The Road To Economic Recovery Requires Deliberate Bias to The Most Disadvantaged

This article by Adv Mthokozisi Xulu. President of SACCI, was published in the June edition of the Department of Tourism’s newsletter, Bonjanala.

Left: Adv Mthokozisi Xulu, Board Member, Seda and President of the South African Chamber of Commerce and Industry (SACCI)

Labelled as a black swan event and likened to the economic scene of World War 2, the outbreak of Covid-19 has had a detrimental effect on global healthcare systems with a ripple effect on every aspect of human life as we know it.

The hospitality and travel industry have perhaps been most hard-hit, with workers facing potential devastating hardships by the hour and with impacts on both travel supply and demand. As a direct consequence of Covid-19, the World Travel and Tourism Council (WTTC) has warned that 50 million jobs in the global travel and tourism sector may be at risk.

Tourism is a major driver of jobs and growth but Covid-19 has dramatically changed this. The impact on tourism enterprises and workers, the majority being young women, is unprecedented. The pandemic has placed many businesses, mainly SMMEs, in a very precarious position with threats to livelihoods and jobs – and the tourism sector is not spared. The virus has demonstrated the risk associated with tourism investments.

Timely, large-scale and, in particular, coordinated policy efforts both at international and national levels, are needed. There is therefore the need to continue to implement urgent relief measures. These include temporary State aid for the tourism and travel sector from national governments, fast and easy access to short and medium-term loans to overcome liquidity shortages, and fiscal relief and unemployment insurance.

We have lamented the adverse socioeconomic impact of the virus on employment and livelihoods, moving beyond lamentation, we as development finance institutions (DFIs) need to commit to devising measures to support the opening up of the tourism sub-sectors and make sure that our local economies thrive again.

As DFIs, empowerment schemes, equity funds and stokvels, we must collectively demonstrate leadership and be a responsible partner in the recovery phase by being at the forefront new funding and incentive packages aimed at ensuring that we don’t roll back years of economic transformation and the leveling of playing fields.

As governments respond to the economic crisis caused by Covid-19, a key question is how the impact will differ across local economies and how policy should respond.

In the short term, if we know which areas are hardest hit, this pointed the way in terms of coordinating emergency response and targeted support.

Tourism is not an insignificant sector. Directly and indirectly, it supports 8,6% of South Africa’s GDP. Its economic
activity encompasses all non-commuter passenger travel, car hire, a wide range of accommodation types, a vast array of activities and attractions, conference centres, retail and restaurants and services such as tour operators, travel agents, conference and event organisers and the like.

Post Covid-19, the travel and tourism industry, like many others, will never be the same again. This means that we
cannot go back to ‘business as usual’, and both private and public stakeholders in the tourism industry will have to rethink many of their practices.

What measures can we adopt, to salvage the industry once this crisis blows over?

Granted, the economic crisis caused by Covid-19 will play out differently in rural vs. urban areas. The same goes for smaller municipalities vs. our metropolitan areas.

Unfortunately, the unusual nature of this crisis makes its local impact hard to predict. This complicates attempts to formulate appropriate area-based policy responses.

This is an opportunity to once again take an unwavering shot at radical transformation of the tourism sector. In the midst of adversity, we must ensure that our small businesses are resilient and agile where possible and start thinking of disruptive approaches in the SMME sector.

Once the pandemic has finally been contained, global travel is likely to slowly recover, allowing the sector to get back on track to meet what the Government hopes will be a growing potential to create more jobs and boost small and medium businesses.

The focus on domestic tourism will entail emphasis on product diversification, of niche markets like heritage tourism and festivals, local events to address seasonality and geographic spread, activation of school and sports tourism and further entrenching a culture of tourism amongst South Africans.

We there need to champion a national compact for tourism recovery and to investigate more measures to ensure
continuous support to tourism businesses to adapt and thrive in a new post-crisis era, and explore innovative capacity-building programmes to enable the travel and tourism to become more inclusive, robust and resilient.

Political commitment is key to ensure that tourism can experience wider economic and social recovery, as proven in the past with disruptions on the back of the highly resilient nature of the sector and its ability to bounce back boldly.

By Adv Mthokozisi Xulu