The travel industry in South Africa is on the road to diversity, says Grant Thornton

12 April 2018 4 min. read

The South African business arena continues to make strides towards achieving diversity, led, among others, by the travel industry. A new report from global professional services firm Grant Thornton has revealed that nearly half of the enterprises active in the sector are black-owned.

Businesses in South Africa have been fairly divided in their opinion about the Broad-Based Black Economic Empowerment (B-BBEE) Act that was passed in 2003. The scheme was aimed at promoting integration of historically disadvantaged segments of South African society, including ethnically black, coloured or Indian sections.

B-BBEE allows organisations in South Africa special benefits if they earn points in the Codes of Good Practice, which include stipulations for ownership, management control, and skill development, among others. Due to the comprehensive nature of its stipulations, the scheme has been widely criticised in the business community for acting as a deterrent, particularly for international businesses.

Others have argued that the scheme is a boon for South Africa, not only because of its social benefits, but also because of certain economic benefits that it has reportedly produced. Over the last year, a number of firms in South Africa have restructured to comply with the scheme’s stipulations, including marketing consultancy Vuma, and business process consultancy RSPH.

Professional services firm Grant Thornton has been actively tracking diversity efforts in South Africa,  in terms of overall levels of equality, including B-BBEE compliance. In a new report about the travel industry in South Africa, commissioned by the Association of Southern African Travel Agents (ASATA), the firm has found that the travel sector is one where B-BBEE has been embraced for the most part.

The travel industry in South Africa is on the road to diversity, says Grant Thornton

The study was conducted among nearly 1,800 enterprises in the travel industry across all segments, from travel agencies to independent travel consultants. The firm was able to obtain full participation from larger firms and roughly 50% participation from smaller enterprises in the sector.

The key finding of the report is that 40% of all travel enterprises in the country are black-owned, while 25% of the firms are black-female owned. Moreover, most firms are doing more than just making minimal efforts to match B-BBEE stipulations, which can be inferred from the fact that 55% of the firms that had achieved B-BBEE certification had attained level 1 or 2 status under the scheme.

In addition, the report found that larger firms in the sector are setting the example, as most of them had achieved the target score for B-BBEE compliance. Nevertheless, the report also identified some areas where firms experience difficulty to some degree or the other. As per the report, most black employment was at the junior management level rather than senior management, which still remains predominantly white.

Among the Codes of Good Practice, while the stipulations on ownership were being met to a large extent, the absence of black and female employees from the middle and senior management levels suggests that firms need to work on the skill development stipulations to ensure that all communities are represented in the future.

Commenting on the report, Otto de Vries, CEO of ASATA said, “We are extremely encouraged by the report’s findings that indicate that travel enterprises have largely achieved excellent scores on their Tourism B-BBEE scorecards. While the positive results have exceeded our expectations, we recognise that further transformation is still required for the travel industry to be reflective of South Africa’s racial demographics. Our study has revealed that the travel sector is dominated by EME enterprises, which is indicative of the important role the industry plays in creating and supporting small and micro businesses, many of which are black and/or female owned.”