PALLO JORDAN'S OPENING REMARKS ON BUDGET DEBATE ON TOURISM

Tourism probably has the best potential of all economic sectors in the country to contribute to sustainable economic growth. The reasons for this are:

1. The tourism sector has a real comparative advantage because tourism capitalises on the natural and cultural diversity of the country and offers a product that is in high demand in industrialised countries, namely natural beauty, adventure, cultural diversity and ultimate escape from the pressures of urban existence.. World-wide, people spend more than R500 billion per annum on such services. There is an acknowledged trend in world tourism towards experience and exploration and South Africa is well endowed to capitalise on this.

2.Tourism has demonstrated consistent growth. The proof of tourism's comparative advantage lies in its consistent growth during the past 4 to 5 years. After the democratic elections, new benchmarks were set and during 1995, a growth of 22% in foreign tourism was experienced, with a 52% growth from lucrative overseas markets, and a 12% growth from the continent. No other sector of the economy has been able to grow at these rates.

The past year, since my appointment of Minister of Environmental Affairs and Tourism, has been a very eventful one from a tourism perspective. When I took over as Minister in July last year, I was faced with the challenges of implementing the policy directives contained in a brand new White Paper on Tourism adopted by Parliament during June. I am glad to report that very substantial progress has been made in piloting a situation where tourism is set to become a major economic force that tangibly benefits the people of South Africa. Before I came to specifics in this regard I wish to touch on the performance and state of the Tourism sector.

Travel and tourism has no doubt been one of the most consistent and highest growth sectors in the economy. The sector strongly compliments the GEAR strategy and can be a major GEAR stimulus. This statement is based on the comparative advantage offered by our natural and cultural resource base, the fact that our tourism attractions compliment world trends, the ability of the sector to attract substantial private sector investment, its ability to stimulate SMME development, the labour intensive nature of the sector, its potential to act as a catalyst for major infrastructure investment and its value as a non-primary export earner.

The tourism sector has been in an expansion phase for the past 9 years and has grown beyond expectations since the democratic general elections. The average annual growth rate in international arrivals during the past 3 years (i.e. Since the 1994 elections) was 16% (from 3,7million to 4,9 million), representing an average annual increase of 11% in arrivals from the African continent (from 2,9 million to 3,6 million) and a stunning 29% per annum from our lucrative overseas markets (from 704 000 to 1,17 million). This is not a "flash in the pan" - if we take it further back, comparative growth rates for the period 1992 - 1996(i.e. 5 years) remains at 16% per annum, with overseas arrivals growing at 20% per annum and those from Africa at 14%. These trends clearly demonstrate that tourism is a sustainable, high growth sector and that arrivals from our lucrative overseas markets are growing steadily.

Conservatively calculated, the figures imply that, during the past 5 years, tourism has earned an additional R5, 5 billion in foreign exchange, created approximately 200 000 new jobs and raised its contribution to the GDP from 3% to an estimated 4,5%.

In addition an estimated 17 million domestic tourism trips were undertaken by South Africans during 1996, increasing at a rate of approximately 2,5% per annum. This translates into tourist expenditure of approximately R26, 8 billion, of which domestic and international tourists contributed approximately R14, 8 billion, and R12, 5 billion respectively. Based on international norms these figures imply that it provides between 500 000 and 600 000 direct and indirect jobs. The Australians have just completed a study conclusively demonstrating that tourism generates 1 out of every 9 jobs in that country and contributes more than 10% to the GDP.

The good performance of the sector could be attributed to the diversity of attractions and unique selling features; well-developed core tourism infrastructure that has been able to absorb and accommodate high growth; largely deregulated commercial enterprise, competitive airspace policy; and relatively good value for money owing to the devaluation of the rand.

We are in urgent need of a clear product branding and fresh marketing strategy; improved international promotion coverage and funding to achieve this; diversification of our product base to reflect the totality of South Africa and spread ownership to all our people; improved access tourism activity in areas that were disadvantaged due to past policies; improved institutional capacity and co-ordination at all tiers; improved service ethic and culture; provision of skilled manpower; and lastly, improved perception of safety.

To constructively address these challenges, the department is currently finalising an action programme for tourism development, for the period 1997 - 2000. The programme is the product of wide consultation with our colleagues in other ministries, provincial partners, the business sector and various other interest groups. Its underlying premise is that tourism should be government led, private sector driven and community-based.

Our vision as contained in the programme is that a globally competitive South African tourism industry will become a lead sector within the national economic strategy, and a major force in the growth and reconstruction efforts of the government. To achieve this vision, the following growth targets were set for the next 3 years:

The overall goal is to increase the contribution of the tourism sector from 4,5% to 8% of the GDP by 2000 and the following specific growth targets pertain:

The following strategies will underpin the achievement of the targets set:

Many of the programmes contained in the strategy have already commenced. I would like to conclude by highlighting some key current initiatives:

The opportunities are endless, given the potential of the industry. But we cannot proceed without adequate resources. As you may be aware, the tourism budget is totally inadequate. To effectively compete in the global marketplace with countries such as Australia (one of our key competitors), that has a national tourism budget of slightly more than ten times the R63 million we spend on tourism promotion, is impossible. Given our additional needs of stimulating local tourism development, we require a substantial improvement in tourism resources.

My Ministry remains optimistic that South Africa's tourism promotion will receive the funding it requires and we look to parliament to address this issue so that it can be speedily resolved.

Z. Pallo Jordan Minister

MINISTRY for ENVIRONMENTAL AFFAIRS and TOURISM