ZAMBIA (eTN) – The Zambia Minister of Tourism, Given Lubinda, arrived in Livingstone last week to spend several days discussing the preparations for the UN World Tourism Organization (UNWTO). He had meetings scheduled throughout his stay to talk to stakeholders, find their views, and make a plan for the meeting, which we were told will take place on July 24-29, 2013.
Business people from the Livingstone community were invited to a meeting at Protea Hotel to give their ideas. Business people in Livingstone, of course, are mostly tour operators. The hall was packed.
We were told that during the 6 months since UNWTO agreed to hold their meeting at Victoria Falls, a shared venture between Zambia and Zimbabwe, that Zambia has had lots of meetings and that they have agreed on a logo but have yet to decide on a mascot.
After some lengthy presentations, the Minister had decided that he would allow some time for the business community to get clarification on the new Statutory Instrument (SI) about using kwacha only for all domestic transactions. Jonathan Chipili was there from the Bank of Zambia and had been given the right to answer any questions.
Mr. Chipili gave a short speech about the government’s new rule stating that they wanted to make kwacha the main currency in Zambia, not the US dollar. He told the audience that foreign currency accounts would still be allowed; that all credit card machines had to be reconfigured to take kwacha; that tour operators would be allowed to change a limited amount of foreign currency; that websites can continue to show the dollar price; that only authorized dealers can deal in foreign currency; and that visas at the border will continue to be paid in foreign currency.
And then there was time for questions.
Mr. Chipili was bombarded with questions and comments. One by one people rose to voice their concerns; concerns which had a real impact on their tourism town. It was clear that the Bank of Zambia had not considered the effects of the new SI on tourism, especially in the border town of Livingstone. Some of the comments were:
– What is the government trying to achieve with the SI?
– Why did government introduce the SI without consultation?
– The SI had been backdated to May 18. It stated that anyone dealing in foreign exchange from that date was guilty and liable to a prison term. Therefore, everyone at the meeting was guilty and should be locked up.
– The only benefits of the new SI will accrue to the banks.
– Employment contracts are often quoted in dollars – does this make them now illegal?
– It is stated that tour operators can accept a limited amount of foreign exchange from their tourists – what is this limit?
– The SI has caused such confusion with our agents abroad, as they did not know what was going on, and when they contacted the lodge owners, they could get no clarification, because we did not know either.
– Zambian operators will have to price higher than operators outside the country. A Zambian operator will have to tell his client that he has to pay in kwacha but when the client goes to the bank to change his dollar, he will not get the required amount of kwacha because of the exchange rate. A price of US$100 is likely to become a price of US$110, just because of the buying and selling rate. An operator outside the country who can use US dollars will be able to stick to the price of US$100.
– Traders at Victoria Falls cannot accept kwacha for all purchases, because there is no bureau there and many visitors cross the border for the day just to see the falls. Are traders expected to send all their would-be buyers to Livingstone to change their dollars into kwacha?
– The SI is really bad timing during the run-up to the UNWTO as it has caused such confusion. Visitors to the meeting are booking their accommodation now, and because of the uncertainty, they are booking in Victoria Falls Town and not in Livingstone.
– Companies borrow from the banks in foreign exchange when they need to replace their equipment-like vehicles, etc. The lending rate for dollars is around 10-11 percent, whereas the lending rate for kwacha is over 20 percent. If a company is required to keep all their money in kwacha, and the kwacha continues to yoyo, it is far too risky to borrow.
These are some of the questions/comments, which I noted, and Mr. Chipili tried his best to answer, but he was only able to repeat Bank of Zambia set responses.
Mr. Lubinda rose and said that he was also confused and asked Mr. Chipili to clarify certain points.
I think, though, that the question and answer which was the jaw-dropper was when one lodge owner asked if a guest wanted to pay, say US$100 for his accommodation, could it be accepted and could it be deposited in the dollar account. Yes, said Mr. Chipili.
So, what is the limit we can accept? If we can accept cash and put it in our dollar account, why can’t we accept dollar credit card payments?
It was obvious to Mr. Lubinda that Mr. Chipili could not answer the detailed questions, so he stood up and said that he wanted all the questions to be written down, and he would take them to the Governor of the Bank of Zambia and get the answers. He quipped that it was time for lunch. He said that he would have another meeting to discuss the UNWTO, because he could see that there was little appetite for it that day.
The following day, another meeting was held and all the Livingstone tour operators’ questions had been put together in a logical format. It was stated that the SI in itself was fine, but it was the clarification by Bank of Zambia that was the problem. The situation on the ground now, was that banks and government were giving different interpretations and that there was total chaos in the industry. Members of the Livingstone Tourism Association had taken the clarification by the Bank of Zambia and added/deleted certain sentences to make the SI workable.
I managed to survive 2 hours of this second meeting and couldn’t take any more. I left, as the Minister was trying to understand the finer points of the concerns so that he could present them to the Bank of Zambia. He was being very patient, although he was obviously tired.
I had wanted to hear about preparations for the UNWTO meeting, but I don’t know if the meeting stayed open until midnight for this… I doubt it.
A LETTER FROM THE BANK:
Because of the new SI, banks are now refusing to honor dollar credit card payments after June 15 –
Kindly advise the merchants that all USD transactions that were banked/uploaded on 15.06.2012 and beyond have been withheld with regards to the implementation of S.I 33 of 2012 by Bank Of Zambia. The central bank has not yet given us the authority to credit the merchants’ accounts with the USD currency. If we went ahead and credited the accounts, the bank and merchants would be in breach of the law.
Just a little comment from me…
In Zambia, tourism is considered a side-line, and the government has not paid much attention to its special needs. Over the years, the government has made changes affecting the tourism industry using steel-capped work boots kicking the life out of the industry. New park fees, the re-introduction of VAT on accommodation, visa fees, new work permits, and now this SI 33. It won’t end, because next year there will be something else.
We have a Ministry of Tourism; we have the Zambia Tourist Board full of professionals in the tourist industry, and not one of them stood up for their industry prior to this SI or any of the other rules. It was left to the private sector. And, quite rightly, the private sector is upset and angry. The amount of money which flies from Livingstone to the government is huge – tax, park fees, visa fees. The tour operators through their tax, pay for salaries and vehicles of the staff at the Ministry of Tourism and Zambia Tourist Board, and yet they get no support from them.
It had to come down to the Minister facing an angry audience to calm the situation and try to find a way forward. We know that Mr. Lubinda is passionate about the tourism industry, but he can’t do it alone. If the staff in the Ministry of Tourism and Zambia Tourist Board don’t wake up, Mr. Lubinda will surely have a heart attack.
And the UNWTO? Well, we await discussions on that.
Will we be ready for the UNWTO? Well, I think the government has to address the currency issue and find a solution first before any operator will put their heart into the preparations. But if Livingstone has the will to perform, it will do it well.