Tourism is regarded as a modern-day engine of economic growth and is one of the largest industries globally, with many countries around the world focusing on tourism as a driver for their economies.
Tourism is also an important sector in South Africa, directly and indirectly contributing approximately 7% to the GDP and employment. The South African tourism supports one in every 12 jobs and the industry’s contribution to gross domestic product grew to 7.9% four years ago during the FIFA Soccer World Cup.
However many small businesses continue to struggle to enter and survive in this capital intensive industry. To encourage more entrepreneurs to take advantage of the opportunities that the sector provides, government offers incentive grants through its Tourism Support Programme to qualifying companies.
The TSP is administered by the National Department of Tourism (NDT) after it was moved from the administration of the Department of Trade and Industry in October 2012.
The NDT reopened for submissions in this year, and the programme has been made more responsive to the current and future development needs of the tourism sector.
We take an in-depth look at what this support programme has to offer SMEs.
What is the Tourism Support Programme?
The Tourism Support Programme (TSP) is a targeted incentive scheme to support the development of tourism enterprises that stimulate job creation, and encourage a geographic spread of tourism investment, and black economic empowerment..
The incentive comes in the form of a reimbursable cash grant.
Grant amounts start upwards of 30% towards investment costs for establishing and expanding existing operations in the country, such as accommodation services, passenger transport services, tour operators, cultural services, and recreational and entertainment services.
What are the requirements?
Applicants to the TSP must meet standard requirements to qualify for benefits.
Applicants must be a registered legal entity in terms of the Acts guiding either a Company, Close Corporation, Co-operative, or a Trust.
The projects in which the applicant is involved must be classified under tourism activities as defined in the tourism guidelines and the project must create a minimum number of full-time employment opportunities, depending on the size of the investment.
Qualifying businesses should be level four, or higher, BB-BEE contributors. The programme targets small investment projects valued at R5 million and below, projects above this investment amount (classified as medium-to-large projects) also qualify.
What are the benefits?
The cost of the qualifying investment in furniture and equipment; land and buildings; and vehicles is capped at R200 million.
The investment grant applicable is capped at a maximum of R30m, calculated in relation to the qualifying investment costs as:
- Investment projects of R5 million and below may qualify for investment grants equal to 30% of their qualifying investment costs, payable over a three year period.
- Investment projects of above R5m may qualify for an investment grant of between 15% and 30% of their qualifying investment costs, calculated on a regressive scale (and payable over a two year period).
TSP is available to local- and foreign-owned enterprises and is provided for qualifying investment costs of furniture, equipment, vehicles, land and buildings.
Projects located within the metropolitan areas of Johannesburg, Cape Town and Durban are excluded from the programme.
It is, however, recognised that not all areas within the municipal boundaries of these three metros are equally developed, therefore projects located in marginalised areas within the metros are considered under the programme. Marginalised areas are considered to be those areas with higher than the national average unemployment rates.
Contact details:National Department of Tourism (NDT):
Mr. Trevor Bloem – NDT spokesperson
Chief Director: Communications
Telephone: +27 (0) 12 444 6607