People admire a colourful sunrise at Sonstraal dam in the suburb of Durbanville. Picture: Henk Kruger/African News Agency (ANA)
People admire a colourful sunrise at Sonstraal dam in the suburb of Durbanville. Picture: Henk Kruger/African News Agency (ANA)

Tourism industry finds itself in dire circumstances

By Edward West Time of article published May 11, 2020

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CAPE TOWN -  The closure of the tourism industry South Africa since March 26 due to the lockdown will mean business closures and has already resulted in the loss of thousands of jobs.

South Africa hosted some 10.4 million international visitors last year. Its tourism sector employs some 740 000 people directly and 1.5 million indirectly. 

The sector is a major contributor to gross domestic product (8.6 percent) and has been shown to be able to grow employment and investment sustainably, even through tough economic conditions.

Tourism Business Council of South Africa (TBSA) chairperson Blacky Khomani said the current inability of tourism businesses to cover costs “is likely to lead to more business closures.”

This, with the cancellation of planned investments, was indicative of his concern that there would be no supply, when tourism moves more fully towards recovery, which he envisaged would be during 2021.

In April, the Department of Tourism,  the TBCSA and IFC, a member of the World Bank Group, conducted the Tourism Industry Survey of South Africa: Covid-19.

The survey was completed by 1 610 respondents, 62 percent of which were firms of older than 10 years.

The survey found that 99 percent of respondent businesses had been impacted negatively by Covid-19, with 50 percent already having made staff redundant. Forty-three percent had put staff on furlough (unpaid leave of absence). Thirty-four percent of firms said revenues were 100 percent less.

“This indicates more than 160 000 employees in tourism in South Africa may already have been affected by the global health crisis,” said Khomani.

Since the introduction of restrictions in the country, 69 percent of businesses had temporarily closed and 58 percent had applied significant downscaling. The survey also indicated that 58 percent and 54 percent of businesses respectively could not cover debt repayments or fixed costs in March.

“This is an un-precedented crisis for the tourism industry and unless steps can be taken to support the industry, a major component of our economy will close down and restarting it will be a challenge.” said TBCSA chief executive Tshifhiwa Tshivhengwa.

Up to 69 percent of businesses surveyed had applied for various relief programs and as expected “the success rates were still universally low in these early days.”

Of more concern was that across those who have applied, the perception that the schemes offered value ranged from 1-8 percent, which implied that the schemes’ benefits were not clear or that the schemes were insufficient to assist.

“IFC recognizes that tourism is an important sector for South Africa. The survey results show it’s not only important to help businesses manage the crisis now, but to also work together to find solutions to help with recovery and job preservation,” said IFCCountry Manager for South Africa Adamou Labara.

The sector is the lifeblood for many micro and small enterprises, and often the only economic activity in rural and remote areas, and creates employment opportunities for men, women and youth across the country.

BUSINESS REPORT 

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