National Tourism Sector Strategy - Department of Tourism

1.2.2 South African contextSouth Africa has come a long way since its firstdemocratic elections in April 1994. The 15-year reviewrecently conducted by government indicates thatsignificant progress has been made in some areas,but that some challenges still remain. In general, thepopulation is satisfied with government’s performanceover the past 15 years.South Africa has managed to stabilise its macroeconomy,with interest rates declining, a less volatilerand, and domestic demand increasing as a resultof a growing middle class. Despite these, there areconcerns in respect of the coordination and integrationof economic policies (industrial, fiscal and monetary), andthe inclusion of the second economy in the mainstreamremains a challenge. Growth in spending is underpinnedby infrastructure investment, including investment in newtourism products and activities.After the 2009 elections, President Jacob Zuma’sgovernment has made significant changes in thegovernment ministries, including the establishment ofa stand-alone Ministry of Tourism, which indicatesthat the tourism industry itself has grown in stature andis being taken seriously by government. Governmenthas to create sustainable jobs and ensure that the lackof wealth is addressed in all areas, particularly in ruralenvironments. Despite early expectations that SouthAfrica may be shielded from the worst of the globaleconomic crisis, the second quarter of 2009 was thesecond consecutive quarter of decline in the GDP, andresulted in the country officially being in a recession.However, since the third quarter of 2009, the country hasbeen on a recovery path, and the results from the thirdquarter of 2010 confirmed that the country is continuingon that path, with a marginal 2,6% growth in GDP quarteron quarter. 11The retail industry is said to be gaining momentumagainst the backdrop of economic recovery; 12 theproperty market has shown significant signs ofrecovery, and, according to the National Association ofAutomobile Manufacturers of South Africa (NAAMSA),new motor vehicle sales increased by 29,6% year onyear in December 2010. 13 Therefore, it is expected thatthe economy will stabilise the job market, and enablegovernment to stimulate employment opportunities andultimately eradicate poverty. Air transport is also a keyenabler for leisure and business tourism. The numberof airlines offering direct flights to South Africa declinedfrom 66 in 1998 to 53 in 2008, but the country has highload factors (>65%); total air passenger movementsare increasing rapidly, and South Africa boasts muchenhancedairport infrastructure.As indicated in the introduction, the tourism industryhas grown significantly since the 1994 elections (seeFigure 1 below). Over the years, the number of hotelsin key locations, such as Cape Town, Johannesburg,Pretoria and Durban, has increased to accommodatea growing number of travellers, and, in recent years,the growth in occupancy rates and average roomrates was robust. However, after the 2010 World Cup’sincreased infrastructure supply, the accommodationsector is facing challenges in terms of occupancy rates.Similarly, other country developments, such as theproperty boom after South Africa’s selection as hostof the 2010 World Cup, imposed a significant burdenon electricity supply, resulting in power shortages andincreased prices.11 Statistics South Africa. Gross Domestic Product, Annual estimates2000–2009, Regional estimates 2000–2009, Third quarter: 2010.Statistical Release. November 2010.12 South African Retail Industry Forecast to 2013. October 2010.13 “New vehicle sales end 2010 with 29.6% hike”. Business Day. 10January 2011.6