The Importance of Local Government in Tourism Development

1. The Importance of Local Government in Tourism Development Prepared for: The Tourism Summit 17 September 2013 Mr V. Madonsela

2. Presentation Outline • The Interface between Local Government and the Tourism Sector • The Importance of the Tourism Sector to Local Government • The Importance of Local Government to the Tourism Sector • Challenges at the Local Sphere of Government: • Local Economic Development • Planning • Responding to the Challenges • Conclusion: Possible Collaboration Areas

3. The Interface Between Local Government and the Tourism Sector: The Constitution • As set out in Chapter 7, Section 152 of the Constitution, one of the objectives of Local Government is to promote social and economic development. • Section 153 goes on to describe the developmental duties of municipalities, stating that a municipality must structure and manage its administration, budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community. • Section 153 further states that a municipality must participate in national and provincial development programmes. • Local Tourism is also singled out in Schedule 4 (B)is one of the competency areas of local government; and also a concurrent responsibility between National and Provincial government (Schedule 4 (a)). • The Tourism Sector is a national priority sector with enormous potential to promote economic development , thus requiring of municipalities to promote it and support it.

4. The Interface Between Local Government and the Tourism Sector: The White Paper on Local Government (WPLG) … 1/2 • In describing the characteristics of a developmental local government, the WPLG (1998) states that the powers and functions of local government should be exercised in a way that has a maximum impact on the social development of communities – in particular, meeting the basic needs of the poor, and on the growth of the local economy • Addressing the functional area of Local Economic Development (LED), the WPLG acknowledges that local government can play an important role in promoting job creation and boosting the local economy by investing in what it terms “the basics” (i.e. providing good quality cost-effective services); reviewing existing policies and procedures to promote local economic development; and the provision of special economic services.

5. The Interface Between Local Government and the Tourism Sector: The White Paper on Local Government … 2/2 • Within the context of the conference discussions, some of the examples provided in the WPLG are quite instructive in terms of identifying the possible programmes that local government should lead, e.g.: • simplification of municipal procedures, • promoting labour intensive programmes, • marketing and investment support, • small business support services, • targeted assistance to a particular sector in the economy which has the potential to expand and create jobs, • training and placement services (skills development). • The White Paper on the Development and Promotion of Tourism (1996) states that Tourism is driven by the private sector and is firmly based in local communities. It states that LG influences tourism products in how they manage their socio-economic environment and how they provide services to their communities (Source National Tourism Sector Strategy)

6. The Interface Between Local Government and the Tourism Sector: Other Enabling Legislation/ Policies • Tourism Act (1993) • Municipal Systems Act (2000) • White Paper on the Development and Promotion of Tourism • Municipal Structures Act: Sect 48

7. The Importance of the Tourism Sector to Local Government …1/2 • As a priority Jobs Driver within the New Growth Path, the contribution of the Tourism Sector to the SA economy has been very positive, between 2011-2012, the following statics are worth noting (or repeating): • Tourist arrivals were above the global growth of 4%, recorded at 10.2% • Total spend increased by 5.9% • Direct contribution to GDP in 2011 estimated at 3% (Stats SA) • Contribution to employment estimated at 4.5% The job creation contribution of the Tourism Sector and the expenditure all take place within a local space, thus contributing to local economic development, job creation, and the overall economic viability of municipalities. A growing tourism sector means a growing local economy as a number of other sub-sectors are affected (e.g. transport; catering; accommodation; banking etc.)

8. The Importance of the Tourism Sector to Local Government … 2/2 • Tourism is also one of the few sectors, apart from Agriculture and Agro-processing that have the potential to make an impact on developing rural economies (e.g.: through eco-tourism and culture based industries). The National Development Plan also makes reference to the rural development contribution of the Tourism Sector. • The Sector is recognised for its labour absorption potential, and the low skills base requirements – therefore, employment creation. Examples are: eco-tourism related projects where communities may become tourist guides and may be involved in infrastructure related projects. • The Tourism Sector value chains and trickle down effect on the local economy is quite extensive as the sector affects many other sectors and activities within a local economy.

