The contentious Tourism Equity Fund (TEF) was in the spotlight again this week when Minister of Tourism, Mmamoloko Kubayi-Ngubane, announced that her department was set to defend the court case brought against the implementation of the Tourism Equity Fund (TEF) by lobby group Afriforum and trade union Solidarity.
Many readers argue that recovery and growth of the sector should be prioritised ahead of government’s drive for transformation of the sector, but director of Seeza Tourism Growth Network, Septi Bukula, believes this is a narrow viewpoint.
He commented: “Perhaps one of the critical weaknesses in the reasoning of those who advance the growth first, transformation later argument is that they look at transformation via a narrow lens.
They seem to believe that de-emphasising transformation hurts only black tourism entrepreneurs. Not so, I argue. This latest challenge is setting back both black and white entrepreneurs.
There are several white entrepreneurs who, right now, are actively looking for avenues to exit their investments by selling. I know this because I'm working with some of them. Some just want to retire, others are selling due to ill-health, and some are pushed by the impact of Covid-19.
On the other hand, there are eager black entrepreneurs who are actively looking to buy in order to enter the industry or grow/diversify their existing operations. When these willing seller/willing buyer transactions are enabled through financing, transformation takes place naturally, even if it isn't the primary motivation behind the transaction.
So, the current legal challenge to the TEF frustrates both those seeking to exit, mainly white, and those seeking entry or growth through acquisition, mainly black. Both sides are suffering the brunt of this legal challenge.
Perhaps this is a good thing for would-be buyers, so they don't rush to invest in sour lemons. The current legal standoff will accelerate the shakeout of marginal businesses, thereby protecting eager prospective buyers from making bad acquisition decisions. There will still be opportunities after Covid-19, so entrepreneurs eager to buy should wait just a little longer. As the saying goes, every cloud has a silver lining.”
He added, in a separate comment:
“I see the ownership element of BEE as just one element of broader transformation, so we can't hold all transformation hostage simply because we don't like certain aspects of BEE.
And, yes, I agree fully that whatever can be done to continue supporting struggling businesses, particularly SMEs - across the board - should absolutely be done. We don't have the luxury of not acting.”