Counting cost of sanctions on Zimbabwe’s tourism sector

Raphael Tayerera Faranisi Tourism Permanent Secretary

The imposition of sanctions on Zimbabwe has resulted in many economic hardships and many problems were experienced, such as increased unemployment, high inflation, currency fluctuations and general economic instability.

One area that has also been hit hard is the tourism sector as sanctions have dealt Zimbabwe’s tourism sector a very negative blow.

Decline in tourist arrivals and room occupancies

During the decade 1989-1999, tourist arrivals grew at an average growth rate of 17,5 percent whilst tourism receipts increased at an average annual growth rate of 18 percent.

However, the prevailing economic conditions have seen the sector experiencing the worst performance since independence.

The year 2000 marked the beginning of the tourism crisis in Zimbabwe. Tourism was at its peak in 1999 and in 2000 the drop was off the charts.

The year 1999 had about 2,1 million tourists, but by 2000 this number dropped to 1,87 million and continued to decline. By 2005, tourist arrivals were as low as 750 000 and the sector was only contributing 3,3 percent to GDP.

Tourism revenues fell remarkably from US$700 million in 1999 to US$60 million in 2004. By 2007, this figure was down to US$43,9 million.

It is important to note that Zimbabwe’s tourist arrivals fall under the High volume low value bracket, and whereas prior to imposition of sanctions in 1999 overseas travellers who are the high spenders accounted for 27 percent of all travellers, they now account for only 14 percent of Zimbabwe’s tourists.

The reduced number of tourist arrivals from the West has seen resort towns such as Kariba being rendered ghost towns as tourists numbers have declined.

While national room occupancy averaged above 60 percent prior to the imposition of sanctions, the figures fell to 40 percent in 2000 and 34 percent in 2006 and have averaged 40-45 percent in recent years.

The sanctions have also made it difficult for tourists intending to travel to Zimbabwe to access travel insurance from their countries since these companies would cite Zimbabwe as an unsafe tourist destination which tourists would be visiting at their own risk.

Travel advisories

The retarded growth noted is largely due to travel warnings that have been issued by Zimbabwe’s major source markets, which have created negative perceptions that the country is unsafe and risky to visit.

Countries such as the US, UK, Germany and Australia have over the last decade issued negative Travel Advisories to their citizens without following the United Nations World Tourism Code of Ethics which calls for engagement of the country about which the travel advisory is being issued and also clear indication of where the events warranting the advisory are taking place.

All this has sadly been ignored.

The country has had to invest more funds in reactionary marketing to counter negative perceptions from the source markets which always blow any slight disturbances in the country to a major humanitarian crisis.

Accessibility of the destination

Accessibility for Zimbabwe by tourists has been compromised due to sanctions. Direct flights to destination Zimbabwe have sharply declined since the imposition of sanctions.

Prior to 1999, Zimbabwe was receiving approximately 42 Regional and International airlines.

The year 2000, when sanctions were imposed on Zimbabwe, there was a sharp decline in airlines coming to Zimbabwe and to date only 14 regional and International airlines fly into Zimbabwe.

A number of foreign airlines such as Lufthansa Airways, British Airways, Air France, KLM and Qantas exited the Zimbabwe market forced by the negative operating conditions occasioned by an economy ravaged by sanctions.

Airlines also faced the challenge of funds transfers for air tickets from Zimbabwe through International Air Transport Association (IATA) which made it difficult for airlines to service Zimbabwe.

Drive through tourists are shunning the destination due to a bad road infrastructure.

The railway system which is a major contributor to scenic tourism has been greatly affected by sanctions.

Road and rail transport projects were also heavily affected due to withdrawal of major partners and funders. For example, some road transport sector support programmes funded by DANIDA and the Swedish Government worth over US$60 million were discontinued due to sanctions.

The national railway of Zimbabwe was being supplied with its rolling stock by European countries such as General electric. Because of sanctions, the company is now forced to use third parties to purchase parts hence increasing its costs of operations.

Reduced investments in the tourism sector

Financially, investments in the tourism sector have also been crippled by the illegal sanctions imposed on Zimbabwe. The Office of Foreign Assets Control (OFAC), in US monitors any form of international financial transactions destined for Zimbabwe.

For the reason that Zimbabwe is under sanctions, any institution handling financial transactions with Zimbabwe will be penalised.

Cases to ponder on are the US$18 million penalty which was charged Standard Chartered Bank in April 2019 for handling transactions for state-owned firms under sanctions.

This then means that Zimbabwe is an OFAC sanctioned country. To a greater extend, the movement and handling of capital financing to the tourism sector has not been spared.

Of concern, is the detrimental effect that the imposed sanctions have had over tourism investment with regards to upmarket hotel construction and refurbishment.

Investors are failing to access lines of credit financing from their banks as the nation has been OFAC sanctioned and identified as not conducive for investment.

OFAC operations have made it difficult even for local investors to secure lines of credit from the global market for such purposes.

