Municipal reserve scores big while tourism businesses suffer

Issued by Jane Cowley, MPL
Shadow MEC for Economic Development, Environmental Affairs and Tourism

A nature reserve run by the Mhlontlo Local Municipality, which has no board and is unable to provide any financials, has been provided R19 million in Tourism Relief funding, while thousands of tourism SMMEs across the province, in dire need, have not received a cent.

This was revealed in a Department of Economic Development, Environmental Affairs and Tourism (DEDEAT) report tabled in the Eastern Cape Legislature last week.

Even more concerning, is that this was done despite previous funds budgeted for the reserve being diverted to pay municipal staff salaries.

The Mhlontlo Nature Reserve, near Tsolo, was the beneficiary of R20 million from DEDEAT in 2017. These funds went to the construction of ten chalets, a borehole, sewerage works, water reticulation, a septic tank, fencing of the lodge, landscaping and a car parking area.

A further R500 000 was subsequently allocated for fire management and more fencing.

SEE: Report (Item 3.5)

Despite this significant investment, the average annual income for the reserve, which includes gate takings, accommodation and conferencing facilities, is a paltry R15,000. The facility’s occupancy rate is an abysmal one per cent.

It would take the reserve 1 267 years to generate the R19 million being provided in the relief package.

The reasons given for this appalling return on investment are that there is no management structure at the reserve, that the product is not ready for market, there is no board of trustees to achieve the goals of the reserve and that there is no relevant business model for the activities within the reserve.

The truth is far simpler. The reserve has no booking system, so guests pay security guards for their accommodation at the gate. There is no accounting system to speak of and the reserve cannot produce financial statements.

That the reserve has qualified for Tourism Relief, because bookings made for accommodation could not be honoured due to the Covid-19 pandemic, is a slap in the face of any legitimate tourism operation in the province!

Despite the call in the report for the additional funding to be monitored, serious concerns have to be raised about why these funds are being disbursed in the first place.

How can the Department justify disbursing close on R40 million with nothing to show for it!

Hundreds of small and medium enterprises in the province have had to close their doors over the past six months. These entities did not even receive any Temporary Employee/Employer Relief Scheme (TERS) funding from the Department of Employment and Labour, despite applying for it.

Had this R40 million been invested in registered, functional small businesses that can produce financial statements at the click of a button, thousands of households in the province could have been saved from the devastating economic fallout caused by the Covid-19 lockdown.

In a capable state, these businesses would all have benefitted from effectively managed relief funds and a provincial government that cared for their wellbeing.

I will write to the MEC for DEDEAT, Mlungisi Mvoko, and request that a full forensic audit be initiated to establish how funds were diverted from the Mhlontlo Nature Reserve to the Mhlontlo Local Municipality, how they were spent and who benefitted from this scheme.

The Eastern Cape provincial government cannot afford irresponsible investment such as this. The department must be held to account for this fruitless and wasteful expenditure.