IMPLEMENTATION STRATEGY OF THE SRI PROGRAMME PRESENTATION TO THE PORTFOLIO COMMITTEE ON TOURISM 12 SEPTEMBER 2014 Department of Tourism www.tourism.gov.za
PURPOSE To provide information about the Social Responsibility Implementation Programme covering the following: Budget and expenditure since 2010/11 financial year, Lessons learnt and critical success factors, Challenges encountered and remedial actions implemented, Sharing of information about the funding process, criteria and requirements. 1
INTRODUCTION The Department of Tourism is funding and managing the implementation of tourism infrastructure and skills development projects through its Expanded Public Works programme namely the Social Responsibility Implementation Programme (SRI). SRI funding is exclusively appropriated for EPWP compliant projects. The objectives of the SRI Programme are poverty alleviation and job creation through tourism development as well as skills development. 2
SRI BUDGET AND EXPENDITURE Financial Year Final appropriation R 000 Actual Expenditure R 000 Expenditure as % of final appropriation 2010/11 270,343 249, 704 92.4 % 2011/12 272,196 272,196 100% 2012/13 283,024 283,024 100% 2013/14 253,229 253,229 100% 2014/15* 300,368 156, 639 (As at 30 Aug 2014) 52% 3
Province ACTIVE PROJECTS PER PROVINCE Eastern Cape 13 Free State 3 Gauteng 2 Kwa-Zulu Natal 4 Limpopo 5 Mpumalanga 3 Northern Cape 3 North West 2 Western Cape 4 Chefs Training Project (All provinces) 1 Sommelier (Gauteng and Western Cape) 1 Total 41 4 Number of projects
PROJECTS UNDER PLANNING PER PROVINCE Province Number of projects Eastern Cape 2 Free State 3 Gauteng 1 Limpopo 1 Western Cape 1 Total 8 5
PROJECTS UNDER TENDERING PROCESSES Province Number of projects Eastern Cape 1 Free State 1 Limpopo 5 Mpumalanga 1 Northern Cape 1 Total 9 6
BACKGROUND The SRI Programme started in 1999 as a Poverty Relief Programme under the former Department of Environmental Affairs and Tourism. In 2004, with the inception of the Expanded Public Works Programme (EPWP), the focus was amended to include job creation with job creation targets allocated to departments. In 2010 the Department of Environmental Affairs and Tourism was split into stand alone Departments. The SRI Programme was also split between the two departments. The environment related SRI projects including projects in the protected areas were ceded to the Department of Environmental Affairs. The tourism related SRI projects were ceded to the Department of Tourism. 7
BACKGROUND continued Cessation gave the Department full responsibility for the projects. Different status of inherited projects: Some were completed and handed over to the owning entities and were no longer under the control of the Department. Others were under planning and implementation. The Department had to ensure that they were completed and handed over. Others were incomplete, vandalised, and not operational. The Department had to assess each project and determine a way forward and action plan. Thus SRI Programme was ceded to the Department of Tourism. With all the inherited the successes, liabilities and challenges. 8
EXAMPLE OF SUCCESSFUL PROJECTS 9
Hector Pieterson Memorial Square in Soweto Funded for R16 million in 2002 During construction 10
Hector Pieterson Memorial Square in Soweto Currently receives about 20 000 visitors annually 11
Zithabiseni Resort - Mpumalanga Mpumalanga Zithabiseni - R 28,300,500.00 Renovation of 80 chalets, kitchen and the dining hall; Construction of new office building, new ablution facilities at the Zithabiseni entrance gate; new reception area, paving of walkways, drilling of boreholes, upgrading of 7km access road, replacement of kitchen machinery and installation furniture in chalets and other new buildings. Achievements: 127 work opportunities created 92,830 training days achieved Current status & use. The facility is currently managed by the provincial department, but in process of transferring to the Mpumalanga Tourism and Parks agency. There are 119 people permanently employed by the resort. Before the renovation, the occupancy was 12% and has increased to above 30%. 12
EASTERN CAPE Ubuntu Craft R 7 600.000.00 The Ubuntu Craft Market Project entails the establishment of a crafting and tourism infrastructure along the N2 (Eastern Cape) just outside Mt. Frere, where 27 permanent employees that are trained in the manufacturing of traditional clothing, leatherwork, basketry, grass-work, pottery business skills, manufacturing and marketing these crafts to tourists visiting the facility, via the internet, and through several marketing channels in the country. Achievements 145 - Work opportunities created. 40,099 - Training days achieved. Current Status & Use. The facility is in use and run by Amabhaca craft cooperative 22 People are permanently employed at the centre. The facility is hired out weekly, business is very good. The conference centre can accommodate 200 people The restaurant attracts day visitors. Total income per annum is approximately R 292 000.00. Ubuntu Craft Eastern Cape 13
Steve Biko Centre Eastern Cape Eastern Cape Steve Biko Centre. R11 000 000.00 Co-funded with Department of Arts and Culture Achievements 69 people are permanently employed Current Status & Use. The facility is being utilised by the Ginsberg community, restaurant is fully functional, library, theatre and the curio shop and internet café. Popular shows have been presented at the centre e.g.. Woza Albert, The Line etc. Memorial lecturers are also hosted, e.g. Steve Biko Memorial Lecture. 14
