Source: US$100 million tourism grant: ‘Govt can’t afford’ | Theindependent (Zimbabwe)
By FREEMAN MAKOPA
ZIMBABWEAN authorities have turned down a request for US$100 million in grants by the tourism sector, saying the cash-strapped government is ill-equipped to extend big packages to haemorrhaging industries.
In an interview with businessdigest this week, Tourism minister Nqobizitha Mangaliso Ndhlovu said the best government could do was build a solid revolving facility which tourism firms hit by Covid-19-induced lockdowns could tap into but pay back.
Early this year, the Safari Operators Association of Zimbabwe (SOAZ) suggested that after suffering the worst battering from pandemic inspired hard lockdowns, the industry was bleeding.
SOAZ said with weak balance sheets and low arrivals, bank loans would aggravate an already difficult situation.
It said direct state interventions through grants, which operators would not be compelled to repay, would address the industry’s problems.
“I don’t think at this point they (government) can afford it,” Ndhlovu said.
“But we do acknowledge that the sector needs soft support for it to remain afloat and grow. But certainly, within that if we manage it well, if we are successful with our revolving fund, which I am confident will happen, we should be able to reach out to these vulnerable sectors.
“The issue of a US$100 million grant was raised during the year again. I think the preference is … the revolving fund,” he said.
Soon after the global Covid-19 health scare hit the globe, advanced countries inducted over US$5 trillion into their economies, with governments taking over companies’ expenses to keep them running, according to media reports.
Governments took over up to 80% of firm pay rolls of airlines and other big industries, according to the reports.
But developing economies failed to raise the big amounts, triggering industrial crises. Tourism dependent economies like Zimbabwe were the hardest hit.
The country saw its international arrivals dropping by 90% last year, according to Zimbabwe Tourism Authority (ZTA) statistics.
The ZTA said this was the biggest such slowdown in 40 years, which came after governments grounded airlines and restricted travel to fight the scourge.
The sector had projected to scale up arrivals by 30% in 2020, riding on improved access after major airport revamps and aggressive forays into the world’s richest source markets.
Instead, Zimbabwe experienced its darkest patch, suffering US$1 billion in write-downs.
The tourism sector is a major foreign currency earner, generating just over US$1,3 billion from 2,5 million tourist arrivals recorded in 2018.
“The freezing of international and domestic travel has significantly impacted tourism, destabilising a forecasted 30% growth in domestic tourism by end of 2020,” the ZTA said last year.
Globally, international arrivals this year dropped by up to 65% between January and May, Ndhlovu said. Africa saw inbound traffic falling by 81%, he added.
Ndhlovu said that the crisis was still affecting Zimbabwe’s tourism industry, which saw arrivals dropping by 72% during the first half of this year.
Last week, Finance minister Mthuli Ncube said the government had issued debt guarantees amounting to $24,2 billion and US$15,2 million to help firms ride out Covid-19 induced operational problems.
A government guarantee is an arrangement in which the State undertakes to pay off a debt or perform an obligation in the event of a default by the primary creditor.
Last year, Treasury announced a ZW$18 billion Covid-19 stimulus package, cutting across all productive sectors.
The package was meant to give firms access to critical liquidity after operations were affected by lockdowns.
During the lockdowns, firms were still required to pay for expenses like rentals and electricity.
The package was aimed at strengthening and expanding existing social safety nets and up-scaling investments into social and economic infrastructure, including recovery of assets destroyed by floods.
SOAZ chairperson, Emmanuel Fundira had said early this year that in the circumstances, extending loans to the sector would amplify an already bad situation.
It was the latest of a series of pleas by sector players for any form of intervention to avert a catastrophe after hotel occupancy levels plummeted from a near 50% in 2019 to about 13% currently at one point.
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