Research On The Performance of The Services Sector (ICT and Tourism)

March, 2012
Small Enterprise Development

Agency

Research on the
Performance of
the Services
Sector

1

Contents
EXECUTIVE SUMMARY ........................................................................................................................................................................... 9
TOURISM SECTOR .......................................................................................................................................................................................... 38
OVERVIEW OF THE TOURISM SECTOR ........................................................................................................................................................ 38
Defining Tourism .............................................................................................................................................................................. 38
TOURISM TRENDS .......................................................................................................................................................................................... 41
4.3. INTERNATIONAL TRENDS .................................................................................................................................................................... 41
MAIN GROWTH AREAS ................................................................................................................................................................................. 43
KEY PROBLEM AREAS ................................................................................................................................................................................... 43
FOREIGN TOURISM SECTOR IN SOUTH AFRICA ........................................................................................................................................ 44
SOURCE OF MARKETS ................................................................................................................................................................................... 44
INTERNATIONAL ARRIVALS ........................................................................................................................................................................... 48
DOMESTIC TOURISM...................................................................................................................................................................................... 50
DOMESTIC TOURISM TRENDS ...................................................................................................................................................................... 50
4.10.1. KwaZulu-Natal .................................................................................................................................................................. 51
4.10.2. Gauteng ................................................................................................................................................................................ 51
4.10.3. Eastern Cape ..................................................................................................................................................................... 51
4.10.4. Western Cape .................................................................................................................................................................... 52
4.10.5. Limpopo................................................................................................................................................................................ 52
4.10.6. North West ......................................................................................................................................................................... 52
4.10.7. Mpumalanga ....................................................................................................................................................................... 53
4.10.8. Free State ........................................................................................................................................................................... 53
4.10.9. Northern Cape .................................................................................................................................................................. 53
THE POLICY AND STRATEGY FRAMEWORK FOR DEVELOPING SMALL AND MEDIUM ENTERPRISES IN THE TOURISM SECTOR .... 54
NATIONAL SUPPORT PROGRAMMES, POLICIES AND STRATEGIES TO SUPPORT SMES IN THE TOURISM SECTOR ......................... 54
4.11.1. The Marketing Tourism Growth Strategy for South Africa 2011 2013 ......................................... 54
4.11.2. The Tourism Act .............................................................................................................................................................. 55
4.11.3. Accelerated and Shared Growth Initiative for South Africa (AsgiSA) .............................................. 55
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4.11.4. Industrial Policy Action Plan 2010/11-2012/13 (IPAP) .............................................................................. 56
4.11.5. National tourism Department Medium Term Strategic Plan 2010/11-2014/15.......................... 57
4.12. NATIONAL SUPPORT/DEVELOPMENT PROGRAMMES .................................................................................................................. 59
4.12.1. Tourism Support Programme (TSP) ...................................................................................................................... 59
4.12.2. Tourism Learnership Project (TLP) ...................................................................................................................... 59
4.12.3. Poverty Relief Programme ........................................................................................................................................ 59
4.12.4. Development Bank of South Africa ...................................................................................................................... 60
4.12.5. Industrial Development Corporation Tourism Business Unit ................................................................. 60
4.13. PROVINCIAL POLICY OVERVIEW ..................................................................................................................................................... 60
4.13.1. Western Cape .................................................................................................................................................................... 61
4.13.2. KwaZulu-Natal .................................................................................................................................................................. 63
4.13.3. Gauteng ................................................................................................................................................................................ 65
4.13.4. Eastern Cape ..................................................................................................................................................................... 65
4.13.5. Free State ........................................................................................................................................................................... 67
4.13.6. Limpopo................................................................................................................................................................................ 69
4.13.7. Mpumalanga ....................................................................................................................................................................... 69
4.13.8. North West Province ..................................................................................................................................................... 70
4.13.9. Northern Cape .................................................................................................................................................................. 71
4.14. IDENTIFICATION OF HIGH POTENTIAL SUBSECTORS ..................................................................................................................... 72
4.15. JOB CREATION POTENTIAL .............................................................................................................................................................. 72
4.17. VALUE CHAINS OR OPPORTUNITIES................................................................................................................................................ 77
4.18. CHALLENGES/BARRIERS .................................................................................................................................................................. 82
ICT SECTOR ................................................................................................................................................................................................... 83
OVERVIEW OF THE ICT SECTOR ....................................................................................................................................................... 83
Defining ICT ........................................................................................................................................................................................ 83
ICT TRENDS ................................................................................................................................................................................................... 83
INTERNATIONAL TRENDS .............................................................................................................................................................................. 84
MAIN GROWTH AREAS ................................................................................................................................................................................. 85
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KEY PROBLEM AREAS ................................................................................................................................................................................... 85
NATIONAL TRENDS ........................................................................................................................................................................................ 85
THE POLICY AND STRATEGY FRAMEWORK FOR DEVELOPING SMALL AND MEDIUM ENTERPRISES IN THE ICT SECTOR .............. 88
NATIONAL SUPPORT PROGRAMMES, POLICIES AND STRATEGIES TO SUPPORT SMES IN THE ICT SECTOR .................................. 88
5.9. DEVELOPMENT AND SUPPORT PROGRAMMES ON A NATIONAL LEVEL ........................................................................................ 90
5.10. PROVINCIAL GOVERNMENTS ............................................................................................................................................................ 91
5.10.1. Western Cape .................................................................................................................................................................... 91
Eastern Cape....................................................................................................................................................................................... 92
5.10.3. Limpopo................................................................................................................................................................................ 94
Northern Cape ................................................................................................................................................................................... 95
KwaZulu-Natal ................................................................................................................................................................................... 96
5.10.6. Free State ........................................................................................................................................................................... 97
Gauteng ................................................................................................................................................................................................. 97
5.10.8. Mpumalanga ....................................................................................................................................................................... 99
North West........................................................................................................................................................................................... 99
IDENTIFICATION OF HIGH POTENTIAL SUBSECTORS .............................................................................................................................. 100
JOB CREATION POTENTIAL ........................................................................................................................................................................ 102
ROLE PLAYERS OR KEY STAKEHOLDERS ................................................................................................................................................... 104
5.13.1. South African Government ..................................................................................................................................... 104
5.13.2. International Software Companies .................................................................................................................... 105
Established Corporate ................................................................................................................................................................ 105
SMMEs .................................................................................................................................................................................................. 105
Public/Private Sector Partnerships .................................................................................................................................... 106
PROVINCIAL ROLE PLAYERS AND STAKEHOLDERS ................................................................................................................................. 106
Blue IQ ................................................................................................................................................................................................. 106
The Innovation Hub ..................................................................................................................................................................... 107
SAVANT ............................................................................................................................................................................................... 107
Cape IT Initiative .......................................................................................................................................................................... 107
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Internet Service Providers Association (ISPA) .............................................................................................................. 107
Information Technology Association (ITA) ..................................................................................................................... 107
Information Industry South Africa (IISA) ......................................................................................................................... 108
Bandwidth Barn ............................................................................................................................................................................. 108
Innovation Fund ............................................................................................................................................................................. 108
5.14.10. ISETT ................................................................................................................................................................................. 108
5.15. VALUE CHAINS ................................................................................................................................................................................ 109
CHALLENGES/BARRIERS ............................................................................................................................................................................ 112
TOURISM SECTOR ...................................................................................................................................................................................... 115
DEMOGRAPHIC PROFILE OF BUSINESSES ................................................................................................................................................ 115
CHALLENGES, OBSTACLES AND OPPORTUNITIES .................................................................................................................................. 121
6.3. SEDA SUPPORT ................................................................................................................................................................................ 127
ICT SECTOR ................................................................................................................................................................................................... 130
DEMOGRAPHIC PROFILE OF BUSINESSES ................................................................................................................................................ 130
7.2. CHALLENGES, OBSTACLES AND OPPORTUNITIES............................................................................................................ 136
SEDA SUPPORT ............................................................................................................................................................................................ 142
RECOMMENDATIONS ................................................................................................................................................................................. 145
CONCLUDING REMARKS .......................................................................................................................................................................... 154
LIST OF REFERENCES ............................................................................................................................................................................... 155
INTERNET SOURCES .................................................................................................................................................................................. 156
INTERNET SOURCES .................................................................................................................................................................................. 156
ANNEXURE A ................................................................................................................................................................................................. 158

List of Figures
Figure 1: Annual Turnover ............................................................................................ 15
Figure 2: The Schematic Cross Sectional nature of Tourism ..................................................... 40
Figure 3: Top 20 Source Markets ...................................................................................... 45
Figure 4: Tourist Arrivals to South Africa by Region in 2009 and 2010 ........................................ 46
Figure 5: Provincial distribution of bed nights 2009-2010 ........................................................ 47
Figure 6: General Tourism Value Chain in South Africa .......................................................... 77
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Figure 7: Percentage of Jobs created in the ICT sector (2003 2010) ....................................... 102
Figure 8: ICT Value Chain ............................................................................................. 109
Figure 9: Business Location .......................................................................................... 115
Figure 10: Age of Business ........................................................................................... 116
Figure 11: Employees ................................................................................................. 118
Figure 12: Annual Turnover .......................................................................................... 119
Figure 13: Major Source Markets .................................................................................... 120
Figure 14: Services .................................................................................................... 121
Figure 15: Effects of Challenges to Business ...................................................................... 123
Figure 16: Access to Opportunities ................................................................................. 126
Figure 17: Improvement of Seda Programmes .................................................................... 127
Figure 18: Programmes to be offered by Seda ................................................................... 128
Figure 19: Business Location ......................................................................................... 130
Figure 20: Representatives ......................................................................................... 131
Figure 21: Age of Business ........................................................................................... 132
Figure 22: Employees ................................................................................................. 132
Figure 23: Annual Turnover .......................................................................................... 134
Figure 24: Role in ICT sector ........................................................................................ 135
Figure 25: Effect of challenges on business ....................................................................... 138
Figure 26: Efficiency of Seda Programmes ........................................................................ 142
Figure 27: Assistance from Seda .................................................................................... 142
Figure 28: Seda Programmes ........................................................................................ 143
Figure 29: Improvement of Services ............................................................................... 144

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List of Tables
Table 1: Type of Company and Services Offered
Table 2: Turnover Bands and Number of Employees
Table 3: Employment type per business category
Table 4: Challenges faced by business
Table 5: Interventions
Table 6: Opportunities
Table 7: Type of Company
Table 8: Annual turnover and employment
Table 9: Number of Employees
Table 12: Opportunities
Table 13: Outbound Tourism Expenditure
Table 14: Top Ten Countries for International Arrivals in 2010
Table 15: International tourist arrivals and departures
Table 16: Number of employers and employees per sub-sector
Table 17: Tourism Opportunities per Province
Table 18: Breakdown of jobs
Table 19: ICT Opportunities per Province
Table 20: Position of representatives
Table 22: Employment type per business category
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Table 24: Opportunities per Province
Table 25: Efficiency of Seda Programmes

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Report Outline
This report is structured in three phases namely:
(i) Executive Summary: which provides an overview of the reports essential information
covering the scope of the study, methodology used, key findings and other key issues raised
during the study. It also provides the conclusions and recommendations.
(ii) Desktop research Findings: This part of the report provides findings on the extensive
desktop review research conducted in this sector and analysis thereof.
(iii) Fieldwork Findings: This section mainly presents the clients feedback which comprised of
SMEs and other stakeholders interviewed during the surveys.
The information in these sections formed the basis for findings analysis and data interpretation, from
which key findings were derived and conclusions made. Specific recommendations and concluding
remarks are included at the end of the report.

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EXECUTIVE SUMMARY
This research is undertaken in line with Seda strategic objectives to contribute to the national
governments goal to sustainable and equitable social and economic development, employment and
wealth creation. It is a study commissioned to focus on the performance of the Services Sector
(Tourism & ICT), and establish its current performance and to identify the possible job creation
opportunities. Furthermore, to recommend the effective role that Seda should play to stimulate job
creation opportunities among small enterprises in the Services Sector.
In this regard, the Small Enterprise Development Agency (Seda) commissioned FEM Research to conduct
Research on the Performance of the Service Sector, focusing on Tourism and the ICT sectors. Seda as
an implementing agency of the dti seeks to up scale the support to small businesses operating in the
Services sector through its various offerings and contribute to the major goal of job creation as
emphasized in the New Growth Path. The Services sector has been identified as one of the key sectors
through which significant employment creation could be realised. Within this context, this research
study aims to establish how the Services Sector is currently performing; its short to long term
prospects.
Outcomes of the Study
The findings of this research will serve as the basis for guidance in identifying possible value chains,
potential projects, how and what effective role Seda could play in stimulating job creation among
small enterprises in the Services Sector. Specifically, the results of this study will facilitate in the
development of relevant programmes, products and services for Sedas targeted clients with potential
to contribute meaningfully in job creation within this sector, and contribute to economic growth in the
country.
Objectives of the Study
The main objective of the study is to identify opportunities for products and services of Seda in the
Services sector, and to provide the basis for the development of a strategy through which such
opportunities could be exploited in order to create an enabling environment or support for new and
existing enterprises with a potential to create jobs. More specifically, the objectives of the study are
as follows:
Identification of key sector segments and value chains and analysis of key developments within
such segments.
Identification of specific opportunities for provision of products and services by local SMMEs.
Identification of barriers and challenges faced by SMMEs and critical factors to operate
successfully in this sector.
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Identification of the required support from Seda within this sector.
Identification opportunities to leverage existing dti initiatives.
Methodology
The following approach was used in undertaking the study:
A comprehensive desktop research was carried out. This included literature review of various
reports on prior studies undertaken on this sector. The main focus was mainly on the review of the
tourism and ICT sectors development trends and major growth areas at the international, national
and provincial.
Fieldwork Surveys conducted through disseminating questionnaires to Seda clients. The sample
size was relatively small, as set out on the TORs where initially, 50 ICT businesses and 50 tourism
businesses in this sector were to be profiled across the country. A list of businesses was compiled
by FEM Research to survey, and Seda operations managers provided some databases with Seda
clients in South Africa. However, a total of 500 businesses were contacted telephonically within
each sector.
Limitations of the study
Several challenges and limitations have been encountered while undertaking the study. These
limitations are highlighted as follows:
Sample size: The sample size of 50 clients per sector is inadequate with respect to ensuring
data validity.
Buy in from provincial offices: Many provincial offices refused to provide a database of clients
citing concerns around confidentiality.
Assess links with current programmes
o In assessing the current Seda support little information was provided as to the current
status of the existing interventions.
o Results of current M&E: No indication or results of any M&E exercises on current
programmes was provided.
Size of the sectors being assessed: The sample size proposed for this study inhibited in-depth
analysis of research findings.

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Key Findings
This part of the report outlines the key findings on international and national trends within the sectors.
The subsequent paragraphs will highlight the key results generated through the fieldwork and data
analysis process.
Tourism Key Findings
International Tourism Trends
During 2010, the number of international tourist arrivals worldwide amounted to 940 million
International tourism receipts in 2010 were estimated to be US$ 919 billion
The top three visited countries were, France, the United States and China
International tourism arrivals across the globe grew by 4.5%, the total number of arrivals
reaching 671 million in the first eight months of 2011
Eco-tourism represents an opportunity with development potential as more people around the
world become environmentally friendly
The promotion of student travel and cultural tourism experiences and packages represent
another international growth opportunity
The key challenges were;
o Economic recessions
o Increased competition
o Rising fuel costs
o Increasing tourism volume and expenditure
National Tourism Trends
In mid-2010, tourist arrivals reached a record high of 8, 1 million
The South African sector experienceda15.1% growth in tourist arrivals and it outperformed
global tourism which only grew by 6.7% in 2010
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The total spend/yield from international tourists in 2010 amounted to R 72.6 billion
Total domestic tourist direct spend for the same period was R 21.1 billion
1.

Africa remains the largest market for the South African foreign tourism
the UK, USA, Germany, Netherlands and France remain the major top five overseas source
markets
Tourisms contribution to GDP in 2009-2010 was 7.9%
The Gauteng and the Western Cape have over the years been considered the most visited
provinces in the country and account for the bulk of the bed nights spent in South Africa
Challenges faced by Tourism Businesses
Specific challenges faced by tourism businesses stem from the general challenges which are finance,
building client bases and marketing.
Finance related challenges include the following:
Access to working capital
Maintaining cash flow
Managing overheads
Increase in transport costs which in turn increases general costs and reduces the available cash
flow and annual profits as companies cannot increase their prices to meet the petrol price
increases
Specific challenges faced by businesses in terms of building client bases include;
Little knowledge of marketing which leads to low numbers in client bases
Increased competition from other companies
Little knowledge of the tender processes in order to gain government clients and increase
current client bases

1
2010 Cape Town & Western Cape Destination Performance, CTRU 2012
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Marketing specific challenges that businesses faced included;
Lack of resources to market the business efficiently which in turn leads to low exposure and
poor numbers of clients
Lack of marketing knowledge and understanding
Increased competition from other businesses particularly established businesses with better
marketing tools and market access
Opportunities for SMEs in the Tourism Sector
Accommodation opportunities exist for small businesses operating within the tourism sector, in
particular these opportunities are for cheaper accommodation packages and facilities. SMMEs can
access opportunities in the accommodation industry by offering accommodation related services.
Within the market, there is an increased need for Bed and Breakfast type of accommodation and
backpacker facilities as well as more affordable family friendly accommodation.
More pronounced opportunities for emerging and existing small enterprises include the following:
cleaning services
catering services
laundry services
gardening services
delivery services
Furthermore, opportunities are also highlighted in beach tourism, cultural tourism and eco-tourism
activities are more suited to small scale operators offering personalised services and activities. These
activities include:
shuttle services
personalised guided tours
hiring of bicycles or equipment such as surfboards and kites etc.
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SMEs could also exploit opportunities available in terms of providing business support to bigger
businesses running tourism and conference facilities. These are the areas with high employment
creation potential. These include:
cleaning
catering
transport
delivery services
Key Findings from Fieldwork Surveys
The majority of the businesses that were surveyed in the tourism sector fall within the accommodation
sector and are registered as closed corporations. It transpired through the findings that most of
businesses in these sector fall within the micro and small businesses bracket that has a turnover less
than R 400, 000 per annum and employ less than ten people. The major source markets for these
businesses are local government and domestic tourists within South Africa.
Clients Feedback
The businesses were assessed and categorised according to income and number of employees. These
indicators were used to determine the size of the businesses. The majority (45%) of the businesses
interviewed were small enterprise with an annual turnover of R150,000 or less, 27% have an annual
turnover of R150,000 - R400,000 and 14% have an annual turnover of R400,000 - R1 000,000. Only 2% of
the businesses interviewed had annual turnovers of more than R1 000,000, while 10% were unaware of
their annual turnover as the businesses were less than a year old.

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Figure 1: Annual Turnover

The businesses with the smaller turnovers; 0 - R150, 000 and R150, 000 - R400, 000 generally employ 1-
5 employees. The majority (59%) of businesses in the 0 - R150, 000 range employ 1-5 employees,
followed by 41% employing 5-50 employees while no businesses that were interviewed employed more
than 50 employees. The majority of businesses with an annual turnover of more than R400, 000 employ
between 5-10 employees, and none of them employ more than ten. This is interesting to note because
despite experiencing growth and expansion from small business it appears as though larger tourism
businesses employ a maximum of ten people at a given time.

0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0-150000 150000-400000 400000-1000000 1000000-2000000 just started
P
e
r
c
e
n
t
a
g
e

Income
16


Turnover Category

Number of Employees
0 5 6 - 20

21-50
Employees
Grand Total
0 - R150,000 59% 41% 0% 100%
R150,000 - R400,000 62% 38% 0% 100%
R400,000 - R1 000,000 29% 71% 0% 100%
R1 000,000 and above 0% 100% 0% 100%
Just started 60% 40% 0% 100%

The highest number (76%) of permanently employed workers are found in businesses that employ
between 5 and 10 employees, while the lowest number (38%) of permanently employed workers are
found in businesses that employ more than 10 employees. Businesses that employ more than ten
employees but less than 50 accounted for 40% of the temporary staff employed, and 38% of the
permanent staff. The micro businesses that employed between 1 and 5 employees had the highest
number (49%) of highly skilled staff. Tourism is affected by seasonality, and it is interesting to note
that 28% of micro businesses (1-5 employees) employ seasonal workers, and larger businesses employ
even less.

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Table 2: Employment Type per Business Category
Number of Employees Temporary Contract Permanent Seasonal
workers
Skilled
employees
Micro (1 5) 22% 5% 46% 28% 49%
Very Small (6-20) 60% 11% 76% 16% 42%
Small (21-50) 0% 0% 0% 0% 0%

Barriers & Challenges
Through the assessment process firms were asked to outline the current challenges that they face in
the day to day operation of their business. From this analysis there are three key problem areas that
small business in this sector have identified, these are:
Finance (43%)- the biggest challenge for tourism businesses was access to finance, the need for
start-up capital, expansion capital and cash flow during low season affected almost half of the
business interviewed
Building client base (17%)- the high number of tourism businesses and the low number of
tourists visiting some areas made it difficult for some businesses to attract and maintain a
client base
Marketing (14%)- is a challenge for businesses as they need to have strong marketing techniques
to differentiate their businesses and attract clients

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Table 3: Challenges faced by businesses
Challenges Count of Challenges
Building client base 17%
Finance 43%
Marketing 14%
Lack of skilled staff 4%
Increase in petrol prices 2%
Training and marketing 4%
None 6%
Struggle to expand 6%
Lack of resources 4%
Grand Total 100%

The following are some challenges documented in detail in subsequent chapters of the report:
Transformation and Access to Tourism Opportunities
Increasing Distribution and Geographical Spread of Tourism Products and Services
Addressing Seasonality of Tourism Demand
External Factors that Influence Tourism Supply and Demand: Political, economic and social
factors such as economic fluctuations, political instability and social unrest can affect the
tourism flows
Existing Support
Looking at the national and provincial policy interventions it is evident that the growth, development
and public sector support of the tourism sector is being driven by the National Department of tourism
who are implementing the following strategic interventions within the sector:
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1. People Empowerment and Job Creation
2. Tourism Sector Transformation
3. Sustainable Tourism Growth and Development
4. Responsible Tourism Promotion
5. Tourism Service Excellence
6. Tourism Sector Knowledge and Policy Leadership
7. Integrated Tourism Governance
8. Public Education, Awareness and Outreach
9. A better Africa and a better world
10. Human Capital Management
11. Good Governance
At a provincial level all the provinces have identified tourism as a strategic sector that can contribute
positively toward job creation and economic development. Hence all provinces have a specific tourism
strategy in place that aims to grow and develop the provincial tourism sector. Some of these policies
look at localised aspects such as:
Development of tourism niche markets areas such as cruise liner tourism, health tourism, sport
and mega event tourism, and culture and heritage tourism
Development of new and existing tourism routes
Locals provided with tourism destination exposure i.e. provides access to communities who do
not usually take part in tourism experiences
Monitor the rollout of the Tourism BEE Scorecard
Establish tourism routes, nodes and clusters

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Relevance of SEDA support in the sector
The tourism industry and the businesses that operate within the industry require assistance in four
areas; marketing, training, certification, and financial assistance. Seda can provide assistance with
marketing and basic business training; as they do not currently offer specialised training specific to the
needs of the tourism sector. Furthermore Seda does not offer financial assistance and accreditation or
certification that many businesses require assistance with. If Seda were to offer assistance in these
instances the programmes they have would be more relevant for tourism businesses.
Required support for SMMEs
A significant number (23%) of businesses interviewed did not require assistance from public or private
organisations; however the majority (77%) required various interventions to ensure the sustainability of
their businesses. The most requested interventions were;
Grants and finance (20%), businesses were need of financial assistance to help expand and
grow the entity and in some cases it was required to maintain the business
Training (18%) was required by businesses for both owners, and staff. The relatively high
number of skilled workers in the industry and the need for further skills show the growth
potential for job creation in the sector
Access to resources (16%) such as business support or networks was required by business to
ensure sustainability and longevity of entities

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Interventions Sum of Count of Interventions
Access to resources 16%
Grants and finance 20%
Improved infrastructure 9%
Marketing 14%
None 23%
Training 18%
Grand Total 100%
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Market Opportunities
Accommodation opportunities exist within the tourism sector, in particular these opportunities are for
cheaper accommodation packages and facilities. There is a need for Bed and Breakfast type
accommodation and backpacker facilities as well as more affordable family friendly accommodation.
Furthermore SMMEs can access opportunities in the accommodation industry by offering
accommodation related services. These services include cleaning services, catering services, laundry
services, gardening services and delivery services. Furthermore these services have very little entry
challenges or barriers and are accessible for SMMEs.
Beach tourism, cultural tourism and eco-tourism activities are more suited to small scale operators
offering personalised services and activities. These activities include shuttle services, personalised
guided tours, and hiring of bicycles or equipment such as surfboards and kites etc.
Tourism and Conference facilities would be opportunities more suited to big businesses as the start-
up costs would be quite large but the opportunities for SMMEs would be in provided services to these
facilities. Again these services would include, cleaning, catering, transport and delivery services, which
are all quite easily accessed. Furthermore these opportunities would create employment in the areas
where they are developed.

