Page 37 - TKZN Annual Report 2023/2024

Poor quality, poor management and the lack of maintenance of cultural and heritage attractions often detracts from visitors’ experiences and damage the image of the KZN destination. There is a need to develop products and experiences that would improve and expand the current offerings, utilise new high-potential tourism areas, and meet domestic and foreign market needs.
In general, funding for preparation of tourism projects falls short in both the public and private sector and, in most cases, funding institutions do not have funding available to prepare projects up to investment stage. Project preparation support remains a challenge for SMME projects in particular, more so now that the entity has taken a position not to offer such support anymore. The Board resolution was informed by the fact that there has been limited uptake from potential funders leading to unfunded project proposals and business plans. Furthermore, as part of the investment promotion efforts by the entity, the SMME projects that were prepared for investment continue to be presented to the participating DFIs and other investment platforms for capital raising projects. Many black communities and individuals with an interest in developing tourism products in the province, providing either accommodation or tourism attractions, are hindered by a lack of funding for project preparatory support.
The commercial banks regard the tourism sector as risky and unattractive, and there are relatively small scale of business loans in this sector. The tourism sector also has no access to venture capital with an appetite for risk that could be utilised to fund projects that are unattractive to banks. Incentives that have been put in place to encourage tourism investment are difficult to access, and have very complex application procedures. Certain required procedures, such as environmental impact assessments and rezoning, are often cumbersome and filled with red tape, which further limits tourism investments.
Although tourism investment opportunities are being promoted by the provincial investment promotion agency, tourism investment promotion at a provincial level is insufficient to drive the tourism development agenda. Government intervention to fund project preparation support should be provided to disadvantaged communities and individuals, in order to unlock potential investments and funding opportunities. The drive for tourism investment promotions should be increased in order to attract both foreign and domestic investments for high-potential tourism projects.
KwaZulu-Natal Tourism Sector Transformation
Transformation is a critical success factor, without which the growth and development of the industry is not guaranteed. However, the rate of transformation in the tourism sector has been very slow, with few black entrants in the market, and large and small businesses are still largely dominated by white people. Significant effort is required not only to transform existing businesses in the tourism sector, but also to grow the sector as a whole to allow for more mainstream black-owned tourism businesses of all sizes to be established.
Constraints in transforming the tourism sector are attributed to multiple factors, including, but not limited to:
• Challenging economic circumstances are leading to high levels of competition and challenges in maximising efficiencies in different subsectors;
• Limited access to funding and financing adversely affecting the operations of tourism enterprises;
• Lack of best practice business management skills are limiting the potential of tourism enterprises to function effectively; and
• Lack of access to tourism markets results in the collapse of tourism enterprises.
New entrants (black tourism enterprises) in the market lack best practice business management skills, which in turn affects the longevity of their businesses. New business owners are sometimes unaware of the opportunities that are present in their environment. The cost and difficulty of accessing and engaging international travel buyers serves as a major barrier to unlocking the growth potential of small tourism product owners and inbound operators. Interventions are required to reduce the cost burden for small tourism enterprises to participate in selected international trade platforms, thereby improving their access to buyers in new and growth markets to unlock demand growth and allow market penetration.
However, opportunities do exist, through Public Private Partnership (PPP) approach large tourism enterprises could participate through enterprise and skills mentorship programmes, alongside financial assistance, and programme facilitation from government. There is also an opportunity for collaborative supplier development programmes to be implemented, thus promoting a sharing economy within multiple business networks and destinations. A variety of market access platforms, both domestic and international, present opportunities for small tourism enterprises to engage with travel buyers.
TOURISM KWAZULU-NATAL ANNUAL REPORT 2023/2024 35