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Enacy Mapakame: Business Reporter
Government departments should take the leading role in pricing goods and services in South African rand if Zimbabwe is to realise an increase in tourist arrivals, analysts have said.Industry players have also argued that Government entities such as the Zimbabwe Revenue Authority, water and power utilities should set their prices and fees in rand to create an even playing field.
The calls come as Finance and Economic Development Minister Patrick Chinamasa in the Mid-Year Fiscal Policy Statement called for speed in the implementation of rand based pricing system for the tourism sector.
“In order for the tourism industry to cushion itself from the current liquidity and cash crisis, it is highly recommended that the sector commences the use of rand based pricing system as agreed upon between the Tourism Ministry, the hospitality industry and the Reserve Bank,” said Minister Chinamasa.
Zimbabwean products are price uncompetitive because of the strong US dollar — the country’s main medium of exchange since 2009 against weakening regional currencies.
This prompted stakeholders, not only from the tourism sector but the whole economic spectrum, to call for a rand based pricing system to boost waning tourist arrivals from South Africa who were opting for other cheaper regional destinations.
Zimbabwe Council for Tourism president Francis Ngwenya told The Herald Business that there is still need to look into the cost drivers for the initiative to be effective.
“The rand based pricing is something that is welcome, and a number of players have already accepted it,” he said by telephone.
“But this is something that needs to be looked at holistically, we still buy fruits from local farmers in dollars as well as pay utilities, employees and payments at the border in USD.
“We would like local authorities and utility providers to price their services in rand as well, and lead by example,” said Mr Ngwenya.
He said the initiative will also boost business for operators who rely mainly on the South African markets especially those in Masvingo and the Eastern Highlands. South Africa is Zimbabwe’s biggest trade partner.
At a recent tourism Indaba held in the capital, some regional tour operators concurred that Zimbabwe had become an expensive destination due to among other factors, the use of the stronger USD resulting in clients shying away from the country.
Economist Mr Thomas Masese said adopting the rand based pricing system will restore the market share Zimbabwe had lost due to weakening of that currency.
“The rand based pricing for tourism is also welcome as most of our tourists come from South Africa. The depreciation of the rand against the USD had greatly reduced the number of tourist arrivals coming from this important source,” he said.
Tourist arrivals from South Africa declined 2 percent in the first quarter of 2016 compared to the same period in the prior year while those from DRC, Zambia and Tanzania weakened by 4 percent, 16 percent and 20 percent in that order.
Confederation of Zimbabwe Industries president Mr Busisa Moyo concurred saying adoption of the rand would be a noble idea given the current liquidity challenges.
“Adopting the rand as the operating currency or push towards softer currency as the key medium of exchange and trade was missing.
“We can maintain a multi-currency framework by businesses and Government operating in rand.
“The USD is a huge incentive for corruption as it is globally convertible and sets the cost base higher than our SA competitors,” said Mr Moyo.
The tourism sector is identified as one of the “low hanging fruits” Zimbabwe can tackle advantage of due to the availability of natural resources,
Online Reporter