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Table 5: Opportunities in the tourism value chain

Opportunities
Province
WC EC NC KZN GP Limp MP FS NW
Accommodation x x x x x x x x x
Beach Tourism
Activities
x x
Catering/Food
outlets
x x
Conference
Facilities
x x x x
Cultural Tourism x x x
Eco Tourism
Activities
x x x x x
Shuttle
Services/Transp
ort
x x x x x
Tourism
Facilities
x x x x x x
Training
facilitators
x x

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Conclusion & Recommendations
Information from various aspects have been analysed in order to develop the recommendations
outlined below. While Seda may not be able to affect all the outlined recommendations it is suggested
that partnerships be created so that the assistance measures outlined below can be put in place.
Funding: With respect to funding just fewer than 50% of firms have identified a need for both
short and long term funding assistance. This could probably be linked with the cyclical nature
of the sector. As in the case of ICT it recommended that going forward Seda should look at
partnering with organizations such as the IDC as well as the DBSA to provide clients with
information regarding funding opportunities while also assisting clients in applying for funding.
Marketing & Building a client base: 31% of firms have outlined this as a major problem that
they are facing. In this respect there are two recommendations that have been put forward.
The first links directly with the next recommendation around training and hence will be
discussed there, the second is looking at developing marketing platforms that clients can use at
no cost or at a small fee; an example of this is dtis free website - small businesses can log
onto dtis website and develop their own websites for free, the objective of this is to promote
the business online and to support small business development
Training: 18% of firms have outlined the need for some type of formal training programme. In
this respect basic as well as advanced training modules need to be developed. It is
recommended that Seda develop specific industry based training modules aimed at assisting
entrepreneurs who are setting up a business as well as those who are running business. Here
also Seda can look at partnering with training institutions as well as institutions of higher
education.
Access to resources: A significant number of firms (16%) have outlined the need for basic
resources (transport, equipment etc). Once again while Seda is not a funding agency a possible
recommendation that can be implemented is the development of geographical industry clusters
where participating firms can network as well as agree upon sharing current resources. Thus
aiming to fulfill the overall need.
Improving access to support programmes and services: 72% of the businesses that made use
of Sedas programmes thought that the services were effective; however they felt that the
services should be improved to include, more marketing and training assistance, assistance in
getting funding and that Seda should provide a better follow up service with clients.

25

Seda Clients Feedback
The businesses in the tourism sector that made use of the Seda programmes found them to be effective
in assisting the business. However, a large number of the businesses were unaware of the types of
programmes that Seda offers. The businesses that had made use of Seda services expressed the need
for Seda to provide assistance with funding, increase marketing products and provide a better follow
up and communication process with clients. The majority of respondents felt that they would require
some form of assistance from Seda, despite being unaware of the product offerings
ICT Key Findings
International ICT Trends
The total telecommunications market in the five international regions had an estimated USD
3.1 trillion value and this is expected to rise to USD 4.1 trillion by 2014
2
.
In 2010 the five international regions for telecommunications were Canada, Europe, Middle
East/Africa, Latin America and Asia Pacific. These countries experienced an increase of 5.5% in
telecommunications in 2010
The Philippines is the top exporter, with 66% of its exports being technology. This is followed
by Singapore with 51%, Malaysia with 40% and Costa Rica with 39%
The main areas for expected growth are Internet usage, Broadband speed and quality and ICT
technologies.
3.3.1.2 National ICT Trends
The ICT sector in South Africa contributes an estimated 7% to the countrys GDP
3
.
The local IT industry is based in both the services sector and manufacturing sector however
that manufacturing within the ICT sector is still within its infancy
South Africa has comparatively higher prices in terms of ICT products, than other African
countries, as well as OECD countries

2
2011 ICT market Review and Forecast Chapter 5, www.tiaonline.org
3
SA Market Summaries: ICT, SAM #009
26

South Africas ICT Sector can be described as being relatively concentrated, in terms of market
structure
The three main hubs are Gauteng with 57% of ICT firms, Western Cape with 17% and KwaZulu-
Natal with 8%.
South African companies specialize in pre-payment, revenue management and fraud
prevention systems
Some manufacturing (e.g. Set-top boxes) does take place locally and these products are
exported successfully to the rest of the world however this is still in its infancy
Specific Challenges
Specific challenges that are faced by businesses in the ICT industry include:
Access to finance is a serious challenge for ICT businesses as it hampers every aspect of the
business from operations and management of cash flows to purchasing of equipment and paying
for running costs
Working capital is another big issue that businesses faces particularly in the startup of an ICT
business, accessing working capital can be difficult for SMMEs
Skills shortages across the industry affect the operations of the businesses as the labour costs
can be higher due to the completion for skilled staff, also businesses that lack the relevant
skills experience a decline in their client bases
Lack of resources such as finance, skills, marketing knowledge and training also affect the
operations of ICT businesses and hamper growth
Lack of infrastructure is a serious concern as the ICT industry is based on infrastructure and
having the necessary infrastructure in place as well as having access to infrastructure is critical
to developing a sustainable business
High cost of imports and products for resale affect the cash flow and profit margins as price
fluctuations cannot be mitigated yet the price of services and products need to remain
relatively unchanged to maintain existing client bases

27

ICT Opportunities
Software and systems development: While the direct opportunities for development and
expansion are limited to the business that is undertaking the opportunity (due to specialised
nature of the opportunities) some associated opportunities exist
Training: Opportunities exist within the training field of the ICT sector, these opportunities
include providing IT training and computer training and systems support for businesses as well
as provide training seminars and conferences for government and IT staff in the industry
Infrastructure provision: the provision of infrastructure such as systems networks and business
network solutions is an opportunity for small businesses. Furthermore the opportunity exists to
supply service to companies that provide infrastructure development and support services.
These services can include maintenance, provision of labour and parts, and providing systems
support and network administration services.
Businesses in the ICT sector play a role in creating jobs as well as developing skills and assisting in
community development. The major challenges faced by these businesses are accessing funding,
market intelligence and infrastructure. These challenge and obstacles have negative effects on the
businesses and generally cause a decline in sales, slow business growth and higher operational costs. To
assist in combating these challenges the businesses in the ICT sector require assistance in developing
market intelligence and securing funding. However despite the challenges and obstacles that exist in
the industry, these businesses remain optimistic about opportunities that exist in the sector and feel
that with funding, training and access to necessary infrastructure the sector will continue to grow and
create jobs and develop skills.
Key findings from Fieldwork Surveys
The majority of the ICT businesses that participated in the survey are established and have been in
operation for more than three years. The bulk of the businesses are registered as closed corporations
and have an annual turnover of less than R 1 000,000 and employ less than 10 people. The major source
of clients for these businesses is South Africa, only a small percentage (6%) of the businesses
interviewed for this study had non South African clients. The results from the data analysis show that
the majority of the entities that were surveyed had been registered as Closed Corporations (88%)
followed by Pty Ltds (6%). Regarding the type of business operations that the firms are involved in it is
evident that Sales and Distribution is the largest contingent counting 53% of all firm surveyed. Another
important area that firms operate in is in the software design and web design ambit (33%).

28

Seda Clients Feedback
When asked about the programmes that Seda should offer, most respondents wanted to see more
marketing and networking tools as well as business funding options through Seda. Furthermore, only
22% of the respondents felt that Seda offered a unique service compared to other development
organisations while 46% of the respondents stated that they were unaware of the exact offerings and
could not compare Seda to other organisations.
Seda offers a number of programmes that are relevant to the start-up needs of ICT businesses and offer
assistance and training to run and mange a businesses, but the industry requires specialised training
and mentorship which is not currently available from Seda. However Seda does offer ICT specific
programmes such as the ICT incubation programme and Seda Technology Programme. One major
problem that businesses faced when dealing with Seda is that they felt the training provided was not
sector specific.
While the majority of the businesses had not made use of Sedas services and were unaware of the
exact product and service offerings of the organisation, 64% still requested assistance or support from
Seda for their business. OF the respondents that had made use of Sedas products and services, the
majority would like to see more marketing, training and funding services in the future, while 41% felt
that Seda could improve their current customer service delivery and speed up the processes when
assisting clients.
Table 6: Type of Company
Type of Company Type of Service
Closed corporation 88% Sales 53%
Pty ltd 6% Software design 33%
Section 21 4% Film & media 11%
Trust 2% Other 3%

29

The tables below have been compiled to further assess the link between employment and annual
turnover described above. From the table below it is evident that the bulk of the firms who have a
turnover of less than R1 million also only employ up to a maximum of 10 individuals.
Table 7: Annual turnover and employment

Annual Turnover

Number of Employees
Micro (1 5) Very Small (6 20) Small (21 50)
0 - R150,000 67% 23% 0%
R150,000 -
R400,000
100% 0% 0%
R400,000 - R1
000,000
78% 22% 0%
R1 000,000 - R2
000,000
33% 67% 0%
R2 000,000 - R4
000,000
25% 50% 25%
Greater than
R4 000,000
0% 33% 67%
Grand Total 62% 30% 8%

In the case of firms with a turnover of R0 R150 000, 94% have 10 or less employees (67% have 1- 5
employees, 27% have between 5 10 employees). As the turnover rises it can be seen that this changes
with 50% of firms having a turnover of R2million to R4million employing between 10 and 50 employees
while all firms having a turnover of greater than R4 million employ in this range.
In order to get a better understanding of the sector and the businesses that function in it, a cross
tabulation was conducted between the number of employees and the type of employment. From the
analysis it is interesting to note that across all business sizes the number of permanent contracts
30

comprise between 60 70% of the total employees. A positive note is that the industry does not
experience much seasonality however temporary employment seems to be well entrenched (firms with
10 20 employees have 27% of their staff on temporary contracts).
Another interesting observation is regarding highly skilled workers, from the analysis it is evident that
the % of skilled workers within the firms decline as the number of employees increase. This has
important implications for job creation in that if the small firms grow the jobs that they will create will
allow for semi-skilled individuals to enter the job market.
Categorisation Temporary Contract Permanent Seasonal Highly
skilled
Micro (1 - 5 Employees) 30% 8% 80% 16% 77%
Very Small (6 - 20
Employees)
6% 6% 12% 2% 63%
Small (21 - 50 Employees) 0% 0% 8% 0% 47%

3.3.1.4 Barriers & Challenges
Funding: 37% of business identified access to short term funding (working capital) as being a problem.
Many businesses have noted the unwillingness of financial institutions to assist them.
Market Intelligence: 29% of business have identified that a key problem that they face is the lack of
knowledge of what are the current growth and development trends in their sector. They argue that due
to their size they cannot spend resources on market research and have asked for assistance in this
regard. Firms have noted the importance of this given that the ICT sector is ever changing and
developing.
Infrastructure: Unlike the firms that required working capital that point highlights the fact that many
firms (13%) have indicated the need for funding assistance so that they can purchase the necessary
infrastructure to compete efficiently.
31

Other points that have been raised by firms are around skills development (8%) as well as payment
delays (5%) and transport costs (3%).
Challenges Percentage
Funding 37%
Import Costs 6%
Infrastructure 13%
Market Intelligence 29%
Payment Delays 5%
Skills 8%
Transport 3%
Grand Total 100%

The desktop analysis has also revealed the following challenges within the sector:
Skills shortages in development, building and maintenance of IT systems & Skills shortages of IT
specialists in the manufacturing industry
Skills shortages in IT and Communication sections of businesses in South Africa
High cost of telecommunications and internet access
Low numbers of South Africans with access to personal computers (4% of South Africans) and
internet subscriptions (1% of South Africans)
Lack of financing for businesses and access to finance for capital and expansion
Foreign Exchange Rates and Economic Influences

32

Existing Support (National & Provincial Government)
Assessing National and Provincial policies and support programmes it is evident that almost all
provinces have a strategy specifically designed for the development of the ICT sector. At a national
level the Department of Communications has established various critical programmes aimed at rapidly
developing the sector
4
:
Programme 1: Governance and Administration- provide strategic support to the ministry and overall
management of the Department
Programme 2: International Affairs and trade- to ensure alignment between South Africas
international activities and agreements in the field of ICTs with South Africas foreign policy.
Programme 3: ICT Policy Development- Develop ICT policies, legislation and strategies that support the
development of an ICT sector and develop strategies that increase the uptake and usage of ICTs by the
majority of the South African population.
Programme 4: Finance and ICT Enterprise Development- to oversee and manage governments
shareholding interest in public entities and to facilitate growth and development of Small, Micro and
Medium Enterprises (SMMEs) in the ICT sector.
Programme 5: ICT Infrastructure Development- to promote investment in robust, reliable, secure and
affordable ICT infrastructure that supports the provision of a multiplicity of applications and services.
Programme 6: Presidential National Commission- to facilitate the development of an all-inclusive
information society by promoting the uptake and usage of ICTs for improved socio economic
development and research.
At a provincial level there are also a number of projects that are aimed at assisting with the
development of the ICT sector i.e.:
The Khanya Technology in Education project, which aims to improve teaching and learning through the
use of ICT technologies in schools (Western Cape)
The Telecommunications project, which has already linked almost all schools in the Western Cape to
the internet- except for a few which still struggle with electricity connections
Eastern Cape Information Technology Initiative (ECITI) has been launched by ECDC. This programme
provides support to local ICT SMMEs. It provides a local ICT business incubation hub, provides software
research and development opportunities and education.
Limpopos ICT Institute Programme aims to produce ICT skills which are lacking in the provincial
industry, for societal and economic development. Its objectives include further skills training so that
skilled individuals are market-ready and job-ready

4
Department of Communication South Africa www.doc.gov.za
33

KwaZulu-Natal has launched an initiative which aims to bridge the digital divide through the
establishment of twelve digital community hubs. These hubs have been set up in rural areas such as
Hammarsdale, Umzumbe, Vryheid, Mandeni and Edendale
5
.
The Free State has launched an initiative called the SMME Incubation Hub- this project has an
investment value of R100 million. This initiative aims to provide physical space to new ICT businesses
and to provide service to help these businesses in their early stages of development. Services include:
business support, help with access to finance, management coaching and business administrative
services to help small developing businesses.

Relevance of SEDA support in the sector
assistance and training to run and mange a businesses, but the industry requires specialised training
and mentorship which is not currently available from Seda. However Seda does offer ICT specific
sector specific.
Required support for SMMEs
During the field work phase of the project firms were asked specifically what type of interventions they
required. Interestingly while skills development had been ranked lower than other challenges it is in
greatest demand (35%) by firms in this sector. Linked with the above findings interventions in the areas
of:
Providing market intelligence is in high demand by firms (30%)
Assisting firms with procuring short term funding (26%)
An important note that has been made by firms linked to the idea of infrastructure is the provision of
Incubation programmes (4%). These interventions have proved very successful in provinces such as the
Western Cape and should be seriously considered going forward.

5
http://www.kwazulunatalbusiness.co.za/pls/cms/ti_secout.secout_prov?p_sid=14&p_site_id=130
34

Interventions Percentage
BEE Certification 4%
Funding 26%
Incubation Programmes 4%
Market Intelligence 30%
Skills Development 35%
Grand Total 100%

Market Opportunities
The analyses of the various provincial strategies as well as other desktop sources (value chain) and the
field work have pointed to the existence of the following opportunities at a provincial level:
Table 11: Opportunities in ICT Value Chain

Opportunity

Province
WC EC NC KZN NW Limp MP GP FS
Business application software x x x
Cctv systems x
Creative industries x x x x x
Document management systems x x
e-learning, e-banking software
development
x x x x x
e-waste management x x
35

Internet and wifi provider x x x x x
IT training and software development x x x x
Multimedia platforms x x x
Network development x x
Online marketing x x x x
Social media platforms and software x x x
Telecommunications and technology
development
x x x x
Voice over IT x
Website development x x x x

Conclusion & Recommendations
Through the analyses that have been conducted it is clear from the attributes outlined in the value
chain, the data analysis and the desktop material that the sector is critical for the long term growth
and development of the economy. This being said it is also clear that the sector is currently mainly
service driven with very little manufacturing taking place. In order to grow and develop the sector
further the following interventions have been proposed. Please note that while Seda may not be able
to affect all these interventions directly they can partner with other organizations to do so:
Skills development: 35% of firms interview in this sector have identified this as a gap, this has further
been reiterated in the findings from the desktop study. For this reason it is recommended that Seda
develop a suite of training initiatives aimed at assisting businesses in the sector.
Providing market intelligence: 30% of firms have identified this as a key problem area. Given this
finding it is recommended that Seda look at partnering with the department of communications to
conduct and regularly publish information on the sector
Assisting firms with procuring short term funding: 26% within this sector have outlined the need for
assistance in this regard. While it is noted that Seda is not primarily a funding agency, it is
36

recommended that going forward Seda should look at partnering with organizations such as the IDC as
well as the DBSA. Seda should also look at providing a yearly list of potential funders to their clients.
Market Intelligence: 29% of firms have identified the need for assistance in understanding the changing
business environment in which they work. Many firms have outlined the fact that it is difficult to grow
their business as they do not have access to market information. In this respect it is recommended that
Seda provided annual sector analyses that outline the current and future growth trends. Note this
information should not be publically available and should be given only to participating Seda clients.
Infrastructure: Over 10% of firms have outlined the need for long funding to ensure the sustained
growth and development of their business. This is closely linked to the earlier funding point and the
recommendation outlined above should also be followed in this respect. Seda could also look at
establishing incubator programmes (please see information regarding the Western Cape).
Improved access to support programmes: 43% of the ICT businesses made use of Sedas services and
participated in the programmes. 41% of these businesses felt that there was room for improvement in
the organization with the following in particular;
Better communication channels and follow up processes with clients
Improved processes as well as faster service delivery of products and programmes and general
assistance

37

PART 1
Contextual overview
This part of the report comprises of two sections providing a desktop report on the two focus sectors of
the Services Sector namely the Tourism and ICT Sectors respectively. It provides deeper insights into
understanding these identified sectors. These are mainly the findings derived from reviewing existing
literature on prior research that has been undertaken in this sector. The main focus is on the growth
development trends and existing support structures in terms of policy and legislation.

\

38

TOURISM SECTOR
OVERVIEW OF THE TOURISM SECTOR
The South African tourism industry remains one of the fasted growing sectors of the economy. This
sector has a great potential to significantly contribute to direct and indirect to employment in the
country. It is ideally placed to create jobs and add value to the countrys rich natural and cultural
resources. The tourism sector is characterised by low barriers to entry and include a range of
enterprises that provide opportunities for economic linkages. Best practices indicate that the tourism
sector is most successful when driven by the Private sector; however, the public sector also has a main
role to play in terms of influencing investments to achieve certain policy objectives. Tourism continues
to be an economic driver in many regions throughout the world.
DEFINING TOURISM
Tourism is defined by SA Tourism as the activities of persons travelling to and staying in places outside
their usual environment for not more than one consecutive year for leisure, business and other
purposes not related to the exercise of an activity remunerated from within the place visited
6
. The
tourism sector is a multifaceted industry and contributes to a number of economic sectors in South
Africa. Tourism has been identified as an economic driver in South Africa as it is labour intensive and
has the capacity to create job opportunities.
The UNWTO defines tourism as the activities of persons travelling to and staying in places outside
their usual environment for not more than one consecutive year for leisure, business and other
purposes. In essence, the definition of tourism encompasses the following aspects (Phillips &
Govender, 2001):
The movement of people , other than moving from home to work, and what people do during
this movement
It is the temporary movement of people
It is a voluntary activity
The purpose of the movement differ (e.g. leisure, business, etc.)

6
SA Tourism, Tourism Definition PDF 2008, Dept. of Environmental Affairs and Tourism
39

The tourism sector is very broad and comprises of various components which mainly encompass the
following:
Hotel and accommodation
These incorporates lodges, resorts, tourist houses, eating establishments, boutique hotels,
guesthouses, self-catering units, bed and breakfast units, back packer hostels etc.
Transportation Services
Includes air, water, road, rail and foot
Entertainment services
Consists of casinos, social halls or clubs, festivals, events, churches and mosques
Information services
Entails travel agencies, tour operators, field guides etc.
Attraction Services (Natural and built or Man Made)
Involves national parks and reserves (wildlife), waterfalls and lakes, dams and other water catchment
areas, beaches, caves, rock formations, scenic, vistas and other areas of impressive beauty, heritage,
sport, adventure, culture,
Government tourism agencies
These are the various agencies set by the government to promote tourism in the country so that it
contributes to economic growth and job creation.
Education and Research
These are the various organizations and institutions which promote the development of tourism and
hospitality education and research to support sustainable tourism
Stakeholders
Includes tourism shareholders, local community and the government

40

The following figure shows the cross-sectional nature of the tourism industry.
FIGURE 2: THE SCHEMATIC CROSS SECTIONAL NATURE OF TOURISM

Source: WTO, 2009

NB:Tourism Industry: refers to all establishments whose principal productive activity is a tourism characteristic activity, i.e.
the sum of all tourism characteristic activities, e.g. accommodation establishments, tour operators, travel agencies, etc., while
the tourism Sector consists of a set of institutional units whose principal economic activity is a tourism characteristic activity
e.g. transport, retail, laundry, security etc. Both the tourism sector and tourism industry constitutes the tourism economy

There are four different types of tourism outlined by the UN namely
7
:
Domestic Tourism: the tourism of resident visitors within the economic territory of the country of
residence.
Inbound Tourism: A tourism of non resident visitors within the economic territory of the country of
reference
Internal Tourism: Tourism of a resident visitor who visits within the economic territory of the country
of residence.
Outbound Tourism: The tourism of travel visitors outside the economic territory of the country of
reference.

7
Recommendations on Tourism, United Nations (83): 5. 1994
41

TOURISM TRENDS
The following discussions provide a snapshot of the trends of the tourism sector both at international
and national levels. It provides insights into present trends and future developments of the tourism
sector. Existing empirical data on tourism sector trends and latest consumer trends are presented.
4.3. INTERNATIONAL TRENDS
The international tourism sector is extremely large and diverse and the current challenges in terms of
determining the exact size of the industry. the number of people travelling across the world are not
always documented and in many cases the number of people travelling domestically are not recorded
regularly and the amount of money spent in the informal markets is not recorded, this makes it
difficult to determine the size of the global tourism industry. During 2010, the number of international
tourist arrivals worldwide amounted to 940 million. The number of international tourist arrivals grew
by 6.6% from 2009
8
. International tourism receipts in 2010 were estimated to be US$ 919 billion. The
table below indicates the expenditure of outbound tourists. This provides an overview of the amount of
money being spent by tourists outside of their home countries. The table shows that the highest
expenditure is from the US tourists while South African tourists spend very little in comparison.
Although this table only provides a small indication of the tourists, it includes two source countries for
tourists into South Africa as well, namely the US and UK.
Table 12: Outbound Tourism Expenditure
Country Year 2008 Year 2009 Year 2010
($)6, 905, 000, 000 ($)6, 420, 000, 000 ($)8, 139, 000, 000
United Kingdom ($)83, 584, 000, 000 ($)61, 133, 000, 000 ($)60, 469, 000, 000
USA ($)118, 643, 000, 000 ($)106, 081, 000, 000 ($)110, 134, 000,000
Thailand ($)6, 700, 000, 000 ($)5, 659, 000, 000 ($)6, 573, 000, 000
China ($)40,987, 000,000 ($)47,108,000,000 ($)59,840,000,000
Source: World Bank Indicators http://data.worldbank.org/indicator/ST.INT.RCPT.CD 2011.

8
UNWTO World Tourism Barometer 2010
42

During 2010 the number of international tourist arrivals reached 940 million
9
, the top three visited
countries were, France, the United States and China. The countries that receive the most tourists are
in Europe, followed by a growing number of Asian countries, however the United States received the
second highest number of tourists.
Table 12: Top Ten Countries for International Arrivals in 2010
Rank Country International
Tourist Arrivals
(2010)
International
Tourist Arrivals
(2009)
% Change
2009 - 2010
1 France 76.8 million 76.8 million 0.0%
2 United States 59.7 million 55.0 million +8.7%
3 China 55.7 million 50.9 million +9.4%
4 Spain 52.7 million 52.2 million +1.0%
5 Italy 43.6 million 43.2 million +.9%
6 United Kingdom 28.1 million 28.2 million -0.2%
7 Turkey 27.0 million 25.5 million +5.9%
8 Germany 26.9 million 24.2 million +10.9%
9 Malaysia 24.6 million 23.6 million +3.9%
10 Mexico 22.4 million 21.5 million +4.4%
Source: UNWTO World Tourism Barometer 2010
China experienced an increase of 9.4% in international arrivals from 2009, and replaced Spain as the
third most visited country in 2010. The country in the top ten with the highest increase in international
tourist arrivals from 2009 to 2010 was Germany with an increase of 10.9%. International tourism
arrivals across the globe grew by 4.5%, the total number of arrivals reaching 671millionin the first eight
months of 2011. Despite the economic volatility in Europe, the tourism industry is proving to be an
essential economic driver by providing foreign exchange to the economies. Asia also experienced

9
43

growth rates of 6% while the Americas reached 5%. In Africa arrivals were down by 4%
10
. Europe
remains the largest source market for international travel and generates more than half of
international arrivals worldwide; following this is Asia and the Pacific with 21% of international arrivals,
the Americas with 16%, the Middle East with 4% and Africa with 3%
11
.
MAIN GROWTH AREAS
Marketing and promotion of tourism products to domestic residents of countries as well as to foreign
markets will increase the number of tourists globally. Eco-tourism represents an opportunity with
development potential as more people around the world become environmentally friendly and aware of
the need for sustainable and environmentally friendly tourism products. This form of tourism can also
be linked to Educational tourism which presents another product in tourism which can be developed
internationally. The promotion of student travel and cultural tourism experiences and packages
represent an international growth opportunity and educational tourism can include the following
12
:
School trips
Alternative Spring Break Travel Experiences
Study Abroad Experiences
Seminar Vacations and Senior Seminars
Skill Enhancement Vacations
Educational Cruises
Focusing on marketing of Sports tourism is another opportunity for growth as international sporting
events attract both players and spectators to events and this in turn leads to an increased demand for
tourism activities, products and services.
KEY PROBLEM AREAS
The key challenges that international tourism faces includes:
Economic recessions- fluctuations in the economy affect buying power and disposable income, and so
the less money people have the less likely that they will travel.

