Tourism fund hailed as potential hope for black entrepreneurs
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BLACK businesses interested in entering the tourism sector may soon be eligible to apply for grants, loans and debt support through a newly launched Tourism Equity Fund (TEF).
President Cyril Ramaphosa said the fund was crucial as it would also ensure that black entrepreneurs who have felt isolated from entering the tourism sector will now have the ability to do so.
The president along with Tourism Minister Mmamoloko Kubayi-Ngubane launched the fund on Tuesday.
The TEF aims to provide a financing vehicle for black businesses and entrepreneurs to invest in businesses within the tourism sector.
The fund is created by the tourism department in partnership with the Small Finance Equity Agency (Sefa).
In total, investment in the fund amounts to over R1.2 billion.
A R540 million cash injection will be supplied by the Department of Tourism, R120 million from Sefa and the remainder of the funds through loan avenues offered by commercial banks.
Interested entrepreneurs and businesses in the sector would be eligible to apply for loans, grants and debt support within the equity fund – which will have a heavy focus on black majority-owned businesses.
Areas of focus in the sector that can apply to the fund include accommodation for hotels, lodges and hospitality for conference and convention venues, the minister said.
Kubayi-Ngubane said the launch of the fund was timely as the tourism sector had been heavily impacted by the Covid-19 pandemic.
Several travel agencies have had to close their doors along with small businesses.
Ramaphosa said the fund would help aid the recovery of the economy and also ensure the transformation in the sector is achieved.
"It will speed up transformation in one of the most crucial sectors of our economy. The launch is taking place as the tourism industry is facing challenges. The nature of the pandemic and restrictions has impacted the tourism industry from the smallest B&B to major hotel chains," Ramaphosa said.
The president said the sector contributes just over 1 million in direct and indirect jobs. He said with its contribution to GDP, it had the potential to achieve more.
Ramaphosa also added that the fund would also help tap into the township and rural tourism avenues – which he said had long been ignored. He said far too often entrants into the sector were often blocked by the large capital base required to enter and TEF would help close that gap.
"The involvement of commercial banks will allow them to access better financing. This will impact the reach of this industry. The partnership between government and commercial banks is an example needed as the economy recovers,“ Ramaphosa said.
He further maintained that government was committed to seeing the fund grow and produce tangible support for black-owned businesses.
"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. It is also our aim to employ local people, to procure goods and services locally, and to make a real contribution to our economy.“
Kubayi-Ngubane said application processes would soon be released on how interested businesses can access the funding capital available.