The Department of Tourism has launched the R1.2-billion Tourism Equity Fund (TEF), aimed at driving transformation in the tourism sector.

The fund has been established in partnership with the Small Enterprise Finance Agency (Sefa) as a new financial support mechanism to stimulate investment and transformation in the tourism sector.

The fund will receive R540-million in funding from the department, as well as R120-million from Sefa, with the balance to be provided by commercial banks participating in the fund.

The South African Economic Reconstruction and Recovery plan identify the tourism sector as one of the key priority areas to revive the economy.

The tourism sector was one of the sectors hardest hit by the Covid-19 pandemic and lockdown regulations, and much remains to be done to stimulate new investment and fully exploit the potential of the sector, Tourism Minister Mmamoloko Kubayi-Ngubane said in an address at the launch of the fund on January 26.

President Cyril Ramaphosa added that the fund is aimed at creating an inclusive and growing tourism sector by supporting entrepreneurship and investment on the supply side of the tourism sector.

The fund will offer a combination of debt finance and grant funding for large capital investment projects in the tourism sector.

Kubayi-Ngubane pointed out that the find would seek to fund commercially viable and sustainable majority black-owned tourism enterprises and facilitate the participation of targeted groups such as women and youth.

The TEF will focus on the following subsectors: accommodation, including hotels and resorts; hospitality and related services, including conference venues; travel and related services, including tour operators; and any other tourism-related products.

The financial support will be provided to acquire controlling equity in entities in the tourism sector and funding of assets of entities in the sector for the explicit purpose of setting up a new entity operating in the sector, as well as asset finance and working capital that will be required to acquire an entity for expansion or operational purposes.