10
European tourism grows above expectations 2011, http://media.unwto.org
11
UNWTO Tourism Barometer 2010
12
Opportunities and tips for Educational Tourism Providers- www.tourism-review.com
44

Increased competition- the supply of tourism offerings is vast and often surpasses the demand, the
competition to attract tourists is fierce.
Rising fuel costs will affect tourism across the globe, as the foundation for all tourism is transport.
Once transportation costs rise, all other costs increase.
Increasing tourism volume and expenditure- by increasing the number of tourists visiting a destination,
the expenditure increases and improves the local economy; however with so much competition in the
industry it is difficult to increase tourism volume into an area.
Natural disasters affect tourism drastically; this was the case in 2010 and 2011 when Europe
experienced volcanic eruptions and Asia experienced floods and earthquakes. Economies were affected
and transportation modes were disrupted.
In order to have a comprehensive understanding of the performance of this sector it is critical to look
at the recent development trends both at foreign and domestic tourism performance closer at the
national level.
FOREIGN TOURISM SECTOR IN SOUTH AFRICA
Foreign tourism has contributed positively to the growth of the South African tourism sector
particularly in terms of the total contribution to tourism revenue. According to tourism SA (2011),
inmid-2010, tourist arrivals reached a record high of 8, 1 million representing a 1,061,687 increase
from arrivals to the country in 2009. The South African sector experienced a15.1% growth in tourist
arrivals and it outperformed global tourism which only grew by 6.7% in 2010. This growth was largely
attributed to the countys hosting of the 2010 FIFA World cup in June and July 2010. Foreign tourism
spends in South Africa accounts for the majority of the tourism revenue for the country. The total
spend/yield from international tourists in 2010 amounted to R 72.6 billion, while the total domestic
tourist direct spend for the same period was R 21.1 billion
13
.
SOURCE OF MARKETS
Africa remains the largest market for the South African foreign tourism, international tourist arrivals
stood at 651,753 in 2010 showing a growth of 12.9% over 2009. Both air markets and land markets grew
on the same period, with the former recording a 14% growth while the latter grew by 12.8%. The
neighbouring SADC countries forms the top five major market sources as shown on figure 2 below:

13
45

FIGURE 3: TOP 20 SOURCE MARKETS

Source: Stats SA, Tourism and Migration Release, SAT Analysis
According to Tourism SA, the UK, USA, Germany, Netherlands and France remain the major top five
overseas source markets. In 2010, the Americas region grew by 37. 8%, Europe recorded 8.1% growth,
while Asia and Australasia grew by 34.6% in the same year (Tourism SA, 2011). It is important to note
that growth took place from all regions (source of markets) which indicate a greater development
potential for this sector.

46

The figure below shows tourist arrival to South Africa by Region:
FIGURE 4: TOURIST ARRIVALS TO SOUTH AFRICA BY REGION IN 2009 AND 2010

Source: Tourism SA, Highlights of 2010 V5, 2011

Americas and Asia & Australasia recorded the highest growth in 2010 by 37 .4% and 34.6% respectively.
This growth implies potential foreign market growth areas for tourism in the future. The Gauteng and
the Western Cape have over the years been considered the most visited provinces in the country and
account for the bulk of the bed nights spent in South Africa. In 2010, Gauteng and the Western Cape
accounted for 67% of the total bed nights spent in the country. While this provides strong evidence
implying that the bulk of tourist based products and services are concentrated in these regions there is
currently no hard data to back this up.
47

FIGURE 5: PROVINCIAL DISTRIBUTION OF BED NIGHTS 2009-2010
Source: 2010 Cape Town & Western Cape Destination Performance, CTRU 2012

Gauteng had the highest number of bed nights for 2009 and 2010, and accounted for approximately 37%
of bed nights in the country. Western Cape had the second highest total and accounted for 30% of the
bed nights spent in South Africa for 2009 and 2010. KwaZulu-Natal had the third highest total of bed
nights with 9% of the bed nights in South Africa spent in the province for 2009 and 2010. The province
with the lowest number of bed nights was the Northern Cape with only 1% of the total bed nights spent
in South Africa for 2009 and 2010. The province with the highest growth in bed nights between 2009
and 2010 was the Western Cape with a 27.4% increase in bed nights, followed by the Eastern Cape with
a 25.6% increase in bed nights for the same period. The province with the smallest growth rates in bed
nights was the Northern Cape with a 0.1% increase. The above results imply that even though tourism
concentrated areas such as the Western Cape, Gauteng etc, there is still potential to further grow and
develop the sector in other parts of the country, and therefore necessitates the strengthening of
existing support and strategies to tap into the latent potential in tourism development and investment
opportunities in these areas.

Gauteng W.Cape E.Cape KZN
Mpumalan
ga
Limpopo N.West N.Cape Free State
2009 20,355,631 15,680,688 2,684,244 5,840,370 3,702,292 2,994,981 1,365,628 527,669 2,651,085
2010 24,800,436 19,971,821 3,371,051 6,297,103 4,010,610 3,224,761 1,685,022 528,101 2,963,599
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
n
u
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48

INTERNATIONAL ARRIVALS
In 2010, the number of international tourists arriving in South Africa was estimated to be 11 574 540
14
.
Since 2007 the number of international tourist arriving in South Africa has increased by 8.5% annually.
The increasing number of international arrivals in South Africa, and the increase in income from the
tourism spends has further established the sector as an economic driver. Furthermore the constant
increase in the number of arrivals per annum means that the industry creates more jobs in the
economy each year and is showing sustainability for future development and growth.
Table 14: International tourist arrivals

Source: Stats SA 2011: South African Tourism 2010
During 2010, the total spends from international tourists visiting South Africa amounted to ZAR 72.6bn.
This amount did not include the amount spent on bed nights in South Africa which amounted to ZAR
66.9bn
15
. The table provides an overview of the tourist spends of inbound tourists into the destination
countries. As can be seen from the table below, South Africa has the lowest revenue generated from
tourism, while the USA has the highest revenue. South African tourism generates less tourism than
other countries because the number of inbound arrivals in South Africa is much smaller than inbound
arrivals in other countries. The reason for the difference in inbound arrivals can be attributed to the
distance between South Africa and other countries as well as the limited air access into the country.
The difference in the number of inbound arrivals also means that South Africa has the potential to
increase the number of inbound arrivals as many people are traveling it is just a matter of attracting

14
STATs SA 2011
15
STATs SA 2011

2007 2008 2009 2010
Arrivals 9,207,697 9,728,660 10,098,306 11,574,540
0
5,000,000
10,000,000
15,000,000
International Arrivals 2007-2010
49

them. If South Africa was to increase market access, and number of inbound arrivals, the potential job
creation and economic spin off would be significant to the economy as well as the general population.
Table 15: Inbound Tourism Expenditure
Country Name Year 2008 Year 2009 Year 2010

South Africa
US Dollars ($) US Dollars ($) US Dollars ($)
($)9,178,000,000 ($)8,684,000,000 ($)10,308,000,000
United Kingdom ($)83,584,000,000 ($)61,133,000,000 ($)60,469,000,000
USA ($)166,375,000,000 ($)147,554,000,000 ($)163,887,000,000
Thailand ($)22,497,000,000 ($)19,421,000,000 ($)23,383,000,000
China ($)44,130,000,000 ($)42,632,000,000 ($)50,154,000,000
Source: World Bank Indicators http://data.worldbank.org/indicator/ST.INT.RCPT.CD 2011
The tourism industry in South Africa has grown at three times the world average. Between 1994 and
2009 the tourism sector has created an estimated one million
16
jobs in South Africa. Tourisms
contribution to GDP in 2009-2010 was 7.9%. The government is geared towards increasing this to 12%
through Asgi-SA initiative and create a further 400 000 jobs. It has been argued that for every twelve
tourists that arrive in the country, one new job is created.
The tourism industry in South Africa is extensive and includes a range of services. The Tourism services
in South Africa are mostly concentrated within three categories
17
:
Direct suppliers
Support services
Development organizations

16
www.southafrica.co.za
17
South African Tourism Sector, www.tourismrsa.com
50

Direct suppliers are the subsectors that affect the tourist directly, they encompass of; tour operators,
transport activities, hospitality and accommodation, and entertainment and experience. The following
box provides a detailed definition of these products and services:
Tour operators: are businesses that offer a tour package either through a travel agency or directly to the tourists. These
packages may include transports, accommodation, sightseeing or entertainment.
Transport activities: include bus companies, shuttles and taxi services as well as car hire, sea travel, rail transport and air
transport.
The accommodation sector: in South Africa is diverse and includes hotels, Lodges, Game Reserves, Backpackers, Guesthouses
and Bed& Breakfast as well as self-catering accommodation and resorts.
Entertainment and experience: include a variety of offerings such as cultural and historical heritage, nature resorts and parks,
entertainment zones, and casinos.

Support services are services that support direct suppliers such as tourism offices, food services,
launderettes and tourism research organizations, and tourism and trade publications.
Development organizations facilitate and promote tourism development and include financial
institutions, education facilities and government departments.
DOMESTIC TOURISM
The main tourism attractions and hubs for tourism businesses in South Africa are located in Gauteng,
KwaZulu-Natal and the Western Cape. Within South Africa, the domestic tourism sector generates
more trips annually than international arrivals, and in 2009 domestic travel generated 30 million trips
compared to 9.9 million generated by international arrivals. Forty nine percent (49%) of all South
Africans travel within the country each year, and on average, South African domestic travellers take
2.1 trips per year
18
. However despite the higher number of domestic travellers, international travellers
spend more money. In 2009, International travellers spent R 79.4 billion while domestic travellers only
spent R 22.4 billion.
DOMESTIC TOURISM TRENDS
In 2010, the number of domestic trips across South Africa amounted to 29.7 million with a total spend
of R21.1 billion from these trips. The Provincial trends for domestic tourists and tourism have been

18
South African Marketing Growth Strategy
51

outlined in the following sections
19
. KZN was the province that attracted the highest number of
domestic arrivals while the Northern Cape was the province that attracted the lowest number of
domestic arrivals in 2010.
4.10.1. KWAZULU-NATAL
The number of domestic arrivals to KZN has been decreasing since 2007 from 10.6 million to 8.3 million
in 2010. In 2008 the total annual spend increased from R4.87 billion in 2007 to R7.77 billion in 2008,
however the total annual spend has declined annually since then and in 2010 amounted to R5.64
billion. Despite these decreases in numbers the province still has the highest proportion of domestic
tourists with 28.1% share of the countrys total arrivals, 26.7% share of total revenue and 29.3% share
of total nights. However the major source of domestic tourists is from the province itself with 74.8% of
the domestic tourists coming from KZN. The second largest source province is Gauteng with 15.5%.
4.10.2. GAUTENG
The majority (72%) of domestic arrivals to Gauteng was for VFR (visiting friends or relatives), and the
number of arrivals increased from 5 million in 2009 to 6.4 million in 2010. The reasons for the increase
in tourist to the province may be attributed to the 2010 World Cup Soccer matches, this in turn would
have affected the total annual spend for the period between 2009 and 2010. The total annual spend
also increased from R3.4billion in 2009 to R4billion in 2010. Gauteng had the second largest share of
the total domestic arrivals, bed nights and revenue in South Africa. The share of total arrivals was
21.5%, the share of total revenue was 18.7% and the share of total nights was 17%. The majority
(53.6%) of domestic arrivals were from Gauteng followed by Limpopo with 14.3% and North West with
8.8%.
4.10.3. EASTERN CAPE
The majority of domestic trips to the Eastern Cape were for VFR (visiting friends or relatives), and in
2010 the Eastern Cape was ranked third in the country for domestic arrivals (13.4%), total bed nights
(17%) and total revenue(11.7%) from domestic travel. However, in 2010 the number of domestic trips
declined from 5.7milion in 2009 to 4 million in 2010. The annual total spends also decreased between
2009 and 2010, from R4.28 billion to R2.47 billion. This decrease in tourism revenue would have an
effect on the rest of the economy in the Eastern Cape as tourism is a major economic driver in the
province. This decline would have affected the employment levels negatively as well as the spending

19
SAT Domestic Tourism Report Provincial Scorecard 2007-2010
52

power of the local consumers which in turn would have impacted negatively on the local economy.
The two major source provinces for tourists were the Western Cape with 23.8% and Gauteng with 9.8%.
The majority (57.9%) of domestic tourists however come from within the Eastern Cape.
4.10.4. WESTERN CAPE
In 2010 the Western Cape was the fourth largest domestic travel destination however the number of
domestic arrivals has been declining since 2007 from 4.5 million to 2.7 million in 2010. Despite the
decline in arrivals in 2010 the total annual spend increased by 26% from 2009. This implies that
although less people are travelling, they are either spending more money due to having more
expendable income or things cost more and this is more likely to be the case as can be seen by the
decrease in arrivals. People have less money to travel and so the number of arrivals in the province has
decreased. The province received 9.1% of the share of total arrivals in the country, 15.6% of the share
of total revenue and 10.7% of the share of total nights. The major source of domestic tourists was the
province itself with 70% arrivals originating in the Western Cape; this was followed by Gauteng with
10.8% and the Eastern Cape with 7%.
4.10.5. LIMPOPO
Limpopo received a small share of the countrys total domestic arrivals and revenue; however the
province experienced an increase in arrivals between 2009 and 2010. The number of arrivals increased
from 1.9 million in 2009 to 2.9 million in 2010, this is an increase of 52%. The total annual spend also
increased in the same period from R1.23billion to R1.72billion. The major source for domestic tourists
was Limpopo with 50.2% followed by Gauteng with 46.7%. The share of total arrivals in the country
amounted to 9.9%, while share of total revenue was 8.2% and share of total nights was 8.7%.
4.10.6. NORTH WEST
The North West province received 2.5 million domestic tourists in 2010, which was an increase from
the previous years total of 1.4million. The total annual spend in 2010 amounted to R2 billion which
was an 84% increase from the previous years total of R1.13billion. The increase in annual revenue
increased the share of total revenue from the domestic arrivals to 9.9%, while the share of total
arrivals reached 8.4% and share of total nights was 7.2%. The major sources of domestic arrivals are the
province itself with 35.8% and Gauteng with 46.4%. The province did not receive domestic arrivals from
the Western Cape or the Eastern Cape in 2010.

53

4.10.7. MPUMALANGA
The number of domestic arrivals to Mpumalanga did not change between 2009 and 2010, and amounted
to 1.7 million for each year. The total annual spends for 2010 was R1.07 billion compared to R1.49
billion in 2009 and as such the province had a very small share of total arrivals and revenue for 2010.
The share of total arrivals was 5.9%, the share of total revenue was 5.1% and the share of total nights
was 6.3%. The major source of domestic tourist in 2010 was Gauteng with 69.1% followed by 24.4%
domestic tourists from the province of Mpumalanga.
4.10.8. FREE STATE
The Free State had a very small share of the total domestic arrivals and revenue in 2010. The share of
total domestic arrivals amounted to 3.6%, the share of total revenue was 3.2% and the share of total
nights was 3.3%. The majority (42.3%) of domestic tourists to the province was from Free State and
39.3% were from Gauteng, followed by Eastern Cape with 12.7%. The number of arrival to the Free Sate
declined between 2009 and 2010, with arrivals decreasing from 1.7 million to 1.1 million. The annual
spend also showed a significant decline from R 1.4 billion in 2009 to R 677 million in 2010.
4.10.9. NORTHERN CAPE
The Northern Cape received the lowest share of total domestic arrivals and revenue from domestic
travel in the country. The share of total arrivals and the share of total nights was .07% each while the
share of total revenue was slightly higher at 1.1%. The number of domestic arrivals declined by 66%
from 600 000 domestic arrivals in 2009 to 200 000 domestic arrivals in 2010. The total annual spend
also decreased from R465 million in 2009 to R223 million in 2010. The major sources of domestic
tourists for the Northern Cape are the Northern Cape with 31.7% followed by Gauteng with 26.8% and
the Western Cape with 26%. The Northern Cape receives domestic tourists from the provinces across
the country with the exception of Limpopo.

54

THE POLICY AND STRATEGY FRAMEWORK FOR
DEVELOPING SMALL AND MEDIUM ENTERPRISES IN THE
TOURISM SECTOR
The following sections of the report provide an overview of the policies and legislations in place to
assist with the development of small and medium businesses in the tourism industry. These sections
discuss the national strategies such as the Marketing Tourism Growth Strategy 2011-2013, the Tourism
Act, and the Accelerated and Shared Growth Initiative for South Africa. Furthermore the provincial
frameworks, policies and strategies are also discussed for each province in South Africa. An overview of
the various support and development programmes within the National government as well as in the
provincial departments is also provided in these sections.
NATIONAL SUPPORT PROGRAMMES, POLICIES AND STRATEGIES TO SUPPORT SMES IN THE
TOURISM SECTOR
On a national level South African tourism is managed by The National Department of Tourism. The role
of the national government is to agree on policy matters and the implementation of strategies
including the monitoring and evaluation of programmes, and to invest in tourism marketing programs.
In order to keep up with international tourism markets and the South African tourism market it is the
governments role to conduct necessary research to identify marketing and development opportunities
as well as to identify new tourism products. The role of the government is to ensure the coordination
of tourism organisations across international, national, provincial and local levels. The National
Department of Tourism and the Department of Trade and Industry work in conjunction with funding
programs and initiatives to provide funding and assistance towards rural development and investments
in small and medium enterprises. There are a number of key policies and strategies that are in place
aimed at supporting growth of the tourism sector and these include:
4.11.1. THE MARKETING TOURISM GROWTH STRATEGY FOR SOUTH AFRICA 2011 2013
The focus of the Marketing Tourism Growth Strategy is to maximize and identify opportunities and
overcome challenges in the tourism industry. This strategy aims to encourage stakeholders to engage in
tourism based operations and guide investments behind the tourism brand and growing demand for
55

South Africa. This Marketing and Growth Strategy has an integrated approach involving coordination of
different departments to reach tourism goals.
This strategy outlines coordination of a number of players in the tourism industry namely The National
Department of Tourism (NDT), South African Tourism (SAT), The Department of Trade and Industry
(DTI), the Tourism, Hospitality and Sport Education and Training Authority (THETA). These
organizations are involved in achieving the goals set out in the strategy and in accordance with the
Tourism Act.
4.11.2. THE TOURISM ACT
The Tourism Acts mandate is to promote sustainable growth, sustainable job creation, and
redistribution and transformation of the tourism industry. This can be achieved by increasing tourist
volumes, increasing the amount of time tourists spend in the country which would in turn increase the
amount of money they spend, and reducing seasonality.
4.11.3. ACCELERATED AND SHARED GROWTH INITIATIVE FOR SOUTH AFRICA (ASGISA)
The two major goals of the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) are to
halve unemployment and poverty by 2014. The achievement of these goals can only take place by
increasing economic growth by 6% of GDP.
20
This national initiative is supported by all spheres of
government to achieve accelerated economic growth by; investing in infrastructure such as power
distribution and rail transport, sector investment of which tourism has been identified, skills and
educational initiatives, eliminating the second economy through initiatives to address inequalities and,
overcoming macro-economic issues such as improving government budgeting.
21

In an effort to promote private sector investment, AsgiSA has developed sector strategies. AsgiSA
identified tourism as a priority sector along with business process outsourcing (BPO). These sectors are
crucial to economic growth as they can be seen as labour-intensive, increasing globally and they have
opportunities for BBBEE and the development of small businesses.
22

AsgiSA outlines the key focus issues in the tourism industry as:
Marketing

20
Accelerated and Shared Growth Initiative for South Africa (AsgiSA) (2006)
21
Accelerated and Shared Growth Initiative for South Africa (AsgiSA)(2006)
22
56

Air Access
Safety
Skills Development.
AsgiSA outlines that through the framework, the tourism sector has already grown to where it can
contribute to 8-12% of GDP. AsgiSA states that furthermore the tourism industry is co-dependent i.e.
the industrys major partnerships are government and the private-sector.
23
The collaboration of the
private and public-sector will address challenges faced in the industry and furthermore share the
weight of overcoming challenges; this can be achieved by ensuring that there is adequate
communication and networking between private and public-sector tourism organizations.
To achieve the objectives of AsgiSA, skills and educational initiatives are in place such as the Joint
Initiative for Priority Skills Acquisition (JIPSA). This initiative is to identify urgent skills needs and
effective solutions for attaining these skills which can be achieved through special training
programmes, bringing back retirees, recruiting skills of expats or sourcing skills from abroad.
24

4.11.4. INDUSTRIAL POLICY ACTION PLAN 2010/11-2012/13 (IPAP)
The Industrial Policy Action Plan aims to create 43 000 direct jobs and 86 000 indirect jobs in South
Africa by 2013. The IPAP is a critical component to growth in South Africa, and deals particularly with
value added activities in manufacturing and other high quality services in the country. IPAP has
identified key action programmes, outcomes and key milestones for various industries and sectors in
South Africa including tourism. The Key Action Plans (KAPs) for tourism are;
KAP1. Niche Tourism Development
This intervention involves the formulation of a Niche Tourism Development Framework. The intention
of this framework is to guide niche tourism development in South Africa and identify the high growth
and yield niche tourism services and products to be developed. Niche tourism provides the tourism
sector with an opportunity to develop new markets and diversify the economy. Furthermore niche
tourism has the potential to create skilled jobs as the products and services are more specialised than
general tourism products. Generally niche tourism products are located outside of mainstream tourism

23
24
57

areas and so the development of niche tourism products could encourage geographical distribution of
tourism benefits.
The key outcomes of this KAP are:
The development of the niche tourism framework
Annual market research reports and analyses to identify supply gaps and development opportunities
Support for industry development through funding opportunities and organisations
KAP2. Tourism Export Development and Promotion
This intervention is the establishment of a private sector driven Tourism Export Council along with
guidelines for tourism enterprises to access individual Exhibitor Assistance under the Sector Specific
Assistance Scheme. The aim of this KAP is to increase market share and promote South African Tourism
products and services globally.
The establishment of the Tourism Export Council
Participation guidelines for the Individual Exhibitor Assistance programme
Increased tourism arrivals and revenue into South Africa as well as increased market access
KAP3. Airline Pricing Structure Investigation
This intervention is to research and investigate the pricing of airlines and to develop a position paper
and to draft regulations for the Consumer Protection Act. The objective is to create transparency for
pricing of tickets for consumers and to promote competitiveness.
Effective regulations of the Consumer Protection Act to address unfair pricing structures
4.11.5. NATIONAL TOURISM DEPARTMENT MEDIUM TERM STRATEGIC PLAN 2010/11-2014/15
The National Tourism departments efforts will be geared towards creating a conducive environment
for the tourism sector to increase its direct contribution to GDP from R52.38 billion in 2009 to R65.72
billion in 2015, and increase the number of jobs supported directly by the sector from 527 630 in 2005
(as per the 2008 Tourism Satellite Account) to 640 000 in 2015. These will be achieved by, amongst
others, increasing the number of foreign arrivals from 9 591 828 in 2008 to 12 068 030 by 2015 and
increasing the number of domestic tourists from 13 483 000 in 2008 to 16 000 000 by 2015. The
international marketing efforts will concentrate on high yield markets. The GDP growth will further be
58

assisted by increasing total tourism direct spend from R100billion in the 2008 calendar year to R169
billion in the 2015 calendar year.
The department has set out 11 strategic themes, together with the associated objectives, to meet
these goals (Medium-Term Strategic Plan, 2010/2011-2014/2015):
People empowerment and job creation: target the unemployed, youth, women, the disabled and
SMMEs to promote job creation in these under employed sectors. The Expanded Public Works workers
employed by Social Responsibility projects are also economically empowered through projects aimed at
improving their skills and capacity levels.
Tourism Sector Transformation: Ensuring that all demographics are represented fairly within the
tourism sector.
Sustainable Tourism Growth and Development: Through addressing geographic and seasonal
imbalances of tourism; involving rural communities in mainstream tourism; promoting travel amongst
South Africans; ensuring that travel and tourism sectors contribute to economic growth; promoting
work in the tourism sector; and targeting young people and promoting people development to ensure
this sustainability
Responsible Tourism Promotion: Ensure responsible, best practices are upheld in Tourism
Tourism Service excellence: promoting the competitiveness and the good work of the Tourism sector.
Tourism Sector Knowledge and Policy Leadership: The following measures are taken to ensure the
Tourism Sector is well managed: Tourism planning and decision making will be informed timeously with
relevant tourism information; the tourism sectors Monitoring and Evaluation system will be uniform
and functional; promote policy and legislation enabling tourism growth and development; support
growth and development of Local Government Tourism initiatives; manage and conduct tourism growth
and development research.
Integrated Tourism Governance: The following measures are taken to ensure that Tourism Governance
is effectively and positively promoting the tourism sector: Promote tourism priorities in Local and
Provincial government plans; provide information which encourages domestic tourism; and facilitate
contributions to the growth of tourism interdepartmentally.
Public Education, Awareness and outreach: promoting a positive image of the Department; encourage
a culture of tourism in the country; empower South Africans through access to information about
tourism; encourage stakeholders to participate in ownership of the sector; and be an accessible, caring
department.
A better Africa and a better World: Encourage a global environment supporting the growth,
development and sustainability of South African Tourism; contribute to Good Global Tourism
Governance; strengthen Regional, South-South and South-North Integration and cooperation.
59

Human Capital Management: ensure skilled, capable and competitive human capital is available, while
promoting representation of a diverse and happy workforce.
Good Governance: The department aims to efficiently maximise their use of allocated resources
towards achieving government mandates, through reducing risk exposure, promoting transformation,
ensuring cooperation with Public Entities and ensuring public transparency and accountability.
4.12. NATIONAL SUPPORT/DEVELOPMENT PROGRAMMES
There are a number of national support programmes that provide both financial and non-financial
support to SMMEs in South Africa. The following section outlines the most relevant programmes for
tourism businesses.
4.12.1. TOURISM SUPPORT PROGRAMME (TSP)
The Department of Trade and Industry (the dti) has a sub programme of the Enterprise Investment
Programme, called the Tourism Support Programme (TSP). The TSP is a cash grant incentive that
supports the development of tourism enterprises. Local and foreign owned tourism entities can apply
for cash grants of up to 30% on qualifying investment costs in furniture, commercial vehicles, buildings
and land, and equipment for establishing a new tourism facility or expanding an existing tourism
facility. These cash grants are payable over a three year period.
4.12.2. TOURISM LEARNERSHIP PROJECT (TLP)
The Tourism Leanership Programme (TLP) is a training programme which is co funded by the
Department of Labour and the Tourism, Hospitality, Education and Sport Training Authority (THETA).
The objective of this programme is to improve training and skills in the tourism and hospitality sector.
4.12.3. POVERTY RELIEF PROGRAMME
The Poverty Relief Programme was established by the government to reduce and ultimately eradicate
poverty in South Africa. The tourism section of the Department of Environmental Affairs and Tourism is
allocated with funding to support tourism projects. The objective of the programme is to use funding
to develop projects that will create jobs, develop new tourism products, and provide training and
ensure sustainability of the project.

