Talking Notes on the Tourism Stimulus Package, 07 May 2020
We meet at a very defining moment for our industry, which has been one of the hardest hit by the Covid 19 Pandemic. Sadly, the Pandemic hit us at a time when we were already experiencing a dip in tourism arrivals. The year 2019 had seen us 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.
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.
With this in mind we have 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 usregistering 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.
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.
As you are all aware Government has gone into overdrive to try and contain this pandemic and I am most grateful for the critical role that the sector has shown in supporting Government efforts throughout the country.The fight against this virus will surely be won and I look for to a stronger, more resilient and growing tourism sector that will be a key pillar in driving our economic recovery and growth.
This meeting to update the sector on a raft of stimulus measures from the government to the tourism sector is a culmination of the various consultations we have held with the industry. This includes the meeting we had at Cresta Oasis at the end of March where you presented in detail your requests for Government support to kick start the industry.
Obviously, what we have today may not be the full menu that you ordered, but it clearly underlines Government’s commitment to ensure the success of the Tourism sector, which is one of the key pillars of the economy.
I am pleased to advise the tourism sector stakeholders that following their detailed submissions to Government, the President and Cabinet have approved the Tourism Sector Support Scheme and the key aspects of which are as follows:-
- Government Guarantee Facility of ZWL500 000 000.00 Government will provide Bank Guarantee Facility worth ZWL500 000 000.00 to assist the Tourism Sector to access working Capital Loans from Banks. In coming 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 that access to lines of credit are 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 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.
- 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 clearly coming out of the events unfolding around the effects of the COVID – 19 pandemic is 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. It is my view that our revival will 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 Government is 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.
- 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 travelling 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, 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.
Let me thank the players in the diverse tourism industry from hotel owners to lodges to safari operators, tour operators, aviation industry among many players for their cooperation and support as we prepare to take off again.
I also want to extend my gratitude to ZimParks, the Ministry and ZTA for generating content that constantly remind us how beautiful our country with its bio diversity is, while emphasising the need to concentrate on the fight at hand so we are able to travel tomorrow.
We are working to conclude our tourism recovery and growth strategy and we have no doubt that our renewed focus on domestic tourism driven by improved domestic connectivity (road, rail and air) and enhanced competitiveness;international arrivals driven by robust destination marketing and promotions; and massive tourism infrastructure development driven by domestic and international investment to plug the infrastructure gap in the sector. More opportunities evidently abundant in the sector have to be unlocked by our innovative and enterprising youths to create the competitive edge we all desire.
I have no doubt that working together better days for the sector lie ahead.
I THANK YOU NGIYABONGA NDINOTENDA