9. The Importance of Local Government in the Development of the Tourism Sector … 1/2 • Local government has a direct impact on the total tourism experience of tourists, and the competitive position and attractiveness of any tourism destination is influenced by the diversity, quality and overall blend of its services and resources (Rogerson, 2013). Examples: • Provision of basic services (e.g. water, sanitation and electricity) • Provision and maintenance of public infrastructure (e.g. roads, energy, signage, public transport, parking) • Provision and maintenance of tourist attractions and other public amenities such as museums, art galleries, parks, maintenance of visitor information services, etc. • Promotion of the physical attractiveness and aesthetics of the locality (beautification of the area) • The regulatory environment: by laws; data-base of tourism offerings; land-use planning and zoning

10. The Importance of Local Government in the Development of the Tourism Sector … 2/2 • The Department of Tourism also states that LG can support the development of the Tourism Sector through: • Supporting sustainable Tourism Development through LED and Integrated Development Plans; • Appropriate infrastructure; • Public education, awareness, and general training; • Acting as catalysts for new business development and supporting existing enterprises (e.g. access to information); • Promoting partnerships between the public and private sector; • Maintenance of the natural environment; • Political will to support the sector. Adapted from the South African Tourism Planning Toolkit for Local Government

11. Challenges in the Local Government Sector in Supporting the Tourism Sector Extract from The National Tourism Sector Strategy: “Despite tourism’s significance, though, local governments have few dedicated or part-time tourism personnel; experience and knowledge of tourism are extremely limited, and, with rare exceptions, no budget is allocated to tourism planning and development activities. The entrenched belief that the Department and Cooperative Governance and Traditional Affairs (COGTA) inherited from the former national department responsible for local government responsible for local government is that there is no need to plan or budget for tourism support. Therefore, capacity building for tourism is critical to improve the overall planning for, and management of South Africa’s tourism Industry” (pg 29) From this extract, three issues stand out: • capacity dedicated to the Tourism function is a challenge, as is Tourism planning; • leadership is needed from the national department that coordinates municipalities, namely, DCoG; • capacity building for Tourism will improve the planning deficiencies.

12. Unpacking the Planning Challenge Further • The lack of focus on credible planning for the tourism sector, and thus resource allocation is a symptom of a number of challenges inside and outside the municipality: • The main challenge currently faced by municipalities is sectoral planning in the development planning processes as many municipalities struggle to develop sector plans (such as Tourism Plans). • Development of Local Tourism Plans and Strategies is usually an outsourced function with limited quality assurance, leading to limited ownership and understanding; • Limited availability of local data, credible economic analysis of the local environment and evidence based strategic planning for the tourism sector; • Ineffective platforms dedicated to integrated planning at national and provincial level, resulting in ‘ the parachuting of initiatives to municipalities ’ and lack of buy-in and support; • The responsibilities of a typical municipal official responsible for tourism cut across many sectors of government: SMMEs; Cooperatives; LED projects; Sector related work (e.g. tourism; agriculture; local industry). This wide span of focus results in de-prioritisation of some areas (e.g.: tourism) • Potential misalignment between Provincial Departments (of economic development) and municipalities: • At the provincial level: the Tourism function is typically separated from the LED function, therefore a misalignment of LED planning and Tourism planning

13. The Planning Challenge in Tourism The National Tourism Sector Strategy correctly points out that the fundamental issues impacting on tourism development at the local sphere of government start with the planning function. The National Department of Tourism has also made the following observations about Tourism Planning at LG • Identified Challenges • Tourism is lagging behind in local government (LG) • Tourism Plans fall outside IDPs, and therefore are not funded • Lack of technical expertise for tourism at LG level • Misalignment of tourism plans across the spheres of government (manifested at the LG level) • Impact/Manifestation • Deterioration in quality of facilities and services • Lack of awareness • Opportunities for new product development not maximized • Regulatory environment unresponsive • Lack of support from local authorities

14. Unpacking the Leadership and Capacity Issues Further • In describing government’s vision for Local Economies, the 2006 National Framework for Local Economic Development (developed by the then DPLG, and currently under review and being updated) states the vision as : • “Robust and inclusive local economies exploiting local opportunities, real potential and competitive advantages, addressing local needs and contributing to national development objectives.” • It further states that among other things, the local economies described above Capture social, cultural, recreational, sports and tourism experiences (pg. 17). • The 2006 LED Framework further elaborates that LED actions can take place at a municipal wide level and require the setting of comprehensive and realistic goals and joint action within municipalities and with the different spheres of government, the private and the community sectors and all local role-players. • It further makes the point that economic growth development and poverty relief goals can be achieved through a range of complementary developmental projects including….tourism, which capitalise on local opportunities and which address specific needs (pg. 54) In essence, the policy intent within DPLG, and therefore DCoG in as far as the importance of the Sector was clear, and remains clear. There are challenges however in terms of aligning efforts at the national level.

