eBusiness Weekly
Golden Sibanda
South African Airways (SAA), one of a handful of foreign airlines flying into Zimbabwe struggling to access blocked funds, is confident Treasury will come good on its promise to facilitate repatriation of a cumulative US$136 million in unremitted revenues, a senior official said.
This comes as a number of foreign airlines have started demanding payment for all flights from Zimbabwe to be paid exclusively in foreign currency, to prevent further accumulation of funds from locally generated revenues while other airlines have threatened cancellation of flights. Cancellation of flights into Zimbabwe could negatively impact the country’s booming multi-million dollar tourism industry, as it would affect connection to source markets, while local travel agents who facilitate bookings would also lose significant business.
Foreign airlines have since escalated the matter to the Ministry of Finance and Economic Development to urgently find a concrete plan that will see Treasury facilitating the repatriation of a specific amount of the unremitted funds to clear the outstanding balance, amid chilling warning and fears the funds may ground the airlines’ operations.
The Ministry of Tourism and Hospitality Industry and the Reserve Bank of Zimbabwe are also part of a team of high ranking official involved in deliberations over a framework to resolve the issue of the blocked funds, as Zimbabwe continues to battle vicissitudes of chronic foreign currency shortages.
Airlines may cut flights
Alexandru Stancu head of account management, South East Africa International Air Transport Association (IATA) told a Tourism Business Council of Zimbabwe (TBCZ) conference in Victoria Falls just over a month ago that the affected foreign airlines had been crippled by the inability to repatriate their funds from Zimbabwe due to forex challenges.
Zimbabwe’s tourist arrivals, which totaled 2,54 million last year, jumped 7 percent in the nine months to September this year compared to the same period last year and are seen expanding by 15 to 20 percent over two years.
Although the Reserve Bank was reported to have escalated its staggered payments to foreign airlines last year, which are done through the International Air Transport Association (AITA) on the back of reports eight foreign airliners, including German based Lufthansa, had suspended flights after unremitted funds hits US$20 million, little has improved since then.
SAA hopeful solution is in sight
SAA acting regional manager for Southern Africa Winnie Muchanyuka told Business Weekly in an interview this week that following challenges faced by foreign airlines in the repatriation of revenue generated in Zimbabwe due to acute shortage of forex in the country, they had escalated the matter to Treasury, which made a firm commitment to assist.
The Reserve Bank currently determines the distribution of foreign currency across the various competing needs, including for importation of fuel, electricity, wheat, medicines, raw materials and proceeds of investments, according to a priority list framework.
However, limited inflows of the hard currency means other key areas fail do get allocations.
“For a long time, we have been dealing with the Reserve Bank and they had given us allocations as and when foreign currency was available, but as the situation and availability of foreign currency worsened, we escalated the matter to the Ministry of Finance.
“The Ministry of Finance has agreed to put a concrete plan in place to be able to make funds available for the airlines so that we are able to continue with operations and then he would also engage with IATA as to how they would make good of the outstanding debt,” Muchanyuka said.
“Airlines are quite optimistic; the engagements that we have had with the ministry of finance and we really looking forward to a concrete plan that the airlines can work around to say that we know that definitely every month or every week we will have X amount because then it makes it easier for you to plan.”
Tourism Business Council of Zimbabwe president Tich Hwingwiri, said this week all obstacles to the travel and tourism industry should be eliminated, chief among them repatriation of funds from ticket sales to foreign airlines from ticket sales generated in the country.
“The airlines servicing Zimbabwe are the lifeline of our tourism and we must do all we can to ensure the airlines are satisfied by their dealings with Zimbabwe, financially and in other ways,” he said.
Hwingwiri said most foreign airlines were confident a solution would be found, which has seen the majority of them continuing to charge fares in the local modes of payment, further stressing the that foreign airlines wanted demonstration of commitment by Treasury, Government and the central of their willingness to facilitate repatriation of blocked funds.
Airlines typically price and sell tickets in the currency of the country in which they are being sold. Then they need to convert those local currency revenues into their main operating currencies before they can be repatriated.
Reserve Bank Governor John Mangudya could not be reached for a comment.
