black economic empowerment and local economic development in the accommodation sector

134 Pages·2017·3.63 MB·English

BLACK ECONOMIC EMPOWERMENT AND LOCAL ECONOMIC
DEVELOPMENT IN THE ACCOMMODATION SECTOR: THE CASE OF
CLARENS, IN THE FREE STATE PROVINCE

BY NYANE MACDONALD EZEKIEL MOFOKENG

A DISSERTATION SUBMITTED IN FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTERS OF TECHNOLOGY

FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF HOSPITALITY AND TOURISM IN THE
DURBAN UNIVERSITY OF TECHONOLOGY

SUPERVISOR CO-SUPERVISOR
DR. A. GIAMPICCOLI DR. S JUGMOHAN
DECLARATION

I, Nyane Macdonald Mofokeng, hereby declare that the dissertation entitled “Black
Economic Empowerment and local economic development in the accommodation
sector: The case of Clarens, in the Free State Province” is my own work and has not
been submitted for any other degree at a university. Furthermore, it represents my
own opinions and not necessarily those of the Durban University of Technology.

…………………………………………………………………….. …………………………………………
NYANE MACDONALD MOFOKENG Date

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DEDICATION

This study is dedicated to my family, my father, Kgosi Mofokeng, my mother, Rose
Mofokeng, and my sister, Cecilia Mofokeng, for constant support and motivation for
me to complete this study. You are dearly loved.
To you, Pap’s, I say thank you for your insistence on education. I hope this
dissertation shows that your tireless work in getting me and Cece educated has paid
off, I hope I’ve made you exceedingly proud.
To you, Tsump, I will always remember our very long conversations on the phone
that were and are always filled with a lot of laughter. They made my day and allowed
me to see the rainbow at the end of this study.
To you, Sparana, I say thank you for being an easy target for me to tease. Making
fun of you was one of the best times I had in a day.
To Thuli Ndlovu, words can’t articulate just what this journey has been like. Thank
you for being a friend, a partner and the rock upon which I could always lean. Love
you always Kati.

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ACKNOWLEGEMENT

I humbly wish to acknowledge the roles and contributions of the following people in
the process of conducting this study:

Dr Andrea Giampiccoli, who is, without a doubt a wonderful researcher and who
has been a source of guidance and support. I thank you Doc for your patience and
the fact that your office door was always open for me whenever I needed it.
Dr Sean Jugmohan, for your constructive advice and motivation. For being willing to
always go the extra mile in ensuring we get the job done.
Dr H L. Garbharran, for editing my work.
Durban University of Technology and the National Research Foundation, for the
financial support throughout the duration of this study.
Lastly, to the many establishments in Clarens for allowing me to conduct my study.

