Zimbabwe

Dollar is king as Zimbabwe cash crisis grows

Airlines reject bond notes as payment as tourism hit by foreign currency shortage

14 October 2018 - 00:03 By RAY NDLOVU and VUYO NDABA


South African Airways (SAA) will not hike ticket prices for its Zimbabwe flights, despite a wave of price increases that has swept through the country over the past few days.
Amid the worst economic crisis in a decade, several airlines have said they are no longer accepting payment in bond notes. Emirates, Kenyan Airways, Ethiopian Airways and most recently British Airways now insist on payment for flights in dollars.
On Monday, British Airways, which operates the Harare-Johannesburg route, said that "in light of the foreign currency repatriation" it was "temporarily limiting" the distribution of tickets in Zimbabwe.
Last month Kenya Airways suspended ticketing in Zimbabwe citing a foreign-currency shortage.
The demand for payment in foreign currency, which is in short supply, appears to have spread across the tourism sector.
Tour operators and hotels in the resort town of Victoria Falls this week joined other service providers demanding payment for their services in dollars. Tourism executives said the sector was "feeling the heat" from the economic meltdown.
However, SAA spokesperson Tlali Tlali said on Friday that there had been no change to its policies regarding the payment of tickets in Zimbabwe.
"As matters stand, nothing has changed from an operational perspective in relation to our operations between the two countries. SAA has not imposed any additional terms or requirements," he said.
SAA, which has the lion's share of Southern Africa's most lucrative route of Harare to Johannesburg, is owed the bulk of the $76m Zimbabwe owes to various airlines.
The International Air Travel Association, at its annual meeting earlier this year, red-flagged Zimbabwe as one of the top five countries in the world that were failing to pay money owed to airlines.
Tlali confirmed that SAA still had outstanding funds that had to be repatriated to SA. He would not comment on the exact amount, but estimates put Zimbabwe's debt to SAA at about $60m.
"The matter is receiving the necessary attention and engagements have taken place with the relevant authorities. We have reason to believe that the Zimbabwean authorities will honour the undertakings they have made. In our view, it would be inappropriate to parade the details," he said.
Travel agents said on Friday that they did not expect SAA to continue accepting payment in bond notes or by card for much longer because it was "unsustainable" for the airline.
National carrier Air Zimbabwe has also not made any changes to its payment for flights.
"However, we are in continuous engagement with the shareholder and the Reserve Bank of Zimbabwe as regards the current economic situation with a view to establishing a sustainable position for our operations," it said in a statement.
On Friday, Zimbabwe Tourism Authority chief executive Karikoga Kaseke said the issue of foreign currency had caused "havoc" in the tourism sector.
"Domestic tourism is the most affected by fuel shortages as they [travellers] cannot travel … this affects occupancy rates in hotels," he said.
The Employers Association of Tourism and Safari Operators said it was worried over the continuing economic meltdown and the threat that it posed to tourist activities.
Association president Clement Mukwasi said this week that tour operators had enough supplies to see them through the continuing shortage of some goods and fuel, but would be unable to cope if the situation persisted.
"Most big companies have their own garages where they pre-buy and stock supplies such as fuel, and can go for two months without buying any fuel. The reserves that the companies have at the moment may push them for two more months, but once they finish … we may not be able to replenish them," he said.
Mukwasi said that though operators expected shortages in their industry, the difficulty lay in the shortage of hard currency, which had now forced a rethink on operations.
In a bid to access foreign currency, Mukwasi said tour operators now demanded that clients pay directly in foreign currency instead of agents transacting on their behalf using bond notes and electronic payments.
The tour operators said they needed foreign currency to order bedding and other goods.
Sam Mavuto, the owner of Adventure Holidays, a local company that offers transfers and tour services, said he insisted on payment in foreign currency.
"I haven't seen much change because my clients are mostly foreign and pay in foreign currency. We are, however, waiting for [Monday] 15 October to see the repercussions of the policy announced by government," he said.
Earlier this month, central bank governor John Mangudya said banks had until tomorrow to separate local accounts and foreign currency accounts funded by offshore proceeds.
But some members of the public are concerned that this will be a pretext for the government to raid forex accounts.
Finance minister Mthuli Ncube this week attempted to allay these fears, saying there would be a statutory instrument "to guarantee that these are private deposits and neither the Reserve Bank nor government has any access to them".

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