60

4.12.4. DEVELOPMENT BANK OF SOUTH AFRICA
The Development Bank of South Africa (DBSA) supports South African tourism by investing in
infrastructure and financing development in partnership with public and private sectors. The DBSA
provides support in the form of equity, loans and grants to both private and public sector clients. The
following types of projects are supported by the DBSA:
Attractions
Facilities and Services
Transport
Support services
Infrastructure development
4.12.5. INDUSTRIAL DEVELOPMENT CORPORATION TOURISM BUSINESS UNIT
The IDC Tourism Business Unit offers financial assistance to accommodation business and capital
intensive tourism projects that will assist in the growth of the tourism industry. Assistance is provided
in the form of loans and the business must provide an equity contribution of 40%. Furthermore projects
must be economically viable to receive assistance from the IDC Tourism Business Unit.
4.13. PROVINCIAL POLICY OVERVIEW
Within the broad tourism sector of South Africa, each of the nine provinces are responsible for the
promotion and marketing of their own region as a domestic and foreign tourist destination. This
marketing and promotion is done in participation with the local government, private sector and
stakeholders of each region to ensure that growth in the tourism sector trickles down to the local
individuals in the form of skills training and job creation, especially amongst previously disadvantaged
communities. Additionally, in order for tourism to be sustainable, each province has ensured that their
tourism growth strategies integrate a strong eco-tourism and environmental impact awareness
25
. In the
following sections, the growth strategies of the provinces are discussed.

25
Eastern Cape Tourism Master Plan, 2011
61

The main goals of the Western Cape Tourism strategies aim to review tourism routes, improve road
signage, develop tourism gateways and conclude and implement mega projects to facilitate the growth
of both international and domestic tourism markets to increase leisure and business tourism and events
in the province.
The tourism sector in the Western Cape (WC) has become the fastest growing and largest job creating
sector of the economic sectors in the province. In effect the WC has been identified as the province
that has the most developed tourism industry in the country. It provides 1 in every 10 employees with a
tourism related job and contributes R 25 billion to the WC economy annually. Due to its economic
contribution to the province as well as the country, the WC Government has initiated ongoing research
projects through the Department of Economic Development and Tourism (WCDEDAT) in order to
address any potential tourism needs and future growth opportunities
26
.
Although the WC tourism sector has been identified as the fastest growing and most developed tourism
sector in the country, a number of barriers have been identified that inhibit growth in this sector,
namely:
Non-existent integrated tourism marketing model, strategy and structure for the province.
Insignificant positioning of the destination as a dynamic business tourism destination.
Insignificant positioning of the destination as a vibrant leisure tourism destination.
Lack of dedicated centralised funding and resources to develop and market events.
Limited and unrealised new tourism infrastructure, niche markets, routes and tourism products.
New businesses and tourism products are not spread as widely as possible, both geographically and
seasonally.
Inadequate innovative tourism products and marketing processes.
Quality of skills and customer service need to match global standards and be maintained.
Weak linkages between tourism and the commercial arts and entertainment sectors (craft, film, music,
visual arts and performing arts)
27
.

26
WCDEDAT, 2009
27
Department of Economic Development and Tourism, Annual Performance Plan, 2011
62

Western Cape Annual Performance Plan 2011/2012
To address these barriers, three strategies were introduced in the WCDEDATs Annual Performance Plan
for 2011/2012. The main focus of Strategy 1 is tourism development. The following interventions have
been identified for Strategy 1:
Development of tourism niche markets areas such as cruise liner tourism, health tourism, sport and
mega event tourism, and culture and heritage tourism; b) development of new and existing tourism
routes; and Development of tourism infrastructure, sites, attractions and facilities.
The main focus of Strategy 2 is tourism destination global competitiveness. This strategy is a new
area and consists of two interventions, namely innovation, mainly methods to attract new tourists and
product development technology
Lastly, the focus of Strategy 3 is tourism support services in the form of: tourism safety and support,
in order to counter any negative perceptions of safety in the WC; tourism quality assurance, by means
of assessment and re-assessment of service accommodation, self-catering services, and tour operators;
Tourism greening, that will be incorporated in quality assessments; universal accessibility, for the
inclusion of the disabled tourist; tourism road signage; Locals provided with tourism destination
exposure i.e. provides access to communities who do not usually take part in tourism experiences
28
.
Additionally, WCDEDAT has developed two more condensed and long-term strategies, aimed at tourism
development in the WC, namely Micro-Economic Development Strategy (MEDS) and DEDAT 5 Year WC
Strategic Plan 2010/15.
These strategies aim to stimulate the growth of both international and domestic markets and
increase both business and leisure tourism and events. Business tourism is particularly important to
the WC as the province has been named the number one African convention destination and was
ranked 37
th
on the global list by the International Congress and Convention Associations Global Ranking
Report. In 2011 alone, the convention industry was expected to generate R 324, 8 million in revenue.
Leisure tourism also plays an important role in the WC tourism sector, as the province hosts a number
of cultural and sporting events, such as The Cape Town International Jazz Festival which generated R
430 million for the province. Both strategies highlight the importance of skills development in the
tourism sector, a key element for sustainability.

28
63

Western Cape Support/Development Programmes
The Western Cape Government offers tourism grants to SMMEs in the tourism industry to develop
business networks, and to support community development projects. Training is also provided for tour
operators and accommodation facility owners. Tour guides are also provided with assistance in
developing business plans and receive after care and monitoring for their businesses. A tourism help
desk has been established to assist emerging entrepreneurs with business development and planning in
the province.
4.13.2. KWAZULU-NATAL
The main goals of the tourism department are to promote and increase the marketing of tourism
products and service to tourists. Tourism in Kwazulu-Natal (KZN) has always played an important role
in the economy as it contributes 10% to KZNs GDP. However, since the 2010 FIFA World Cup, the
promotion and marketing of KZN as a sports destination has become the focus of the tourism marketing
strategies. The provinces 2010 website, which was also the first of its kind informed visitors on
provincial specific facts regarding the soccer event. The website has become a platform through which
retail and other tourism companies obtain business, and the province hopes it will continue to attract
tourists to the province over years to come
29
.
KZN Department of Sports and Recreation
Another goal of the Department of Sports and Recreation is to attract new sporting events since KZN
already has the sporting infrastructure in place (with the Moses Mabhida Stadium as center-piece) and
has proven its ability to host big events in recent years. Sporting events that have showcased the
provinces ability to manage and host big events are: the FIFA Beach Soccer World Cup and the
Confederations Cup Soccer in 2009; FIFA World Cup South Africa in 2010; and FINA World Swimming
Championships in 2011. Furthermore the Durban FIFA Fan Fest was attended by 766 412 people during
the 2010 FIFA World Cup. Other annual events that have been successfully hosted by the province
include the Comrades Marathon, the Durban July and the Dusi Canoe Marathon.
Apart from sport, KZN also has well-developed, diverse, and popular tourism assets, around which their
tourist strategies are developed. One of KZNs goals is to market province as niche market destination
for cruise tours, educational tours, cultural tourism, charters and plane trips, golf, health and hunting
all year round.

29
KZNDEDAT, 2009
64

KZN Beach Tourism Policy
Another tourism strategy that has been planned for 2012 is the Beach Tourism Policy; the objective of
this strategy is to get municipalities along the coast of KZN to participate in a joint marketing
mechanism that will ultimately promote the province as a whole to international tourists
30
.
KZN Department of Economic Development and Tourism: Strategic Tourism Plan
The key objectives of KZNDEDAT strategic plan for tourism are to transform and develop the sector
with the following interventions:
Ensuring tourism product development promotes the packaging of tourism activities and experiences so
that the province is the destination of choice for South Africa and in this way increase investment in
the sector which will result in the creation of sustainable job opportunities.
Work with all stakeholders in the sector to develop a Provincial Tourism Master Plan, which will drive
tourism development, growth and skills development.
Develop and implement the KZN Provincial Tourism White Paper and ensure capacity building takes
place where necessary to facilitate implementation.
Strengthen the tourism development service offering for SMMEs, co-operatives and emerging previously
disadvantaged tourism entrepreneurs and expand service delivery to SMME across the province to drive
tourism growth and development.
Finalize and implement the Provincial Tourism Transformation Plan.
Monitor the rollout of the Tourism BEE Scorecard
Review the KwaZulu-Natal Tourism Act and all other relevant legislation and regulations for alignment
with the National Governments Medium Term Economic Framework and to eliminate any hurdles
blocking tourism growth and development and the subsequent job creation
31
.
KwaZulu-Natal Support/Development Programmes
Tourism KwaZulu-Natal supports tourism business development in the province by facilitating tourism
entrepreneur development and training. Training is provided to tour operators and tour guides in skills
training, feasibility studies and various business planning skills and strategies. Furthermore assistance
is provided in business marketing and developing business linkages for SMMEs.

30
www.kwazulunatalbusiness.co.za
31
Theta, 2011
65

4.13.3. GAUTENG
The Gauteng tourism strategies aim to stimulate job creation, strengthen safety and security in the
province and promote Gauteng as a smart and creative province, through the use of investment,
marketing, and the required skilled workforce
3233
.
Gauteng Tourism Strategy
Tourism, as an economic sector, plays an important role in facilitating growth and transformation of
the economy of Gauteng. A key strategy that promotes growth in the tourism sector is the
identification of required tourism-related skills that are required and that can be developed in
workshop interventions. The objective of this strategy is to alleviate poverty in the province and
promote economic growth. During the Gauteng tourism summit in 2011, a Gauteng specific tourism
strategy was created as an adaption of the national tourism sector strategy. This strategy aims to
create 225 000 sustainable tourism-related jobs by 2015.
Gauteng Support/Development Programmes
Gauteng Tourism Authority
The Gauteng Tourism Authority (GTA) offers assistance to small businesses in the tourism industry
through facilitating skills training and providing funding. The objectives of the GTA assistance are to:
Provide critical infrastructure to promote growth and investment
Support tourism development
Improve community members quality of life and promote community involvement ion projects
Support training and skills development
Establish tourism routes, nodes and clusters
Improve tourism visitor experiences in the province
4.13.4. EASTERN CAPE
The main goal set out for tourism in the EC, is to realize its tourism potential and drive tourism growth
and development in this province. This will be achieved through:
tourism product development

32
www.joburg.org.za
33
Theta, 2011
66

Tourism marketing
Human resource development
Development of tourism relevant infrastructure
Transformation of the tourism sector
Increase in tourism research and information
Improved tourism safety and security
Improved management of the tourism sector
34
.
Eastern Cape Provincial Marketing Strategy
A provincial marketing strategy has been developed to promote strategic partnerships with key
marketing partners, promote the province at relevant trade shows and exhibitions and engage in
targeted marketing with important target markets.
Tourism product development aims to improve the product offering of the province and also to
increase investment potential. The products are diverse and are intended to assist in the upliftment of
rural communities in the province.

The following high priority potential tourism products have been identified for development:
Gariep Lake Development,
Maluti-Drakensberg Transfrontier Park in Alfred NZ area
Mandela Development Corridor linking eco-tourism of the Wild Coast to adventure tourism
Hotspots of the Southern Drakensberg
The Amatole Park and Living Museum linking all the conservation areas of this district to
showcase the areas natural beauty.
Human resource development has been identified as a key driver to improving the provinces tourism
sector competitiveness, as a skilled workforce is a competitive workforce. The master plan identifies
that training happens in a haphazard manner and a tourism skills audit is needed so that the province
may have a coordinated approach to human resource development. This links directly to the skills
planning activities of THETA and due to this synergy the province and THETA have agreed in principle
to work together on the tourism skills audit. The province would also like to develop and promote skills

34
Eastern Cape Tourism Master Plan, 2009-2014; Eastern Cape Socio Economic review and outlook, 2011
67

development in the province especially within workplaces and aims to develop, adopt and implement a
comprehensive skills development strategy and structure for the province.
Development of tourism relevant infrastructure has been prioritized and transformation of the
tourism sector has been identified as being imperative to contribute to the economic transformation of
both the province and tourism sector, and it allows for communities to perceive tourism as being
beneficial and valuable.
Tourism research and information has been identified by the province as being critical, as research in
the tourism sector is limited and the lack of research regarding the tourism sector and more
specifically Tourism HRD has hampered accurate skills planning and effective skills development.
Tourism safety and security will be improved as 54.1% of tourists to the province who reported having a
bad experience while in the province identified crime as the biggest issue.
Management of the tourism sector has been identified as a critical area and identifies that those
responsible for the management of the tourism sector do not have the necessary skills for the sector to
be able to grow to reach its full potential, including both public and private managers. The strategy
entails tourism capacity building initiatives for all managers as well as management related training for
those managers requiring it
3536
.
Eastern Cape Support/Development Programmes
The Eastern Cape Tourism Board offers training, marketing, and assistance with exhibitions and
business linkages to SMMEs in the tourism industry. The assistance is provided in the form of non-
financial support to SMMEs.
4.13.5. FREE STATE
The provinces focus is developing a nature-based tourism sector in the rural areas of the province and
capitalizes on the abundance of scenic beauty in the province. The rural areas surrounding the
established Golden Gate tourist attraction can be further developed and enhance the offering. The
development initiatives are listed as follows;
Develop tourism products as part of focused tourism routes in rural areas such as the Maloti Route.
The development of routes within routes has been identified as means of exploiting the existing
fractured tourism attractions within the province to generate exciting and new tourism products. A
super route linking all the tourism attractions of the Eastern Free State, by means of combining hiking,
quad biking, horseback riding and river rafting trails is an example such a route.

35
Theta, 2011
36
ECDEDEA, 2008
68

Tourism routes must have a core and ancillary focus, therefore a route such as the Maloti Route would
have a nature-based tourism focus but subsidiary routes feeding off this main route with cultural and
historical focus will be developed.
Tourism development options in the province include previously disadvantaged individuals and their
communities and will be used as means of uplifting the rural poor. This is not limited to BBBEE
opportunities only but also includes creating employment opportunities for these individuals and their
communities.Development of the existing adventure-based weekend and day-trip market of the Vaal
River and Parys area.
The conferencing and event sub-sector in the province and particularly Bloemfontein will be
developed as the central location within the country is ideal for this market and it is further envisaged
that while Cape Town, Durban and Johannesburg are all competing for international conferences,
Bloemfontein should exploit its central position and focus on staging national conferences. The
development of the conference industry in Bloemfontein could also have a knock-on effect for
tourism in the province as more business travelers will be exposed to the province and might return
with their families for leisure travel.
The province also hosts the Macufe Festival and the Volksblad Kunstefees; however these are
primarily aimed at the domestic market in the province and need to be developed to the same level as
the National Arts Festival or North Sea Jazz Festival to attract visitors from across the country to the
province.
The sport, recreation and fitness sub-sector has also been identified as an area with huge tourism
development potential. The province and Bloemfontein in particular have a multitude of excellent
sporting venues, including world class drug testing facility at the University of the Free State that has
been approved and accredited by the International Olympic Committee since 1995 and has been
conducting thousands of doping test ever since. Therefore there is huge sports tourism potential within
the province that is made even more attractive due to its central location
37
.
Free State Support/Development Programmes
The Department of Economic Affairs and Tourism in the Free State provide non-financial support to
SMMEs in the tourism sector through:
Advice on starting a business
Marketing assistance and providing marketing material
Facilitating linkages with other support programmes such as TEP
Facilitating training for tour guides, catering businesses and accommodation facilities

37
Theta, 2011
69

Assisting with exhibitions for tourism businesses
4.13.6. LIMPOPO
The focus of the province is on improving education and skills, providing essential infrastructure and
Building capacity in technology. Furthermore the goals of the province are to open access to capital
markets and to improve institutional efficiency in specific destinations with high tourism potential with
regards to the following tourism sub-clusters:
Special interest activities such as Mapungubwe and Nyslvlei birding
Game and hunting industry value chain Golf tours
Biospheres such as Waterberg, Soutpansberg and Lowveld
Family entertainment including resorts, sports and picnics
Polokwane business tourism focusing on conferencing and events including the staging of sports
events
Mountain adventures tourism on the escarpments
Trans - frontier Parks
38

Limpopo Support/Development Programmes
The Department of Economic Development and Tourism in Limpopo has established a section 21
company, a non-financial support information hub and a SMME Development Agency to provide support
to tourism businesses in the province. Furthermore, the Limpopo Tourism Authority was established to
assist SMMEs in the tourism industry with marketing, exhibitions, training and partnering with the TEP.
4.13.7. MPUMALANGA
The focus of the provinces tourism development is to provide efficient and effective administration
and strategic support service to the sector and to facilitate support and development of business
enterprises in the sector. Furthermore the province has set out the following objectives and goals for
tourism development:
To ensure the participation of HDIs in both and sector and economy as a whole
Ensure the development of a competitive sector
Create a platform to enhance sustainable tourism growth

38
Theta, 2011
70

To implement consumer protection and awareness strategies that creates an environment
conducive to fair trade
Ensure the co-ordination of relevant economic research in the sector
To contribute to the management of information and knowledge of the sector
To provide economic policies and strategies for the sector
Determine the effectiveness and impact of policies, strategies and programme objectives have
had on the sector
39

Mpumalanga Support/Development Programmes
The Department of Economic Affairs and Tourism in Mpumalanga provides non-financial support to
SMMEs in the tourism industry. The support is provided in the following ways:
Assistance with writing a business plan
Marketing support
Establishing or setting up an office
Tour guide registration
Providing exposure at exhibitions and conferences
4.13.8. NORTH WEST PROVINCE
The NW province aims to stimulate growth in its tourism sector and allow it to reach its full potential
through tourism policy and strategy; tourism marketing; tourism development; tourism information
management; and institution arrangements. By addressing these key strategic objectives it aims to
diversify its tourism sector through the promotion of cultural tourism, entertainment and hospitality to
international tourists
40
.
The North West 2014 Business Road Map
The North West Parks and Tourism Board adopted a new strategy in 2004 which is called the "2014
Business Road Map". The key objectives include the following:
To create a strategic culture within the organization
To ensure financial efficiency and sustainability
To contribute to the transformation of the economy

39
Theta, 2011
40
NWPG, 2004; Theta, 2011/2012-2015/2016
71

To ensure the alignment of the operations of the organisation
To ensure the alignment of the financial and strategic dimensions of the organisation
To create a humanized workplace environment
41
.
North West Province Support/Development Programmes
The Product Development unit of the North West Parks and Tourism Board focuses on tourism
development in the area and engages with the local communities to:
Promote investment in tourism and community development
Promote capacity building
Promote SMME development
To promote SMMEs development the Product Development unit assists with marketing at trade
shows and Indabas and provides skills training to businesses as required.
4.13.9. NORTHERN CAPE
The tourism marketing focus for the province is to market the area and build a strong market
intelligence base and develop a distinct and recognizable provincial brand. Specifically, the Northern
Cape Tourism Authoritys strategy is to promote the Northern Cape as a destination for Extreme
Escapism, to enjoy the open spaces and extreme topography and features of the province. This strategy
has a strong focus on attracting extreme events such as the Maloof Skateboard Cup, land speed
record attempts, paragliding, rafting, etc.
Tourism product development to package the existing tourism products in the province and to
allow for the development of new attractions to the province.
Tourism spatial development so that the tourism sector in the province be developed around strong
tourism clusters with existing tourism products which will allow consumers to access high tourism
potential areas.
Transformation in tourism. The province is actively seeking to promote compliance with the Tourism
Sector Codes of Good Practice and in this way drive the transformation of its tourism sector
4243
.

41
www.tourismnorthwest.co.za
42
Tourism Consulting and Marketing, 2011
43
Theta, 2011
72

Northern Cape Support/Development Programmes
The Department of Economic Affairs and Tourism in the Northern Cape provides non-financial support
to SMMEs in the tourism industry. The support to SMMEs includes the following:
Marketing assistance
Assistance with business plans and proposals
Provision of mentors and mentorship to SMMEs
Provision of business counseling and feasibility assessments
Facilitation of exposure at national and international tourism exhibitions
4.14. IDENTIFICATION OF HIGH POTENTIAL SUBSECTORS
The main subsectors within the industry are accommodation, transport, tour operators, and
entertainment and tourism experience. Within South Africa there are an estimated 5000 travel
agencies and more than 800 tour operators. The number of registered tour guides in South Africa in
2006 was 10 115. In terms of vehicle hire, there are an estimated fifty small car hire operators in
existence. Accommodation businesses
44
are spread across South Africa, and there are an estimated 230
timeshare resorts in operation, approximately 8000-9000 guest houses and B&Bs, and 1000 private
game reserves and lodges. These accommodation figures do not include hotel accommodation and
backpackers.
Given the information available publicly regarding opportunities within the tourism industry the
subsectors that have been identified as high potential growth subsectors are accommodation,
transport, and entertainment and experience. These opportunities are discussed in more detail in the
data analysis section.
4.15. JOB CREATION POTENTIAL
National goals for job creation in the tourism industry in South Africa have been set out by the
Department of Tourism in a Medium-Term strategic plan for 2010/11-2014/15. The first strategic
theme in the report focuses on People Empowerment and Job Creation, as tourism is described as,
among many definitions, a labour intensive industry with the capacity to create jobs in a variety of
economic industries, such as arts and culture, sport, agriculture, transport, and construction
45
. The

44
45
MTSP, 2010; NTSS, 2011
73

goal of the estimated 640 000 tourism related jobs by 2015, compared to the 527 630 jobs in 2005, is
planned to be achieved through the means of two objectives
46
:
To contribute to job creation through the use of labour-intensive methods targeting the unemployed,
youth, women, the disabled and SMMEs
To build and improve the skills and capacity levels of the Expanded Public Works workers employed in
the Social Responsibility projects
This goal further supports the plan of the African National Congress (ANC) to create 225 000 new jobs
in the tourism sector by 2020. The Tourism Enterprise Partnership (TEP) is also greatly committed to
achieving the governments 2020 goal and have already set clear targets for the organisation to
achieve, among many, 10 000 new jobs in the current financial year
47
.
At present there is no database in South Africa that captures all the entities operating in the tourism
sector. This makes the quantification of the exact size of this sector very difficult, which consequently
makes accurate skill planning very problematic. This is due to the large amount of Small, Medium and
Micro Enterprises (SMME) that dominate both the tourism sector and its subsectors, which are too small
both in size and income to be registered on any official national databases. However, when taking into
account those entities that are registered on one or more official databases, the total number of
entities in the tourism sector come to 41 740 entities, who employ around 378 000 staff members.

