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Coronavirus bleeds over K42bn out of tourism, 30 thousand jobs lost

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By Yohane Symon 

The travel restrictions which countries across the globe imposed as a control measure for Covid-19 spread have left Malawi’s already weak tourism sector so badly battered, authorities have confirmed.

As the virus spread and killed more than 2 million people around the world, so has it killed jobs in Malawi, rendering 30,000 people out of work and starving the economy more than K42 billion in tourism revenue.

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According to United Nations World Tourism Organisation (UNWTO), global tourism suffered its worst year on record in 2020. Due to Covid-19, international arrivals dropped by 74 percent when compared to 2019 figures, according to UNWTO. And the Covid-19 spikes have driven deep into the flesh of local tourism.

Out of the 230, 000 people who were directly employed in the tourism sector at the start of the crisis, 30,000 of them lost their jobs in the first wave alone, according to Ministry of Tourism. In addition, as of mid-2020 the industry had lost over K42 billion in revenue through cancellation of confirmed bookings, among others, according to spokesperson for the ministry, Sarah Njanji.

There are indications that current scale of revenue loss could be over double that of June 2020.

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“In general, the local tourism sector was contributing about 7.7 percent to GDP before Covid-19 pandemic. But in view of the global drop of 74 percent in international arrivals in 2020 and also the losses the tourism industry has registered locally in the same period, it can be estimated that the contribution to GDP will be lower in the past year compared to previous years,” Njanji said.

She said an initial survey by Ministry of Economic Planning and Development done in April-May 2020 projected that tourism would have a negative growth of over 12 percent up to December 2020. Now it is anticipated that this negative growth will be even worse with travel restrictions, closure of tourism enterprises and job losses as the second wave hit.

‘Minimising the impacts’

Njanji said the ministry has been undertaking initiatives aimed at cushioning especially small scale players in the industry from the impact of the pandemic. For instance, Njanji said government put in place a flexible payment system for tourism licences as well as the suspension of the one percent tourism levy payment by operators.

She added that the ministry is also providing technical support to the industry players to build resilience.

In addition, the Department of Tourism carried out capacity building training for 500 micro, small and medium enterprises (MSMEs) in tourism businesses management.

However, Njanji said government cannot suspend some of the licences as some players in the industry are requesting because issuance of tourism licences is mandatory under the Tourism and Hotels Act.

“Most importantly, we cannot waive licences because a licence is an indication that a tourism enterprise is meeting the minimum standards for operating a tourism business. “But we have taken a flexible approach in enforcing payment of the licence fees,” she said.

‘Barely surviving’

But some players can hardly feel the impact of these initiatives. For instance, Pamudzi Lodge which is situated adjacent to Sunbird Nkopola Lodge in Mangochi has halved its labour force since the pandemic started due to loss of business.

Managing Director for the facility, Fred Hauli, said their revenue dropped drastically despite that some costs for running the resort have remained fixed.

“We depend mostly on conferences and foreign visitors to survive. But we are unable to have these due to the travel restrictions. Firstly, we started with reducing salaries for our employees but we could not even manage, so we had to trim our labour force,” he said.

Hauli said failure by the government to remove some of the fees which operators pay has compounded their problems.

“We are grateful that the government suspended payment of one percent of the tourism levy. But this is little compared to money we pay for other licences. We need to pay licenses for bar, restaurant, and the lodge separately. And we also need to pay water licence if we are pumping our own water from the lake on top of VAT. This is too much in the period we are going through,” he said.

Apart from lodges, the situation has also seriously grounded other auxiliary players such as taxi operators, tour operators, travel agents, tour guides and visual artists. And the Malawi Tourism Council (MTC) is not optimistic there will be any more tangible support from authorities in the near future.

‘Long term solution’

MTC chairperson Jones Malili said they have been engaging the government on possible approaches to cushion the tourism sector. But government has been citing lack of resources as one of the major reasons holding it back from coming out with a bailout plan for tourism operators.

“As a matter of long term solution, apart from offering bailout packages, there is need to set up a tourism investment fund which will help affected institutions to recapitalise. This fund can also be accessed by new enterprises venturing into the tourism business,” said Malili.

Currently, the MTC is organising a series of post Covid-19 management trainings across the country. The aim is to help tourism operators recover from the effects of the pandemic and introduce measures to revive the sector and sustain it in the event of emergence of new pandemic.

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