Hamza Farooqui, Founder and CEO of Millat Investments
Creating sustainable investment in South Africa
For South Africa to rebuild its tourism industry amidst the ravaging effects of Covid-19, it will need a “tourism for dummies” approach – ensure the safety of tourists, have a coherent strategy and create an enabling business environment. In other words, let’s get back to basics.
There are three things that South Africa’s tourism has going for itself: year-round mild climate, welcoming people and authentic cultural diversity. But there are three things that go against it: an absence of safety, a lack of coherence between all tourism role-players and the unwillingness to be open for business on a global scale.
All of these cracks need to be addressed if we are to rebuild tourism. It really comes down to government getting the basics right first. It needs to create an environment in which tourism businesses, particularly global brands, can thrive.
Make South Africa safe for tourists
I hail from an immigrant family who came to these shores seeking a better future. Over the years we have seen the country evolve from the euphoria of 1994 to the urgent need for constructive economic growth. As a family we are deeply committed to playing our part. In many respects, it probably has to do with our history as immigrants, who have fire in their bellies to bring about change and make an impact on their adopted home.
However, spurts of xenophobic attacks over the last decade, and not forgetting the recent riots, have made South Africa a destination to avoid. Racism is still embedded in our structures. All of these issues have made us insular, effectively cutting us off from the global tourism ecosystem.
We do not even consider Africans coming into our country as inbound tourists yet they make up nearly 80% of our foreign arrivals before and during the Covid-19 era.
In addition, the vaccination rollout, while steady, has been achingly slow. To date, just 17-million vaccinations have been administered since the rollout started in February this year. As a result, the UK has placed South Africa on the red list for travel. This means British tourists wishing to visit South Africa have to undergo 10 days of quarantine when they return to their home country. It makes South Africa an unattractive destination. Estimates put the loss of revenue at R26-million per day.
Our traditional major source markets, Germany and the US, have only made travel to and from South Africa easier as of September. But we cannot continue complaining and waiting for the UK to open. We need to act and look for alternate markets.
We can attract tourists from countries in the Middle East, China and India – all of which have a growing middle and upper class that is hungry to travel and consume our authentic offerings. We just need to start focusing on bringing them here. In fact, the UK and Europe has been a key beneficiary from the Middle East for years – we can take a page from that playbook and apply it to our strategy. But we chose not to because we continue to stick to what is familiar and comfortable.
Such self-made problems can be rectified through political will. The forthcoming new age of tourism will not be kind to countries that have lacklustre safety policies. Conscious travellers will be looking for destinations that are crime free, family-friendly, politically stable and adherent to Covid-19 regulations.
A need for a coherent strategy
In light of the Coronavirus’ decimation of tourism, the South African government drew up a sectoral recovery plan to recuperate the industry to pre-Covid levels. But the plan fails to mention a coherent public-private strategy.
Government claims to recognise tourism as one of the economy’s crucial industries that can lift the country out of its quagmire. This sentiment is clear in its Economic Reconstruction and Recovery Plan. Yet the government’s actions are contrary. A R4.1-billion budget for tourism is not sufficient for recovery. The tourism department received even less in the years before Covid-19. The previous finance minister, Tito Mboweni, said in his Budget Speech in February that the department reprioritised R540 million for the Tourism Equity Fund to support recovery. And that was about all that was said on tourism.
It has been reported that foreign tourists put off travel to South Africa for a later stage as it is seen as a long-haul, once-in-a-lifetime destination. I believed this too, until Australia made that reason irrelevant. Statistics show that of the 9.4-million international arrivals Down Under in 2019, more than 370,000 were from the US and 344,000 were from the UK. The industry contributed almost AUD61-billion (R660-billion) to the country’s GDP. That is because Australia has driven a collective approach from all levels of government and the private sector. Both sectors run with the same messaging and have the same agenda.
More than that, we need to consider an aviation policy which is accessible and open. Have we ever considered an open skies approach? The country needs to sort its airlift problems. It had been without a national carrier since September 2020. Only in September this year did South African Airways take to the skies again, opening up routes between major South African cities and five other African destinations.
Statistics show that Africa makes up just two percent global airlift. Just how much of that share South Africa occupies is unknown. It is time that we have an open skies policy at least for our fellow African countries. It would make South Africa an airline hub for the rest of the continent.
A national carrier is important but even more so is the success of a vibrant tourism market. We need to look beyond politics and what other parts of the world have done. We will need to do more if we are to deliver South Africa as a hub status for Africa, South America and the Middle East. Reconsidering our aviation policy and being accessible to the world will be a step in the right direction.
Let’s finally be open for business
Tourism is a super-sector. It is the only industry that involves other sectors such as manufacturing, information technology and transport. To effectively tap into this opportunity, there needs to be a willingness to do business on the global stage. South Africa cannot remain insular any longer.
We could start by building our domestic market as a base. Studies have shown that South Africans mainly travel within the country to visit family and friends. This does not need to be the only reason any longer.
The Coronavirus has given us the opportunity to build a well-oiled local tourism industry based on leisure travel with niche offerings.
While Sho’t Left Travel Week is admirable in its intentions, dedicating one week every September is not going to entice the average South African to visit her own backyard. In addition, the discounts offered are paltry, with many luxury establishments charging rates to locals that are reserved for elite or foreign tourists.
Travel for South Africans should be made accessible and affordable. Big local brands still dominate the tourism landscape with an outdated product and service culture delivered as if they are doing the customer – and the tourism industry on the whole – a favour. Such arrogance continues to make tourism inefficient. The need for global brands to bring a change, competition, agility, skills and global best practice is even more relevant today.
In addition, the introduction of such brands will bring the country’s tourism on par with the global ecosystem as they generate an international presence and awareness of South Africa as a destination. These brands play a key role in attracting fair market share purely by being in a destination. They are a driver for destination marketing.
Tourism still an employment powerhouse
When tourism rebounds amidst the Covid-19 chaos, it will recapture its capability to be a major employer. Pre-Covid statistics show that it contributed 4.5% of total employment in South Africa and remained resilient in tough economic times. We will, once again, look to tourism to mend the current 34% unemployment rate.
The private sector, particularly global brands, will play a part in developing the employees’ skills. It can partner with tertiary institutions in growing a workforce fit for the industry. It will need to take the lead because tourism businesses bring global best practice and world-class training. But government would first need to create an enabling environment for these businesses to exist and thrive. They need to have the resolve and ability to execute their plans. We need less talk and more action.
In 2019, we only attracted 15.8-million foreign tourists. That is almost 10-million less than what the city of Venice receives in a year. And with Covid-19, South Africa’s figures dropped by 71% to just 5-million foreign arrivals.
We need to be smarter when it comes to attracting tourists. We need to find a way to place the country high on the global agenda. South Africa needs to stop being arrogant. Not every tourist is eager to visit our country. South Africa is not the only destination from which to choose. The sooner we understand this, the sooner we will be able to attract an abundance of tourists, create jobs and revive the tourism industry.