46
MTSP, 2010, p.6
47
Global Media Face Off INDABA, 2011
74

The breakdown of the estimated total amount of entities into its sub-sector, are illustrated in the table
below:
TABLE 16: NUMBER OF EMPLOYERS AND EMPLOYEES PER SUB-SECTOR
Sub-sector Number of
employers
Percentage Number of
employees
Percentage
Hospitality 28 000 67% 290 000 77%
Travel and Tourism 6 200 15% 28 000 7%
Gaming and Lotteries 740 2% 10 000 3%
Sport Recreation and Fitness 3 300 8% 20 000 5%
Conservation and Tourist
Guiding
3 500 8% 30 000 8%
Total 41 740 100% 378 000 100%
Source: Prodigy Grant Thornton, 2007, quoted in Theta, 2010
It has been estimated that those SMMEs that employ between 0 and 49 individuals account for 96.05%
(20 565) of the complete tourism sector. As previously stated, SMMEs also dominate each sub-sector of
the tourism sector with 96.36% of the Hospitality sub-sector, 95.99% of Travel & Tourism sub-sector,
95.92% of the Sport Recreation & Fitness sub-sector and 95.26% of the Conservation & Tourist Guiding
sub-sector being SMMEs.
The statistics above imply that the tourism industry in South Africa is comprised of a large number of
SMEs and as such the potential for growth of the SMEs exists as well as the potential for further SME
development. Furthermore it is imperative that SMEs receive support and promotion from government
and other organization to ensure that the tourism industry continues to grow and create jobs in the
economy.
Some of the main reasons provided for the large amount of SMMEs in the tourism sector, are the
perceptions held by upcoming entrepreneurs that tourism provides a platform for making quick money
without investing too much capital; and the fact that minimal barriers exist when starting a new SMME,
75

as there are no formal registration requirements and only basic industry specific skills are required to
do so
48
.
Tourism and the Film Industrys job creation potential
Apart from the well-utilized economic industries in which tourism jobs make out a large part, the
National Tourism Sector Strategy (NTSS, 2011) has highlighted that South Africa is not yet fully utilizing
the potential of the filming industries in terms of job creation in the tourism industry. Due to the facts
that these industries have generated revenue of over USD1 trillion in 2003; and are still growing on a
rate of over 9% in the film industry and over 6% in the television industry , these industries are believed
to have greater capacity, than other advertising campaigns, to reach a bigger tourism market
audience. These industries are important because they have the ability to bring about education,
socialization, and preservation of cultural heritage all of which helps to establish growth and
sustainability of tourism in South Africa
49
.
Niche Tourism: City tourism products and services
Additionally, it is said that the 2010 FIFA World Cup attracted a new type of tourist to South Africa,
who rather wanted to explore and enjoy the city life, shops, restaurants and museums, than the nature
sites. South Africa has, in the past, mainly focused on advertising itself as a wildlife safari experience
and nature destination, it is now challenged to focus more on what the cities have to offer to
tourists
50
. This may then become a new opportunity for job creation in industries such as restaurants,
night clubs, wine farms, city tour operators, and other attractions located in and around the major
South African cities.
Role Players or Key Stakeholders
In South Africa, the key role players and stakeholders in the tourism sector include public and private
sector stakeholders. On a national level the key stakeholders include, The National Department of
Tourism, South African Tourism, The Department of Trade and Industry, Tourism Business Council of
South Africa, and the Tourism, Hospitality and Sport Education and Training Authority.

48
Theta, 2010
49
NTSS, 2011
50
76

The roles and responsibilities of these organisations are outlined in the table below:
Roles and Responsibilities of organisations in the Tourism sector of South Africa
The National Department of Tourism (NDT) The role of the NDT to ensure the sustainability of
tourism as a contributor to the South African
economy. The Department manages the core
tourism data set, and distributes this and other
research information to the public and private
sectors.
South African Tourism (SAT) SAT is responsible for marketing the South Africa
brand as an international visitor destination. It
owns the South African tourism-marketing brand,
under which the global tourism campaign is
managed. SAT strengthens its key marketing
messages by providing quality information to
visitors through its website
The Department of Trade and Industry An objective of the DTI is to create an
environment that enables investment, trade and
enterprise development. These objectives have
direct links to the tourism sector as it is a tool to
attracting foreign direct investment to South
Africa through the many attractions and products
demonstrating South Africas tourism potential.
One focus of the DTI is to transform the informal
economy through the development and growth of
SMMEs and there are many national funding
programs to indicate the departments dedication
to this.
Tourism Business Council of South Africa The TBCSA is a private-sector membership
organisation, which provides support to the
tourism industry. The TBCSA represents a
partnership between government and the private
sector to ensure joint responsibility tourism
policy, direction and its implementation.
Tourism, Hospitality and Sport Education and
Training Authority
Tourism, Hospitality and Sport Education and
Training Authority, is the Sector Education and
77

Training Authority (SETA) established to equip
people with skills and training in these sectors;
those who are employed or those wanting to be
employed.
4.17. VALUE CHAINS OR OPPORTUNITIES
The South African tourism value chain begins with the tourists, who can access the sector privately or
through a travel agency. The flow between tourist, transport, operator, accommodation and
entertainment can occur at any point. Each of the tourism categories is supported by secondary
services.
Figure 6: General Tourism Value Chain in South Africa

Source: FEM Research 2011
The main players are in the tourism value chain are tourists, tour operators and tourism products,
accommodation, catering, and visitor experiences and services. These players interact with each other
in various stages and they require support from secondary services such as suppliers of products or
78

related services. Each player in the tourism value chain has a specific function and requires secondary
services and support. For example when a tourist decides to come to South Africa it may be for
business or pleasure, they will require transport, accommodation, food and possibly entertainment.
The tourist interacts either with a tour operator to arrange the necessary requirements or the tourist
might interact with each of the required products directly.
A tour operator can be a transportation service provider or a travel agent; and importantly they may
require services from industries that are not related to tourism. These products and services would
include fuel, maintenance, internet and business support and labour to operate the business
efficiently. The tour operator may deal directly with tourists or other tour operators on behalf of
tourists, furthermore tour operators will liaise with accommodation establishments and visitor
experiences as well as catering establishments.
These types of relationships exist throughout the tourism value chain. Accommodation establishments
need the support services such as laundry, cleaning and maintenance to offer services to tourists, who
either book accommodation services directly or through a tour operator. Accommodation establishment
can offering catering or outsource catering services or refer tourists to specific catering
establishments. Visitor experiences and services are recommended similarly by tour operators and
accommodation establishments. Opportunities that exist for SMMEs in the tourism value chain are both
within the direct supplies and the support services. Within the direct supplies there are opportunities
for small tourist operators in township tours, cultural tours and educational tours. There is also a need
for quality affordable accommodation as well as transport and shuttle services. Opportunities within
the support services are more diverse and include offering services such as laundry services, catering
services, maintenance and construction services, cleaning services, landscaping and gardening services,
and general supplies. The table below provides an indication of the type of opportunities that exist in
the tourism value chain per province.

79

TABLE 17: TOURISM OPPORTUNITIES PER PROVINCE

Opportunities

Province
WC EC NC KZN GAU Limp MPA FS NW
Accommodation X x x x x x x x x
Beach Tourism
Activities
x X
Catering/Food outlets x x
Conference Facilities x x x x
Eco Tourism Activities X x x x x
Shuttle
Services/Transport
X x x x x
Tourism Facilities X x x x x x
Training facilitators X x

accommodation related services. These services include cleaning services, catering services, laundry
services, gardening services and delivery services. Furthermore these services have very little entry
challenges or barriers and are accessible for SMMEs.
offering personalised services and activities. These activities include shuttle services, personalised
guided tours, and hiring of bicycles or equipment such as surfboards and kites etc.
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Tourism and Conference facilities would be opportunities more suited to big businesses as the start-
up costs would be quite large but the opportunities for SMMEs would be in provided services to these
facilities. Again these services would include, cleaning, catering, transport and delivery services, which
are all quite easily accessed. Furthermore these opportunities would create employment in the areas
where they are developed.
Key growth opportunities for tourism in South Africa include:
Business tourism marketing and packaging
At the moment business tourism accounts for a small percentage of tourism in the country however the
sector continues to grow annually and presents a major growth opportunity especially for packaged
products and services. Business tourism is a growing industry and business tourists generally spend
more money on average than leisure tourists. Packaging and promoting business tourism products and
services represents an opportunity for economic growth and distribution of tourism offerings. There is
also a need for conference facilities with good service level other than ICCs.
Eco tourism packages and offerings
Climate and environmental awareness has created an opportunity for sustainable and environmentally
sensitive tourism products. These types of activities include hiking, biking, visiting farms and being
involved in community tourism projects.
Medical tourism packages
South Africa offers an affordable option for medical procedures given the foreign exchange rates and
the excellent health services as well as the diverse tourism offerings available, the packaging of
medical services and tourism offerings is development opportunity for South African tourism. These
opportunities can be as diverse as offering a medical service to offering a transport service or
accommodation. Medical tourism would be geared towards people having minor procedures so that the
risk factors would be minimal and these people would still be able to partake in tourism activities.
Development of tourism facilities such as coastal resorts and activities
Tourism facilities and resorts exist in South Africa, however these can be upgraded and expanded to
increase the product and service offerings and attract more visitors. Furthermore theme parks present
a development opportunity for South African tourism as currently there are not many established
theme parks in the country.

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Charter flights and incentive tourism packages
Increasing air access and availability of flights to South Africa will increase market access. Increased
market access will increase tourist arrivals and in turn increase economy growth and development. The
increase in tourists to the area will create jobs as well as opportunities for SMMEs to enter the tourism
industry as secondary service providers. Opportunities could include transport and shuttle services,
tour guides and accommodation.
Development of SMMEs in the support services industry
Tourism businesses rely on support services to function efficiently, these services include maintenance
of buildings, equipment and vehicles, catering services, cleaning and laundry services as well as
administrative support such as IT and business services. Opportunities exist for SMMEs to provide these
services to tourism businesses.
Furthermore, gaps in tourism products were identified in the Spatial Gap Analysis for the Western
Cape
51
and these gaps are applicable to the rest of South Africa as well;
Lack of quality affordable accommodation
At present the accommodation facilities in South Africa are catering for middle to high income tourists
and there is a need for more affordable accommodation for families and young tourists. This
accommodation should be more competitively priced, and offer similar services of backpacker
establishments.
South African cuisine, township experiences
Promoting and packaging township and rural tourism with South African cuisine offerings represent an
opportunity for small businesses and entrepreneurs as well as communities.
Adventure tourism
South Africa has an opportunity to attract more adventure tourists by diversifying the adventure
tourism offerings to attract repeat visitors.

51
JH van der Merwe, SLA Ferreira and A van Niekerk, Spatial Gap Analysis of Tourism Development Opportunity in the Western
Cape Province 2008
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4.18. CHALLENGES/BARRIERS
Key Challenges to the South African Tourism Industry are:
Transformation and Access to Tourism Opportunities
Transformation of the tourism industry in South Africa is a key problem as the access to the
opportunities has been limited for SMMEs and black owned enterprises. In order to create jobs and
develop SMMEs and improve the economic conditions within the country, transformation within the
tourism industry needs to be addressed.
Increasing Distribution and Geographical Spread of Tourism Products and Services
At the moment the tourism offerings and products are concentrated in the main tourism hubs of KZN,
Gauteng and the Western Cape. To increase the economic impact of tourism and tourism expenditure
to the rest of the country it is important to improve the distribution of tourism products and improve
access to tourists to areas outside of the main tourist hubs.
Addressing Seasonality of Tourism Demand
Tourism in South Africa is seasonal and this seasonality of the tourism products and offerings needs to
be addressed to increase the volume of tourists and the expenditure to benefit the countrys economy
further and create more jobs.
Tourism offerings and products are subject to seasonality and demand and to ensure the economic
viability of the tourism industry in South Africa, it is necessary to develop products and services that
are sustainable and have a low impact on the environment while still having a maximum impact on the
economy, this however is difficult as the tourism industry is highly competitive and South Africa has to
compete with established eco-tourism destinations and tourism abroad.
External Factors that Influence Tourism Supply and Demand
Political, economic and social factors such as economic fluctuations, political instability and social
unrest can affect the tourism flows into the country; however these factors are usually unforeseen and
are addressed as necessary.

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ICT SECTOR
OVERVIEW OF THE ICT SECTOR
The subsequent discussion presents the overview of the ICT sector as a component of the services
sector. It presents development trends of the sector both at international to local level. The policy
and legislative background to support this industry growth is also analysed.
DEFINING ICT
The OECD defines the ICT as a combination of manufacturing and services industries that capture
transmit and display data and information electronically. It is a broad sector that includes ICT
equipment, ICT devices, electronic components, and ICT services such as telecom, eHealth, business
and education services. Traditionally, it includes all hardware and software that store, receive,
transmits or retrieve information. The sector encompasses all information processing technologies such
as computers, Internet and telecommunications.
The information element of ICT is divided into two types of products; traditional computer based
technologies, and digital communication technologies. Traditional computer based technologies include
hard drives, processes and office applications while digital communication technologies include
computerized and digital networked information and technologies.
The communication element of the ICT relates to and includes information and data that is transferred
over networks using technology to send and receive the information. There are two types of networks,
internal and external. Internal networks are local area networks (LAN) and external are Wide Area
Networks (WAN) that allow individuals to communicate beyond internal networks. The ICT sector is
divided into two subsets; Manufacturing and Services. Manufacturing includes the manufacture of
computer hardware and telecommunication equipment. Services include IT services such as customer
software applications, Computer software packages, and Telecommunication services.
ICT TRENDS
During 2010, the ICT sector experienced some growth after the 2009 recession. There was a renewed
emphasis on upgrading broadband infrastructures and expanding the reach in rural areas through
mobile and fixed technologies. Public network equipment spending increased by 14.5% in 2010 due to
the launch of new projects internationally. The total telecommunications market in the five
international regions had an estimated USD 3.1 trillion value and this is expected to rise to USD 4.1
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trillion by 2014
52
. The demand for telecommunications and internet subscriptions will continue to grow
as the number of users increase and the demand for these services in business activities increase.
INTERNATIONAL TRENDS
In 2010 the five international regions for telecommunications were Canada, Europe, Middle East/Africa,
Latin America and Asia Pacific. These countries experienced an increase of 5.5% in telecommunications
in 2010, after a decline of 1.6% in 2009. Fixed broadband increased by 9.9% while wireless services
experienced a growth of 9.4% and public network equipment increased by 8.4%
53
. The only sector that
did not experience growth during 2010 was dial up internet. The most likely reason for this is that more
people are making use of mobile technology and wireless connections and the need for residential dial
up connections may be decreasing.
The top four countries that export ICT technology and equipment are Philippines, Singapore, Malaysia
and Costa Rica. The Philippines is the top exporter, with 66% of its exports being technology. This is
followed by Singapore with 51%, Malaysia with 40% and Costa Rica with 39%.
The international broadband market is huge, with Europe being the largest in the world, with an
estimated 128.3 million lines. Between 2009 and 2010, 9 million new lines were installed in Europe.
The fixed broadband penetration rate in Europe has continued to grow and by July 2010, the number
was 25.6%.
Fibre optic cables and network usage have increased internationally and at the moment Italy is the
largest FTTH market in Europe with over 2.5 million homes connected.
The ICT hardware manufacturing sector is one of the largest growing and fastest growing manufacturing
industries in the world. The ICT manufacturing industry in Taiwan focuses on the assembly and
manufacture of products such as PCs and mobile phones, and in 2010 the sector generated revenue of
US$220 billion. The second largest industry is the optoelectronics industry, which focuses on
manufacturing products for display panels generated US$53.2 billion in 2010
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.

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2011 ICT Market Review and Forecast Chapter 5, www.tiaonline.org
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MAIN GROWTH AREAS
The ICT sector has grown over the years and is expected to continue to grow as new technologies
emerge and the industry becomes more innovative and competitive. The main areas for expected
growth are Internet usage, Broadband speed and quality and ICT technologies.
Increased Internet access and usage by emerging and developing countries
Improved technology and speed and quality of broadband
Widespread use of broadband networks create an opportunity for growth and development in
innovation and competitive advantage
KEY PROBLEM AREAS
Key challenges to the growth of the international market are:
Human capital and innovation- there is a shortage of skilled workers in the industry and there is a
need to develop the industry through education
Attracting Foreign trade and FDI is a key problem area as the market is extremely competitive and
innovative
Infrastructure (telecommunications, electricity, transportation) is an important part of any
development especially for ICT where the sector depends on infrastructures such as electricity and
road access
Regulatory reform and red tape reduction for policies to improve development of ICT industries and
create friendlier business environments to attract FDI
NATIONAL TRENDS
In South Africa, the ICT sector has been identified as a key sector for economic growth and long term
sustainability. The ICT sector in the country contributes an estimated 7% to the countrys GDP
55
. Over
the years the South African economy has shifted from an economy rooted in the primary sectors to an
economy that is driven by the tertiary sectors. The economy is now moving towards a knowledge based
economy with a focus on technology, e-commerce and financial services. The local IT industry is based

55
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in both the services sector and manufacturing sector, and South African companies specialize in pre-
payment, revenue management and fraud prevention systems. Some manufacturing (e.g. Set-top
boxes) does take place locally and these products are exported successfully to the rest of the world. It
should be noted however that manufacturing within the ICT sector is still within its infancy.
South Africa has comparatively higher prices in terms of ICT products, than other African countries, as
well as OECD countries. Furthermore, whilst South Africa can be characterized as having the most
developed telecom networks, this area of the ICT Sector continues to lag behind. In terms of
broadband penetration, South Africa has fallen behind many global competitors with similar GDPS.
This includes ICT sectors of countries like Argentina, Poland and Brazil.
56
According to the Network
Readiness Index (2010-2011), South Africa is ranked number 61, well below their African counterpart
Mauritius (rank 47). The rest of the other African countries lie within the lower half of the NRI
rankings.
Although South Africa has managed to surpass other sub-Saharan countries in terms of development of
the ICT Sector, it has recently begun to fall behind. Between 2007 and 2009, South Africa fell five
positions from 52
nd
to 47
th
on the World Economic Forum Readiness Index.
57
The drop in the ranking
can be attributed to relatively low market penetration especially in broadband in South Africa. The low
market penetration is largely due to the high costs of telecommunication and broadband in South
Africa, however as more competitors enter the market this should drop prices and hence increase
access.
Prospects for future growth and development of South Africas ICT sector remain promising. In 2009
South Africa was amongst some of the African countries that represented the top five countries in the
African region, as indicated by the ICT Development Index (IDI). Other countries included Seychelles,
Mauritius, Gabon and Cape Verde. The ICT sector contribution to GDP has increased considerably over
the past five years, as the country has developed its network capacity and improved infrastructure, and
globalization. However, this contribution has been outperformed by other performing African
economies, and in particular, some of the Asian countries as well.
South Africas ICT Sector can be described as being relatively concentrated, in terms of market
structure. The market concentration of the sector is comparable to other concentrated markets like
New Zealand (50%), Mexico (monopoly) Switzerland (>50%) and Norway (>59%). In 2008, South Africa
had the fifth highest market concentration (measured in HHI), which may contribute to the relatively

56
South Africa ICT Sector Performance Review 2009-2010
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South Africa ICT Sector Performance Review 2009-2010 pp. 4
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higher pricing of ICT products. The ICT sector in South Africa consists of IT services and some
manufacturing of devices and components. Furthermore, the ICT sector in South Africa can be
categorized into three sub sectors; Communications, Electronic components, and Software and IT
services.
Within South Africa the ICT sector has grown across the nine provinces, however there are still areas
such as the Eastern Cape that are underdeveloped. The three main hubs are Gauteng with 57% of ICT
firms, Western Cape with 17% and KwaZulu-Natal with 8%.
The Gauteng ICT sector contributes around 6%
58
to regional GDP and the sector offers a diverse range
of products from manufacturing to software design and software management. International companies
such as Microsoft, Hewlett-Packard, IBM, ICL, Cisco and Unisys are all based in Gauteng.
It is estimated that the ICT sector in the Western Cape generates an annual turnover of R9 billion and
the sector is expected to grow between 15-20% per annum
59
between 2008 and 2013. KwaZulu-Natal is
becoming an attractive place for ICT investment as the province has a number of advantages for
business growth. The infrastructure and access to transport as well as the existing manufacturing base
provide the sector with opportunity for further growth. Twelve digital community hubs have been
established in the rural areas as a way to increase access to digital information to communities.

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ICT Information and Communication Technology, www.gautengcompanies.co.za
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THE POLICY AND STRATEGY FRAMEWORK FOR
DEVELOPING SMALL AND MEDIUM ENTERPRISES IN THE
ICT SECTOR
This section provides an overview of the policy and strategy framework for developing small and
medium enterprises in the ICT sector. This overview includes a discussion on the National and
Provincial policies and strategies that are relevant to the ICT sector. The relevant support and
development programmes have also been included in this section.
NATIONAL SUPPORT PROGRAMMES, POLICIES AND STRATEGIES TO SUPPORT SMES IN THE
ICT SECTOR
The National Communications Act 2005
The Electronic Communications ACT 2005 is aimed at deregulating the telecommunications sector and
although it is primarily a licensing framework, it also promotes the entry of SMMEs into the sector
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.
The Electronic Communications Act of 2005 was developed for the following:
to promote convergence in the broadcasting,
broadcasting signal distribution and telecommunications network services and broadcasting
services;
to provide for the granting of new licenses and new social obligations;
to provide for the control of the radio frequency spectrum,
to provide for the continued existence of the universal service agency and the Universal Service
Fund, and to provide for matters incidental thereto
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.
ICT Policy
The Department of Communications in South Africa is responsible for ICT policy and strategies and is in
the process of formulating further policy framework to guide the sectors development.
There are three principles for ICT policy
62
and these are:

60
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www.acts.co.za/electr_comm/index.htm
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Department of Communications South Africa www.doc.gov.za
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Develop ICT policies and legislation that support the development of an ICT sector that creates
conditions for accelerated and shared growth of the South African economy, which positively
impacts on the wellbeing of all our people and is sustainable.
Develop strategies that increases the uptake and usage of ICTs by the public, thus maximizing
the impact of the ICTs in service delivery, nation building and social cohesion as well as
creating conditions for better life for all.
Provide a base for informed, timely, forward-looking and proactive ICT policy decision making
in the Department and sector as a whole to evaluate the impact of those policies, laws and
strategies on improving lives of South Africans.
The Department of Communications has also established a number of strategic projects which aim to
achieve some advances in the ICT Sector. These programmes form part of the medium term strategic
plan for the department, and include the following
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:
Programme 1: Governance and Administration- provide strategic support to the ministry and overall
management of the Department
Programme 2: International Affairs and trade- to ensure alignment between South Africas
international activities and agreements in the field of ICTs with South Africas foreign policy.
Programme 3: ICT Policy Development- Develop ICT policies, legislation and strategies that support the
development of an ICT sector and develop strategies that increase the uptake and usage of ICTs by the
majority of the South African population.
Programme 4: Finance and ICT Enterprise Development- to oversee and manage governments
shareholding interest in public entities and to facilitate growth and development of Small, Micro and
Medium Enterprises (SMMEs) in the ICT sector.
Programme 5: ICT Infrastructure Development- to promote investment in robust, reliable, secure and
affordable ICT infrastructure that supports the provision of a multiplicity of applications and services.
Programme 6: Presidential National Commission- to facilitate the development of an all-inclusive
information society by promoting the uptake and usage of ICTs for improved socio economic
development and research.

