Africa: Open sky policy’ will grow GDP in Namibia study shows

DESPITE slow economic growth, the tourism industry remains a beacon of hope for the Namibian economy.
The weak South African rand would continue to support growth in the wholesale and retail trade sector as it relates to the tourism sector, Simonis Storm Securities (SSS) said in a report on Friday.

The report said despite the macroeconomic headwinds that have resulted in a deterioration of Namibia’s fiscal and external trade position in 2015 and ultimately feeding into 2016, the tourism industry remains strong.

“Firstly, we believe that the weaker rand would continue to support growth in the wholesale and retail trade sector as it relates to the tourism sector. Secondly, the expected operations of additional airlines – Qatar Airlines, KlM, and Ethiopian Airlines in Namibia are likely to attract more tourists from central Africa, the Middle and Far East, and Europe,” the report said.

SSS said this would improve Namibia’s net travel receipts, and therefore ease pres- sure on the current account, which SSS estimates to be at 13% of GDP. It said embracing an ‘open sky policy’ would be necessary to optimally capitalise on export earnings from international travel services.

The report said the ‘open sky policy’ is in line with the government’s ambition of positioning the country as a transport logistics hub for Southern Africa.

Revenue generated from the tourism levy is under-optimised due to alleged underreporting of accommodation occupancy rates. SSS said strengthening the efficacy of the levy administration holds significant potential to beef up the revenue, and therefore improve the international marketing of Namibian tourism. It said tourists in general prefer paying less for accommodation, and as such choose to stay at permanent tented camps, or board with families. It said investment opportunities exist in developing camping structures.

The report added that the Namibian tourism industry has less regulatory barriers compared to its neighbours South Africa, Botswana, Zimbabwe, Zambia and Angola, which it said presents an attractive climate for further investment.

The 2014-2020 industry growth targets in the ministry of environment and tour- ism’s investment strategy aim to increase the tourist arrivals from 1,2 million to 2,5 million.

The Namibian tourism levy is set at 2% of fees paid for a room in a hotel, lodge or bed-and-breakfast establishment. A penalty charge of 5% is also imposed on late payments.

“While the implementation of the levy has been applauded for ensuring the sustainable provision of quality services to tourists from a marketing perspective, the administration of the levy has its own drawbacks,” the report said.

SSS said there are allegations made against hotels and accommodation establishments that accommodation occupancy rates are under-reported.

“This ultimately results in lower revenue collection from the levy than what could potentially be collected,” it stated.

SSS said the reported occupancy rate for 2015 averaged 25%, which, according to industry experts the firm consulted is way below the market expectation of at least 70%.
Source: namibian.com.na

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