Tourism minister Mmamoloko Kubayi-Ngubane is insisting that support for distressed firms and establishments in the sector will be guided by empowerment (B-BBEE) codes, a move that could disqualify many companies from accessing government funding to mitigate the effect of the coronavirus.

The coronavirus crisis has brought tourism activity to sudden stop across the globe as governments implement extreme measures to curb the spread of the disease. Like many of his counterparts around the world, President Cyril Ramaphosa announced a 21-day lockdown in March, which is due to end on April 16.

Estimates suggest that the extreme measures by governments to fight the pandemic could cost the global tourism industry 50-million jobs. There are about 320-million people employed in the sector.

Kubayi-Ngubane said on Tuesday as a first phase to support small and medium-sized players in the sector, a R200m Tourism Relief Fund, had been established to provide a one-off capped grant assistance to ensure sustainability of the sector during and after the tough government measures to curb the spread of Covid-19.

The fund targets tourism establishments such as resort properties; bed and breakfasts (B&Bs); guest houses; lodges and backpackers; restaurants (not attached to hotels); conference venues (not attached to hotels); car rental companies; tour operators and travel agents.

Capped at R50,000 per entity, the grant funding can be used to subsidise expenses towards fixed costs, operational costs, supplies and other pressure cost items. Kubayi-Ngubane said preference would be given to enterprises with the highest score in terms of the criteria, which serve as a pre-qualification. A panel of experts will conduct the final evaluation in terms of functionality.

“We will be guided by the tourism B-BBEE codes of good practices approved by the minister of [trade and industry] in 2015 ... the Tourism Relief Fund is administered in line with the objectives of economic transformation, and our vision to ensure sustainable and inclusive tourism development. The disbursement of funds will ensure equitable spatial distribution in terms of provinces,” Kubayi-Ngubane said.

She said disregarding BEE requirements would be tantamount to breaking the law.

Kubayi-Ngubane said the funding would not be adequate and the government was considering other support measures for the sector. She said if the virus were not contained by August, it would be very unlikely that there would be much tourism activity in the rest of 2020 and possibly the first half of 2021. The government would therefore focus on boosting domestic tourism and then engage external markets in the first quarter of 2021.

DA MP and trade and industry spokesperson Dean Macpherson said BEE requirements should be suspended during the crisis.

“The tourism minister is greatly mistaken as BEE should not be a requirement for funding in an instance like this, as it is not envisaged in the act, but rather about doing business with the state.

“This is a lifeline, not a business transaction. For her to state that she is ‘breaking the law’ is an assault on the minister of small business, who said that BEE and black ownership would not be required for funding: is she accusing her of breaking the law?” Macpherson asked, saying there were there are only two people who could bring an end to the fiasco, which is having real consequences for businesses.

“[Trade and Industry] minister [Ebrahim] Patel can do the right thing to suspend BEE, or if he is incapable of this, the President should instruct him to do so as the fact is, this economic fallout from Covid-19 will know no race, and to play race-based politics in a national crisis is quite frankly a national disgrace.”

But the tourism minister disagreed. “Why [is the DA] choosing to focus on one policy [BEE] and not tax compliance for example? I am implementing government policy ... [The DA] have never supported the transformational agenda in this country,” she said.

The department of trade and industry was yet to respond to request for comment at the time of publishing.

phakathib@businesslive.co.za