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5.9. DEVELOPMENT AND SUPPORT PROGRAMMES ON A NATIONAL LEVEL
National government offers various programmes and development support initiatives to small
businesses within ICT and across various sectors in South Africa.
The Department of Trade and Industry (dti) has a number of initiatives and SME support and
development programmes in place. The dtis SMME development programme which aims to support
Small, Medium and Micro Enterprises- prioritizing entrepreneurship and growth and development in the
industry. This applies to all industries, including ICT. Furthermore, the Enterprise Organisation is a
project of the dti which offers funding to promote the growth of small businesses. There are many
initiatives and programmes which are project- specific- each offer specific services to specific types of
business. For example, the Black business supplier development programme offers funding to
majority black owned businesses, business process outsourcing & off shoring offers investment and
training to businesses with offshore clients, critical infrastructure programme offering cash grants
upon completion of an infrastructure- developing project , co-operative incentive scheme offers
grants to emerging co-operatives, preferably benefitting underprivileged communities, enterprise
investment programme offers investments to manufacturing companies , film production incentive
offers a package of incentives to encourage the film production industry in South Africa, and Sector
specific incentive scheme offers generic funding grants to develop industries overall (ICT services
industry falls under this). Many of these projects can be utilized to benefit ICT industries in different
ways.
Seda along with other national departments offer programmes and support to ICT businesses. The Seda
Technology Programme (STP), is a merger of many small enterprise support agencies for the ICT
industry; including the GODISA trust, the National Technology Transfer Center, dti business incubators,
Technology Advisory Center, Technology for women in business and the South African Quality
institutes support programmes. The STP is a dti programme, offering financial and non-financial
support to ICT businesses; business incubation, facilitating technological innovation and increasing
access to technology and quality technical support services.
The International Development Corporation (IDC) also offers support to developing SMEs in South
Africa. The IDC has an ICT Business Unit which focuses on the development of businesses which rely on
ICT technologies. They provide funding and support to projects in the ICT Sector; IT,
Telecommunication, E-waste, electrical and electronic manufacturing etc. Focus is put on sustainable
businesses which create jobs and develop rural communities and society.
Collectively, these programmes aim to achieve sector growth and advancement, by establishing a
platform that can allow companies in the sector to compete at an international level.
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5.10. PROVINCIAL GOVERNMENTS
On a provincial level, each province is responsible for developing and implementing strategies and
policies to promote and grow the ICT sector. These strategies and policies are aligned with the
National objectives set out by the Department of Communications. The provincial strategies, policies,
initiatives and interventions are outlined in the following paragraphs.
The main goals of the Western Cape are to improve government service delivery and citizen
participation through the use of ICT technologies and information management.
e-Learning Initiative
The Western Cape has implemented the e-Learning initiative. This initiatives projects include
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:
The Khanya Technology in Education project, which aims to improve teaching and learning
through the use of ICT technologies in schools,
The Dassie project, which aims to improve teaching and learning in Further Education and
Training Colleges through implementation of ICT technologies,
The Telecommunications project, which has already linked almost all schools in the Western
Cape to the internet- except for a few which still struggle with electricity connections,
The WCED Online project, which aims to provide web-based information and services regarding
the education department to learners, teachers, parents, school administrators and partners in
education,
The E-curriculum project, which aims to develop unique ways of using ICT technologies and
services for the development, delivery and support of school curricula
ICT to Rural Libraries Project
The Western Cape introduced the ICT to Rural Libraries project in 2008. This project seeks to provide
internet access to rural communities as well as a computerized library and information system (called
CPALS) in these communities. These rural communities will have subsequent access to electronic
information resources. These resources also provide a platform through which to acquire and practice

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http://www.westerncape.gov.za/eng/directories/services/11483/15082
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ICT skills. Grants have been received from the National Department of Arts and Culture and over 50
communities were expected to be connected by 2010
65
.
Cape Gateway
The Western Cape Government launched an initiative called the Cape Gateway. This project aims to
provide information about government departments and services online- government projects and
services can be searched by the public through Cape Gateway. This is an example of e-Government as
practiced by the Western Cape
66
.
Western Cape Support/Development Programmes
The Cape information Technology Initiative (CITI)
The Cape information Technology Initiative (CITI) is an initiative funded by the Western Cape
Government and private entities, which aims to develop the local ICT industry through services such as
business development, skills training, networking and research. Furthermore the CITI identifies
potential projects, sources funding and monitors the successes and progress of these projects. The
mission of the initiative is to support the growth, promotion and transformation of the ICT sector in the
Western Cape.
EASTERN CAPE
The main goals of the Eastern Cape are to create an empowered, connected and informed province
using ICT technologies to stimulate the economy through skills development.
Impala Eastern Cape Provincial Co-operative Development Fund
In 2010 the Eastern Capes ICT industry was identified (amongst others such as tourism, chemicals,
textiles and more) by the Eastern Cape Economic Development and Environmental Affairs Department
as one of the candidates for a share of R50 million in support funds from the Impala Eastern Cape
Provincial Co-operative Development Fund. It aims to promote the viability and competitiveness of co-
operatives and supports manufacturing and services sectors of the industry
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.

65
(http://www.westerncape.gov.za/eng/directories/projects/14942/186276/)
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(http://unpan1.un.org/intradoc/groups/public/documents/other/unpan022130.pdf)
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(http://www.dedea.gov.za/News/Pages/R50mdevelopmentfundtohelpsupportco-opsunveiled.aspx)
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e-Government Initiatives
The Eastern Capes provincial government is supporting e-government initiatives. E-government
projects have been launched and are expected to increase service delivery throughout all sectors
within both provincial and municipal government. This project strives to add to ideas of the Eastern
Cape providing a good quality of life for all, a compelling place to live, work and investment
opportunities and balanced and integrated development as steps are being taken to move forward
through providing ICT services for the people and their government. Two particular municipalities are
to be assisted through e-government: King Sabata Dalindyebo and Mbizana, enabling broader access to
information, better service delivery, transparent governance and citizen participation in these
particular communities. The e-governance projects in the Eastern Cape provide further support to
already-existing initiatives which are supporting the areas of Finance, Human Resources, Local
Economic Development, Technical Services and Information & Communication Technology systems
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.
The e-Education Initiative
An e-Education initiative was launched in the Eastern Cape. The project was launched in 2006. Through
ICT Schools, E-Schools and E-Administration, the Eastern Cape provided a comprehensive platform for
e-Education in the province. In line with the e-Education White Paper, the province provided a new
information and communications technology environment in education. Through this project,
government ensured that schools that are connected via networks, are connected to the internet, and
can communicate electronically and that ICT facilities and support are provided to the community
through public schools. This initiative has benefitted rural and local communities and has promoted
economic development through education and skills development. The initiative has provided
technology like computers, printers, scanners, satellite dishes and more through government and
private-sector partnership
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.
Eastern Cape Support/Development Programmes
Eastern Cape Development Corporation
The Eastern Cape Development Corporation (ECDC) is the Eastern Capes provincial economic
development agency, implementing economic development policies of the Eastern Cape Government
and owned by the Eastern Cape Government. The ECDC promotes growth of the local economy and
local businesses. It offers finance to SMMEs which can benefit the local economy, it promotes

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(http://lgict.org.za/document/e-governance-local-government-eastern-cape)
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(http://unpan1.un.org/intradoc/groups/public/documents/CPSI/UNPAN022750.pdf)
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investment in local business, promotes global economy and export and it offers services such as
business planning, IT support, market development and networking. It aids the creation and acquisition
of business projects, helps development of local and rural investment and development and offers aid
in finding suitable business premises.
Eastern Cape Information Technology Initiative (ECITI)
Specifically for the ICT industry, the Eastern Cape Information Technology Initiative (ECITI) has been
launched by ECDC. This programme provides support to local ICT SMMEs. It provides a local ICT business
incubation hub, provides software research and development opportunities and education, a
Technology park which offers support to entrepreneurs and SMMEs, and the supply and maintenance of
telecommunications services in the province and their potential for growth and outsourcing/ off
shoring.
5.10.3. LIMPOPO
The main goals of Limpopo are to promote sustainable development, education, and knowledge so that
individuals can utilize ICTs to full advantage and improve their quality of life.
Business Incubation Programme
Limpopo has launched The Business Incubation Programme- the long term goals of which include
encouraging IT business entrepreneurs in Limpopo to progress and turn community-based ideas into
business ventures. This is expected to raise Limpopos Technology Entrepreneurial Activities (TEA)
index rating from 3 to 6 between 2009 and 2014. The initiative focuses on keeping an educated
workforce, attracting investments, developing economy through knowledge creation and job creation
through entrepreneurship in the province.
Open Access Broadband Wide Area Network Programme
Limpopos Provincial Open Access Broadband Wide Area Network Programme strives to provide cheap
broadband connectivity to provincial government departments, local municipalities, health institutions,
businesses and eventually all Limpopo residents- particularly in rural areas. It seeks to attract
multinational corporations, ICT entrepreneurship, and a skilled, educated workforce to work and stay
in the province. This, in turn, supports economic development, investment and talent attraction.

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Limpopos ICT Institute Programme
Limpopos ICT Institute Programme aims to produce ICT skills which are lacking in the provincial
industry, for societal and economic development. Its objectives include further skills training so that
skilled individuals are market-ready and job-ready. Improving ICT skill levels of the community at large
is also a goal and this serves to bridge the digital divide- equipping citizens for participation in global
economy and enhancing their educational and economic opportunities. This results in job creation and
reduced poverty and increased ICT services and skills for the public and private sectors
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. The Limpopo
government aims to reduce unemployment amongst the youth, women and the marginalized- this is to
be achieved partially through business process outsourcing and off shoring
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.
Limpopo Support/Development Programmes
Limpopo Economic Development Enterprise (LIMDEV)
Limdev is the Limpopo Economic Development Enterprise- the provincial government body responsible
for the growth and development of SMMEs and industry. This body offers assistance and financing to
SMMEs in the province through their Enterprise Development Finance Division. It has also launched a
project specifically for the local ICT industry aimed at skills training and development.
NORTHERN CAPE
The main goals of the Northern Cape are to promote sustainable development, education, and
knowledge so that individuals can utilize ICTs to full advantage and improve their quality of life.
The Northern Cape does not have a specific strategy for ICT development and growth however there
are initiatives in place to promote the industry.
In 2011, the Northern Cape local municipality required ICT services addressing issues of
standardization, a need for improved control and security, and ageing LAN and WAN infrastructure. A
partnership with Integr8 aimed to address this situation and fulfill requirements covering server,
virtualization, directory, and messaging platforms. The initiative aims to improve the municipalitys IT
infrastructures overall security, stability, manageability and availability. Through seeking these

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(http://economic.ncape.gov.za/inspire/limpopopgmict.asp)
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(http://www.limpopo.gov.za/docs/LEGDP%202009-2014.pdf)
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products and services from local business (Integr8), The Northern Cape government is stimulating and
encouraging growth in the local ICT industry.
Thintana i-Learn
The Northern Cape in partnership with Telkom and strategic partners has also funded a R21 million
project named Thintana i-Learn. This project is supported by schoolNet SA and the National
Department of Educations Centre for Educational Technology and Distance Education. This project
provided 18 Northern Cape schools with between 10 and 20 networked computers and training.
KWAZULU-NATAL
The main goal of KwaZulu-Natal is to promote e-skills knowledge production.
KwaZulu Natal e-Skills Initiative
KwaZulu-Natal implemented an e-Skills initiative in 2010. An objective of this initiative is to establish
an e-Skills Knowledge production and Coordination Hub in the province, to be launched by Deputy
Minister of Communications, Obed Bapela. The province seeks to develop citizens e-skills and their
ability to use and develop ICTs in the context of an information society and knowledge economy.
Raising citizens ICT competencies will enable them to participate in advancement of business,
government and society in general
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.
Metro Connect
KwaZulu-Natal launched the Metro Connect programme in 2008. This initiative involved the sale of
spare capacity on the municipal fibre network at a discounted rate. An expected result of this is the
attraction of new ICT businesses into the province.
Digital Communication Hubs
KwaZulu-Natal has launched an initiative which aims to bridge the digital divide through the
establishment of twelve digital community hubs. These hubs have been set up in rural areas such as
Hammarsdale, Umzumbe, Vryheid, Mandeni and Edendale
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.

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http://www.doc.gov.za/index.php?option=com_content&view=article&id=475:communications-department-launches-the-
e-skills-knowledge-production-and-cordination-hub&catid=88:press-releases
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5.10.6. FREE STATE
The main goals of the Free State are to develop SMMEs and to stimulate growth in the economy through
ICT development.
Regional Innovation Strategy
The Free State Has Launched an initiative aiming to develop provincial Regional Innovation Strategy- it
intends to provide a friendly business climate and environment to enhance innovation capabilities of
firms located in Free States proposed innovation Hub.
SMME Incubation Hub
The Free State has launched an initiative called the SMME Incubation Hub- this project has an
investment value of R100 million. This initiative aims to provide physical space to new ICT businesses
and to provide service to help these businesses in their early stages of development. Services include:
business support, help with access to finance, management coaching and business administrative
services to help small developing businesses.
Free State Support/Development Programmes
The Free State Development Corporation (FDC) offers non-financial support to SMMEs in the ICT sector.
The support includes assistance in identifying investment opportunities, assistance with securing
business premises and funds and providing assistance with development of local and international
markets.
GAUTENG
The main goals of Gauteng are to enhance ICT infrastructure and improve service delivery and create
jobs in the CT industry.
Blue IQ
Blue IQ, as an agency of Gautengs Provincial Government, has provided initiatives for economic
growth and development in the province. Blue IQ initiatives seek to develop growth in Business
tourism, sports tourism, high value added manufacturing, logistics, property asset management, energy
and ICT sectors. Blue IQ delivers strategic economic infrastructure to the ICT sector and aims for
sustainable economic growth in the sector, indirectly contributing to job creation and profit. Blue IQ
invests in projects with growth potential.

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Gauteng Shared Services Centre
The Gauteng Shared Services Centre (GSCC) is involved with the government on several initiatives- it
has been incorporated into the Gauteng department of finance. This body centralizes the provinces
technology projects. One such project is Gautengs e-Governance initiative- the Gauteng Online
project. This project has information and details on Gauteng government and its projects online for
citizens to browse and search.
In 2009, R100 million was assigned to provincial ICT infrastructure programmes. One such ICT
infrastructure project- the largest of them all- was the Gauteng Link: a multi-billion rand broadband
project which promises to deliver broadband internet to the people of Gauteng
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. The project was
expected to be completed by 2010 but, due to a lack of funding, had not even been started by late
2010
75
.
Gauteng Support/Development Programmes
Blue Catalyst
Blue Catalyst is a development intervention initiative for entrepreneurs and small businesses, funded
by the Gauteng provincial government. Blue Catalyst started the Blue IQ project which focuses on
building skills and providing funding and credibility to the ICT industrys technology and knowledge-
based business opportunities. It provides a network of finance providers, mentors and business advisers
to entrepreneurs in the industry, helping to build a support network to aid the development of SMMEs.
Business plans, funding of up to R1 million, skills advice, and powerful online networking are provided
through this online-platform initiative.
Gauteng Enterprise Propeller
The Gauteng Enterprise Propeller (GEP) offers financial and non-financial support to SMMEs in Gauteng.
Services provided include access to finance, competitive lending rates, access to support skills and
information, and advice and guidance on business skills.

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5.10.8. MPUMALANGA
The main goals of Mpumalanga are to promote infrastructure development, skills development, SMMEs
and industry development in ICT, and improve public service efficiency through the use of ICT
interventions.
Emalahleni Career Guidance and Information Communication Technology Resource Center
In 2010 Mpumalanga launched the Emalahleni Career Guidance and Information Communication
Technology Resource Center. This initiative was started by the Mpumalanga Department of Education
and the National Department of Mineral Resources with members of the private sector like MTN, Anglo
American, Vodacom and Eskom. The center will provide for school communities and out-of-school
youths in the Emalahleni region in Mpumalanga
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.
Mpumalanga Support/Development Programmes
The Mpumalanga Economic Growth Agency (MEGA) offers financial and non-financial support to ICT
businesses as well as businesses in other sectors. The financial support includes bridging finance and
loans. Non-financial support includes training, marketing and branding, business counseling and
assistance with legislative compliance.
NORTH WEST
The main goals of the North West are to empower rural communities as well as develop ICT knowledge
and skills in the province.
In 2009, the North West Province identified the city of Potchefstroom was aiming to be Africas first
cyber city. This welcomed partnerships with the local university, which offers great potential research
and development in the ICT sector as well as the potential for offering ICT services throughout the
country and even the continent
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.
In November 2010, the Northwest launched an initiative to improve government efficiency through
access and use of ICT technologies such as VoIP, Fax Gateway, Video Conferencing, internet and
Email.The North West has provided learning centres, Public internet access in libraries and tribal
community centres in an effort to stimulate provincial and local social and economic development.

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http://www.info.gov.za/speech/DynamicAction?pageid=461&sid=10832&tid=10849
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http://www.tradeinvestsa.co.za/investment_opportunities/180760.htm
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An initiative by the North West to leverage investment in ICT infrastructure in 2010 saw the
implementation of nodal points for broadband connectivity and distribution in the province- to be used
by Government offices and fan parks. The North West has prioritised the fostering of a knowledge
economy through ICTs and as such has facilitated the rollout of e-Learning centres in schools, public
internet access in libraries and coordination with the African Drive project and the Dinaledi Schools
initiative.
The Northwest Province is utilising and developing the use of ICT services, at a local and rural level,
through the deployment of various ICT technologies for improving healthcare information and
interventions. Such ICT technologies to be used include individual and specialised Health Portals,
Health information and Health Monitoring systems. The North West Province launched an initiative in
collaboration with Thusong service Centres to provide ICT services for innovation and knowledge
management in order to speed up the contribution of the ICT sector to economic development and
innovation
78
.
IDENTIFICATION OF HIGH POTENTIAL SUBSECTORS
The South African Department of Trade and Industry (DTI) identified potential investment opportunities
within the ICT sector based on the development of:
Access control and security systems and equipment;
Automotive electronic subsystems;
Systems and software development in the banking and financial services sector;
Silicon processing for fiber optics; and
Integrated circuits and solar cells.
9

The duality of South Africas economy makes it an ideal market for the testing of new innovations.
South Africa is recognized as one of the top 30 software development outsourcing destinations. In 2007,
South Africa was globally ranked on a par with Australia and India.
79
South Africa is also an established
global provider of quality, low cost call centres. The country provides call centres for AOL, ASDA,
Virgin Mobile UK, Samsungs European digital camera division and others.
12
The majority of ICT

78
http://www.google.co.za/url?sa=t&rct=j&q=north%20west%20province%20ict&source=web&cd=3&ved=0CDYQFjAC&url=http%3A
%2F%2Fwww.doc.gov.za%2Findex.php%3Foption%3Dcom_docman%26task%3Ddoc_download%26gid%3D62%26Itemid%3D540&ei=pfEL
T6ygBMLMhAfQ6emPBA&usg=AFQjCNGrTiAzzx-23uyDABha_T0iFM0adA&sig2=6hcXsK9TPsrwdRqLNCb9iQ&cad=rja
79
www.SouthAfrica.info
101

multinationals operating within the sector maintain representative distribution outlets for the supply of
goods and services and partake in little to no local manufacturing, R&D or solutions creation. South
Africas IT spending in 2009 is expected to reach R97 billion with expected growth at 5% per annum
over the next 5 years.
80

South Africas key areas of expertise include:
Managed (outsourced) services
e-Security
Biometrics and software development
High-end ICT product and services consultancy.
9

Further opportunities for growth for ICT sectors and particularly SMMEs in South Africa are:
Educational and Skills development platforms and programmes such as E-learning- by increasing the
use of ICT products and technologies in schools, the number of learners in South Africa with access to
computers and internet will increase and improve the skills and knowledge of learners. These skills and
knowledge are transferrable and can be developed into businesses and SMEs.
Increasing access to internet and broadband subscriptions- by lowering the cost of internet and
broadband, the demand for these products will increase which will in turn create jobs and promote the
industry and the economy.

80
IDC. Aid to Recovery: The Economic Impact of IT, Software and the Microsoft Ecosystem on the Economy 2009
102

JOB CREATION POTENTIAL
The industry has grown to such an extent that in 2010, 12.78% of jobs created in that year were in ICT.
This amounted to 344 384
81
jobs being created in 2010.
Figure 7: Percentage of Jobs created in the ICT sector (2003 2010)

Source: FDI Intelligence 2011, analysed by FEM Research
The graph above provides a graphical representation of the increase in employment levels in the
national ICT sector. Despite declining global expenditure during the period 2008-2010, the national ICT
Sector has managed to achieve a 3.96% increase over the same period.
Within the industry the sector that created the most jobs in 2010 was the Electronic Components
sector with 153 308 jobs created, followed by Communications with 103 777 jobs created and Software
and IT with 87 299 jobs. The number of jobs created in the sectors has increased since 2009. However,
the Software and IT services has seen a decrease in the number of jobs created since 2008, while the
economic recession can account for the decrease in 2009 it was expected to increase in 2010 along
with the other sectors. The continued decline may be attributed to the scarcity of skilled employees in
the sector.

81
FDI Intelligence 2011, analysed by FEM Research
2003 2004 2005 2006 2007 2008 2009 2010
Percentage of jobs created 11.58 12.28 13.80 12.30 12.06 8.82 11.13 12.78
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
Percentage of jobs created in ICT sector
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Table 18: Breakdown of jobs created in ICT sectors
Sector 2005 2006 2007 2008 2009 2010
Electronic Components 119,324 115,827 160,855 147,185 110,351 153,308
Software & IT services 103,383 123,737 120,128 129,832 105,831 87,299
Communications 90,436 108,245 82,567 76,743 95,399 103,777
Total Jobs created 313,143 347,809 363,550 353,760 311,581 344,384
Source: FDI Intelligence 2011, analysed by FEM Research
Skills shortages in the ITC sector are a major problem for the growth of the industry and therefore the
job creation potential of the sector is huge for South Africa. The IT and Communication Technology
sector falls within the Technical sector and the estimated shortfall of IT skills for 2009 was 24%
82
. This
shortfall relates to the skills required to develop, build and manage the IT systems required to support
economic growth in the country. The number of people required to address this shortfall is
approximately 100 000 skilled workers. In 2010 the estimated shortage of skilled IT specialists in the
manufacturing sector alone numbered 14 000. The biggest problem experienced by businesses in the IT
and Communications sector is the availability of South African skills, businesses have begun importing
the skills they require. This proves that the sector has great potential in creating jobs if sufficient
training and development of job-seekers takes place.
The Department of Communications hopes to create job opportunities through direct funding and have
outlined the following objectives
83
:
160 000 jobs should be created in the set top box industry.
25 000 jobs should be created in the broadband access arena.
8 500 jobs were earmarked for content creation.
The widespread provision of broadband access through the laying of new submarine cables presents
many new job opportunities for the sector. The laying of cables and the subsequent usage thereof will
create both direct and indirect employment opportunities. Furthermore the increased broadband
connectivity presents job opportunities to the sector too: people will need the technology to access

82
Solidarity Research Institute, Skills Shortage in SA: Summary of facts per Sector regarding this issue, January 2008
83
http://ekhayaict.com/moblog/ICT-economic-empowerment-and-job-creation-by-the-DoC
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broadband and they will need network and IT support to connect efficiently, increased broadband
access means that more service providers can emerge in the market too, creating more jobs and
businesses.
ROLE PLAYERS OR KEY STAKEHOLDERS
There are many role players and key stakeholders within the ICT industry, each one contributing in its
own way to the industry. Main Role players and stakeholders include the government and governing
bodies, large corporate, international software companies, small businesses and several ICT initiatives
(government and private owned), all of which comprise the ICT industry and the various goods, services
and processes which define it.
5.13.1. SOUTH AFRICAN GOVERNMENT
One of the most prominent and influential role players and stakeholders for the ICT industry is the
government. The government (on various levels: national, local, municipal) has authority over many
activities within the industry through legislation e.g. broadcast legislation from the governing body
ICASA which allocates broadcast spectrum and dictates broadcast law
84
.
The government is a key stakeholder because it can benefit from the use of ICT products and services
and, at the same time, supporting the ICT industry can benefit the economy and subsequently benefit
the government. Developing the industry is highly beneficial to the economy, the government and the
country as a whole; as such, it is important for the government to play a role in stimulating the
industry. The Department of Communication, therefore, stresses the importance of government and
the private sector working together to optimize growth and development within the industry and the
economy as a whole
85
. Several projects have been launched to ensure that this partnership between
government and the ICT industry is effectively beneficial and ongoing. For example, E-Government
initiatives being launched: millions of Rands have been allocated to the ICT sector by government to
implement new information technology systems for government administrative processes.
These E-Government initiatives are mutually beneficial to both the government and the ICT sector: the
ICT Sector gets paid by the government and jobs are created and business is acquired through these
projects, so the ICT sector is benefiting; and the government benefits through improved service

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http://www.africanbrains.net/2011/09/16/sa%E2%80%99s-ict-market-could-be-worth-r250bn-by-2020/
85
http://www.africanbrains.net/2011/09/16/sa%E2%80%99s-ict-market-could-be-worth-r250bn-by-2020/
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delivery, more efficient systems and a more stimulated economy
86
. Another instance of the mutual
development and support between government and the ICT industry is government subsidy of Set-top
boxes (STB) for the analogue-digital broadcast migration: this partnership in production benefits both
the ICT industry and the government through stimulating the industry and the economy and delivering
services to society simultaneously.
5.13.2. INTERNATIONAL SOFTWARE COMPANIES
In an increasingly technologically aware and dependent economy, information and communication
technology and software is becoming increasingly valuable and important. The local ICT industry
recognizes the value of software development and retail as it has grown extensively in recent years
87
.
The value of international software companies to local ICT industry is visible in that Microsoft, the
biggest international software company, announced in 2010 that it would be investing R425 million in
local software companies to develop them into globally competitive players as part of their
empowerment strategy
88
this shows the influence of international software companies to the local ICT
industry and its development.
ESTABLISHED CORPORATE
Large corporate have a huge need for ICT services. Many large companies outsource non-core ICT work
processes to ICT companies; this creates a market for the ICT services sector and can provide job
creation potential. Many corporations are reliant on IT, networking and technologies and therefore
require ICT support, network support and other services from ICT service providers; as such this
outsourcing constitutes more than a third of the ICT services market
89
.
SMMES
Small businesses are playing an increasingly large role in the development of South Africas ICT industry
in that they too require many ICT goods and services for the running and maintenance of day-to-day
business in todays information society. For example, new registrations of close corporations between

86
http://gep.cobwebinfo.co.za/servlet/file/SAMS%2011%20ICT%20GEP%20-
%20print.pdf?ITEM_ENT_ID=14237&ITEM_COLL_SCHEMA_ID=407&ITEM_VERSION=1
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(http://gep.cobwebinfo.co.za/servlet/file/SAMS%2011%20ICT%20GEP%20-
%20print.pdf?ITEM_ENT_ID=14237&ITEM_COLL_SCHEMA_ID=407&ITEM_VERSION=1)
88
(http://www.servicepublication.co.za/index.php/magazine/ict/236-state-of-the-ict-industry)
89
106

2007 and 2008 increased from 250 000 to 280 000. Many new businesses that launch require ICT
manufactured goods such as computers, phones, and fax machines and require continuous ICT services
too, such as network and IT support. This growing market represents a huge opportunity for a growing
ICT goods and services market- apparent in the sales of PCs and laptops increasing by 15% a year and
the number of computer users increasing exponentially over time
90
.
PUBLIC/PRIVATE SECTOR PARTNERSHIPS
Both private and public sector organisations play a powerful role in the ICT industry in South Africa
through helping ICT companies in various capacities.
An example of a government-owned initiative aimed at assisting various industries and promoting
development on a national scale, is the National Empowerment Fund (NEF), which has a preferential
procurement fund that offers financing and loans to black-owned businesses that have been identified
for service contracts or tenders and who need this capital to ensure effective delivery.
PROVINCIAL ROLE PLAYERS AND STAKEHOLDERS
On a provincial scale, many provinces offer services to the ICT industry- these play a powerful role in
assisting and developing the industry. For example, the Free State, Eastern Cape and Gauteng each
have ICT assistance and development bodies: The Free State Development Corporation (FDC), The
Eastern Cape Development Corporation (ECDC) and The Gauteng Enterprise Propeller (GEP). These
government bodies provide small enterprises with business support and finance, helping the
development of small ICT businesses and the industry overall.
BLUE IQ
Government and private sector have also formed partnership bodies which assist the ICT industry. For
example; in Gauteng, Blue IQ is a government-private partnership which falls under the Gauteng
government. Blue Catalyst is a branch of Blue IQ and it provides entrepreneurs in the ICT industry who
are starting technological businesses with smart ideas with a network of funders and mentors for
their assistance.

