A nearly $40 million cut allocated by Tanzania’s government to mitigate the impact of the COVID-19 pandemic on the travel and tourism industry has starkly divided the key stakeholders over priority areas to invest.
The funds are part of the $567.25 million loan approved by the International Monetary Fund [IMF].
The loan was designed to support Tanzania authorities’ painstaking efforts in responding to the pandemic by addressing the urgent health, humanitarian, and economic effects.
Projects include renovation of infrastructures, installation of security systems, and purchase of mobile COVID test kits.
Whereas the Ministry of Natural Resources and Tourism unilaterally allocated a lion share of the $39.2 million package set aside by the central government to support a multi-billion-dollar tourism industry recovery to repair hard and procure new soft infrastructures, the private players have faulted the move, saying it wouldn’t yield the envisaged outcomes.
A fortnight ago, the Minister of Natural Resources and Tourism, Dr. Damas Ndumbaro, issued a statement highlighting a number of projects where the money would be invested with a belief to revive the tourism industry hobbled by the COVID-19 pandemic.
Dr. Ndumbaro said projects to be implemented include renovation of infrastructures, installation of security systems, and purchase of mobile test kits for testing COVID-19 infections among tourists.
To be precise, the Minister said a large chunk of the funds would be used to renovate roads with a combined 4,881 km leading and within key national parks of Serengeti, Katavi, Mkomazi, Tarangire, Nyerere, Kilimanjaro, Saadani, and Gombe as well as Ngorongoro conservation area.
The package would also go to support the state-run Tanzania Forests Services Agency [TFSA] and Tanzania Wildlife Management Authority [TAWA] in their forestry and wildlife conservation drives.
The Ministry also plans to invest a substantial amount of cash into acquisition of tourism-related transportation facilities; key among them would be a lavish glass-bottom boat to cater for Indian Ocean cruising to be deployed at Kilwa Island to offer tourists a seamless view of the underwater flora and fauna from within the boat.
“These projects will simplify access to different tourist attractions, rollout of new tourism products to diversify tourism activities to capture the emerging tourist market, and subsequently revive the tourism industry,” Dr. Ndumbaro noted in a statement.
However, the key players in tourism are not in favor with the proposed expenditure of funds meant to support the industry recovery to hard and soft infrastructures, saying the government should rather use them as a stimulus package to achieve quick recovery and immediate return on investment.
The Tanzania Association of Tour Operators [TATO] with approximately over 80 percent of market share of the tourism business in Tanzania says that the funds should be used to support the recovery of the industry mainly through the private sector and in the most appropriate way, which in return will stimulate other sectors in value and supply chains.
Accordingly, this will recover thousands of lost jobs and generate revenue for the economy, TATO said in a statement.
“The funds should be issued to private sector investors to get restructuring loans at long term low interest rates specifically for recovery and not for new investments,” reads the TATO statement signed by its chairman, Willbard Chambulo.
TATO proposed that the portion of money also ought to reduce VAT on tourism, more funds to a state-run marketing agency, Tanzania Tourists Board [TTB], to be able to promote the destination efficiently to keep the critical industry ticking over in the face of cutthroat competition among the peers.
“We jubilated upon our government’s announced package for the tourism industry, thinking that was a timely shot in the arm for the beleaguered industry, as it would accelerate recovery, but unfortunately this is not going to happen” reads the TATO statement.
TATO proposed that the funds should include working capital or loans with low interest rates in the hands of hard-hit tour operators and other stakeholders to restart business since the banks don’t offer them even overdraft credits.
“Offering a low interest rate and long-term working capital or loans for travel and tourism players will help them service existing obligations and invest in strategic areas crucial to revive the tourism industry faster than infrastructures would do,” TATO chief argued.
TATO Chairman Chambulo quoted the President Samia Suluhu Hassan saying the Ministry and tourism stakeholders would sit together and agree on the priority areas to put money to spur the industry back to life.
“What I recall, Madam President Samia Suluhu Hassan told us private sector while in New York, and I was there personally to sit with our ministry and discuss the expenditure of these funds, but to our shock, we only read on the newspapers how the money [was] allocated,” Chambulo noted.
Before the outbreak of the coronavirus, the Bank of Tanzania [BoT] data shows that tourism in 2019 attracted 1.5 million tourists earning the economy $2.6 billion for the first time, becoming the leading foreign currency earner.
In 2020, the latest World Bank report indicates, tourism fell by 72 percent, thanks to the ripple effects of COVID-19 pandemic, prompting the massive businesses closure and causing unprecedented layoffs.
“As we are talking now, thousands of staff are still at home, as we are struggling to revive the industry with empty hands. We have bank loans and interests are piling up. As if that is not enough, no bank is interested to issue credit to us anymore; virtually we are left to die,” he said.
“As TATO Chairman, I want to thank Madam President Hassan for securing a loan and allocating $39.2 million for tourism to revive the industry. We propose the Ministry to issue loans to credible businesses to be able to get back where we were before COVID-19; get back our people to work; maintain lodges, tented camps, vehicles; and support anti-poaching drives, while we are recovering slowly,” he explained.
“We will get back to business again, and this IMF loan must be paid back whether by us or by our children and grandchildren. [The] loan has to be injected into business to generate profits, create employment, and pay taxes,” Chambulo noted.
As the tourism sector transitions gradually into recovery mode with the rest of the world, the Latest World Bank’s report urges authorities to look toward its future resilience by addressing long running challenges that could help position Tanzania on a higher and more inclusive growth trajectory.
Areas of focus include destination planning and management, product and market diversification, more inclusive local value chains, an improved business and investment climate, and new business models for investment that are built on partnership and shared value creation.
Tourism offers Tanzania the long-term potential to create good jobs, generate foreign exchange earnings, provide revenue to support the conservation and maintenance of natural and cultural heritage, and expand the tax base to finance development expenditures and poverty-reduction efforts.
The latest World Bank Tanzania Economic Update, Transforming Tourism: Toward a Sustainable, Resilient, and Inclusive Sector, highlights tourism as central to the country’s economy, livelihoods, and poverty reduction, particularly for women who make up 72 percent of all workers in the tourism sub-sector.