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Support for tourism is support for the economy. Development Bank of Namibia Acting Head of Investments Hellen Amupolo says the Bank is throwing its weight behind the tourism industry with repayment holidays and finance for qualifying enterprises.
Development Bank of Namibia (DBN) Acting Head of Investments, Hellen Amupolo says the Bank is throwing its weight behind the tourism and hospitality industry, as one of the most important contributors to Namibia’s economy.
Amupolo points out that although the industry measures itself on aggregate earnings and employment, this does not fully reflect the depth of its impact on the wellbeing and socio-economic impact on families and communities. Tourism and hospitality, she says, has a deeper human truth, and needs to deploy to rebuild the gains that it has made.
Although the industry has come to a halt in the face of Covid-19, it needs to prepare for recovery now, rather than later. She explains that competition for the global tourist dollar will become fiercer as the recovery progresses and Namibia needs to be well-placed as an attractive destination.
The Bank has already taken measures to preserve its borrowers in the industry with repayment holidays of N$33.8 million. These repayment holidays are valid until November 2020, and the cost of recapitalized interest is being reduced by five-year extensions of loan periods.
Amupolo says that the barometer of recovery has to be accommodation, which is the basis for any further economic activity in the industry. Without bed occupancy no secondary activity will take place, including vehicle rentals, activity operations, tourism related retail and hospitality in the restaurant sector. Accommodation will also have a secondary impact on wholesale, manufacturing, transport and logistics as well as business services.
In light of this, she urged accommodation facilities to prepare preliminary business plans, and assemble pre-Covid cash-flow statements and balance sheets. By developing in advance documents required for applications for finance, qualifying enterprises could potentially reduce delays in project implementation. She invited interested parties to contact the Bank to find out about application requirements.
Talking about recovery, Amupolo said the Bank will be closely watching activity in the SADC, and hoped that a travel bubble would emerge between countries, particularly with continued relaxed quarantine requirements for South African inbound travel over December, if feasible. However, she said that she expects the recovery to be uneven, with gradual international recovery.
In light of this, she said diversity of markets is important to make up for lockdowns in different international markets. She also said that in the long-term the industry could seek finance for facilities to cater to special interests and potential longer stays. Focused facilities for special interests, she noted, are more likely to attract tourists. The more focused the market, the bigger the potential given the current uncertain environment, she explained.
On the topic of preservation of the industry, Amupolo suggested that larger enterprises consider using DBN finance to buy shares in smaller tourism and hospitality enterprises that are vital to the tourism and hospitality network.
She illustrated the concept with an example of a large accommodation establishment with a reliance on a specific service provider. By ‘buying’ a small partial shareholding, the larger accommodation industry could preserve the service provider, capacity for the recovery and strengthen its balance sheet. If the smaller enterprise failed without the support of the ‘buy-in’, however, this would reduce the competitiveness of the larger establishment.
On the topic of general finance offered by DBN, Amupolo said the Bank offers a range of products, however it excels at structured finance tailored to milestones of the project. She also added that the Bank provides grace periods to enable borrowers to grow their turnover before beginning to pay.
Although the recovery will gather momentum, it is better to lay plans in advance and be prepared for different scenarios, Amupolo concluded, urging the tourism and hospitality industry to contact the Bank.