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National Parks

Author: Giju Varghese ~ SANParks

( Article Type: Explanation )

Commercialisation for Conservation Strategy

How do we ensure financial sustainability using commercialisation as a funding model for protected areas without compromising on the conservation mandate?

While democratisation of our country led to a higher demand for government funds, the state continues to fund conservation. Expansion and management of Protected Areas requires increased demands for such funds. South African National Parks (SANParks) generates significant streams of revenue from internally run tourism operations. However, further funds were required to develop additional tourism infrastructure. Operational costs are increasing and the efficiencies of the State-run tourism operations are lower than that of the private sector.

Protected Areas require management over a long term and this responsibility may be best left in the hands of the State as the ultimate guarantor and cannot be left to the private sector. However, the State can leverage opportunities that arise from tourism from the private sector.

In 1999, SANParks adopted a strategy termed ‘Commercialisation for Conservation Strategy‘. As the title implies, the intention is to generate additional revenue for SANParks to fund conservation. The management of commercial operations in parks will, over time and in a responsible manner, be transferred into the hands of commercial operators who are better qualified and equipped to run these facilities. SANParks is responsible for monitoring the provision of these commercial services and facilities in parks by the private sector to ensure that they achieve organisational objectives and comply with various guidelines.

The objectives of the strategy were to access capital and expertise from the private sector. Commercial risks would be transferred to the private sector, while SANParks can focus on its core function of biodiversity conservation. Under strict environmental guidelines, a limited number of the private sector investors were awarded concession contracts where ecotourism lodges are built and operated, and after a period of 20 years, the assets are transferred back to the state. The existing shops and restaurants were also outsourced for a period of nine and half years. Operators are required to recapitalise and refurbish these outlets.

From a financial perspective, capital investments worth over R270 million has been invested in the ecotourism concession lodges and refurbishment worth R18 million has been spent. Concessionaires and operators are required to pay a percentage of revenue as rental, and the concession revenue expected over the 20-year period is worth approximately R500 million. SANParks also increased net profit from the shops and restaurants, from R12 million to over R24 million in the first year post outsourcing.

Although the primary objective of commercialisation is to generate more revenue, the process was carefully designed to encourage partnerships that encourage Historically Disadvantaged Individuals (HDI) shareholding and economic development of areas adjacent to the parks. Three of the successful bidders were black-controlled consortia; and all of the other bidders have significant black shareholding – an excellent result in a subsector (game lodges) in which black representation in ownership has hitherto been virtually non-existent. The 10 new game lodges have created over 660 new jobs in the neighbouring communities and concessionaires have undertaken to outsource a minimum guaranteed R6.3 million per annum from year three onwards to local HDI businesses.

Perhaps the greatest benefit from the process, however, is that SANParks as an institution is now susceptible to scrutiny by third parties and is therefore accountable for the way it manages its parks. The environmental regulations that apply to the commercial operators are vastly superior in many instances and over time, SANParks will be forced to comply with its own standards. This can only be to the long-term benefit of our national parks.