Witsieshoek Mountain Hotel- Free State FS WITSIESHOEK MOUNTAIN LODGE R19 500 000.00 Total upgrade of Witsiehoek hotel and sewer treatment plant; Demolishing of old buildings, upgrade 4 medium size chalets; Construct one manager house, rehabilitate old sewer treatment plant, up Install central heating system, upgrade 2 sentinel buildings, upgrade gate house, upgrade staff accommodation, and upgrade electrical wiring outside and inside buildings. Achievements: 16 people permanently employed Current status & use. Transfrontier Parks destination (TFPD) is operating the facility on behalf of the Batlokwa traditional council. 80% of the project is complete and the projects has almost 90% occupancy rate whilst implementation is in progress Local businesses are already benefiting from the project e.g.. Women s cooperative is producing the curtains & the local furniture factory is manufacturing the furniture for the circular chalets. 15
WC George Tourism Information Centre (Phase 2) R9 500 000.00 Upgrading and refurbishment of the Main Tourism Office. 2 satellite tourism offices were constructed in Pacaltsdorp and Thembalethu with landscaping, fencing, and paving; the required site works were done at both sites. The 3 tourism offices were equipped with tourism IT infrastructure and development of a Township Tourism Trail in the George area. Achievements: 2 permanent staff members employed, one at Pacaltsdorp and one at Thembalethu. 3 students that rotate between the two tourism offices. Current status & use. George Tourism Information Centre Western Cape The facilities are mainly used by Tourists but students as well as the community make use of them. The Thebalethu information centre was built in a township and has kick started tourism development in that area. The buildings are of an incredibly high standard and the work is of excellent quality. 16
National Chefs Training Project R39,600,000 National Chefs Training Project This unique partnership with the South African Chefs Association which began in April 2011, enlisted 1 760 previously unemployed youth being trained young people from all walks of life in South Africa. The qualification earned through the programme is recognised by all cookery or food-related sectors, from small restaurants to largescale hotels. The qualification is also recognised internationally. Achievements 72 Distinctions 332 Merit Awards High employment rate, above 50% Studying Diplomas 346 Students winning national and international competitions 24 Students are currently overseas with UBUNTU International Current Status. Graduations took place in August 2014. 17
EXAMPLES OF PROJECTS WITH CHALLENGES 18
FS : Barolong Boo Seleka Projects Description Challenges 1. Upgrade 1km gravel access road. 2. Construction of sewer network. 3. Water reticulation. 4. Construction of 8 new chalets and a laundry. 5. Install electricity connection in the new buildings and a septic tank. Project Total Budget: R3,372,500 1. The project is incomplete. 2. The Project Implementer got liquidated. Departmental Intervention 1. Several meeting held with the Implementer who promised to completed the project but failed to do so. 2. Letter of demand written to the implementer. 3. Legal Action will be taken against the implementer. 19
FS : Qwaqwa Guest House Project Projects Description Challenges Construction of a Guest House with; 1. 32 Bed Chalets 2. Guard House 3. Main Building 4. Access Road 5. Self Accommodation 6. Furniture Project incomplete Departmental Intervention 1. Forensic investigation commissioned by the Department. 2. Appointed another company to complete the project. Project Total Budget:R17,328,655 20
Observations, challenges and lessons learnt Majority of the tourism facilities being funded through the SRI programme are in the rural provinces however there is a lack of enabling infrastructure in these areas, which severely limits the long term sustainability of the projects. The SRI programme ends up funding the bulk infrastructure as part of developing a tourist facility and this resulted in increased project costs. The assets created through the projects are handed over to either a municipality, provincial government department, provincial tourism authority or a beneficiary. However there is limited technical and management expertise of community based owning agencies and to some extent local municipalities to commercially run the tourism projects and ensure that they are sustainable over time. 21
Observations, challenges and lessons learnt SRI Programme creates community based businesses which requires substantial financial and non-financial support. A shift of focus from infrastructure construction to include business and management support. Assessment of viability and due diligence must be done before committing any funds. The planning, implementation and monitoring delivery framework for the SRI infrastructure programme was not aligned to the construction industry hence poor project management and poor workmanship. 22
CORRECTIVE MEASURES IMPLEMENTED The impact of corrective measures not immediately felt or seen, although there are some quick wins. Strengthened the project management and internal controls Reviewed and aligned the SRI infrastructure framework to the construction industry and EPWP Infrastructure Guidelines. Developed application and business plan guidelines and checklist. Assessment of viability is done and due diligence conducted for new projects. Projects must prove that they will be commercially/ financially viable before funding is granted. Assisting projects with operations and sustainability plans, and linking them to the management companies. 23