90
107

THE INNOVATION HUB
The Innovation Hub, based in Pretoria, is another such partnership between government and the
private sector which assists the ICT industry. This initiative is also funded by Blue IQ, falling under the
Gauteng government. The Innovation Hub is a Science Park with international accreditations- it
provides entrepreneurs in the hi-tech ICT industry with networking and face-to-face as well as virtual
support of their business support and business incubator services.
SAVANT
The South African Technology Vanguard (Savant) is another public-private partnership which assists the
local ICT industry through local and international marketing. The aim of this initiative is to develop and
strengthen the South African ICT sector and empower it as a globally recognized competitor.
Private sector organizations and bodies also seek to help the ICT industry in various capacities and
stimulate growth and development in the industry throughout the country. Examples of these include;
CAPE IT INITIATIVE
The Western Capes Cape IT Initiative is a section 21 company which aims to assist companies in the
ICT sector through networking and mentorship.
INTERNET SERVICE PROVIDERS ASSOCIATION (ISPA)
The Internet Service Providers Association (ISPA) is a non-profit South African Internet industry
organization. The organizations members include educational networks, commercial service providers
and non-profit providers. This body represents an important network of Internet service providers
within South Africas ICT industry.
INFORMATION TECHNOLOGY ASSOCIATION (ITA)
Information Technology Association (ITA) is a body which represents ICT companies who supply IT
equipment, systems, software and services within the industry. This body lobbies government and
provides a mentorship and support programme called Phakisa- this initiative is aimed at small
companies within the ICT sector.

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INFORMATION INDUSTRY SOUTH AFRICA (IISA)
The Information Industry South Africa (IISA) is a body which compiles a comprehensive list of the
associations within the ICT sector. It facilitates networking between these associations and promotes
the expansion of ICT networks and partnerships.
BANDWIDTH BARN
The Western Capes Bandwidth Barn is a Cape Town based initiative which provides business support
as well as rental space to small ICT companies, stimulating growth and development for these small
companies and the industry as a whole.
INNOVATION FUND
The Innovation Fund is an initiative which finances the patenting of new technologies which have been
developed by entrepreneurs and companies.
5.14.10. ISETT
Isett is the local ICTs Sector Education Training Authority. Through this organization, local ICT business
owners can organize training and learnership programmes for their businesses. This body oversees
training initiatives in the ICT sector and provides a valuable service in terms of skills development in
the industry
91
.

91
109

5.15. VALUE CHAINS
FIGURE 8: ICT VALUE CHAIN

Source: 2007, McCormick & Onjala, Methodology for Value Chain Analysis in ICT industry: Frameworks for the Study of Africa
The various stages of the ICT value chain are interconnected and rely on efficient relationships
between each stage for the value chain to function effectively. The ICT value chain consists of
manufacturing as well as services. The manufacturing of components and technologies rely on support
services such as raw materials, fuel, infrastructure and workforce. These components are
manufactured and used in the ICT services sector, where products and services are offered to the final
consumers.
The value chain in the illustration above is an international standardised one that includes all aspects
of the industry from services to manufacturing. However within South Africa, manufacturing is not a
110

large part of the sector and as such the main areas within the South African value chain are, design and
products development, distribution and trading to final consumers.
Assessing the diagram above it is evident that the first stage of the ICT value chain is the conceptual
design and development of a product. A recent example of this is the i-pad. During this stage designers
and developers conceptualise the product and design both the hard and soft ware aspects in the form
of prototypes.
Once the prototypes have proven successful the product is the moved into the manufacturing stage, (it
is important to note that often a triangular manufacturing system is employed i.e. Initial development
an prototyping are performed in one country i.e. South Africa, manufacturing is then done in another
country i.e. China and finally sales and distribution take place in a third country i.e. USA.) During this
phase the actual assemble of the product takes place, hence the need or infrastructure to house and
supply the manufacturing plant, machinery to conduct the manufacturing and assembly as well as
packaging and labeling of the final product. It is important to bear in mind that during this phase there
may be many other services provides involved especially where the manufacturing plant is large and
machinery need to be maintained.
The final sections of the ICT value chain represent the bulk of the ICT sector in S.A. This refers to
the logistics and distribution of the packaged product. At this stage the product is sent through
various channels to stores i.e. Incredible Connection, Makro, and Game etc where it is purchased by
consumers and then used.
The opportunities that have been identified within the industry exist in the services value chain. These
services include installation of CCTV equipment and systems, companies that offer a diverse
product offering to consumers such as marketing, hosting and system maintenance, and bulk short
message services (sms) - this can include resale of bulk sms or the use of sms for advertising and
marketing.
Further opportunities exist in the manufacturing and installation of set top boxes and residential
satellite television installations. Specific opportunities that exist in the provinces in the ICT value
chain are illustrated in the table below.

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TABLE19: ICT OPPORTUNITIES PER PROVINCE

Opportunity

Province
WC EC NC KZN NW Limp MPA GAU FS
Business application software x x x
Cctv systems x
Creative industries x x x x x
Document management systems x x
e-learning, e-banking software
development
x x x x x
e-waste management x x
Internet and wifi provider x x x x x
IT training and software
development
x x x x
Multimedia platforms x x x
Network development x x
Online marketing x x x x
Social media platforms and
software
x x x
Telecommunications and
technology development
x x x x
Voice over IT x
Website development x x x x

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CHALLENGES/BARRIERS
The key challenges and barriers faced by the South African ITC sector are;
Skills shortages across the ICT Sector
Skills shortages in development, building and maintenance of IT systems
The lack of skilled personnel and individuals in the building and maintenance of IT systems affects the
efficiency and functioning of ICT systems. Skilled personnel are required to ensure that systems are
maintained and functioning at optimum capacity in all businesses that area related to ICT or make use
of ICT systems.
Skills shortages of IT specialists in the manufacturing industry
The skills shortages in manufacturing of ICT products is a serious problem, as skilled personnel are
required to keep South Africa competitive in the manufacturing industry as well as to keep the
technologies up to date with global standards.
Skills shortages in IT and Communication sections of businesses in South Africa
The lack of skilled personnel affects the efficiency of businesses which in turn affects the profitability
of businesses in South Africa as they do not function as efficiently as they could. This will have a
negative effect on the economy in the future.
High cost of telecommunications and internet access
High costs of telecommunications, internet and broadband affect the operations of businesses as they
increase the operations costs and this in turn decreases the profits of businesses. With lower costs of
internet and broadband, more households and small businesses could access the internet and increase
their market access.
Low numbers of South Africans with access to personal computers (4% of South Africans) and internet
subscriptions (1% of South Africans)
Personal computers and high costs of internet subscriptions in South Africa mean that fewer people in
the country have access to internet connections and computers. Lower costs would increase the
number of subscribers and in turn generate more demand and create jobs in the industry.
Lack of financing for businesses and access to finance for capital and expansion
The lack of funding and access to finance affects mostly SMEs in South Africa, without finance many
entrepreneurs are unable to start businesses or expand existing businesses.

113

Foreign Exchange Rates and Economic Influences
ITC businesses are affected by economic fluctuations and foreign exchange rates as the businesses rely
on imports and exports to a large extent. The adverse effects of fluctuating exchange rates and the
import tariffs can have a very negative effect on the growth of SMMEs.

114

PART II:
Fieldwork Findings
This section of the report provides the analyses of the surveys conducted on the businesses for the
research on the performance of the services sector report. The questionnaire that was used to conduct
the surveys was designed by FEM Research and interviews were conducted telephonically using a
database of Seda clients from across the country and a list of businesses in the industry generated by
FEM Research. This section is structured in the same way as the questionnaire and provides a brief
analysis of the responses gathered during the surveys. There is some overlap between these sections
and the key findings and recommendations section.

115

TOURISM SECTOR
DEMOGRAPHIC PROFILE OF BUSINESSES

The highest proportion of businesses that were interviewed in the fieldwork phase of the project were
situated in the North West Province (23%), followed by Free State (21%) and Gauteng (19%). The
smallest proportion of respondents were from Limpopo (2%) followed by KZN (4%) and Eastern Cape
(4%).
Figure 9: Business Location

The main respondents to the surveys were the owners, with 58% of all tourism surveys being completed
by the owners, followed by managers (16%) and directors (10%).
Table 20: Position of Respondents
Position of respondent % of respondents
Chairperson 2%
Coordinator 2%
Director 10%
Manager 16%
Owner 58%
6%
4%
4%
23%
13%
21%
8%
19%
2%
Western Cape KZN Eastern Cape North West Mpumalanga
Free State Northern Cape Gauteng Limpopo
116

Secretary 2%
Shareholder 2%
Supervisor 4%
Treasurer 2%
Trustee 2%

The majority (42%) of the tourism businesses that were interviewed are established businesses that
have been in operation for five years or more. A small number (8%) of businesses were less than a year
old while the remainder (50%) of the respondents was businesses that have been in operation between
2 years and five years.
Figure 10: Age of Business

The majority (72%) of the businesses interviewed are registered as Closed Corporations followed by
Sole Proprietors (10%). Furthermore 55% of businesses were located in the Accommodation sector,
followed by Tour operators and Tour guides (14%). Catering businesses accounted for the smallest
percentage (2%) of the respondents.

< 1 Year 1 Year 2 Years 3 Years 4 Years 5 Years
Greater
than 5 years
Series1 8% 0% 17% 19% 14% 15% 27%
0%
5%
10%
15%
20%
25%
30%
117

Type of Company % Type of Service %
Closed corporation 72% Accommodation 55%
Co operative 2% Catering 2%
Private company 8% Curios 8%
Pty Ltd 4% Entertainment 8%
Sole proprietor 10% Tour operators and tour guide 14%
Trust 4% Transportation 12%

None of the businesses that were interviewed were owned by people or companies outside of South
Africa. Businesses in South Africa are classified into the following categories:
Micro- owner run and employs up to 5 people
Very Small- Employs between 6 to 20 People
Small - Employs between 21 to 50 people
Medium- Employs up to 200 people

The number of employees within the tourism businesses varied between 1 and 20; however the average
number of employees was five for each business. The majority (59%) of the businesses employed
between 1 and 5 employees, while 31% employed between 5 and 10 employees and only 10% of the
businesses employed more than ten employees.

118

Figure 11: Employees

The highest number (76%) of permanently employed workers are found in businesses that employ
between 5 and 10 employees, while the lowest number (38%) of permanently employed workers are
found in businesses that employ more than 10 employees. Businesses that employ more than ten
employees accounted for 40% of the temporary staff employed, and 38% of the permanent staff. The
smaller businesses that employed between 1 and 5 employees had the highest number (49%) of highly
skilled staff, while bigger businesses employed less skilled staff.
Table 22: Employment Type per Business Category
Number of Employees Temporary Contract Permanent Seasonal
workers
Skilled
employees
Micro (1 5) 22% 5% 46% 28% 49%
Very Small (6-20) 60% 11% 76% 16% 42%
Small (21-50) 0% 0% 0% 0% 0%

1-5 Employees 6-20 Employees
Series1 59% 41%
0%
10%
20%
30%
40%
50%
60%
70%
%

119

The majority (45%) of the businesses interviewed were small enterprises with an annual turnover of
R150,000 or less, 27% have an annual turnover of R150,000 - R400,000 and 14% have an annual turnover
of R400,000 - R1 000,000. Only 2% of the businesses interviewed had annual turnovers of more than
R1 000,000, while 10% were unaware of their annual turnover as the businesses were less than a year
old.

The businesses with the smaller turnovers; 0 - R150, 000 and R150, 000 - R400, 000 generally employ 1-
5 employees. The majority (59%) of businesses in the 0 - R150, 000 ranges employ 1-5 employees,
followed by 36% employing 5 - 10 employees and only 2% employing more than ten employees. The
majority of businesses with an annual turnover of more than R400, 000 employ between 5-10
employees, and none of them employ more than ten. This is interesting to note because despite
experiencing growth and expansion from small business it appears as though larger tourism businesses
employ a maximum of ten people at a given time.

0-R150,000
R150,000-
R400,000
R400,000-R1
000,000
R1 000,000-R2
000,000
just started
Series1 45% 27% 14% 2% 10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
120


Turnover Category

Number of Employees
0 5 6 - 20

21-50
Employees
Grand Total
0 - R150,000 59% 41% 0% 100%
R150,000 - R400,000 62% 38% 0% 100%
R400,000 - R1 000,000 29% 71% 0% 100%
R1 000,000 and above 0% 100% 0% 100%
Just started 60% 40% 0% 100%

The majority (69%) of the clients that make use of the businesses services are South African.
Figure 13: Major Source Markets

69%
31%
Domestic International
121

More than half (55%), of the businesses surveyed were accommodation businesses, 15% were tour
operators and tour guides and 12% provided transport services.
Figure 14: Services

Conclusion
The majority of the businesses that were surveyed in the tourism sector fall within the accommodation
sector and are registered as closed corporations. The majority of the tourism businesses are micro and
small businesses that earn less than R 400, 000 per annum and employ less than ten people. The major
source markets for these businesses are local government and domestic tourists within South Africa
CHALLENGES, OBSTACLES AND OPPORTUNITIES
General Challenges
During the survey process the businesses were asked to outline the current challenges that they face in
Finance (43%)- the biggest challenge for tourism businesses was access to finance, the need for start-
up capital, expansion capital and cash flow during low season affected almost half of the business
interviewed.
8%
55%
8%
2%
12%
15%
Curios Accommodation
Entertainment Catering
Transportation Tour operators and tour guide
122

Building client base (17%)- the high number of tourism businesses and the low number of tourists
visiting some areas made it difficult for some businesses to attract and maintain a client base
Marketing (14%)- is a challenge for businesses as they need to have strong marketing techniques to
differentiate their businesses and attract clients.
Specific Challenges
Specific challenges faced by tourism businesses stem from the general challenges which are finance,
building client bases and marketing. Finance related challenges include the following:
Access to working capital
Maintaining cash flow
Managing overheads
Increase in transport costs which in turn increases general costs and reduces the available cash
flow and annual profits as companies cannot increase their prices to meet the petrol price
increases
Specific challenges faced by businesses in terms of building client bases include:
Limited knowledge of marketing which leads to low numbers in client bases
Increased competition from other companies
Limited knowledge of the tender processes in order to gain government clients and increase
current client bases
Marketing specific challenges that businesses faced included;
Lack of resources to market the business efficiently which in turn leads to low exposure and
poor numbers of clients
Lack of marketing knowledge and understanding
Increased competition from other businesses particularly established businesses with better
marketing tools and market access

123

Outcomes, Needs and Requirements
The biggest effect of obstacles and challenges on businesses was a decline in sales (33%), and
businesses stagnating (33%).
Figure 15: Effects of Challenges to Business

Eight percent of the businesses reported that the challenges and obstacles faced by the entity have not
affected the operation of the business yet.
A significant number (23%) of businesses interviewed did not require assistance from public or private
organisations; however the majority (77%) required various interventions to ensure the sustainability of
their businesses. The most requested interventions were:
Grants and finance (20%), businesses were need of financial assistance to help expand and grow the
entity and in some cases it was required to maintain the business.
Training (18%) was required by businesses for both owners, and staff. The relatively high number of
skilled workers in the industry and the need for further skills show the growth potential for job
creation in the sector.
Access to resources (16%) such as business support or networks was required by business to ensure
sustainability and longevity of entities.

33%
26%
33%
8%
Decline in sales Operations have been affected Business has stagnated No affects
124

General Opportunities
Opportunities that exist in the tourism sector range from accommodation to tourism facilities and eco-
tourism activities. Furthermore these opportunities can be developed across South Africa.
The province specific opportunities are outlined in the table below.
TABLE 24: OPPORTUNITIES IN TOURISM

Opportunities

Province
WC EC NC KZN GAU Limp MPA FS NW
Accommodation x x x x x x x x x
Beach Tourism
Activities
x x
Catering/Food outlets x x
Conference Facilities x x x x
Eco Tourism Activities x x x x x
Shuttle
Services/Transport
x x x x x
Tourism Facilities x x x x x x
Training facilitators x x

125

Specific Opportunities
accommodation related services. These services include:
cleaning services
catering services
laundry services
gardening services
delivery services
Furthermore these services have very little entry challenges or barriers and are accessible for SMMEs.
offering personalised services and activities. These activities include:
shuttle services
Personalised guided tours
Hiring of bicycles or equipment such as surfboards and kites etc.
Tourism and Conference facilities would be opportunities more suited to big businesses as the
start-up costs would be quite large but the opportunities for SMMEs would be in provided services to
these facilities. Again these services would include:
Cleaning
Catering
Transport
Delivery services
All of which are all quite easily accessed. Furthermore these opportunities would create employment in
the areas where they are developed.
126

In order to access the abovementioned opportunities entrepreneurs would require finance, marketing
and training, 29% of the businesses surveyed felt that finance and training were needed to access
opportunities. Government support and marketing and training were also regarded as key to accessing
opportunities in the tourism sector.
Figure 16: Access to Opportunities

The expected outcomes of these opportunities and accessing them are job creation and skills
development in the tourism sector.
Conclusion
The tourism businesses that were surveyed in the research process play key roles in providing
accommodation, information to tourists and transportation services. The businesses face challenges
such as lack of finances and inefficient marketing which in turn affects the access to clients. The effect
of these challenges on the businesses is declining sales and poor growth. To combat these challenges
and effects, the businesses require assistance in accessing training and funding. Despite these
challenges there are opportunities that exist in the tourism sector across the provinces. These include
developing cheaper accommodation facilities and offering shuttle services to tourists. These
opportunities are accessible with finance, marketing and training.

3%
29%
26%
10%
19%
3%
3%
7%
Promotion Finance and training
Government support Access to resources
Finance and marketing Finance
127

6.3. SEDA SUPPORT
Feelings toward Seda Programmes/Services
The majority (63%) of the businesses did not feel that the services at Seda needed to be improved,
however 21% felt that service delivery should be faster and 12% felt that more specific business training
should be offered to businesses. Furthermore the businesses were not able to comment on whether or
not Seda offered a unique product when compared to other development organisations as they were
unaware of the product offerings. The majority (85%) of the respondents required assistance from Seda
for their businesses.
Figure 17: Improvement of Seda Programmes

Awareness of Seda Programmes/Services
Fifty percent (50%) of the businesses had made use of Seda programmes. Of this total, 72% felt that the
programmes had been effective in assisting their businesses.

21%
4%
12%
63%
faster service better follow up offer more specific business training no
128

TABLE 25: EFFICIENCY OF SEDA PROGRAMMES
Previous use of Seda % Efficiency of Seda programme %
Made use of programmes
50% Effective 72%
Did not make use of Seda
50% Not effective 28%

Relevance and Effectiveness of Seda Programmes to SMME Development
When asked to comment on what programmes Seda should offer, the businesses that responded had
three comments;
More marketing and training
Seda should provide financial assistance
Seda should provide better follow up services and programmes
Figure 18: Programmes to be offered by Seda

The tourism industry and the businesses that operate within the industry require assistance in four
areas; marketing, training, certification, and financial assistance. Seda can provide assistance with
marketing and basic business training; as they do not currently offer specialised training specific to the
needs of the tourism sector.
50%
21%
29%
Marketing training Financial assistance Follow ups
129

Furthermore Seda does not offer financial assistance and accreditation or certification that many
businesses require assistance with. If Seda were to offer assistance in these instances the programmes
they have would be more relevant for tourism businesses.
Conclusion
The businesses in the tourism sector that made use of the Seda programmes found them to be effective
in assisting the business however a large number of the businesses were unaware of the types of
programmes that Seda offers and as such could not comment on Seda. The businesses that had made
use of Seda felt that the organisation should provide assistance with funding, increase marketing
products and provide a better follow up and communication process with clients. The majority of
respondents felt that they would require some form of assistance from Seda, despite being unaware of
the product offerings.

130

ICT SECTOR
DEMOGRAPHIC PROFILE OF BUSINESSES
This section of the report provides the analyses of the surveys conducted on the ICT businesses for the
research on the performance of the services sector report. The questionnaire was designed by FEM
Research and interviews were conducted telephonically using a database of Seda clients from across
the country and a list of businesses in the industry generated by FEM Research. This section is
structured in the same way as the questionnaire and provides a brief analysis of the responses gathered
during the surveys. There is some overlap between these sections and the key findings and
recommendations section.
ICT businesses were contacted across the provinces and the most data was gathered from Gauteng
(22%), Eastern Cape (22%), Western Cape (16%) and Free State (16%) regions. The Northern Cape and
North West had the lowest number of responses.
Figure 19: Business Location

The surveys were completed by the owners (44%), directors (23%) and managers (33%) of ICT companies
across the provinces of South Africa.

Area
eastern
cape
free
state
gauteng
Nothern
Cape
kzn limpopo
mpumal
anga
western
cape
North
West
Series1 22% 16% 22% 2% 4% 6% 10% 16% 2%
0%
5%
10%
15%
20%
25%
131

Figure 20: Representatives

The main business activity and core work conducted by businesses that were surveyed in the ICT sector
was services related. Sales and software design businesses accounted for the bulk of the surveys.
Looking more closely at the businesss being assessed it is evident that the bulk of the entities (62%)
are well established with 26% being between 3 5 years old and 36% being older than 5 years, only 12
percent of the businesses surveyed were in existence for less than 1 year.

23%
33%
44%
Director Manager Owner
132

Figure 21: Age of Business

The majority (88%) of the businesses surveyed were registered as Closed Corporations. The remainders
of the businesses were registered as PTY Ltd, Section 21 and Trusts. Regarding the type of business
operations that the firms are involved in it is evident that Sales and Distribution is the largest
contingent counting 53% of all firm surveyed. Software design was also a significant sector with 33% of
businesses surveyed conducting work within this sector. None of the businesses surveyed were owned
by people or companies outside of South Africa.
From the graph it is clear that the bulk of the businesses that have been assessed are micro and micro
as defined earlier with 62% having only 1 5 employees. In total 80% of all businesses assessed have less
than 10 employees.
Businesses in South Africa are classified into the following categories:
Micro- owner run and employs up to 5 people
Very Small- Employs between 6 to 20 People
Small enterprises - Employs between 21 and 50 people
Medium- Employs between 51 to 200 people
For the purpose of this report we have further broken down the small category into businesses that
employ between 5 and 10 employees and businesses that employ 10-20 employees as well as businesses
that employ between 20-50 employees. This has been done to provide a more in depth understanding
of small businesses that were interviewed for this study.
Figure 22: Employees
1 Year 2 Years 3 Years 5 Years
Greater than 5
Years
Series1 12% 14% 12% 26% 36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
133

The graphs on the following page illustrate the size of the firms that have been assessed. This is done
by assessing to key facets i.e. turnover and the number of employees. From these graphs it is evident
that the majority of firms assessed fall below R1 million turnovers per annum. The majority 38% have a
turnover of R0 R150 000, followed by 23% that have a turnover between R400 000 R1 000 000. In
total 76% of the firms assessed fell below the R1 million marks.

