Trade union Solidarity and its civil rights associate, AfriForum, are challenging government's decision to use broad-based black economic empowerment scores to determine who its eligible for the R200m in emergency funding for tourism-related businesses affected by the Covid-19 pandemic.
In an urgent application heard in the Pretoria High Court on Tuesday, the union and the Afrikaans civil rights group want the court to set aside a decision by the Minister of Tourism, Mmamoloko Kubayi-Ngubane, to use the transformational scores for the sector as part of her department's funding criteria. They argue that the criteria are unconstitutional.
The department of trade & industry adopted tourism's empowerment codes of good practice in 2015.
Hotels and other industries dependent on travel and tourism have been shut ever since President Cyril Ramaphosa in late March announced a national lockdown to slow down the spread of the deadly coronavirus. Solidarity is aggrieved that while all businesses were affected, some may not benefit from the relief fund.
The union's legal representative, Corné Goosen, argued in court that the minister erred in applying empowerment laws to the Disaster Management Act, arguing that the system disadvantaged white-owned business. Even if white-owned businesses were compliant with the tourism sector code, they could not get the same relief as a black business.
"Even at their best rate, they (white business) won't be able to compete black-owned businesses."
Speaking after the court proceedings, Kubayi-Ngubane said the fund had received more than 10 000 applications. She said her department won't be able to move forward with phase 1 of the disbursement of funds before the legal matter was concluded.
"From our position this is a matter worth defending," she said.
Early in April, the department announced a R200 million fund to assist businesses whose operations have been financially impacted by Covid-19 related operational challenges. Funding is to be capped at R50 000 per businesses.
SA's tourism industry has come to a virtual standstill since the lockdown began just over a month ago, and with social distancing set to continue for the foreseeable future, it is unlikely to return to normal operations any time soon.
Before the pandemic, tourism accounted for over 1.2 million jobs in South Africa and contributed more than 8% to economic activity. A prolonged period of non-activity could potentially lead to job losses, adding pressure to the already high unemployment rate.
Judge Jody Kollapen said he wold deliver judgment on the matter by the end of the week.