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TABLE OF CONTENTS
...................................................................................................................................... i
DECLARATION ..................................................................................................... i
DEDICATION ........................................................................................................ ii
ACKNOWLEGEMENT ......................................................................................... iii
LIST OF FIGURES ............................................................................................. viii
LIST OF TABLES ................................................................................................ ix
ACRONYMS ......................................................................................................... x
ABSTRACT .......................................................................................................... xi
CHAPTER ONE .......................................................................................................... 1
BACKGROUND TO THE STUDY ............................................................................... 1
1.1 Introduction ........................................................................................................ 1
1.2 Background and context .................................................................................... 2
1.2.1 Conceptualising Black in the context of transformation .................................. 3
1.3 Rationale for the study ....................................................................................... 4
1.4 Problem statement ............................................................................................. 5
1.5 Aim and objectives of the study ......................................................................... 6
1.6 Limitations of the study ...................................................................................... 6
1.7 Benefits of the study ........................................................................................... 7
1.8 Definition of concepts and terms ........................................................................ 7
1.9 Structure of the dissertation ............................................................................... 8
1.10 Conclusion ....................................................................................................... 9
CHAPTER TWO ........................................................................................................ 10
LITERATURE REVIEW ............................................................................................. 10
2.1 Introduction ...................................................................................................... 10
2.2 Tourism ............................................................................................................ 10
2.3 The history of tourism in South Africa .............................................................. 11
2.4 The history of tourism in Clarens ..................................................................... 13
2.5 Local Economic Development and its purpose ................................................ 14
2.6 Tourism in the framework of local economic development context .................. 15
2.7 LED in the South African context – Pro-growth vs Pro-poor ............................ 20
2.8 Black Economic Empowerment in South Africa ............................................... 21
2.9 Effectiveness of BEE ........................................................................................ 26
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2.10 BEE and its implementation in South Africa ................................................... 28
2.11 Role of Black directors employed in listed companies ................................... 32
2.12 B-BBEE success and challenges ................................................................... 33
2.13 BEE/Affirmative Action a global context ......................................................... 33
2.14 Transformation of the tourism industry ........................................................... 37
2.15 BEE and transformation of the tourism sector ............................................... 37
2.16 BEE led transformation within the small tourism sector ................................. 38
2.17 The Tourism Charter and Tourism BEE scorecard ........................................ 43
2.18 Participation of Black people in the tourism industry ...................................... 43
2.19 Ownership of tourism businesses .................................................................. 45
2.19.1 Defining Black ownership of a company ..................................................... 45
2.19.2 Black businesses’ ownership constraints .................................................... 46
2.19.3 Employment equity ...................................................................................... 47
2.19.4 Gender Equity ............................................................................................. 56
2.19.5 Preferential procurement ............................................................................. 58
2.20 LED and BEE within tourism: a summative context of the literature .............. 60
2.21 Conclusion ..................................................................................................... 63
CHAPTER THREE .................................................................................................... 65
RESEARCH METHODOLOGY ................................................................................. 65
3.1 Introduction ...................................................................................................... 65
3.2 The area under study ....................................................................................... 66
3.3 Research design .............................................................................................. 69
3.4 Qualitative research design .............................................................................. 69
3.5 Quantitative research design ........................................................................... 70
3.6 Population and sampling .................................................................................. 70
3.7 Sampling .......................................................................................................... 71
3.8 Data collection .................................................................................................. 72
3.9 Data analysis .................................................................................................... 73
3.10 Reliability ........................................................................................................ 73
3.11 Validity ............................................................................................................ 73
3.12 Ethical considerations .................................................................................... 74
3.13 Limitations of the study .................................................................................. 74
3.14 Conclusion ..................................................................................................... 75
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CHAPTER FOUR ...................................................................................................... 76
PRESENTATION, INTERPRETATION AND DISCUSSION OF FINDINGS ............ 76
4.1 Introduction ...................................................................................................... 76
4.2 Descriptive statistics ......................................................................................... 76
4.3 Biographical Data ............................................................................................. 77
4.4 Place of birth .................................................................................................... 77
4.5 Race and current nationality of respondents .................................................... 78
4.6 Position in the company ................................................................................... 79
4.7 Length of business operation ........................................................................... 80
4.8 Type of business ownership ............................................................................. 81
4.9 Ownership of the accommodation establishment ............................................ 82
4.10 Staff complement by occupation type ............................................................ 83
4.11 Understanding of Black Economic Empowerment ......................................... 84
4.12 Procurement from BEE compliant suppliers .................................................. 85
4.13 Business support of the B-BBEE programme ................................................ 86
4.14 Effectiveness of B-BBEE ................................................................................ 87
4.15 Government mechanisms for fair transformation ........................................... 88
4.16 Linkage between employment equity and preferential treatment ................... 89
4.17 Transformation targets set in the Tourism Charter ....................................... 90
4.18 Conclusion ..................................................................................................... 91
CHAPTER FIVE ........................................................................................................ 93
CONCLUSIONS AND RECOMMENDATIONS ......................................................... 93
5.1 Introduction ...................................................................................................... 93
5.2 Overview .......................................................................................................... 93
5.3 Achievement of study objectives ...................................................................... 94
5.3.1 Objective 1 .................................................................................................... 94
5.3.2 Objective 2 .................................................................................................... 95
5.3.3 Objective 3 .................................................................................................... 95
5.3.4 Objective 4 .................................................................................................... 96
5.4 Conclusions ...................................................................................................... 96
5.5 Recommendations ........................................................................................... 98
5.5.1 Recommendations for improving transformation in the accommodation
industry ................................................................................................................... 98
5.5.2 Policy ............................................................................................................. 99
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5.5.3 Capacity Building .......................................................................................... 99
5.5.4 Procurement Policy ..................................................................................... 100
5.5.5 Funding ....................................................................................................... 100
5.5.6 Improvement of the BEE policy ................................................................... 100
5.6 Recommendations for further research .......................................................... 102
5.7 Final comments .............................................................................................. 102
REFERENCES ........................................................................................................ 104
Appendix A ............................................................................................................. 116
Respondents letter of consent ............................................................................. 116
Appendix B ............................................................................................................. 117
Researchers letter of consent .............................................................................. 117
Appendix C ............................................................................................................. 118
Questionnaire ....................................................................................................... 118

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LIST OF FIGURES

Figure 2.1 The bases and risks of local development strategies……………………..16
Figure 2.2 Territorial systemic strategy………………………………………………….19
Figure 2.3 Scorecard for preferential procurement…………………………………….59
Figure 3.1 Map of Clarens and surrounding areas………………………………..…...67
Figure 1.2 Map of Clarens and the CBD………………………………………………...68
Figure 4.1: Gender of participants………………………………………………………..77
Figure 4.2: Place of birth…………………………………………………………………..78
Figure 4.3 Race and current nationality of respondents……………………………….79
Figure 4.4: Occupational position of responsibility……………………………………..80
Figure 4.5: Operation of the establishment in years……………………………………80
Figure 4.6: Type of ownership……………………………………………………………81
Figure 4.7: Ownership by race……………………………………………………………82
Figure 4.8: Staff complement by occupation type……………………..……………….83
Figure 4.9: Respondents understanding of BEE……………………………………….84
Figure 4.10: Procurement from BEE compliant suppliers……………………………..85
Figure 4.11: Sector Support of the B-BBEE...…………………………………………..86
Figure 4.12: Perceptions regarding the viability of B-BBEE…………………………..87
Figure 4.13: Views on government mechanisms for transformation…………………88
Figure 4.14: Perceptions on preferential treatment and employment equity....……..89

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LIST OF TABLES

Table 2.1: Core elements of BEE………………………………………………………...26
Table 2.2: JSE Black directorships analysis (2006-2012)……………………………..31
Table 2.3: Tourism Scorecard 2012 target on weighting points………………………41
Table 2.4: Tourism Scorecard 2017 target on weighting points………………………42
Table 2.5: Tourism Charter indicators………………...…………………………………43
Table 2.6: Category of Black ownership in the context of the BEE policy…………...46
Table 2.7: Schedule 4 – Turnover threshold applicable to designated employers….50
Table 2.8: Schedule 1 – Maximum permissible fines that may be imposed for
contravening the Employment Equity Act of 1998……………………………………...51
Table 2.9: Schedule 1 – Maximum permissible fines that may be imposed for
contravening the Employment Equity Act of 2012……………………………………...52
Table 2.10: Distribution of employment by race…………………………………….….54
Table 3.1: Number of establishments surveyed………………………………………..72
Table 4.1: Ownership structure breakdown……………………………………………..83
Table 4.2: Tourism Charter 2014 target and the Tourism B-BBEE sector codes 2017
target………………………………..……………………………………………………….90

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