The developmental returns on investments in the tourism sector by a Developmental Financial Institution in South Africa

Abstract

Development Financial Institutions (DFIs) are established to promote and support national economic development. In so doing, they have to align themselves to the national policies such as the National Growth Path and Industrial Policy Action Plan (IPAP) which amongst other things places development at the forefront. The purpose of this research was to study the developmental returns that are available in the tourism sector to help Development Financial Institutions in meeting some of their objectives, such as job creation, support and stimulation of SMME‟s growth, promotion of black economic empowerment initiatives and development of rural and township areas. Data was collected in the form of interviews conducted with different tourism players and IDC‟s employees who manage the relationships with the interviewed tourism stakeholders. Other sources of evidence, such as tourism client reports compiled by the IDC, were also utilised. The research reveals notable development outcomes in the form of job creation and fulfilment of some elements of the BEE scorecard such as skills development. However, SMME development appears to be lagging behind. Inclusion of the informal tourism players into the tourism mainstream was also found to be limited. Development Financial Institutions, through their funding mandate have the power to ensure attainment of maximum development returns possible.