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Tourism players fail to secure loans

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Tourism players fail to secure loans


The uptake of Government guaranteed loans by tourism players has been very low as most applications were reportedly rejected by participating banks because of weak balance sheets, industry players have claimed.

While Zimbabwe is slowly pulling out of Covid-19 induced slump, it has been difficult for the tourism operators to obtain loans from the banks after going for almost two years closed.

The industry is one of the sectors badly affected by Covid-19 induced lockdowns and travel restrictions imposed by some countries in a bid to contain the spread of the deadly coronavirus.

The local tourism industry is among sectors benefiting from nearly US$1 billion in Special Drawing Rights (SDR) released by the International Monetary Fund last year.

In total, the global lender distributed SDRs worth approximately US$650 billion to all its members to help them recover from the devastating impacts of the pandemic.

In Zimbabwe, part of the SDRs are providing a form of guarantee under which, banks extend loans to productive sectors including tourism, manufacturing and horticulture.

“The industry was closed, we had no cash flows…something which banks look at when considering applications,” Dr Emmanuel Fundira, the chairman of Zimbabwe Safari Operators Association told The Sunday Mail Business in an interview on Tuesday.

“Very few operators had strong balance sheets. In as much as bankers were ready to give (out) loans, our (financial) positions were not sufficiently convincing.”

The coronavirus, which reportedly emerged in China in December 2019, spread around the world and brought almost everything to a standstill. While other industries in Zimbabwe such as mining, manufacturing and commerce were classified as essential services and were allowed to operate, the case was different for the tourism industry.

Restaurants, hotels and bars were shutdown while conferencing activities were banned.

Travelling was curtailed while borders were closed.

In an interview, the chairman of Tourism Business Council of Zimbabwe (TBCZ), Mr Wengayi Nhau, concurred with Dr Fundira saying the financial positions for most operators were not “satisfactory,” rendering them “very high risk borrowers.”

“The industry is not attractive for lenders,” said Mr Nhau. “We are coming out of a difficult situation, we have not been operating for a very long time. The only way to capacitate the industry is to provide a form of a grant since the industry was the most affected.”

Despite financial difficulties, the industry was beginning to show signs of recovery although this could be dampened by Russia’s war on Ukraine. “We expect Eastern Europe to limit non-essential travel due to the conflict between Russia and Ukraine,” said Mr Nhau. “This will affect our peak as we normally have many visitors from Europe during winter. We are hoping a solution (to the crisis) would be found.”

Eastern Europe is the fastest growing tourism market for Zimbabwe especially Poland.

In 2021, international tourism experienced a 4 percent increase in 2021, or 15 million more international tourist arrivals compared to 2020 but still 72 percent below the pre-pandemic year of 2019, according preliminary estimates by the United Nations World Tourism Organisation. This follows on from 2020, the worst year on record for tourism, when international arrivals decreased by 73 percent.

The uplift in demand was driven by increased traveler confidence amid rapid progress on vaccinations and the easing of entry restrictions in many destinations.

International tourism rebounded moderately during the second half of 2021, with international arrivals down 62 percent in both the third and fourth quarters compared to pre-pandemic levels.

According to limited data, international arrivals in December were 65 percent below 2019 levels. The full impact of the Omicron variant and surge in Covid-19 cases is yet to be seen.

The pace of recovery remains slow and uneven across world regions due to varying degrees of mobility restrictions, vaccination rates and traveler confidence.

Europe and the Americas recorded the strongest results in 2021 compared to 2020 (19 percent and 17 percent respectively), but still both 63 percent below pre-pandemic levels.

By sub-region, the Caribbean saw the best performance (63 percent above 2020, though 37 percent below 2019), with some destinations coming close to, or exceeding pre-pandemic levels. Southern Mediterranean Europe (57 percent) and Central America (54 percent) also enjoyed a significant rebound but remain 54 percent and 56 percent down on 2019 levels respectively. North America (17 percent) and Central Eastern Europe (18 percent) also climbed above 2020 levels.

Africa saw a 12 percent increase in arrivals in 2021 compared to 2020, though this is still 74 percent below 2019.

In the Middle East arrivals declined 24 percent compared to 2020 and 79 percent over 2019.

In Asia and the Pacific arrivals were still 65 percent below 2020 levels and 94 percent when compared to pre-pandemic values as many destinations remained closed to non-essential travel. Sunady Mail.

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