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Red tape is throttling the tourism industry

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

In his State of the Nation Address, President Cyril Ramaphosa said that the number of jobs in the tourism sector can easily double. But endless delays in issuing accreditation permits and vehicle operating licences are driving operators to their knees.

My brother, Onne Vegter, is an established inbound tour operator. He founded his safari company in 2005. I have no intention of advertising it here, because that would be unethical journalism. I have another reason for mentioning this.

My brother is the sort of person to do everything by the book. So when he applied to renew his tourist transport operator accreditation in April 2017, he did not expect to have to wait until Christmas to have it approved. But apparently, this is par for the course in the tourism industry these days.

I am one of the lucky ones, to have only waited eight months for accreditation,” he tells me.

President Cyril Ramaphosa, in his 2018 State of the Nation Address, said:

Tourism is [an] area which provides our country with incredible opportunities to, quite literally, shine. Tourism currently sustains 700,000 direct jobs and is performing better than most other growth sectors. There is no reason why it can’t double in size.”

He added: “This year, we will enhance support for destination marketing in key tourism markets and take further measures to reduce regulatory barriers and develop emerging tourism businesses.”

Yet despite these commitments, regulatory barriers are actively destroying tourism businesses. According to reports in Tourism Update, an industry publication, regulatory delays are even forcing tour operators to turn away work.

Until 2016, tour operators were licensed by provincial regulators. This process was messy and prone to delays. Some provincial regulators worked well, but others did not work at all.

On 29 July 2016, the National Public Transport Regulator was established by the Department of Transport. The tour operator licensing function was consolidated under this regulator, based in Pretoria. The goal was to offer a consistent licensing and accreditation procedure for all.

However, good intentions paved the road to hell, and the centralised regulator has only made matters worse. Responsible for a wide range of public transport services, the regulator appears to be ill-qualified to serve the unique needs of the tourism industry.

To be accredited as a tour operator and obtain vehicle operating licences requires piles of paperwork. The process is a model of bureaucratic complexity and over-reach.

The vehicle operating licence application form doesn’t even provide for tour operators. The options on offer are to use vehicles for a scheduled bus service, a minibus taxi-type service, a staff service, a charter service, a courtesy service, a metered taxi service, or a scholar service. Tour operators have to tick “other”, and then explain what they actually do.

In the very next section, operators are required to describe their routes. Only chartered services and metered taxi services are exempt from having to provide this information.

That government should control and authorise routes is a questionable idea even for ordinary public transport services, but it is especially inapplicable to tour operators. They do not follow fixed routes. They are not public transport providers, and should not be regulated as if they were. They also do not use “authorised ranks and terminals”, which they need to specify in the next section of the application form.

Because tour operators provide a “long distance service”, they have to explain why passengers cannot use existing transport services and motivate why the proposed service is necessary. Again, this requirement is patently absurd, especially for tour operators.

To be accredited as a tour operator, applicants have to pay a R1,000 fee and complete a lengthy application form. Once this is done, it’s time to collect supporting documentation. This includes ID or company registration documents, tax clearance certificates, valid vehicle licences, registration and roadworthies, proof of passenger liability and vehicle insurance, certified copies of existing vehicle operating licences, a sworn declaration in which the applicant certifies that they’re not a criminal, a signed statement of compliance with labour laws, a letter of good standing from the Department of Labour, and finally, a letter of recommendation, explaining why the applicant should be a tour operator.

The list becomes more onerous the longer it gets, but that last document is the cherry on top. Why would anyone need to get someone else to justify to the government why they should run a business, in order to be granted official permission to do so?

When all this rigmarole is over, the National Public Transport Regulator might lose the documents, as they did in my brother’s case. But even if all goes well, the bureaucratic nightmare is far from over.

Once the paperwork has been received and processed, the applicant should prepare to receive regulator inspectors on-site. Because of difficulties getting to everyone, the regulator now exempts operators with fewer than seven vehicles from inspection, although this raises the question why such inspections are necessary at all.

If there are unsafe tour operators, chances are they’d be heavily concentrated among the smaller operators. If it makes sense to inspect premises at all (which it doesn’t), it would make more sense to inspect only operators with seven or fewer vehicles.

Then, the applicant may be requested to appear personally before the National Public Transport Regulator board to address any concerns the board may have and to justify their application.

Many times I have had to appear before a board of people who had no understanding of tourism and had never run a tourism company, to explain myself and motivate why I should receive an operating licence for my vehicles. And I routinely had to wait six or eight months for a new operating licence,” my brother wrote last year.

When the government is entirely satisfied that it cannot find a single reason why it might deny you the right to operate your tour business, it’s time to publish the application in the Government Gazette. Apparently, 21 days are needed to allow for “opposing applications”.

The idea of soliciting “opposing applications” makes sense in the case of, say, property developers, where neighbours might have reasons to object. It is nonsensical in the case of a tour operator, however. The only people – other than bureaucrats – that might object to someone running a tourist transport business are other tourist transport operators, and their opinions on their competition ought to be moot.

My brother tells me that the National Public Transport Regulator has a large backlog of accreditation applications, yet its board meets only once a month – flying in members from all over the country – to consider these applications. “They have far too few staff for one office to do the work previously done by nine provincial offices,” he says.

Without proper licences, operators are left with few options. A few might risk their businesses by using their vehicles illegally. This carries with it the risk of having the vehicle impounded. If an accident happens, the business won’t be covered under passenger liability or vehicle insurance.

This, of course, makes the sector ripe for bribery and corruption. There have already been reports of traffic officials targeting tourist transport vehicles, and incorrectly issuing large fines for offences related to vehicle operating licences.

Law-abiding operators might hire licensed vehicles to service clients while their own are standing idle. This is an additional expense, which contributes to the cash drain of leaving their own vehicles idle when they earn no revenue, while repayments remain due.

Some operators are not replacing old vehicles, simply because they struggle to get new vehicles licensed. This means that regulatory delays are actually making the industry less safe for passengers.

Some operators have been forced to put their businesses on hold until their accreditation and vehicle operating licences finally arrive. Few businesses can afford to pay staff for doing nothing, even for one month, let alone six or eight. So they retrench. They shut down.

The result of all this burdensome over-regulation and regulatory delay is the exact opposite of the government’s stated goal for the tourism industry.

The accreditation of tourist transport operators ought to be removed from the ambit of the Department of Transport and given to the Department of Tourism. Operating licences for tourist transport vehicles will still have to go through the Department of Transport, but they can be expedited by not treating them as if they were ordinary public transport services.

The National Public Transport Regulator promises to turn around accreditation applications within 60 days, and vehicle operating licences within 24 hours. Even these wishful timeframes are too long. There is no reason why an accreditation permit cannot be issued within a day, and a vehicle operating licence cannot be issued within an hour.

Regulatory and documentary requirements ought to be limited to essential safety matters, and should not duplicate what operators already do to run their businesses, conduct annual roadworthies, and licence their vehicles and drivers to carry passengers.

The best solution would be to remove the responsibility from a national regulator altogether, and to use industry self-regulation to accredit tour operators.

Under the auspices of the Southern Africa Tourism Services Association, a membership-based industry group, a self-regulation programme has been established to cater for open safari vehicles operating in SanParks game reserves. Extending such a model to all tourist transport operators could dramatically improve regulation and streamline the accreditation process.

Regulators exist to ensure the safety of passengers, certainly. But they also need to ensure that when people want to do business, employ people, and grow the economy by driving tourists around, they can do so without facing high hurdles and crippling delays just to get the government’s permission. That’s not how you double employment in the tourism industry, Mr Ramaphosa. DM


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