We need to look at tourism as a saviour

Published Dec 6, 2016

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South Africa has staved off a global credit ratings agency downgrade for more than a year now, holding on - just - to the rating one small step above “junk” as defined by the three largest global credit ratings agencies: S&P Global Ratings, Fitch and Moody’s.

A downgrade to “junk” would effectively put a stop to all new foreign investment in South Africa, as the ratings agencies send a message to the world that South Africa is unable to service its foreign debt. A downgrade would also precipitate significant job losses across the economy and an almost instant currency devaluation.

The travel and tourism sector would, along with the rest of the economy, suffer these downgrade repercussions. However, for the tourism industry there will be additional implications.

The nation has freshly emerged from the 2012/15 power and energy crisis that saw economic growth stumble, then stall. This, along with the drought (that tightens its stranglehold on the agriculture sector and continues to set the price of food soaring); labour issues (and violence) in mining; stubbornly high unemployment rates (presently at more than 27 percent of the adult population), and inflation puts immense pressure on local consumers.

A downgrade to “junk” would increase the pressure manifold. Many more jobs would be lost; the rand would decline further; prices would increase; and people would hunker down for survival. There would be scant disposable income to spend on non-necessities such as leisure trips.

For an industry whose lifeblood is the domestic market (at any one time, almost 75 percent of tourists in South Africa are locals), the implications are obvious.

Attractiveness questioned

While it is true that a devalued rand could well be leveraged to boost our destination’s attractiveness to foreign tourists; it’s perilous to imagine that a downgrade would be good for the travel and tourism industry.

A downgrade to “junk” could effectively stop foreign investment in South Africa, including investment in projects to develop tourism infrastructure.

It is no exaggeration to say that tourism is one of the very few sectors of the economy that is growing. With threats of a downgrade, it makes good sense to give tourism every means it needs to continue on its robust growth path.

Revised immigration requirements (that made their entrée in 2014) continue to bedevil tourism.

The Tourism Business Council of South Africa (TBCSA) continues to work hard with both private and public-sector role players to find solutions to the issues of congestion at our major airports as visitors queue for biometric visa processing, and to clear the confusion that continues to reign over the requirement (or not) for unabridged birth certificates for child tourists.

We are pleased that our initiatives to engage policymakers have been welcomed. We are making progress. The industry bears the burden of misperception: many don’t regard tourism as a bona fide and valuable sector of the economy. Tourism must continue working to get its house in ship-shape order to entrench its credentials as an essential sector of the economy.

The industry is (sometimes justifiably) accused of employing and exploiting cheap foreign labour. The wider sector must work at addressing this. The matter of financial leakage must be addressed, too. This is when our own economy (and industry) haemorrhages a lion’s share of capital for trips by foreigners to the economies of source market countries.

The TBCSA is working at many levels and in a number of forums to address these and other challenges.

We believe that South Africa’s tourism leaders are committed to constructive action to address the issues; and to working in partnership across the sector.

It augurs well for our quest to mainstream the industry and secure its credibility as an essential contributor to national economic growth.

We rely on public sector stakeholders and policy makers to create an enabling environment for tourism. As the TBCSA and the broader industry, I believe we are committed to making tourism a force for good.

We need the government, the nation and other economic sectors to join us.

TBCSA chief executive Mmatati Ramawela.

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