CORRECTIVE MEASURES IMPLEMENTED Joint ventures between the owning agency and the private sector are being considered where capacity to manage does not exist. The NDT has committed to working closely with the provincial departments and local municipalities in ensuring the long-term sustainability of the projects Forensic audits investigations instituted where mismanagement of funds were alleged. Visited ceded projects in 2012. A plan of action is being determined for each project. Staff training and capacity building. 24
FUNDING PROCESSES Funds community based tourism infrastructure projects and skills development/training projects. The Department is responsible for identifying and sourcing appropriate EPWP tourism projects in consultation with the national, provincial and local tourism stakeholders. The Department is responsible for appointing service providers to implement the projects, for the management of contracts signed with the service providers and overall project management. Project proposals must be submitted via the provincial department which is responsible for tourism. Each province has a tourism provincial structure which discusses and prioritises proposals to be submitted to NDT for funding. 25
TYPES OF PROJECTS FUNDED Heritage tourism projects Recreational tourism Hospitality and accommodation facilities lodges, guest house, B&Bs, resorts etc. Niche tourism projects Tourism attractions Tourism training and capacity building projects targeting the unemployed youth Tourism routes Camp and caravan sites Picnic sites Hiking trails Visitor/Tourism Information Centres and interpretation Centres Nature based tourism 26
FUNDING CRITERIA Biased towards rural areas and poverty nodes with tourism potential. Projects that meet the EPWP and NDT requirements. Projects which targets rural areas. Projects must unlock the tourism and economic potential of an area. Project must improve the competitiveness of South African tourism industry. Projects must be supported by the relevant provincial tourism department and must be included in the IDP of the local municipality. The assets created must benefit the wider communities. The project must be financially viable and sustainable in the long term 27
Detailed Business Plan FUNDING REQUIREMENTS Feasibility study report covering market analysis, competitor analysis and competitive advantage, pricing, marketing, location Land ownership and availability Letter of support from the municipality and province, and inclusion of the project in the IDP Project Designs /drawings / building plans where feasible Detailed costing of a project and financial projections Owning agency: composition, governance, capacity, experience, skills, owning entity registration documents Management and operations arrangements Access to the project site Enabling infrastructure road, water, electricity, sanitation etc. 28
OBJECTIVE STAGE RESPONSIBILITY PHASE The SRI Project Development Process A Step by Step Guide There are five stages in the SRI project development process, which together take the project from testing and screening of the initial idea, right the way through to operationalization and evaluation. The five stages, and their outputs are outlined in the chart below. Project Feasibility & Business Plan Stage 1 Determine feasibility and financial viability, and develop a business plan Determine feasibility. Assess the following aspects: Approximate size of market Competitor analysis Marketing strategy Financial feasibility and costing Ownership institutional arrangements Management/operations arrangements Management structure Location and access Enabling infrastructure & services Land ownership Identify economic/ environmental/social impacts Identify partnership requirements for delivery Owning Entity Draft business plan & Submit for funding Develop business Case and Project Plan (Business plan) Identify funders and submit for funding Funding Approval Stage 2 Funding Approval Provincial Tourism Structures identifies and prioritises project proposals for submission to NDT (July-Oct) NDT receives the project proposals, screens and evaluates them. (Nov- Jan) NDT conducts due diligence and confirms information contained in the proposals and business plans (Feb-March) NDT approves or declines projects for funding (April-May) NDT/ Province Project Planning & Development Procure providers NDT appoints project implementing agents in line with the government procurement processes to plan and implement the approved projects (June-Aug) NDT Stage 3 Plan project Develop construction plan and tender documentation Develop marketing plans, promotion strategy Develop management Plan, Governance plan 0perations Plan & Financial Plan Gain relevant legal permissions i.e Approval of building plans, EIA and Record of Decision, Land zoning approval etc (Sept-March) Implement the Project Implement the business plan Commence build of physical infrastructure and support services Commence with the promotion and PR plans to ensure successful launch of product Management training Operational and Systems set up NDT/Province/ Local Municipality/ Owning Entity Project Operations Stage 4 Operate the Project Operationalise the plans Ensure marketing, promotion and PR plans are implemented and markets are penetrated Monitor marketing, and promotion and PR plans carefully Continue with staff development and training Customer services Maintenance and upgrading of facilities and buildings Owning Entity Evaluate Stage 5 Evaluate Evaluate product to establish: Economic, social and environmental impact of product Did product achieve its intended objectives Refine product if required based on lessons learnt
THANK YOU 30