Slam low funding for the tourism sector by the private sector and European Union.
Uganda’s Tourism industry is the top sector where foreigners exchange earners by visiting touristic attractions. Despite of pandemic, the tourism sector was valued at $1.6 billion in 2019 -2020. Whereas foreign visitors were at 1.4 billion thus increasing demand for government funding by European Union led by Luis Lechiguero and civil society.
The agency UTB responsible for the promotion of the sector receives Shillings 181 billion for the year 2021/22, with US$ 30 million (110 billion Shillings) internally and to the foreign markets for marketing the tourism industry in Uganda.
The financial year budget this year for the sector increased to Shillings 194.7 billion.
In a financial comparison of Kenya and Uganda about tourism sectors, the Kenyan government allocated the sector in 2021-2022 equal to about Uganda Shillings 300 billion but which reduced to Shillings 160 billion and 50 billion has gone to promotional activities.
“Just like his home country Spain, Uganda’s tourism has all it takes to transform the country if only the right decisions are made. Lechiguero says in less than six months that he has been in the country; he has toured half of the gazetted tourist-protected areas and can tell how much potential the country has.” the head of programs European Union Luis Lechiguero said during the conference.
While at the 5th Annual Bankers’ Conference in Uganda, the delegate Luis Lechiguero the head of programs EuropeanUnion from Spain continuously said that the government and the banking sector have not done much in promoting the country as a tourist destination. According to Lius, he referred to other countries in the region and what they have done to improve their tourism sector in their recent levels.
To help the Tourism sector survive the effects of the COVID-19 pandemic, the EU gave a grant of about Shillings 20 billion through the Uganda Development Bank.
The help from the EU brought the total increase of 60 billion including the rescue package for the government and helped the interest rate to drop to about 8 percent according to UDB from 12 percent.
However, by setting conditions that the majority could not afford according to the Association of Tour Operators, the management of the fund caused discomfort in the sector as the bank was accused of favoring some operators at the expense of smaller businesses.
“The money which is channeled through the UDB comes with the conditions for qualification however they have not given up on this category of entrepreneurs, as there are initiatives meant to help them put in place what is required.” He said.
Before introducing more flexible and affordable loan products, the bank has been accused of focusing on bigger entrepreneurs by setting the minimum loan amounts to 100 million shillings which are beyond the needs of the majority of the operators.
According to the 2019/2020 tourism sector in Uganda earned 1.6 billion dollars annually, tourism sectors of Kenya and Tanzania earned 8.5 billion dollars, and 6.5 billion respectively.
In comparison with Uganda, Kenya and Tanzania in terms of the economy, the Uganda sector contributed 7.7 percent to the GDP; Tanzania contributed 10.7 percent and 8 percent in Kenya and 15 percent in Rwanda.
“The low funding to the sector could be one of the reasons commercial banks are not encouraged to lend to it.” Julius Mukunda, the Executive Director of Civil Society Budget Advocacy Group commented on the level of funding by the government of Uganda.
Mukunda added saying that the government has been slow in areas like tourism infrastructure in Uganda.
“The financing gap issue is being tackled with various initiatives including reviewing legislations. These include the amendment of the Tourism Act which will enable private investments in more areas in the sector like wildlife conservation, which he says will help where the government has fallen short.” Basil Ajer the Director for Tourism at the Ministry of Tourism, Wildlife and Antiquities said.
When COVID-19 broke out in 2020, the tourism sector lost 90 percent of its business where half of the revenues to tourist areas were from domestic tourism and only 150,000 visitors were recorded because international visitors were almost locked down which affected Meetings, Incentives, Conference and Exhibitions(MICE).
Pandemic not only affected the travellers but also the hotel business where rendered redundant and more than 400,000 jobs were lost however there is some improvement in the sector.” there are international conferences due in Uganda starting next year and that this will call for a lot of investment in facilities, hence the need for banks to increase financing to the sector.” Daudi Migereko, the Chairman of the Uganda Tourism Board says for example.
“A need to extend hosting facilities to the countryside, especially in the new cities being established, which will increase the benefits of the tourism sector to the country.” He added.