To that effect, our tourism product remains tired as no capital injection is available for product renewal (which as per standard should follow a five year refurbishment cycle) and the sector has failed to see the construction of big state of the art accommodation facilities for the past two decades and the exiting of big brands such as Sheraton, who because of their countries of origin (White Plains, New York, United States) could not operate in Zimbabwe because of the sanctions.

Tourism relies heavily on progressive investment; the imposed sanctions have placed a huge plug on tourism investment through impeding the smooth movement of capital financing and the eradication of investor confidence and there has not been any major investment in the tourism industry since 2002.

Decline in Service Standards

Tourists, as consumers of value, pay for experiences and services which, with the exception of the niche elements of dark tourism, are almost always expected to be positive and pleasurable.

The driving factors that influence a tourist’s decision to travel to a particular destination have been studied at great length, and there is consensus with regards to what they are.

If a destination has basic provisions such as electricity, water, clean surroundings, proper accessibility, amenities, and has its own significance, it will attract tourists.

A deprivation of these services to any degree leaves tourists apprehensive, which hinders their enjoyment and relaxation.

Since the imposition of sanctions against Zimbabwe two decades ago, basic Resident Oriented Products like hospitals, banking services, water and energy supply have been incapacitated as investment in the public sector has dried up.

By the same token, Tourism Oriented Products like accommodations, theme-parks, tour operators, cinemas and restaurants have fallen into disrepair due to capital flight and low patronage, as the country’s private sector continues to shrink.

The resulting impressions leave the tourist with a high degree of dissatisfaction, as the details of their events and experience on the tour are often stored as a negative long term memory.

Impact on Community Based Tourism and Livelihoods

Communities have also not been left out by the effects of Sanctions. The development of Community Based Tourism (CBT) in Zimbabwe has faced numerous challenges in the past decade.

Among other challenges, the economic sanctions imposed on Zimbabwe by the Western countries two decades ago has led to a stunted growth in CBT projects due to a decline in international partners.

The tourism industry has witnessed reversal and termination of donor funding in CBT projects with organisations such DANIDA terminating all projects after the imposition of sanctions.

The decrease in donor funding and support resulted in communities sinking deeper into poverty as community capacity building projects lack funding and also the government struggling to meet its financial obligations.

Moreover, in the KAZA Trans-frontier Conservation Area Zimbabwe has not been getting the financial support from international partners for community development on its side of the trans-boundary ecological area disadvantaging communities in the area due to sanctions.

Only a few friendly countries such as Japan are assisting community based tourism initiatives which debunks the much held theory that the sanctions are targeted and restrictive.

With reduced tourists arrivals in most parts of the country except Victoria Falls, many community projects which sustain livelihoods have struggled to operate and this has negatively affected the lives of communities who look up to tourism for livelihoods.

Policy reforms that the Ministry has put in place which credit the removal of sanctions:

2025. a) In August 2020, the President Mnangagwa launched the National Tourism and Recovery Strategy to grow the tourism economy to US$5 billion by 2025.

The Strategy anchored on Zimbabwe’s vision to be a prime international tourist destination based on the judicious and sustainable exploitation of the unique assets of nature, culture, heritage and the built environment as espoused in National Development Strategy (NDS1)

1. b) The Ministry launched a domestic tourism campaign, dubbed Zimbhoo. The campaign was focusing on urging residents to rediscover Zimbabwe in a bid to prop up the tourism sector.

The campaign comes as authorities were pushing to make up some of the shortfall in tourist revenues.

To support this campaign, Government has exempted VAT on all tourism services for domestic tourists in a bid to reduce the prices being charged on tourism products and services.

The campaign is in line with the National Tourism Recovery and Growth Strategy, challenging the sector to achieve a US$5 billion dollar Tourism Economy by year 2025.

Furthermore, domestic tourists became destination ambassadors, assisting in promoting the destination and also encouraging international tourists who are usually keen to visit areas visited by locals. Domestic tourism further expanded the chain and helped in building national pride at the same time promoting national understanding among locals.

1. c) The Ministry has launched the “Destination MICE” (Meetings, Incentives, Conferences, Events and Exhibitions) Campaign aimed at steering growth and recovery of the tourism sector through hosting of big local and international events.

The campaign is an outcome of extensive consultative within the tourism industry and draws inspiration from the National Tourism Recovery Strategy, which was launched by the President Mnangagwa in August 2020.

1. d) In March 2022, the Government of Zimbabwe in collaboration with the United Nations World Tourism Organisation (UNWTO) launched the Tourism Satellite Account system, which is assisting the country in measuring the contribution of the tourism sector to the national economy. The Tourism Satellite Account is an internationally recognised tool which is able to holistically account for the performance with other countries that have long adopted the tool.

 Ambassador Raphael Tayerera Faranisi is the Permanent Secretary in the Ministry of Environment, Climate,Tourism and Hospitality Industry.