By Michael Kanaabi Dollar
Tourism revenues both domestic and international for Uganda having dropped from a peak of close to 1.9 Billion US Dollars in 2018 to under 200 million US Dollars in 2020 as a result of the Covid-19 pandemic. The pandemic was a big set back to the local tourism industry.
However, Uganda's banking industry through its lead association the Uganda Bankers Association has this industry and it’s recovery on the top of its agenda as expressed in the 2022 Bankers Conference at the Kampala Serena Hotel on Tuesday.
Julius Kakeeto the Ugandan Bankers Association Vice Chairman and CEO of Post Bank Uganda called on fellow leading bankers to consider increasing finance to the tourism sector to fast track its recovery after the full opening up of the economy.
He said: “There is need for banks to partner with other financial sector players and private sector tourism players to create and offer the best possible credit and financing solutions to Entrepreneurs and investors in tourism sector so as to unlock its full potential,”
While giving opening remarks for the final day of the annual Uganda Bankers Association Conference 2022, Kakeeto emphasized the need for more synergies and partnerships between the public sector, the banking industry and private players in the tourism industry.
75% of investments in the tourism industry are owned by local entrepreneurs and investors and extending credit lines to them will not only have a net positive effect on their growth but also create a substantial trickle down effect on employees, suppliers and other service providers to the industry.
Financing to the tourism industry according to Kakeeto reached Shs435 billion in 2021 a number that should grow significantly as new opportunities emerge in the sector from it’s full opening up post lockdown.
The tourism industry pulled in over 1.6 billion US dollars to the national economy prior to the lockdowns in 2019 showing the potentially huge returns credit to the sector can generate.
Hon. Daudi Migereko the Uganda Tourism Board (UTB) Chairman while addressing the bankers and other stakeholders reminded all attendees of the 7.7% contribution to GDP contributed by the tourism sector to the local economy before the Covid-19 lockdowns.
Therefore, it is imperative for the bankers to consider extending increased credit on more favorable terms to the sector to help the industry recover and shoot to greater growth levels.
The former Cabinet Minister also applauded Post Bank for extending credit to him and other players in the tourism sector at a time when other banks were still skeptical an example he urged other banks to follow and help grow the sector.
With the World Tourism and Travel Council predicting growth of the tourism sector in Africa to surpass 27.7% for 2022, banks should take the lead with Development finance Institutions and Government lending a hand to grow the sector he added.
Stephen Assimwe the Private Sector Foundation of Uganda (PSFU) Executive Director and former CEO of UTB noted that the tourism sector offers some of the best returns for investors and bankers. It’s only in this industry where you will find a client (tourist) spending given up to $7000 USD in a week while here a good indicator for potential returns in the industry.
“With tourists spending over 300$ a day per square metre of space on accommodation in top hotels which is much higher than the average rent in the city for say a week, banks should look no further when it comes to which sector to lend” he says.
Government also needs to heavily increase it’s direct spending on tourism and cut back on industry taxes to have impact especially in international markets and also encourage more investment in the sector as a result.