Executive Mayor of Cape Town, Dan Plato, has declared an intergovernmental dispute with the Minister of Tourism, Mmamoloko Kubayi-Ngubane, on the application of racial criteria for tourism businesses applying for funding relief.
Plato said this followed numerous attempts by the City of Cape Town to engage Kubayi-Ngubane, on this matter.
He said COVID-19 had brought the tourism sector to a complete halt after the borders were understandably closed to tourists in a bid to contain the spread of the virus but that these measures were wreaking havoc on economies across the world.
In acknowledgement of the severity of the impact of these measures, numerous relief funds were announced by the national government, including the R200 million (€10.40m) made available by the Department of Tourism to assist small, micro and medium-sized enterprises (SMMEs) in the tourism and hospitality sector.
The Tourism Relief Fund provides a once-off capped R50 000 (€2 600) grant assistance to SMMEs in the sector to help keep them going through the lockdown and after.
The City of Cape Town – like numerous other organisations – is opposed to the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice being applied as one of the criteria for SMME businesses to qualify for assistance.
“Effectively this means that many SMMEs in the tourism sector will not qualify for the funding that they need to keep their businesses going. We are in a crisis and now is not the time to apply ineffective transformation goals to emergency relief funding that is needed by all business owners and the many staff they employ,” said Plato.
He pointed out that the Cape Town economy relied heavily on the tourism sector. “According to the latest available statistics by Statistics South Africa, the tourism value added to our local economy in 2018 was roughly R18.1 billion (€941.47m). In the same year according to the same source, the tourism sector directly supported just over 113 000 jobs,” said Plato.
In a statement, the Executive Mayor outlined the numerous steps – taken since March this year – to engage with Kubayi-Ngubane.
“No response has been received, despite follow-up requests from the Mayor’s office. As a result, the City is now compelled to initiate an intergovernmental dispute in line with the Intergovernmental Relations Framework,” Plato said.
The International Institute for Race Relations, the Democratic Alliance and several other civil rights organisations have challenged the application of B-BBEE criteria to several relief funds during this time of crisis.
Trade union, Solidarity, and civil rights organisation, AfriForum, took their case of unfair discrimination to the Labour Court but their case was overturned in favour of the Minister applying the B-BBEE criteria.
The two organisations then filed an urgent appeal application which the Constitutional Court had dismissed, noting that it was “not in the interest of justice to hear the application urgently”.