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Africa’s Cash Cow Crippled by COVID-19

The collapse of the travel and tourism industry – from airlines to safari guides – could be catastrophic for African economies. The World Travel and Tourism Council (WTTC), an industry association, estimates that tourism and its associated activities generate about 9% of the continent’s income. The sector employs 10m Africans directly, and perhaps 14m more jobs are created by its knock-on impacts. Tourism is also a major foreign exchange earner. It brings in more dollars than coffee sales in Uganda. In Ethiopia tourist receipts account for nearly half of total exports. Cyril Ramaphosa, the South African president, has called tourism the “new gold”. Businesses of all sizes have plunged into survival mode. With no revenues coming in, their future depends on how much they can reduce their costs, how much cash they hold, and whether they can access finance. An empty hotel does not need to pay for food or room cleaning, says Hersi of the Kenya Tourism Federation. But it still has to pay salaries and fixed costs such as maintenance and electricity bills, while servicing bank loans at double-digit interest rates. Africa’s airlines also face tough choices. Many of them were already in bad shape before the pandemic. As airports shut down, air traffic has been reduced to cargo transport and occasional repatriation flights. The number of scheduled seats on flights to and from African countries fell by 70% in the four weeks to 6 April, according to OAG, which collects flight data.