The European Union (EU) has provided €6 million (Shs 25.8bn) in grants to help resuscitate private businesses in the tourism sector that have taken a major hit following travel restrictions that stopped foreign tourists from coming in.
Tourism is Uganda’s biggest foreign revenue earner drawn from foreigners who visit the country to see the diverse attractions including gorillas, other wildlife, geographical features and beautiful landscapes.
Uganda has more than half of the world’s total mountain gorilla population.
But the country will lose $1.6 billion a year in earnings from tourism as visitors stay away due to the impact of the coronavirus, President Yoweri Museveni said recently.
The hospitality sub sector - hotels, lodges and other accommodation facilities in Kampala and national parks - is the most affected by Covid. Some hotels have had to lay off their staff due to lack of business.
The Uganda Hotel Owners Association (UHOA) chief executive, Jean Byamugisha says the industry is losing at least $25m monthly in revenue due to Covid.
Now, the European Union delegation in Uganda says it’s providing Uganda with €6 million ($ 7m) in grants.
EU ambassadors are assessing the impact of COVID-19 on the country’s tourism sector. The EU recently gave Uganda Euro six million (25.2 billion Shillings) in support of the private tourism sector.
“EU and Uganda agreed that Uganda Development Bank (UDB) deliver a special financial product (loans with attached grants) to the tourism sector in Uganda to allow the running of companies affected by COVID19,” the EU delegation tweeted on Saturday.
“Given the current cash flow constraints in the sector due to the dramatic reduction of visitors, loans with attached grants will be provided to resuscitate the tourism sector, allow companies to keep operating and sustain existing jobs,” the statement adds.
This week, a delegation of EU Ambassadors was in Kasese where they met lodge owners & tourism operators to discuss the impact of COVID19 on the tourism sector in Uganda.
The ambassadors were assessing the impact of COVID-19 on the country’s tourism sector.
The Shs 25.2bn will be channelled through Uganda Development Bank (UDB), where actors can access it at a discounted rate of 8 percent.
UHOA’s Jean Byamugisha told SoftPower News that: “The 6M Euros will help with the operational costs of the hotels during the COVID 19 period. Hotels still have to pay overhead costs like rent, salaries, utilities etc despite having no revenue”.
She said that some businesses in tourism are likely not to survive the effects of COVID-19 if no stimulus is pumped into the sector which brings in USD 1.6bn annually with about 1.8 million tourists.
Statistics by Uganda Tourism Board (UTB) show that out of the 1.8 million tourists, 1.3 million are foreigners while 500,000 are local tourists.
Currently, tourism in Uganda contributes nearly 8% to GDP and employs over 667,000 Ugandans which is over 6.7% of Uganda’s total employment.
Byamugisha says government of Uganda is yet to give a stimulus to the tourism sector despite President Museveni’s repeated acknowledgement that tourism has been the most hit sector of the economy.
“UHOA has written and presented a paper to government for a stimulus package but have not yet received a concrete response apart from the E.U. /UDB package,” she said.
Asked how businesses have been coping since they primarily depend on foreign visitors, Byamugisha said the domestic market is bridging this gap.
“Hotels have reduced their rates to encourage more domestic tourists to visit. However the domestic market is not the silver bullet that we hoped since the entire country is suffering as well”.