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Review cost structure to entice domestic tourism: Minister

Review cost structure to entice domestic tourism: Minister

Review cost structure to entice domestic tourism: Minister
Minister Mangaliso Ndlovu

Oliver Kazunga, Senior Business Reporter
ENVIRONMENT, Climate, Tourism and Hospitality Industry Minister, Mangaliso Ndlovu, yesterday unveiled Government’s bank guarantee facility worth $500 million to assist the tourism sector to access working capital loans from banks.

The minister said the stimulus package would boost the tourism sector post Covid-19 lockdown. He said this as he announced a raft of measures to ensure the success of the industry, a key pillar of the economy.

“In coming up with this decision Government is cognisant of the fact that the tourism sector has lost substantial business through cancellations and postponement of travel since January 2020 to date.

“We are also aware that access to lines of credit are often hampered by lack of collateral or often stringent lending conditions by the financial institutions,” he said.

“We believe the bank guarantee facility will go a long way in helping tourism industry to kick-start operations.

“Operational details of the facility will be finalised by Treasury and will be announced within the next few days.”

Minister Ndlovu said Government is keen to see increased investment in tourism facilities cognisant of the impending capacity constraints in the sector by way of rooms shortage, conference facilities limitations and related infrastructure.

In view of the foregoing, the Government has approved the establishment of a tourism revolving fund for the sector and has injected seed capital of $20 million into the fund.

“While Government has injected the local currency to kick the revolving fund, we will continue to work with local and international partners to attract more capital into this fund.

“Operational details of this fund will be announced in due course,” he said.

Minister Ndlovu said one of the key lessons that came out of the events unfolding around the effects of the Covid– 19 pandemic was the need to develop domestic tourism.

In this respect, it is envisaged that due to the current measures that restrict travel aimed at containing the Covid-19 pandemic, international tourism will be slow to recover, hence the need to provide incentives to stimulate domestic tourism.

“Government has, therefore, approved a waiver of Value Added Tax payable by domestic tourist for accommodation and services.

“This is envisaged to significantly lower the cost accessing tourism facilities by locals and I want to challenge you all in the sector to meet Government half way by thoroughly interrogating our cost structures so that our people can experience their beautiful country and your pristine facilities at affordable rates,” he said.

The minister said it was his view that the revival would be anchored on domestic tourism and focus has to be on driving demand for facilities in the sector.

He said Government was aware that a number of international clients had made advance payments for their travel into Zimbabwe, which were, however, interrupted by the Covid– 19 pandemic.

“We appeal for such potential visitors to postpone their visits and come when the scourge is over. In this regard, Government has approved the deferment of the liquidation of foreign currency paid by international clients who could not travel due to the pandemic,” he said.

Furthermore, Government is cognisant of the integral role played by the Zimbabwe Tourism Authority (ZTA) in driving the national tourism recovery and growth.

“Currently the ZTA is funded largely from the two percent levy charged on tourists travelling into the country.

“Given the current downturn in tourist arrivals, revenue streams for ZTA have declined substantially.

“ZTA will be afforded substantial support to ensure that the organization is capacitated to fully discharge its mandate,” said the Minister.

Government has also undertaken to settle all long overdue bills with the tourism sector players for services already rendered.

This move is expected to unlock working resources for the sector.

“I wish to commend tourism players for their unwavering commitment and efforts to ensure the speedy recovery of the tourism sector.

“On its part Government wishes to restate the recognition of tourism as a key pillar of the economy and will continue to work with all stakeholders to improve the well-being of the sector,” said Minister Ndlovu.

Due to the Covid-19 pandemic, 2020 is projected to be a very difficult year for the tourism business as countries including Zimbabwe have gone into lockdown, while numerous business events have either been cancelled or postponed and flights have been suspended for a lengthy period of time.

He said the industry has projected a three point scenario for tourists arrivals. “The first is the best case (optimistic) scenario, which assumes a 30 percent decline in arrivals and is based on the assumption that the outbreak will be contained by the second half of the year.

“This may see us registering 1,6 million arrivals by year end,” he said. “The middle of the road scenario assumes a 60 percent decline in arrivals resulting from Covid-19 and this may see us registering approximately 920 000 tourist arrivals by year end.

“The last is obviously the worst-case scenario, which assumes an 85 percent decline in arrivals to close the year at 350 000 tourist arrivals.”

This is predicated on the assumption that the current status of restrictions on international travel persist until year end especially in major source markets of Europe and the US, said Minister Ndlovu.

Overall, the Minister said Government also anticipates a consequent fall in tourism business, with the country set to lose between US$500 million to US$1.1 billion in potential tourism revenue this year from the projected revenue of US$1,4 billion.

The tourism industry has been one of the hardest hit by the Covid-19 pandemic coming as it did at a time when Zimbabwe was already experiencing a dip in tourism arrivals.

Last year saw the country experiencing a 11 percent decline in tourist arrivals from 2,6 million received in 2018 to 2,3 million largely due to destination image issues driven in part by a concerted deliberate negative messaging about Zimbabwe and key destinations.

While an upturn in arrivals was expected in 2020, anchored on aggressive destination image promotion and marketing, the outbreak of the pandemic is expected to further dampen travel and tourism in the country and the globe at large. — @okazunga.

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