Tourism growth hampered by VAT, roadblocks

Business
Government has to intervene to improve the operating environment for the tourism industry, observers have said.

Government has to intervene to improve the operating environment for the tourism industry, observers have said.

BY FIDELITY MHLANGA

Zimbabwe has acknowledged the strategic role and contribution of tourism to its broader economic turnaround and observers say it is, therefore, important for government to support the growth of this sector.

The industry is beset by a high pricing regime which has made it uncompetitive, while it is also affected by too many police roadblocks. These militate against the growth of domestic and foreign tourism.

Among other concerns, the industry has been pleading with government to remove the 15% value added tax (VAT) on foreign accommodation which was introduced in January 2015.

Zimbabwe Council for Tourism president, Tichaona Hwingwiri told Standardbusiness that the 15% VAT on foreign accommodation was an albatross around the tourism sector’s neck.

“Industry maintains its recommendation that the 15% VAT charged on foreign accommodation be removed as it adversely affects destination competitiveness. Tourism is about numbers, hence our continued plea,” he said.

Hospitality Association of Zimbabwe president, George Manyumwa concurred and added another concern — that of too many roadblocks. He said the numerous police roadblocks were impeding the growth of the tourism industry alongside the 15% VAT.

“The 15% VAT is not good for our tourism because it makes our destinations pricier. Labour, water and electricity are more costly in Zimbabwe compared to other Sadc countries and adding 15% is just but killing our tourism destination. This has made Zimbabwe not competitively priced. We have already seen a decline in arrivals from South Africa and Namibia. South Africa used to command more arrivals in Zimbabwe, but arrivals have reduced by 50%. We now need to drive more domestic tourism to compensate for this downturn,” Manyumwa said.

Vice-President Emmerson Mnangagwa last Tuesday told delegates at the launch of the International Year of Sustainable Tourism for Development in Harare that hoteliers must offer competitive prices which do not scare away tourists.

“Hand in hand with these two developments is the need for our tour operators, hoteliers and other tourism service providers to offer competitive prices for our tourism facilities. Exorbitant prices scare away tourists and defeat the whole purpose of brand Zimbabwe,” he said.

Economist Clemence Machadu said tourism was a very sensitive industry that “requires a very robust crisis and reputation management system, which we currently do not have.”

“Another issue is price of course; our tourism packages are expensive compared to other tourism destinations, which gives tourists the disincentive to visit Zimbabwe, preferring other destinations where they get value for their money. The strengthening dollar is also not making the situation better as it discourages regional tourists from visiting Zimbabwe,” he said.

“With the planned interest rate hikes in America, the greenback is likely to strengthen further and that means tourists from countries with weaker currencies have to pay more when visiting Zimbabwe.”

Due to lack of formal employment, the majority of Zimbabweans are now finding a means of survival through informal businesses which, however, do not earn them enough income to spare for visiting tourist attraction centres.

Machadu said domestic tourism was a direct function of income.

“Zimbabwe is a low-income economy, and we live in an environment where no less than 70% of the population earn an income of $200 or below. So will they really afford to indulge in some tourism services when their income is not even enough to meet the monthly basics? So for domestic tourism, I think it’s really much about affordability and the only policy to address that is one that grows the income. Otherwise, the only tourist package that many locals can afford is their neighbourhood recreational parks,” Machadu said.

Despite the constraints, government is envisioning a $5 billion tourism economy by 2020. Last year, the sector generated $819 million in receipts from 2,1 million visitors, signalling a need to work extra hard to achieve the target.