radically reshape the sector. The easiest and most important of these is relaxing visa requirements by introducing electronic visa applications, expanding the visa waiver programme and recognising visas already issued to other destinations, such as the Schengen Area (26 European states), the US, UK, Australia and Canada.

Visa exemptions

Though SA is a member of the Brics bloc, visitors from Russia and Brazil are allowed entry without visas, but the same is not true for those from China and India. This is a major obstacle to increasing visitor numbers. Most of the top 10 tourism markets – including the US, UK, Germany, France, Netherlands, Brazil, Australia, Canada and southern African countries – are given visa exemptions. It has been proposed that the visa waiver programme be extended to a further 19 countries, and in fact seven of these were recently approved, including New Zealand, Saudi Arabia, Qatar, the United Arab Emirates, Cuba, Ghana, São Tomé and Principe.

Many of the remaining problems inhibiting faster tourism growth are regulatory. Some of the proposed changes will smooth the path for tour operators obtaining licences for vehicle registrations and renewals. It currently takes months for licences to be approved, and several tour operators have closed down as a result. Operators are required to provide black economic empowerment (BEE) certificates, proof of market demand and letters of support from the industry association. This unnecessary bureaucratic clutter is finally getting the attention it deserves, with a proposal on the table to set up a multi-departmental national tourism body to accredit operators and implement self-regulation.

While other countries have solved the issue of parents travelling with minors, Department of Home Affairs officials are not always aware of their own regulations and travel advisories that allow easier access for minors. Additional documentation should only be requested under suspicious circumstances, says Gillian Saunders, an independent tourism advisor. “The travel trade and IATA [International Air Transport Association] are still advising visitors to carry a birth certificate if only one parent or another adult is travelling with a child. They do not feel confident to push family travel yet,” she says.

‘Quick interim measure’

The recognition of Schengen, USA, UK, Canada and Australia visas for visitors to SA would serve as “a quick interim measure to improve access to SA for many nationals of visa-requiring countries who already hold valid visas from the above countries/areas”, adds Saunders. “And, if implemented, could continue.”

The Department of Tourism has started working on a China-ready strategy, and extra resources are being ploughed into dealing with Chinese visa applications.

Air transport policy is another issue that needs urgent overhaul. What is happening nationally is fragmented and inconsistent, and this is driving access to OR Tambo International Airport in an ad-hoc fashion. Cape Town International has achieved excellent air access, and King Shaka International in Durban is fairly active, but traffic to other centres is lagging far behind.

Given what is at stake, and the relative ease with which tourism could ignite a broader economic recovery, it is a wonder it has taken us this long to wake up to the obvious realities staring us in the face.

Source: Grant Thornton

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.