1-5 Employees 6-20 Employees 21-50 Employees
Series1 62% 31% 7%
0%
10%
20%
30%
40%
50%
60%
70%
%

134


In the case of firms with a turnover of R0 R150 000, 94% have 10 or less employees (67% have 1- 5
employees, 27% have between 5 10 employees). As the turnover rises it can be seen that this changes
with 50% of firms having a turnover of R2million to R4million employing between 10 and 50 employees
while all firms having a turnover of greater than R4 million employ in this range.
In order to get a better understanding of the sector and the businesses that function in it, a cross
tabulation was conducted between the number of employees and the type of employment. From the
analysis it is interesting to note that across all business sizes the number of permanent contracts
comprise between 60 70% of the total employees. A positive note is that the industry does not
experience much seasonality however temporary employment seems to be well entrenched (firms with
10 20 employees have 27% of their staff on temporary contracts).
Another interesting observation is regarding highly skilled workers, from the analysis it is evident that
the % of skilled workers within the firms decline as the number of employees increase. This has
important implications for job creation in that if the small firms grow the jobs that they will create will
allow for semi-skilled individuals to enter the job market.

Annual
turnover
0-R150,000
R150,000-
R400,000
R400,000-R1
000,000
R1 000,000-
R2 000,000
R2 000,000-
R4 000,000
greater than
R4 000,000
Series1 38% 13% 23% 8% 10% 8%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
135

Categorisation Temporary Contract Permanent Seasonal Highly
skilled
Micro (1 - 5 Employees) 30% 8% 80% 16% 77%
Very Small (6 - 20
Employees)
6% 6% 12% 2% 63%
Small (21 - 50 Employees) 0% 0% 8% 0% 47%

The client base for the ICT businesses was South Africa, less than 10% of the business had international
clients or clients from another African country.
Of the businesses surveyed, 24% felt that their business played a role in skills development in the
industry, 16% felt they assisted in creating jobs in the economy and 8% felt that they were involved in
community development.
Figure 24: Role in ICT sector

24%
16%
16%
8%
10%
10%
4%
12%
Skills Development Job Creation
Sales Community Development
Networking and internet services/ support Computer Equipment (support, repair, supply)
Design (Graphic/ Web) IT Services
136

Conclusion
The majority of the ICT businesses that participated in the survey are established and have been in
operation for more than three years. The bulk of the businesses are registered as closed corporations
and have an annual turnover of less than R 1 000,000 and employ less than 10 people. The major source
of clients for these businesses is South Africa.
7.2. CHALLENGES, OBSTACLES AND OPPORTUNI TI ES
General Challenges and obstacles
Funding: 37% of business identified access to short term funding (working capital) as being a problem.
Many businesses have noted the unwillingness of financial institutions to assist them.
Market Intelligence: 29% of business have identified that a key problem that they face is the lack of
knowledge of what are the current growth and development trends in their sector.
Infrastructure: Unlike the firms that required working capital that point highlights the fact that many
firms (13%) have indicated the need for funding assistance so that they can purchase the necessary
infrastructure to compete efficiently.
Other points that have been raised by firms are around skills development (8%) as well as payment
delays (5%) and transport costs (3%).
Specific Challenges
Specific challenges that are faced by businesses in the ICT industry include:
Access to finance is a serious challenge for ICT businesses as it hampers every aspect of the business
from operations and management of cash flows to purchasing of equipment and paying for running
costs.
Working capital is another big issue that businesses face particularly in the startup of an ICT business,
accessing working capital can be difficult for SMMEs.
Skills shortages across the industry affect the operations of the businesses as the labour costs can be
higher due to the completion for skilled staff, also businesses that lack the relevant skills experience a
decline in their client bases.
137

Lack of resources such as finance, skills, marketing knowledge and training also affect the
operations of ICT businesses and hamper growth.
Lack of infrastructure is a serious concern as the ICT industry is based on infrastructure and having the
necessary infrastructure in place as well as having access to infrastructure is critical to developing a
sustainable business.
High cost of imports and products for resale affect the cash flow and profit margins as price
fluctuations cannot be mitigated yet the price of services and products need to remain relatively
unchanged to maintain existing client bases.
The biggest effects of the obstacles and challenges on businesses in the ICT sector are:
Decline in business (25%)
Slows the growth of the business (20%)
Increases operational costs (19%)
It should be noted that 19% of the businesses that were surveyed felt that the challenges faced by their
businesses did not have an impact on the overall operation and outputs of the business.

138

Figure 25: Effect of challenges on business

Following on from the above challenges, firms were then asked specifically what type of interventions
they required. Interestingly while skills development had been ranked lower than other challenges it is
in greatest demand (35%) by firms in this sector. Linked with the above findings interventions in the
areas of:
Providing market intelligence is in high demand by firms (30%)
Assisting firms with procuring short term funding (26%)
An important note that has been made by firms linked to the idea of infrastructure is the provision of
Incubation programmes (4%). These interventions have proved very successful in provinces such as the
Western Cape and should be seriously considered going forward.
General Opportunities
A number of opportunities in the ICT sector were identified during the surveys. These opportunities are
applicable to the different provinces and have been illustrated in the table below.

25%
20%
11%
19%
6%
19%
Slows down business
Slows growth of the company
Affects performance in the market/ market penetration
Financial Costs
Loss of Workforce/ Employees
No Big Impact
139

Opportunity

Province
WC EC NC KZN NW Limp MPA GAU FS
Business application
software
x x x
Cctv systems
x
Creative industries
x x x x x
Document
management
systems
x x
e-learning, e-
banking software
development
x x x x x
e-waste
management
x x
Internet and wifi
provider
x x x x x
IT training and
software
development
x x x x
Multimedia
platforms
x x x
Network
development
x x
Online marketing
x x x x
Social media
platforms and
x x x
140

software
Telecommunications
and technology
development
x x x x
Voice over IT
x
Website
development
x x x x

Specific Opportunities
Assessing the opportunities outlined above there are three general categories in which these
opportunities fall. While the above opportunities can be accessed by SMMEs, it is also important to
assess the associated opportunities which occur when the above are developed.
Software and systems development: While the direct opportunities for development and expansion
are limited to the business that is undertaking the opportunity (due to specialised nature of the
opportunities) some associated opportunities exist
Smmes can provide physical infrastructure to these software development firms and well as ongoing
maintenance of these systems
Smmes can also consider partnering with these firms to look at distribution their products. This case
the smme would act as an agent and earn a commission on each sale.
Training
Smmes would be required to provide the infrastructure for the training to take place i.e. venue,
catering, equipment etc.
As in the opportunity above Smmes can also look at partnering with these firms to look at distribution
of their products.

141

Infrastructure provision
Smmes can provide a host of services to these companies i.e.
Logistic support
Sourcing of infrastructure components
Provision of labour
Maintenance
When asked to describe what is needed to access opportunities in the ICT sector, all of the businesses
that responded felt that there were three things needed to access opportunities:
Finance
Infrastructure and resources
Training
The expected outcomes of these opportunities are the promotion of job creation in the ICT sector as
well community and skills development. Furthermore it is expected that the advancement in skills
could lead to new developments in technology and the manufacturing sector of the ICT industry.
Conclusion
Businesses in the ICT sector play a role in creating jobs as well as developing skills and assisting in
community development. The major challenges faced by these businesses are accessing funding,
market intelligence and infrastructure. These challenge and obstacles have negative effects on the
businesses and generally cause a decline in sales, slow business growth and higher operational costs. To
assist in combating these challenges the businesses in the ICT sector require assistance in developing
market intelligence and securing funding. However despite the challenges and obstacles that exist in
the industry, these businesses remain optimistic about opportunities that exist in the sector and feel
that with funding, training and access to necessary infrastructure the sector will continue to grow and
create jobs and develop skills.

142

SEDA SUPPORT
Feelings/Attitudes towards Seda Programmes/Services
Of the businesses that had made use of Seda Services and programmes, only 15% felt that the
programmes were not effective and had not helped their businesses at all. The majority (85%) of the
businesses felt that the services received had been very effective in assisting their businesses.
Figure 26: Efficiency of Seda Programmes

Sixty four percent of the businesses require assistance or support from Seda.
Figure 27: Assistance from Seda

85%
15%
Effective service Not Effective
64%
36%
Yes No
143

Awareness of Seda Programmes/Services
Only 46% of the businesses surveyed had made use of Seda services and programmes.
Figure 28: Seda Programmes

Relevance and effectiveness of Seda Programmes to SMME Development
Forty one percent of the businesses that had made use of Seda programmes and services felt that there
was room for improvement. The main areas that required improvement were:
Better communication and follow up with clients about queries and services
Improve the processes and speed up service delivery
Provide more focused and specialised training for ICT businesses

46%
54%
Yes No
144

Figure 29: Improvement of Services

When asked about the programmes that Seda should offer, most respondents wanted to see more
marketing and networking tools as well as business funding options through Seda. Furthermore, only
22% of the respondents felt that Seda offered a unique service compared to other development
organisations while 46% of the respondents stated that they were unaware of the exact offerings and
could not compare Seda to other organisations.
assistance and training to run and manage businesses, but the industry requires specialised training and
mentorship which is not currently available from Seda. However Seda does offer ICT specific
sector specific.
Conclusion
While the majority of the businesses had not made use of Sedas services and were unaware of the
exact product and service offerings of the organisation, 64% still requested assistance or support from
Seda for their business. Of the respondents that had made use of Sedas products and services, the
majority would like to see more marketing, training and funding services in the future, while 41% felt
that Seda could improve their current customer service delivery and speed up the processes when
assisting clients.

Better communication and
follow up
Improve processes and speed
up service delivery
Provided specialised training
Series1 36% 40% 24%
0%
10%
20%
30%
40%
50%
145

RECOMMENDATIONS
In order to make recommendations on improving programmes offered by Seda or developing new
programmes and services it is necessary first to identify existing programmes and services that are
offered and determine the relevance to the needs of the ICT and tourism businesses.
Seda (Small Enterprise Development Agency) is promoted as an agency that offers a starting point for
potential entrepreneurs and a growth opportunity for existing entrepreneurs. This is achieved through
business consulting, training and (when unable to help) referrals to suitable specialists.
Sedas services are orientated towards upholding their three objectives: 1) to increase the capabilities
and competitiveness of small business enterprises; 2) to ensure that all small business enterprises have
equal access to support services; and 3) to strengthen the organization for service delivery.
Seda provides four service categories that will enable it to deliver on its mandate. The first two
discussed focuses on potential entrepreneurs while the final two focus on existing entrepreneurs:
Seda Business Talk
Business Talk is a package for potential entrepreneurs or business owners who are enthusiastic about
starting their own business in the near future. Overall, this package includes business information and
advice, small enterprise training, and assistance with business registration.
Interested persons, who are thinking of starting a business, are encouraged to visit any of the Seda
branches located countrywide to obtain information on Seda Talk seminars (which offers a basic
overview of Co-operatives, Entrepreneurs, and Franchises), Seda Start-up1 training and other Business
Talk programmes offered.
During this initial stage, business advisors will focus on motives for wanting to start a business,
characteristics and other necessities for starting a business, testing the business ideas viability,
exploring other support services, and information on business development.
After having formalized a clear idea of the business one wants to start (the strategic focus stage), Seda
advisors will help clients to draw up a business plan, consisting of the following areas:
Your strategic focus
The marketing plan
146

The operations plan that will differ depending if the client will be a manufacturer or
retailer
The staffing plan
The financial plan
During each of these above mentioned areas a three-step cyclical planning process should be used,
consisting of:
Think and Strategize,
Test your ideas through research, and
Analyze and draw conclusions
Clients are warned to not become stuck in the planning mode. A business plan should normally consist
of 20 pages (including financial statements) and planning should only take one to six months.
Lastly, Seda advisors will help clients decide what type of business they will enter into/begin and will
therefore weigh the advantages and disadvantages of each of the following: sole proprietorships,
partnerships, close corporations, private companies or trusts. Seda also offers the Cooperatives and
Community Public Private Partnership (Coops & CPPP) Programme to specifically satisfy the needs of
rural clients. This programme supports non-traditional organizational forms and specifically directs its
focus to rural areas and the use of local resources. Key sectors for this programme is agribusiness,
cultural tourism, mining and mineral beneficiation, and trading and auxiliary services.
Seda Business Start
Business Start is a package that provides assistance in the form of tools and techniques to those clients
who are ready to start a business. Overall, this package focuses on business planning, business
counseling, access to finance, and business support.
Seda business start has four key areas of focus:
Financing your business
Most small businesses will need money in order to lift itself from the ground. Before the business
becomes profitable, money will be needed to acquire stock and materials, equipment, money to pay
employees salaries, telephone bill, rent, etc. However, before applying for a loan, clients are urged to
find out the exactly information the person/institute requires in order to make the application process
as fast and effective as possible.
147

Seda guides all clients in creating a successful presentation for the bank that will make the loan
application a success. This is achieved by focusing on three key areas, namely: Bank requirements for
SMEs; reasons why banks refuse loans; and checklist for a presentation to bankers
Managing your business
Seda advises clients to put systems in place in order to manage the business effectively. This should be
done so that every demand the business faces can be 'channeled' in a certain direction and dealt with
in a planned way which will enhance control over all business processes.
Key factors that Seda advise their clients to acquire include: a proper Business Financing Plan; a
comprehensive plan for potential bankers that will finance the clients business; a good understanding
of fraud and the prevention of it; well informed of the services of the Independent Regulatory Board
for Auditors; good understanding of bank services; and a good understanding of business financial
management. Appropriate links are provided on Sedas website for more information of each topic.
Marketing for small businesses
Seda focuses on the four Ps of marketing to help their clients make their products more appealing to
customers than that of their competition. The four Ps include Product, Price, Promote, and Provide.
According to these four factors Seda provides guidance in advertising, promotional activities, customer
relations, selling techniques, pricing, packaging, and the location and name of the business.
Seda Business Build
SEDA offers business build services to small business owners. These services are aimed at helping
small businesses to grow and improve through various programmes. These programmes include; Advice
for tender processes, business networking, technical business support and ISO accreditation, help with
an export readiness assessment, toolkits for participating in exhibitions and trade shows, and
productivity improvement.
Seda Business Grow
SEDA offers Business Grow services to small businesses. These services aim to achieve sustainable
growth in small businesses. Business Grow uses the same services as Business Build, but have a
different focus. This programme offers:
- Business assessment and diagnostic tools: assessing the business needs for sustainable growth and
providing a solution through SEDAs services and networks
148

-Business Management: improving business management skills, including financial admin and
management; coaching and mentoring; Strategic planning; business optimisation and turnaround
strategies; listing on JSE and AltEx.
-Management systems/ technology: SEDA offers technical support like ISO Accreditation Product
Improvement, Market Penetration and Tender Support. This support comes from SEDA branches
offering the services.
- SEDA offers trade point programmes: Trade Point programmes are initiated by an international, non-
governmental organisation called The World Trade Point Federation. It aims to increase SMEs
participation in global trade. Global trade and networking is promoted through their Global Trade
Directory System, which provides a database of companies registered from 70 countries in the network.
This system provides companies with networking, marketing and exposure in the Global Trade market
and offers trade related information, market intelligence and other services.
- SEDA also offers an Export Development Programme to small businesses. This service helps businesses
to grow through assisting them in developing export systems.
ICT Specific Programmes offered by Seda:
SEDA offers the STP- the Seda Technology Programme. The STP aims to increase the accessibility,
knowledge and use of technologies in small businesses, especially those from an underprivileged
background, to help them develop and grow. This should increase their overall productivity and
competitiveness in an increasingly technological market and general society.
SEDA has launched the Nelson Mandela Bay ICT Incubator in the Eastern Cape. It aims to grow and
promote economic growth in the Eastern Capes ICT sector. It focuses on ICT Cluster Development,
business Development, Skills development and Job creation in the ICT sector.
The services that the incubator provides include Mentorship, networking with industry players and
investors, and physical ICT infrastructure. Entrepreneurs also get support from the Entrepreneur
Support Program provided by the incubator, helping them with business plans, mentorship,
information, finance assistance and business ideas.

149

Tourism Opportunities and the Seda Programmes
Tourism Opportunity Assistance Offered by
Seda
Programme Programme Applicable
to SMMEs
Accommodation
Y All programmes can be
utilised for this opportunity
Specific support such as
running a guesthouse and
meeting the requirements to
get a better tourism rating
would be helpful to
entrepreneurs
Catering/Food outlets
The current available
programmes are well suited
for this opportunity
Tourism Activities
(Beach, Eco and
Cultutral)
Specialised marketing and
training is required to access
these opportunities and at
present Seda does not provide
specialist training or
marketing for the sector
Business Tourism
Facilities and Activities
The current available
programmes are well suited
for this opportunity
Shuttle and Transport
Services
Entrepreneurs wanting to
access these opportunities
may need assiatcne with
permits and certification,
currently this type of
guidance and assistance is not
available from Seda

Table of ICT opportunities and Relevant Seda Programmes

ICT Opportunity Assistance Offered by
Seda
Programme Programme Applicable
to SMMEs
Software and systems
Current programmes can be
utilised but entrepreneurs in
this field require specialist
150

development
knowledge and mentorship
that relates to ICT systems
and software, rather than
just general assistance from
Seda
Training
The current programmes can
be utilised to start a training
business however if a business
requires training or
accreditation that is specific
to the ICT industry, there are
no current programmes in
Seda to accommodate this
Infrastructure
provision
Seda does offer assistance in
infrastructure development
and support as can be seen in
the Nelson Mandela Bay ICT
Incubator

Recommendations on developing services and programmes to accommodate development
opportunities:
The following opportunities have been identified for Seda to assist in the development of the services
sector and these interventions have been identified through the desktop review as well as through the
data analysis.
Tourism Opportunities:
Opportunity 1:
Funding for businesses: Businesses require funding for various reasons and it is not always possible to
apply for finance from private institutions, furthermore businesses are unaware of the public sector
funding that is available and as such require assistance in accessing these funding avenues.
Intervention:
Providing assistance with securing funding: Seda can offer assistance in securing funding for tourism
businesses or at least offer assistance in funding applications for businesses. Seda can recommend
151

institutions that tourism businesses can apply to for funding as well as offer assistance in facilitating
contact with funding organizations.
Recommendation:
It is recommended that partnerships be established between funding facilitation organizations such as
the IDC as well as the DBSA with Seda to provide clients with information regarding funding
opportunities while also assisting clients in applying for funding.
Opportunity 2:
Expanding existing businesses by Marketing & Building a client base: a major issue that businesses face
is maintain and expanding their client base. Businesses have difficulty in expanding clientele and
accessing new markets and so they require assistance in developing more aggressive marketing skills as
well as developing advertising platforms to increase their client base.
Intervention:
Assist with building client base and improving marketing: Seda can provide assistance to these
businesses by providing in depth marketing training and tourism specific training; furthermore Seda can
also provide guidance with regards to applying for government tenders.
Recommendation:
Develop training and marketing platforms to increase exposure of businesses as well as promote online
marketing
Opportunity 3:
Development of /facilitation of Training: Seda can develop training and facilitation programmes to
increase their current product offering as well as to assist small businesses access much needed
industry specific training.
Intervention:
Provide accredited training specific to the industry: Industry specific training for tourism businesses is
essential and would include training in marketing of tourism products, development of tourism
products and providing quality assurance.

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Recommendation:
It is recommended that Seda develop specific industry training as well as accredited training for
entrepreneurs in the industry. Partnerships and collaborations may be formed with training facilities or
organisations
Opportunity 4:
Access to resources: businesses in the tourism industry, particular small businesses are not able to
access all the required resources; these include basic services such as municipal and infrastructure as
well as finance and assets.
Intervention:
Facilitate access to necessary resources to promote industry growth
Recommendation:
It is recommended that Seda partner with other organisations or develop network clusters whereby
businesses can share resources.
ICT Opportunities:
Opportunity 1:
Skills development: ICT businesses experience skills shortages which hamper their ability to grow and
expand. Skills development would combat the skills shortages, as well as improve job creation
opportunities. Training is required to facilitate skills development in the ICT industry.
Intervention:
Provide industry specific training: Training is required by ICT business, the training is not general
business or marketing training but specific skills, such as software design and developing, network
support and maintenance. The training providers would need to be industry specialists.
Recommendation:
Seda can develop specialized training aimed ICT businesses and provide them with after training
mentorship

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Opportunity 2:
Accessing market intelligence: provides an opportunity for Seda to assist small businesses in accessing
market intelligence and in doing so help these businesses to become competitive and to grow.
Intervention:
Provide market information to businesses in the industry: Seda can partner with other organisations to
develop a platform that provides market information to small businesses.
Recommendation:
Seda can develop partnerships with the department of Communication to research and publish regular
documents on market information as well as develop annual sectoral reports
Opportunity 3:
Assisting firms with procuring short term funding: Short term funding is required by firms on occasion
to supplement cash flow or as bridging finance. These firms can be assisted by Seda through the
development of a short term funding facilitation programme. This will assist small businesses and help
with their development in the industry.
Intervention:
Facilitate funding for ICT businesses: Seda can provide advice or assistance to ICT businesses that
require short term funding, their needs can be assessed and the relevant funding agencies can be
contacted and applications can be made through assistance from Seda.
Recommendation:
Develop partnerships with funding organizations and develop a list of potential funders relevant to
each industry
Recommendations for Further Research
The recommendations for further research flow primarily from the scope and limitations of this study.
As outlined in the limitations section, this study faced various challenges:
Sample size
Buy in from provincial offices
Assess links with current programmes
Status of current assistance provided
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Results of current M&E
Size of the sectors being assessed
Given the above challenges it is recommended that further research be conducted as follows:
Partner with specific regional offices and; using their databases, conduct sector specific mapping.
This exercise will build on the information already provided in this report i.e. key opportunities &
challenges; however it will allow for targeted interventions to take place within specific geographical
nodes
Further analyses of each sector should be conducted at a National level. However the associated
sample size should be increased to include at least 500 1000 participants as well as participants
that would be affected by upstream and downstream opportunities.
A separate analysis should be undertaken to benchmark Seda clients to those clients who have
opted to use Seda services. This can be linked to ongoing M&E so that the impact of Seda programmes
can be tracked effectively

CONCLUDING REMARKS
The results from the research process have identified that both the ICT and the Tourism sectors have
significant potential for job creation and economic development. Neither of the sectors has achieved
their full potential which indicates that there is further room for entrepreneurs to develop and grow.
Through the research process it is clear that both sectors are growing significantly and have already
made significant contributions to the national and provincial economies. However, as outlined in both
the literature as well as the data analysis both sectors are faced with various challenges that are
inhibiting growth and job creation.
In this respect it is crucial that Seda looks at the various proposed interventions and begins to
implement sector specific interventions. As outlined by the Minister of Finance in the latest budget
speech, small business is and will become more and more significant in shaping the development of our
economy, hence, measures to assist them with respect to growth, development and long term
sustainability need to be put in place.

155

LIST OF REFERENCES
Tourism Sector Bibliography
Accelerated and Shared Growth Initiative for South Africa (AsgiSA) (2006)
Eastern Cape Department of Economic Development and Environmental Affairs
Eastern Cape Tourism Master Plan, 2011
JH van der Merwe, SLA Ferreira and A van Niekerk, Spatial Gap Analysis of Tourism Development
Opportunity in the Western Cape Province 2008
KZN DEDAT
National Tourism Strategy 2011
Recommendations on Tourism, United Nations (83): 5. 1994
SAT Domestic Tourism Report Provincial Scorecard 2007-2010
SA Tourism, Tourism Definition PDF 2008, Dept. of Environmental Affairs and Tourism
South African Marketing Growth Strategy
STATs SA: South African Tourism 2010
Theta
WC DEDAT

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I NTERNET SOURCES
European tourism grows above expectations 2011, http://media.unwto.org
Opportunities and tips for Educational Tourism Providers- www.tourism-review.com
World Bank Indicators http://data.worldbank.org/indicator/ST.INT.RCPT.CD 2011
www.capetownroutesunlimited.com
www.joburg.org.za
www.tourismnorthwest.co.za
ICT SectorBibliography
Department of Communications South Africa
FDI Intelligence 2011, analysed by FEM Research
ICT market Review and Forecast Chapter 5, 2011
IDC. Aid to Recovery: The Economic Impact of IT, Software and the Microsoft Ecosystem on the
Economy 2009
McCormick &Onjala, Methodology for Value Chain Analysis in ICT industry: Frameworks for the Study of
Africa 2007
Solidarity Research Institute, Skills Shortage in SA: Summary of facts per Sector regarding this issue,
January 2008
SoumitraDutta& Irene Mia, The Global Information Technology Report 2010-2011: Transformation 2.0
South Africa ICT Sector Performance Review 2009-2010

157

www.digitimes.com
www.doc.gov.za
www.itu.int
www.northenrcapebusiness.co.za
www.reconnectafrica.com
www.SouthAfrica.info
www.tiaonline.org
http://gep.cobwebinfo.co.za/
http://www.africanbrains.net
http://ekhayaict.com/moblog/ICT-economic-empowerment-and-job-creation-by-the-DoC
http://www.info.gov.za/speech/DynamicAction?pageid=461&sid=10832&tid=10849
http://www.tradeinvestsa.co.za/investment_opportunities/180760.htm
http://www.doc.gov.za/index.php?option=com_content&view=article&id=475:communications-
department-launches-the-e-skills-knowledge-production-and-cordination-hub&catid=88:press-releases
http://www.westerncape.gov.za/eng/directories/services/11483/15082

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ANNEXURE A
List of Businesses contacted during fieldwork phase (please refer to separate attached document)

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Small Enterprise Development

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