With the second largest economy in Africa, how has South Africa been coping with the economic fallout from the pandemic? In our first part of a series on the impact of COVID-19 on the country, we look into how buying the rand has become a punt on the chances of a second wave of the coronavirus as the importance of the South African economy recedes.
South Africa VS Coronavirus: Billions already lost in tourism
In the fourth part of our series on the impact of COVID-19 on South Africa, we look at its tourism and hospitality sectors. They have lost an estimated R68bn in revenue amid the coronavirus outbreak, which has necessitated national lockdowns and enforced restrictions on global travel.
This is part 4 of a series.
The R270bn tourism industry, which anchors South Africa’s less-developed provinces, is reeling and counting the cost of the worldwide pandemic, says Tourism Business Council of South Africa (TBCSA) CEO Tshifhiwa Tshivhengwa.
The entire value chain and associated industries that depend on tourism and hospitality are feeling the squeeze induced by the coronavirus crisis.
- “[The] R68bn comes with a loss of employment. The other industries and sectors we impact are going to suffer, this includes agriculture and the manufacturing of vehicles. We buy 12% of locally manufactured vehicles for car rentals.
- “Retail is going to be impacted. If you look at Sandton mall and the high-end retail stores, there are a lot of people who come from other African countries to buy [luxury goods]. They aren’t coming. Those who manufacture furniture and those who are in construction are going to be impacted. We are not doing renovations. We are not building new hotels,” says Tshivhengwa.
However, “we are no different from what is happening around the world – it’s a global phenomenon,” South African (SA) Tourism CEO Sisa Ntshona tells The Africa Report.
“Up to two weeks ago, 90% of airlines around the world stopped flying. On 26 March, we went into lockdown level 5. That meant all our borders were closed and tourism was not rated as an essential service. All activities had to stop within this sector,” explains Ntshona.
Steps to recovery
The TBCSA is an industry body whose members include hotel group operators and car rental companies. SA Tourism markets the country as a tourism destination on behalf of the South African government.
The TBCSA and SA Tourism have put their heads together to design a tourism recovery strategy, which encompasses a phased approach to re-opening the sector. Although the two entities are aligned about the need to de-risk the sector and a phased re-opening, they differ on when a full re-opening can be realised.
For Tshivhengwa, time is of the essence and a full re-opening is a matter of urgency. In contrast, Ntshona points to the government’s risk-adjusted strategy, which is not timebound but factors epidemiological guidance. As of 1 June 2020, the country entered level 3 of lockdown.
Right now, South Africa is three months away from its high tourism season, which begins in September. Between now and then, the ideal scenario for Tshivhengwa would be the re-opening of provincial borders.
“The first phase of recovery is domestic. Open interprovincial travel. There’s no point saying hotels are open, but people cannot travel across the provincial borders,” says Tshivhengwa.
On Wednesday 17 June, President Cyril Ramaphosa announced that sit-down restaurants, movie theatres, licensed accommodation, casinos and business meetings would be permitted following consultation with industry.
However, the country’s borders remain closed to international travellers and interprovincial travel is prohibited.
“While we celebrated the opening, it was simply the first phase of many to come. The key thing to highlight is while we were in level 5 and level 4, proactive initiatives were done by the sector itself. We call these de-risking activities,” adds Ntshona.
“In its current form, tourism is rated as a level 1 activity. The rounds of announcements you’ve seen lately is … recognition of some of these plans we’ve put in place to open up the sector,” notes Ntshona.
There is a new reality at hand for the sector. This was crystallised by the fact that, for the first time in its history, SA Tourism told people not to travel and cancelled the Africa Travel Indaba.
Indaba is the largest tourism and travel showcase on the continent and attracts a regional and global audience of buyers and service providers.
In addition to the recovery strategy, SA Tourism has focused its efforts on protecting the supply side of tourism. It did this through the Unemployment Insurance Fund-Temporary Employee Relief Scheme (UIF-TERS) intervention and the Tourism Relief Fund.
