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COVID-19 mayhem and the travel and tourism sector

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With Zambia’s economic activity already in decline, COVID-19, the disease caused by the novel coronavirus is wreaking havoc in key sectors of the economy. The respiratory disease caused by the virus looms large over Zambia, with over 4 million cases confirmed globally at the time of publishing. Before the virus emerged, Zambia was already facing mounting debt, a depreciating currency and escalating inflation, among other issues.

Of particular importance to Zambia’s economy is the travel and tourism industry where economic tremors are already being felt by the effects of the global pandemic. With slightly over 200,000 jobs created in 2017, the sector’s direct contribution to the country’s gross domestic product stood at K6.9 billion (around $6 million at the time), representing 3.2 percent of total GDP. The sector is estimated to rise by 5.6 percent from 2017 to 2027, to be growing around K12.5 billion ($1.2 billion) annually, representing 1.9 percent of total employment, according to projected figures from the Ministry of Tourism and Arts.

The World Travel and Tourism Council (WTTC), an international non-governmental organisation which represents the travel and tourism private sector globally with over 170 membership says the industry is Zambia’s fastest growing and most bullish economic sector, according to its 2018 Report.

And the WTTC’s latest annual review of the sector states that international visitors alone spent K8.4 billion representing 8.3 percent of the total Zambian exports, and in terms of spending characteristics the leisure sectors account for a total of 38 percent while business was at 62 percent, domestic spending stood at 47 percent while international spending was 53 percent.

Over the last several weeks, the global pandemic has compelled countries including Zambia to devise a set of measures ranging from travel bans to the banning of public gatherings or even total lockdown in an attempt to contain the spread of the virus.

“Eastern province has recorded a reduction in revenue amounting to US$3,591,793 followed by Southern Province with US$1,991,117, Lusaka Province US$425,296, Western Province with US$140,000 and Central Province, which houses Kafue national park has recorded a loss of US$600,000,” tourism minister Ronald Chitotela said recently at a media briefing in Lusaka.

He affirmed that Zambia’s tourism sector has not been spared from the effects of COVID-19 as the country has recorded a total loss in revenue of about US$7 million, representing a reduction of 21 percent, attributing the losses to tourists cancelling their trips and demanding refunds after making bookings.

In view of the recent developments, Finance Minister Bwalya N’gandu disclosed that GDP growth rate has since been revised downwards from 3.2 percent to around 2 percent despite the anticipated significant recovery in the agricultural sector. Other notable sectors expected to slow down include mining, manufacturing, construction and retail.

With the bulk of citizens living hand to mouth, economist Chibamba Kanyama has observed that a large number of Zambians survive by either selling something or offering temporary labour and a day out of the market is as good as death.

“My advice is that as we take lockdown measures, we should do so strategically. I am concerned about how the economy and individual households will survive long term,” he said.

Lusaka-based financial analyst Mambo Haamaundu has described the impact of the global pandemic on the travel and tourism industry as devastating.

“The occupancy rates in hotels and lodges countrywide have dropped as people are not travelling for holidays due to the circumstances that we have found ourselves in. Due to restricted movements, industries such as travel and tourism that thrives on the movement of people have been badly hit,” Haamaundu observed.

Despite Zambia not yet being in a full scale lockdown, a close analysis shows the economy has been severely affected. Economic activity is on the decline as more people are placed on forced leave and others work from home, additionally many people now only move when absolutely necessary, thereby affecting the transport sector and the wider economy.

On March 25 2020 President Edgar Lungu announced a suspension of all international flights from Harry Mwaanga Nkumbula and Simon Mwansa Kapwepwe international airports stating that all flights coming into the country should land and depart only from Kenneth Kaunda Airport in Lusaka city to ensure efficient and effective screening of travellers. This move alone, while important to containing the spread of the virus, will certainly affect inflows of tourists into the country.

“The region that has been hit the most is the Eastern province which comes with the South Luangwa national park safari packages. This has an effect on our treasury because some of these monies were paid in advance and the owners are demanding a repayment,” Chitotela disclosed.

Financial and Fiscal Measures

In a bid to revive the local economy, the Ministry of Finance has outlined some financial and fiscal measures in line with President Lungu’s seven point plan to combat the spread of COVID-19.

These include setting up an epidemic preparedness fund under the ministry of health amounting to K57 million; cabinet’s recent approval of a COVID-19 contingency and response plan with a budget of K659 million under the Disaster Management and Mitigation Unit (DMMU) and government has since started mobilising funds through the budget and engagement with various local and international stakeholders.

“Government will release K2.5 billion to reduce domestic arrears owed to domestic suppliers of goods and services; reduce outstanding arrears to pensioners under public service pension fund and retirees under ministry of justice; and reduce outstanding third-party arrears and other employee related commitments. In addition, K140 million will be released to pay local contractors in the road sector,” Dr. N’gandu said.

Effect on the global travel and tourism sector

The coronavirus epidemic is putting up to 50 million jobs in the global travel and tourism sector at risk, the WTTC has said.

The WTTC noted that of the 50 million jobs that could be lost, around 30 million would be in Asia, seven million in Europe, five million in the Americas and the rest in other continents.

According to statistics, over 800,000 people travel each month from Europe to the United States, equivalent to a $3.4 billion monthly contribution to the US economy.

The tourism industry currently accounts for 10 percent of global GDP.

WTTC’s managing director Virginia Messina has since called on governments to remove or simplify visas wherever possible, cut travel taxes and introduce incentives once the epidemic is under control. She also encouraged flexibility in the sector, so that travelers can postpone and not cancel their plans.

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