Implementation of the Tourism Sector Codes

Posted by Gavin Borrageiro
Sunday, 26 July 2009  |  0 comments
Gavin Borrageiro is a consultant at Transcend Corporate Advisors.
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On Wednesday, 27 May 2009, the Minister of Tourism announced the official gazetting of the Tourism Sector Codes. The codes, effective from 22 May 2009, pave the way for the implementation of Broad-Based Black Economic Empowerment and transformation in the tourism industry. What does this legislation mean to you or your business? Well, in the event of your company having a turnover greater than R2.5mln, you need to comply and complete a self-assessment (scorecard) and submit the document to the Tourism Empowerment Council of South Africa (TECSA).

Taking into consideration that the sector code encompasses many different aspects of the value chain within the tourism industry, we decided to probe the cost of compliance. The primary objective of the code for the next 5-years is Human-capital with the creation of a skilled workforce and business development in the sector. However, reporting to TECSA and compliance with the code is based exclusively on the ‘Memorandum of Understanding” (MOU) signed between certain market associations.

Furthermore, the code is binding on the public sector, but not the private sector. However, in the event of an organisation being affiliated to one of MOU signatories or interacts directly with government, then compliance is required. As a result, organisations that fall outside the above categories will not incur any penalties or sanctions for non-compliance.

However, companies with a turnover greater than R5mln that conduct business in the private sector will remain under pressure from their corporate clients to produce a scorecard based on the DTI codes of good practice. In addition to the “should I or not?” debate, there are two obstacles for a successful implementation of the sector code. The first is none of accredited rating agencies are certified by the Department of Trade and Industry (DTI) and South African National Accreditation System (SANAS) to issue Tourism Sector Scorecards.

The second problem is the gazette stating all BEE certificates will become invalid in August 2009, if issued pre-April 2008 by non-accredited agencies, or agencies not in possession of a pre-assessment letter. The latter means unverified companies would seek to conclude their scorecards, based on the generic code, by the end of July 2009. This scorecard is valid for a period of 12-months and therefore the Tourism sector will be hesitant to incur an additional cost for a sector-specific verification and scorecard before March 2010.

Finally, the answer on compliance to the sector code remains organisation-specific and depends on its interaction with government, parastatals, corporate citizenship and willingness to contribute to the transformation of the tourism industry.

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