Furthermore, the government has put in place a credit guarantee scheme through the banks to avail R200bn to support various sectors. But “the UIF-TERS programme is going to come to an end,” counters Tshivhengwa. And for some people, the UIF-TERS is not enough and does not cover their salaries, and they are pinning their hopes on a re-opening to earn a full income.
In Mpumalanga, where South Africa’s Kruger National Park is situated and home to other popular tourist attractions, the devastation is palpable, says Tshivhengwa.
The communities around Hazyview, Skukuza, areas adjacent to the Kruger and all the way up to Numbi Gate are feeling the effects of the closure of game parks, hotels, lodges and B&Bs.
The big hotels groups have not been spared either, with some retrenching employees in their thousands. Some of the smaller B&Bs owners are considering exiting the business entirely and have placed their properties in the market for sale. “We know there aren’t many people willing to buy B&Bs at this time,” notes Tshivhengwa.
This is why the TBCSA has intensified its lobbying for a re-opening. The industry body has had engagements with the president, as well as the tourism minister and SA Tourism.
Tshivhengwa does concede that decision-making rests with the National Command Council and the cabinet – and not tourism minister Mmamoloko Kubayi-Ngubane, who has given the TBCSA a sympathetic ear.
Regional pecking order
A great driver of the TBCSA’s agitating for a re-opening by September is that the industry fears South Africa could lose its status as a regional hub, especially in the Southern Africa Development Community (SADC).
In this regional context, South Africa serves as a gateway destination to other territories within SADC. This enables the country to receive the most number of visitors to its shores.
A further advantage was that South African Airways (SAA) operated long-haul flights to destinations including London, New York, Frankfurt and the Far East, making the airline an essential component of the connectivity that gained the country regional hub status.
However, a delayed re-opening could potentially leave a gap that might be filled by countries such as Tanzania and Kenya in East Africa. “We have already seen what’s happening in Addis Ababa, where a lot of people are flying on Ethiopian Airlines,” warns Tshivhengwa.
“If we don’t have the function in SAA, other countries are going to be opened for other international airlines to fly directly. Qatar, for example, could fly directly to Gaborone. We will lose that status if we are not careful,” the TBCSA CEO cautioned.
Another area where the TBCSA has focused its lobbying efforts is South Africa’s contentious visa regime. The industry won an important concession when the government scrapped the unabridged birth certificate requirement.
Now, the industry body has trained its eyes on the country’s e-visa system, saying it needs to be tightened and ready by the time international travel commences.
“Let’s finish the e-visa system to enable travel, especially for the rest of Africa. A lot of people want to come here. They need to be able to apply for visas online. We can’t be doing the ‘come to the office and do paperwork’ [method],” says Tshivhengwa.
However, Ntshona believes COVID-19 has made everyone’s visa regime obsolete. “I think we’ll be moving to an environment where everyone has a visa regime, but for significantly different reasons. It’ll be driven around getting to know your health status, so that you don’t pose a risk for country you’re travelling to,” predicts Ntshona.
With regards to re-opening, if the sector gets it wrong, Ntshona says it may not get another chance to get it right. “You open up too soon, and you will see the pandemic going the wrong way – then you’re not attractive to anyone as a destination. That in itself becomes a problem. You’ll have a stigma that will take longer to undo than being cautious in terms of how you open up the sector.”
For Ntshona, a crucial part of recovery is how the sector will rethink what tourism looks like. “Not just in South Africa, but across the continent.” This would involve having a fresh look at source markets. “We are evolving ….” Ntshona cites New Zealand and Australia as countries which have the pandemic under control, but have opted to keep their borders closed to international travellers.
A toast of sorts
In the absence of a firm commitment about when the sector will be opened up, Tshivhengwa has welcomed the easing of restrictions on sit-down restaurant.
But there is a caveat.
“We must make sure the restaurants will be able to sell liquor in the evenings. The majority are evening restaurants and some operate from Thursday to Sunday, when the traffic is there. Liquor is a big part of the margins in restaurants,” explains Tshivhengwa.
On that note, “we hope the regulations that follow make business sense and ensure we can go back on our feet,” concludes Tshivhengwa.
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Click here for part 2.
Click here for part 3.
Click here for part 4
Click here for part 6