The lock down suffocates one of SA’s biggest assets

Aug 21, 2020 | Uncatogorised

Independent author: Chris Hattingh

According to Tourism Minister Mmamoloko Kubayi-Ngubane, the tourism sector has lost R54.2 billion so far in 2020. We need to keep in mind the effect of COVID-19 on international tourism, but it is becoming clearer by the day that the South African government’s own lockdown and COVID-19 regulations have had a very negative impact on the tourism sector’s business. Furthermore, it is not just guesthouse owners and large hotels that are suffering from the lock down; employees, their families, partners in the food and beverage industry and various service providers in the supply chain are struggling to return to pre-COVID levels at all.

The purpose of the lock down was, according to the government, to reduce the pressure of COVID-19 on health services. However, in the process, the government and supporters of the strict lockdown, have completely forgotten about the large-scale negative effects that come with  preventing people from working.

In the same submission as mentioned above, Minister Kubayi-Ngubane said there is a chance that about 600 000 people in the tourism sector could lose their jobs if the sector does not open by September. With more than 10 million unemployed prior to COVID-19, such numbers would be devastating for the economy and the South African society.

The Tourism Department did make it clear that some relief would be provided for tourism businesses, provided that the claiming business meets certain racial requirements. This perspective misses the bigger picture, namely that people of all races work in the tourism sector. If the owner of a business just happens to have a white skin color, the business will not receive help from them and there is a greater chance that all the employees in the business may lose their jobs as a result.

However, the government should not have placed tourism businesses in this life-or-death situation in the first place. Currently, people are only allowed to stay in guest houses when traveling for business. Airbnb’s – which can at least provide some South Africans with a little extra income – are still closed. Many foreigners have only heard of how special South Africa is and after months of restrictions all over the world, people are hungry to travel again (and if they travel, they are going to spend thousands in their currencies here). There is therefore no better time than now to completely reopen South Africa’s borders to tourism. As long as guesthouses have clear COVID-19 measures in place, the government should allow them to reopen their doors to tourists – locally and from abroad.

According to Fin24, in 2018, travel and tourism in South Africa contributed the following: 1.5 million jobs and R425.8 billion to the economy – 8.6% of all economic activity in the country. We cannot underestimate the importance of tourism. Unfortunately, the facts indicate that the government has no idea just how important the sector is and that there is no urgency to re-open the doors. According to a recent article in City Press, the sector loses about R750 million every day – no one can absorb losses such as this.

Economic progress and higher living standards go hand in hand with economic and individual freedom. No one can run and grow a business effectively when its freedom is restricted around every corner. The guest house owner must make all kinds of daily decisions and pay employees and service providers. When the government restricts or suspends economic activity, we should not be surprised if businesses struggle and people lose their jobs.

The margin for error is much smaller for guest houses in South Africa’s countryside and small towns. While larger hotels can carry the cost of the the lockdown for a longer while, guest house’s resistance are much smaller.

Before COVID-19, it was already difficult to run a business in South Africa – more and more laws and higher taxes lead to an unfriendly business environment. The government has been on the wrong policy path for years – more state control over the economy and people’s lives. COVID-19 exposed the structural problems in South Africa. As people adjust their best and resume business again, the world is going to continue reopening. South Africa could be one of the first countries to warmly welcome guests again – if the government allows employers in the tourism sector to do business again.

In their fight against COVID-19, the government has forgotten just how important and how finely tuned, the economy is. The lock down was simply a blunt tool and if we are to believe the figures of the Minister, there is still a lot of bad news ahead. It is high time that the government stepped back and put control back in the hands of businesses in the tourism sector. Only economic freedom can give South Africa a chance in the post-COVID-19 world.

The following letter of opinion was drawn up by an independent person and does not necessarily represent the opinion of Sakeliga, its management, board of directors or members. Business League gives no guarantees as to the completeness, reliability and accuracy of this information.