The Zimbabwean government will provide Bank Guarantee Facility worth ZWL$500 million to assist the Tourism Sector to access working capital loans from banks, Environment, Climate, Tourism, and Hospitality industry Minister Nqobizitha Mangaliso Ndhlovu has said.
Unveiling a stimulus package today to boost the tourism sector in post COVID-19 lockdown, Minister Ndhlovu announced a raft of measures to ensure the success of the industry, a key pillar of the economy.
“Incoming up with this decision Government is cognizant 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 is often hampered by lack of collateral or often stringent lending conditions by the financial institutions.”
“We believe the Bank Guarantee Facility will go a long way in helping the Tourism Industry to kick-start operations. Operational details of the Facility will be finalized by Treasury and will be announced within the next few days,” Minister Ndhlovu said
This followed various consultations with the industry in which submissions were made to Government culmination in key aspects that include:
Tourism Revolving Fund
The Government is keen to see increased investment in tourism facilities as we are fully conscious 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 ZWL20 000 000.00 into this 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.
Waiver of Value Added Tax on Domestic Tourism
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.
The Minister said was his view that the revival would be anchored on domestic tourism and focus has to be on driving demand for our facilities. Operational details of this waiver will be announced in due course.
Deferment of Liquidation of Foreign Currency paid by International Clients
The Minister 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.
Support For Zimbabwe Tourism Authority
Further, Government is cognizant 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 2% Levy charged on tourists traveling 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.
Payment of Money owed to Tourism Operators by Various Government Institutions
In addition, the 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,” he said.
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, whilst numerous business events have either been cancelled or postponed and flights have been suspended for a lengthy period of time.
Minister Ndhlovu said the industry has projected a three-point scenario for tourists arrivals.
- “The first is the best Case (optimistic) Scenario which assumes a 30% 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
- “The Middle of the Road Scenario assumes a 60% 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% 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 persists until year-end especially in our major source markets of Europe and the US,” he said.
“Overally, we also anticipate a consequent fall in tourism business, with the country set to lose between US$500 million – US$1.1 billion in potential tourism revenue in 2020 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 at a time when Zimbabwe was already experiencing a dip in tourism arrivals.
The year 2019 had seen the country experiencing a 11% decline in tourist arrivals from 2,579,974 received in 2018 to 2,294,259 largely due to destination image issues driven in part by a concerted deliberate negative messaging about our country and our key destinations.
Whilst for Zimbabwe an upturn in arrivals was expected in 2020, anchored on aggressive destination image promotion and marketing, the COVID-19 pandemic outbreak which started in November 2019 is expected to further dampen travel and tourism in Zimbabwe and indeed globally.