All you need to know about the new Tourism Equity (not relief) Fund
Information provided by SATSA:
The Department of Tourism, in partnership with the Small
Enterprise Finance Agency (SEFA), has launched the long-anticipated
Tourism Equity Fund (TEF).
The fund will be used to provide debt finance and grants to black entrepreneurs in the tourism sector, and especially women and youth, to create a more inclusive and representative sector.
Delivering her opening address, Tourism Minister Mmamoloko Kubayi-Ngubane said that broadening participation in the tourism sector to South Africans of all races, ages and genders can only enrich the tourism sector to be more competitive and sustainable in the long run. As South Africans, we know and understand that our diversity is our strength and it is only when this diversity expresses itself in all spheres of our lives that we will be able to reap its benefits,” the Minister said.
The total value of the fund amounts to R1.2 billion, which includes R540 million from the Department of Tourism, R120 million from SEFA and R594 million from commercial banks which are participating in the programme. It will be managed by SEFA over the next three years, after which it will be evaluated and refined.
Although the fund was conceptualised prior to the COVID-19 pandemic, the Minister said that it has even greater relevance now as many tourism players look for opportunities to recover and rebuild their businesses.
The key objectives of the fund are:
- Fund commercially viable and sustainable majority black-owned tourism enterprises with a minimum of 51% black ownership including enterprises in rural areas and townships, to help create jobs, alleviate of poverty, fight inequality and promote the growth of black-controlled tourism enterprises.
- De-risk the funding provided to tourism enterprises through long-term capital that will ease the debt repayment ability of black-controlled enterprises.
- Facilitate the participation of targeted groups such as women and youth in the priority tourism sectors as defined by the B-BBEE sector codes.
- The enterprise must be a registered legal entity in South Africa
- The entity needs to be 100% owned by South African citizens
- The entity needs to be predominantly Black owner-managed and controlled (51%)
- The entity needs to be registered and compliant with SARS
- The entity must be operating in the qualifying sectors
- Accommodation, e.g. Hotels, Lodges, Resorts and Self-catering Units, Backpacker facilities
- Hospitality and related services, e.g. Conference and Convention venues attached to a substantial accommodation element, privately owned attractions in already developed tourism nodes.
- Travel and related services, e.g. Tour operators
- Any other tourism-related products and initiatives not referred to above which supports tourism development imperatives and economic impact in terms of job creation, geographic spread and strengthening the tourism offering of South Africa
Important to Note:
- Minimum transaction size is R 10 million
- No maximum transaction size, however entrepreneurs ought to understand the limitations of the Fund as grant funding is limited to R 20 million and SEFA can finance up to R15 million
- Apart from Equity, the Fund is able to finance Developments and Expansion Projects. Start-ups acquiring a going concern, or acquiring the shares of existing tourism business can and will be considered. Asset Finance and Working Capital also included linked to the mandate of the fund
- Term of loan facility is a maximum of 10 years
- Start-ups will be considered
Minimum Documents Required:
- Business Profile
- B-BBEE Certificate or affidavit
- Company registration documents
- FICA documents
- 12 months bank statements
- Certified IF copies of Directors/Members
- Latest Annual Financial Statements and Management Accounts
- 5-year Cash Flow Projections
- Relevant industry certification
- Facility statements of other funders where applicable