15. Unpacking the Leadership and Capacity Issues Further • The Tourism function in a municipality resides within the Local Economic Development Unit • Generally, the LED functions and units of municipalities are one of the most challenged units in terms of functionality • Some of the challenges relate to the following: • Conceptually, there is inconsistent understanding of what LED is and hence what an LED unit ought to focus on, hence the State of LG Report made the observation that “LED has been found to be erratic in municipalities” • Because LED (and thus Tourism) is a concurrent function across the spheres of government, there are challenges with alignment in terms of policy, planning and implementation • LED is traditionally referred to as an unfunded mandate by municipalities. Hence the funding for most LED units (and hence Tourism Projects) is minimal. • LED human resources capacity in most municipalities is very minimal to make impact: a symptom of municipalities not understanding what to do with the LED function • In some municipalities, there is no Tourism Manager/Officer: all LED related functions, be they agriculture, enterprise development or tourism development, depend on one single individual • Linked to capacity issues, most municipal officials cannot access external sources of funding due to lack of capacity to develop bankable proposal and business plans

16. Responding to the challenges

17. Improving Planning Outcomes … 1/2 • Tourism does not exist in isolation of other activities in the economy, thus, a holistic planning approach which recognises the linkages between tourism and other economic activities , seeks synergies and complementarities is necessary (Rogerson 2013) • Chapter 5 of the Municipal Systems Act (Act 32 of 2000) provides an overarching framework for integrated development planning in municipalities • The Systems Act also requires the Minister for Cooperative Governance to develop regulations and guidelines on, among other things, the alignment of Integrated Development Plans with national and provincial priorities and programmes as well as other municipalities. • The IDP represents a single, inclusive and strategic plan of a municipality that integrates planning and aligns the resources and capacity of a municipality • In the main the IDP integrates all sectoral plans in order to facilitate the achievement of integrated development in communities • Within this area the Department provides direct support to targeted municipalities; develops guidelines and frameworks; and provides support on spatial planning related issues

18. Improving Planning Outcomes … 2/2 • DCoG has established a National IDP Support Team whose function is to support development planning processes in municipalities. This includes assisting municipalities to develop sectors plans (e.g. Tourism). • The benefits of improved integrated planning for tourism imply that other sectors such as Infrastructure, Community Serves and Safety, etc, can develop support plans to promote the sector. Additionally, provincial and national government gain confidence in allocating own resources. • DCoG has developed a Revised IDP Framework for municipalities outside metros and secondary cities which amongst other things provide guidelines on how to integrate sector plans in the IDP. • This framework is currently being rolled out in identified municipalities. • DCoG is also assisting municipalities with spatial planning [capacity building on GIS]. • Currently, the National Department of Tourism participates in the Department’s IDP Support Team

19. Improving Local Economic Development Outcomes … 1/3 • As an economic sector, Tourism has direct linkages with DCoG’s work through the Local Economic Development (LED) function of the Department. Therefore, in the area of LED, the mandate of DCoG relates to the development and implementation of policy, legislation and strategies: specifically the National Framework for Local Economic Development; • Within the LED Framework, the Department must provide guidance to all the three spheres of government on integrated planning, implementation and monitoring for key economic sectors • Monitoring of compliance with legislation and policies; • Provision of support to provinces and municipalities and monitoring of performance of local government; and • Coordination and facilitation of economic development programmes that have an impact in the local sphere of government. • Guided by Outcome 9, DCoG must also support a responsive, accountable, effective and efficient local government system for the development of all economic sectors • Currently, DCoG does not have collaborative programmes with NDT with respect to Tourism-LED linkages.

20. Improving Local Economic Development Outcomes:Programmes • Currently updating the 2006 Framework for Local Economic Development: The National Department of Tourism has an opportunity to influence the LED Framework to improve Tourism outcomes at the local level • Red Tape Reduction Programme in collaboration with the Department of Trade and Industry • Private sector collaboration programmes • Business Development Forums • Business Adopt A Municipality • Direct support to municipalities with the development of their LED Strategies and Plans with the aim of improving the competitiveness of localities • Coordination of all Local Government Capacity Development Programmes

21. Possible Collaboration Areas with the National Department of Tourism • Joint planning in national strategy and policy development • Piloting and implementing the Beyond the strategies: municipalities need to be guided in terms of minimum requirements to properly discharge the tourism support function. • What are the guidelines? What opportunities for funding exist? • Capacity building is essential, and the two Departments can work together in this area to maximize the impact of the NDT’s current capacity building initiatives, and to avoid duplication. • DCoG can rally the support of provincial DCoGs – who have provincial structures targeting LED officials: NDT can use such platforms to communicate its own plans. • The role of traditional leadership in rural tourism: DCoG can facilitate linkages with the Department of Traditional Affairs. • Consideration of funding support for municipalities specifically • Joint implementation of the South African Tourism Planning Toolkit for Local Government

22. Thank You!Contact Details for the LED Unit:Phumla Ndaba012 334 4983Phumlan@cogta.gov.za