‘Strong Kwacha’ hits tourism operators’ earnings, laments ZATO president Dr. Patson Chifumbe
Zambian Association of Indigenous Tour Operators (ZAITO) president Dr. Patson Chifumbe.
By Chali Mulenga in Livingstone, Southern Province
The appreciation of the Zambian Kwacha against major foreign currencies is negatively affecting the tourism sector, with operators facing reduced earnings and higher operational costs, the Zambian Association of Indigenous Tour Operators (ZATO) has said.
ZATO president Dr. Patson Chifumbe said the strengthening of the kwacha is eroding revenue for tourism businesses that largely earn in foreign currency but incur significant costs in imported goods and services.
Dr. Chifumbe explained that most tourism establishments depend on imported inputs such as equipment, consumables and specialised services, which require payments in United States dollars.
“It surely makes the earnings lower by exchange rates. Tourism properties mostly rely on imported goods which need the dollars to make the acquisitions,” Dr. Chifumbe said.
Dr. Chifumbe noted that the key challenge for operators is converting charges into kwacha while maintaining profitability amid fluctuating exchange rates.
“The key is to convert the charges to kwacha. A low dollar rate makes the acquisition expensive. The instability of the dollar would actually make it more challenging to stabilise the rates in kwacha,” Dr. Chifumbe said.
Dr. Chifumbe acknowledged that the current appreciation of the kwacha is having a negative impact on the tourism industry, as it reduces the value of foreign currency earnings when converted into local currency.
“Yes it does, but we may have to recalculate our rates to bring them to operational equilibrium,” Dr. Chifumbe said.
Dr. Chifumbe said while the stronger kwacha may benefit consumers in some sectors, tourism operators are being forced to review pricing structures to sustain operations and remain competitive in the regional market.
Dr. Chifumbe warned that continued currency volatility could make it difficult for operators to maintain stable pricing and plan long-term investments in the sector.
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