TOURISM B-BBEE OWNERSHIP TARGET PEGGED AT 30%

TOURISM B-BBEE OWNERSHIP TARGET PEGGED AT 30%

• 15 September 2023
• Tourism
• SA Legal Academy

The tourism sector’s broad-based black economic empowerment (B-BBEE) ownership target has been pegged at 30%. This was confirmed in a media statement on Cabinet’s 13 September 2023 meeting and is in line with a February 2023 Constitutional Court ruling apparently prompting the announcement – albeit rather belatedly.

Perhaps its intention was to end any remaining uncertainty regarding the legality of a 51% black ownership requirement imposed in January 2021 as one of the criteria to be met by small and medium tourism-related enterprises applying to the Tourism Equity Fund for relief during the Covid-19 pandemic.

According to a Department of Tourism media statement at the time, the R1.2bn fund was created ‘partly’ with the aim of meeting sector transformation commitments made before the pandemic. On that basis, assistance was offered to qualifying enterprises in the form of ‘a combination of grant funding, concessionary loans and debt finance to support equity acquisitions and new and expansion developments in the tourism sector’.

The target market was ‘majority black-owned and black management-controlled tourism enterprises (minimum 51%) in accommodation; hospitality and related services; and travel and related services, products and initiatives’.

Solidarity and AfriForum separately challenged the 51% black ownership requirement in the Gauteng High Court (Pretoria), lost – and took the matter to the Supreme Court of Appeal, which found that B-BBEE status levels should not have been included in eligibility criteria for grants intended to provide relief to tourism enterprises affected by the economic impact of Covid-19.

Somewhat confusingly, however, the Cabinet statement refers to ‘support’ for the Tourism Equity Fund and its ‘implementation’, tending to suggest that assistance for eligible enterprises is still available. Yet a summary of the Constitutional Court ruling noted, among other things, that ‘all the money in the Tourism Relief Fund had been paid out and nobody sought to have that money paid back to the fund’.

Begging the question: If the fund was established to disburse Covid-19-related economic relief and to support transformation, what is its purpose now – assuming it still exists for ‘implementation’ as the Cabinet statement seems to imply?

Having declared the matter moot based on the exhaustion of all R1.2bn in the relief fund (nevertheless initially established as an equity fund), according to a summary of the Constitutional Court ruling the case has significant implications for any challenges brought before a High Court regarding the powers of the Tourism Minister to impose B-BBEE selection criteria with black ownership targets exceeding 30%.

Clarity is needed from the Department of Tourism on any relief, support or other plans it has for struggling enterprises in the sector.

Cabinet media statement (item B2)

May 2021 Tourism Department media statement

February 2023 Constitutional Court ruling

Published by SA Legal Academy Policy Watch

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