Getting tourism sector out of dire straits

 NANCY MWAPE, Lusaka

THE tourism sector in Zambia has been hit the hardest by COVID-19 shockwaves, with virtually no international tourist arrivals since March 2020.

Business in the tourism sector almost came to an abrupt halt owing to travel restrictions and subdued domestic tourism activities.

Although the country is now seeing a rise in the consumption of tourism services by the domestic market, this is not large enough to support the multitude of enterprises, especially large hotels that cater for international travellers or the luxury lodges at the higher end of the market.

The World Travel and Tourism Council has warned that the COVID-19 pandemic could cut 50 million jobs worldwide in the travel and tourism industry.

Eco-Tourism Association of Zambia (ETAZ) also projects that the pandemic could result in 7,000 jobs being lost, 168 safari lodges and camps closing, while over US$100 million would be lost from the safari industry in 2020.

Similarly, the air transport has also been adversely affected by the COVID-19 pandemic.

During the first half of 2020, domestic and international passenger movements at Zambia’s four major airports reduced by more than one million. The four international airports are Kenneth Kaunda in Lusaka, Simon Mwansa Kapwepwe in Ndola, Harry Mwaanga Nkumbula in Livingstone and Mfuwe in Mambwe.

However, with the easing of lockdown measures, some international airlines have resumed flights into Zambia.

Concerned about the happenings in the tourism industry, Government, in its quest to revive the sector and promote local tourism, has proposed relief measures to be implemented in the 2021 national budget.

Among the measures to be implemented is the time to pay agreement covering income tax and value added tax.

“Government has reduced corporate income tax rate from 35 percent to 15 percent on income earned by hotels and lodges on accommodation and food services, suspended import duty on Safari game viewing motor vehicles, tourist buses and coaches,” Minister of Finance Bwalya Ng’andu announced during his presentation of the 2021 national budget to Parliament on Friday.

Additionally, Government has also suspended retention fees paid by tourism enterprises, registration fees for hotel managers and licence renewal fees paid by hotels and lodges.

Since March this year, hundreds of workers have been sent on forced leave by hotel owners and tour operators in Lusaka and Livingstone, citing loss of business resulting from cancelled bookings, which grounded the industry.

Visits to the Victoria Falls heritage site were equally suspended on March 28 this year to avert the spread of the novel coronavirus.

However, on May 21, President Edgar Lungu announced the reopening of the Victoria Falls to help revive the sector, with a call on players to also consider tapping into the K10 billion stimulus package to boost their businesses.

To facilitate an increase in tourist arrivals into Zambia, Government has injected over US$1 billion in the construction of four international airports.

Dr Ng’andu announced that Simon Mwansa Kapwepwe International Airport and Kenneth Kaunda International Airport would be opened next year.

Likewise, to encourage Zambians to operate in priority sectors, under a multi-facility economic zone or an industrial park, Government has proposed to reduce the investment threshold for Zambian citizens to qualify for tax incentives under the Zambia Development Agency Act number 11 of 2016 to US$100,000 from US$500,000.

Furthermore, the minister of Finance has proposed to suspend import duty on safari game viewing vehicles, tourist buses and coaches.

Livingstone Tourism Association chairperson Rodney Sikumba is optimistic that the reduced corporate income tax will help stimulate the stifled industry.

Further, the association is pleased with the proposed reduced investment threshold in the tourism sector for Zambia to qualify for tax exemption.

“Most of our budget submissions have been taken up and on tax, we seem to have made progress and we are happy about that,” Mr Sikumba said.

Similarly, ETAZ chairman Grant Cumings is thrilled with relief measures given to the tourism sector.
“The announcements are very much appreciated; these are the first meaningful tourism reliefs in many years. In the context of recovery from COVID, the reduction in corporate tax is a welcome relief in a profitable environment, but perhaps not so effective in the current environment where tourism business are generally suffering huge losses, near bankruptcies. When companies are losing money, a tax on profit is not so helpful compared to a time when companies are profitable,” explains Mr Cumings.
For some time, ETAZ members have been crying for the removal of import duties on vehicles. Therefore Mr Cumings feels the relief has come at a right time when companies are struggling to meet statutory payments to employees and Government.

“While such measures are appreciated and helpful, and will be more so in the coming years; much more meaningful help to tourism now would be stimuli, like removing or at least reducing VAT on tourism services, and introducing a meaningful marketing budget and programme to generate new interest and growth in Zambia’s tourism,” Mr Cumings said.

But, acknowledging the difficulties regarding preparations of the 2021 national budget under the current economic conditions, the Tourism Council of Zambia has extolled Government for responding favourably to their submissions in an attempt to stimulate the economy.

Council board chairperson Vincent Mupwaya applauded the Minister of Tourism and Arts, Ronald Chitotela, and his ministerial team in addressing growth constraints faced by the tourism sector.
“It is our considered belief that the announced stimulant package will encourage foreign direct investment and also free up resources for reinvestment, reduce job losses in the tourism sector and enterprise level,” Mr Mupwaya said.

With tourism being the most affected economic sector by COVID-19 shocks, the council believes the industry will only recover if the announced measures are sustained for a reasonable period to allow the sector to recover fully.

And Mr Chitotela says Government is determined to resuscitate the sector through promotion of domestic tourism.

The minister has since appealed to tourism players to start reducing tourism packages for the domestic market so that Zambians could begin to benefit from local tourism services.

Source: Getting tourism sector out of dire straits (30/09/20)