malvernmugadzikwa
Business Writer
Operators in the tourism and hospitality industry say after nearly two years of Covid-19 induced lockdowns, they are facing serious limitations regarding access to affordable long-term funding, which might hamper a promising recovery.
This comes after both the fiscal and monetary authorities allegedly failed to facilitate access to funding specifically meant for the tourism industry, as promised, leaving operators in a latch.
Tourism is one of Zimbabwe’s four largest economic sectors. In 2018, the tourism sector accounted for 4,25 percent of Zimbabwe’s economy while it raked in US$1,03 billion for the country.
In 2019, the sector accounted for 6,3 percent of gross domestic product (GDP) with a value of US$1,23 billion.
The data from the country’s tourism satellite account tourism accounted for 1,56 percent of national employment levels in 2018, with around 100 000 jobs supported and created.
But travel restrictions globally since the outbreak of the pandemic in December 2019 meant operators in the travel, tourism and leisure industries could not operate normally due to national lock downs imposed to contain the spread of Covid-19.
And while the industry kept incurring fixed overheads during lockdowns, it was not able to generate income to pay for the costs, recapitalise or spruce up the product in preparation for reopening.
Operators in tourism, travel and leisure are reportedly reeling under massive debts because they had to contend with unavoidable overheads such as lease renewals, fees, licensing and staff costs and other statutory obligations while the sector was stagnant.
The discovery of Covid-19 vaccines and the containment measures rolled out by countries globally have seen a drastic decline in new infections, allowing increased movement of people internally and reopening of national borders.
Tourism Council of Zimbabwe chief executive officer, Paul Matamisa, said the future of the tourism industry looked promising, further expressing hope the industry was on its way to regain yesteryear glory.
However, he said the recovery journey will take a bit of time and serious constraints included limited access to affordable long term financing needed to revamp the tourism products that could hamper recovery.
“It is shaping up nicely, we are beginning to see recovery. We are hoping that if the current trends continue we should be able to reach the levels that we were before Covid-19 hit us, but it will take a little bit of time” Matamisa said.
Matamisa said challenges in accessing appropriately priced funding was the biggest stumbling block to the promising signs of recovery in the tourism and hospitality industry.
“We have been talking about it for quite some time, but I think businesses were hit hard by Covid-19, with the closures of tours and so on, this did not help us much,” he said.
He said due to the impact of the lockdowns, which curtailed all activities amid waves of the ravaging pandemic, operators in the sector required funding assistance to get back on their feet.
Unfortunately, Matamisa said nothing had come through in terms of funding promises made by the Government, both through the Reserve Bank of Zimbabwe and Treasury.
The Reserve Bank of Zimbabwe (RBZ), in 2018, unveiled a US$15 million tourism development support facility to fund tourism projects as well as entice new sector players.
In December 2019, the Cabinet approved the setting up of a Tourism Revolving Fund as part of efforts to support the sector’s recovery from the adverse effects of the Covid-19 pandemic.
The Government also committed to bail out tourism players under its nearly US$1 billion disbursement from the International Monetary Fund, which has not been realised by operators, ironically, despite funds being meant to ameliorate shocks from the pandemic.
Zimbabwe is one of the IMF’s 190 member countries that received allocations under the multilateral lender’s US$650 billion SDR global bailout to shore up domestic reserves, stimulate growth and strengthen countries’ response measures to counter the negative impact of Covid-19.
“There were several facilities by the RBZ before Covid-19, but this never really worked. We agreed and produced a report on what was required for the industry, what we want is implementation of that agreement.
“Right now, the $500 million (Guarantee) facility that was put in place with Government support; just one operator has been able to access it and all the operators are still waiting and want to access that,” he said.
Matamisa said the blame apparently lay with the bank, which he said were not comfortable with terms proposed by the Government under the guarantee facility “where they are answerable for any outcomes”.
“They say that they have got their own funds, which they are encouraging people to borrow, but which are expensive. Funds under the Government guarantee are not as costly,” he said.
Further, Matamisa said the Government had also committed to put in place a tourism revolving fund, but again this remained just a commitment, which has not been actioned, as it has not been funded.
Safari Operators Association of Zimbabwe president, Emanuel Fundira, said most operators were reeling under massive debt as they had to contend with fixed overheads such as lease renewals, fees, licensing and staff costs and other statutory obligations against a freeze and or stagnation of revenue streams due to border closures and extremely limited business off take.
“It should be noted also that the Safari Industry is heavily dependent on mostly foreign sourced clients whose travel plans in the last 18 months were negatively affected by health travel bans.
“It therefore follows that the recovery process is going to be difficult in the absence of meaningful intervention (by the Government)”, he said.
Fundira said the Government guarantee facility was “ not a grant or soft loan or any other form of incentive, which meant that Operators were still expected to approach their bankers with bankable proposals supported by positive cash flows, which was and is a supervening impossibility.
“The off-take therefore was far below in making any meaningful impact. Even that said Banks act on bankable plans secured on a viable business plan and that a guarantee becomes a 3 tier secondary security .
“Due to limited fiscal space, guarantee became the only intervention extended by the Government, which fell far short of the needs and expectations of the Industry,” Fundira said.
Bongani Ndlovu