The absurdity continues in South Africa’s response to the coronavirus pandemic, with the tourism department undertaking the decision that relief funding for the tourism industry will prioritise business that meet Broad-Based Black Economic Empowerment (BB-BEE) criteria.
According to the World Travel and Tourism Council, South Africa’s tourism industry contributed towards 2.8% of our GDP in 2018, a figure of some R139 billion. So just so we’re clear, tourism is massive in South Africa, and while we’re fortunate that our summer only just ended and the worst of the COVID crisis should (hopefully) have passed come the peak period for tourism in December/January, there is no question that, because of travel restrictions and quarantines all over the world, the tourism industry is going to take a massive hit.
So, naturally it came across as utterly absurd that the Department of Tourism and its minister Mmamoloko Kubayi-Ngubane have argued that recipients of the Tourism Relief Fund (amounting to R200 million) will be guided by the BB-BEE Codes of Good Practice approved by the minister of Trade and Industries in 2015 and distributed according to the objectives of Economic Transformation, and its vision to ensure sustainable and inclusive tourism development, according to Business Tech.
“As a minister I must never be found to be flexible when implementing the laws of this country,” Kubayi-Ngubane told the committee handling the subsequent court case that the department has had to face after the Union Solidarity and AfriForum accused her of implementing a racist policy, according to Fin24.
The Pretoria High Court dismissed the case, which will now be taken to the constitutional court after Kubayi-Ngubane argued that the R200 million relief fund had a cap of R50,000 relief funding per business permitted, allowing for a total of 4,000 companies to be assisted. And therefore, out of more than 11,000 applications received, she would have to prioritise.
“I don’t know where these allegations come from. We have a policy of BB-BEE in this country. People must understand where we come from and that the playing field must be made equal,” she said.
“We can never sustain this country if we remain an unequal society with the majority on the sidelines of the economy.”
Furthermore, she expressed surprise about reports that many tourism businesses chose not even to apply to be considered for the department’s COVID-19 aid, because they are not BEE compliant.
“While exemptions exist for small businesses. It does not mean that if you are a ‘white company’ you cannot be exempted for BEE,” she said.
She also emphasised that this policy would be in line with previous efforts to achieve economic transformation and that failing to continue that policy would render all previous efforts null.
“We worked so hard to enable them to be part of the tourism sector. We put money into nurturing their businesses and helping them to start gaining market access. We want them to be able to continue after the pandemic is over,” she said.
Racism is a touchy subject in South Africa. It always has been and probably always will be. Therefore, I would rather not address whether this is a racist policy or not. And while “white businesses” have always had an advantage over black-owned enterprises, there’s also a basic truth that those advantages mean that they bring in more money, pay higher taxes and employ more people. That’s not to say that there’s no such thing as a successful “black business”, but it is the argument on which the minister’s proposal rests.
And if these “white businesses” are generating more taxable income, creating more jobs and, more importantly, facilitating more tourists, then we should prioritise them on the criteria of merit, not economic transformation. South Africa has had a taste of what economic transformation looks like over the past 26 years and it’s not a pretty picture. If the ship sinks, we all sink with it, and the virus knows no race. It affects “white businesses” just as much as “black businesses” – the ANC will rule over a country of ashes if they continue taking on policies geared towards transformation over success and prosperity.
Ever since BEE was implemented as a government policy in the late 90s, the beneficiaries of these policies have mostly been part of a small, well-connected, black elite and the majority of the country still battles to put food on the table. Economic transformation has not been achieved and BB-BEE is certainly not the answer. Now, I’m no expert in the tourism industry and I certainly can’t see the future, but what I do know is that taking a failed policy and applying it as a solution to an economy on its knees is not a smart move.
It will only create further sinkholes in the economy and will not result in economic empowerment for anyone, but merely demoralisation, a further “brain drain” of educated white South Africans leaving the country for greener pastures, and it would kick the body of our economy while it’s down. So, once again rather than make everyone wealthier, the government has chosen to make everyone poorer. Is that your definition of economic transformation, Honourable Kubayi-Ngubane?