Tourism Dept preparing to defend ownership criteria for equity fund in court

The tourism equity fund has been in the works since 2016 and was formed to fastrack transformation in the sector which is dominated by white people by granting funding to businesses that have 51% black ownership and management.

FILE: Tourism Minister Mmamoloko Kubayi-Ngubane. Picture: @Tourism_gov_za/Twitter.

JOHANNESBURG - Tourism Minister Mamoloko Kubayi-Ngubane said that the department was preparing to defend the ownership criteria for the tourism equity fund in the High Court.

Last month, lobby groups Solidarity and AfriForum successfully applied for an interdict stopping the implementation of the fund until their main challenge was heard.

The tourism equity fund has been in the works since 2016 and was formed to fastrack transformation in the sector which is dominated by white people by granting funding to businesses that have 51% black ownership and management.

Minister Kubayi-Ngubane said that the government’s efforts to transform the tourism sector was being frustrated by the court challenge brought by AfriForum and Solidarity.

"The existence of family-owned businesses that may not always seek to do business with government's transformation efforts, as there is no incentive to transform in such instances. Many entrepreneurs point to a funding gap in demand for collateral whether they are dealing with commercial banks or development finance institutions alike."

However, Solidarity and AfriForum applied to the court to have the scheme reviewed, saying that it deviated from provisions in the BEE Act and the tourism code.

Kubayi-Ngubane said that Solidarity and AfriForum told her they would prefer that the funds for the equity scheme be redirected to help the industry recover from the COVID-19 impact.

She added that while they were not blind to the impact of the pandemic on the sector, inclusion and transformation was equally important.

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