Harare - The Zimbabwean government has adopted the usage of the rand in its tourism sector and the securitisation of gold for loans.
The country’s treasury announced the adoption last week, saying that the measures were meant to breathe liquidity into the country struggling economy that is set to grow by 1.2 percent this year.
Finance Minister Patrick Chinamasa told Parliament during the presentation of the 2016 fiscal policy review that Zimbabwe would start using the rand to ease transactions in the sector and to better attract visitors from its southern neighbour.
“In order for tourism industry to cushion itself from the current liquidity and cash crisis, it is highly recommended that the sector commences the use of the rand based pricing system as agreed upon between the tourism ministry, the hospitality industry, and the Reserve Bank,” Chinamasa said.
Slowed down
The country’s tourism sector slowed down in recent years as visitors have been forced to use the US dollar in the country after the country introduced a multi-currency regime that also included, Botswana pula, pound sterling, the euro, Australian dollar, Chinese yuan, Indian rupee and Japanese yen.
Although the sector has reacted negatively to recent protests against President Robert Mugabe’s government policies, it has since rebounded with inflows rising 16 percent to 450 572 in the first quarter of this year on the back of strong source markets in South Africa and China.
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Chinamasa also indicated that the government could relax the state’s protectionist grip on troubled Air Zimbabwe, charging that the aviation sector was now open to other players keen on the country’s routes and destinations.
Karikoga Kaseke, the chief executive officer of the Zimbabwe Tourism Authority (ZTA) said Kenya Airways had previously shown interest in landing in Victoria Falls but had been turned down because of the government’s protectionism of the route for Air Zimbabwe.
However, this has now changed as the sector is now open for all operators.
“Kenya Airways send a request (previously) with a study showing that it was viable to fly into Victoria Falls than into Livingstone (in Zambia.
“The issue was that we were still in the old regime where we were protecting Air Zimbabwe,” said Kaseke.
Chinamasa also said investors were willing to provide loans on the back of the rand and mineral resources, particularly gold.
He said Zimbabwe, cash strapped and starved of investment in its key economic sectors, would target the creation of a “large gold reserve in a systematic manner for purposes of securitising borrowing for development programmes.
“In this regard, government will identify claims... these claims will then be either disposed of at 100 percent value, through auction or competitive bidding,” Chinamasa said.
He said the country expected economic growth of 1.2 percent this year, lower than an earlier projection of 1.4 percent though marginally higher than last year’s reading of 1.1 percent.
He said the country saw the mining sector growing by as much as 13 percent this year, although the broader economy will still be muzzled to a growth of about 1.2 percent, exacerbated by declining investments and remittances.
“The right things should be done to see mining live up to its potential. Mineral prices are slowly rising but we have seen members counter this by ramping up production volumes.
“However, power supplies are still a concern and policy clarity will go a long way in providing certainty to environment,” a chamber of mines executive said on Friday.
BUSINESS REPORT