Last week Finance and Economic Development Minister Patrick Chinamasa officiated at an occasion to mark the change in the business model of African Sun.
Over the years the hotel group has reported a series of losses in excess of $20 million due to a poor business model. The new business model involves the entry of South African Legacy Group of Hotels under a management contract for five of African Sun Hotels.
Now for those who might not be in the know, the Legacy Hotel chain, chaired by Bart Dorrestein, is one of the leading hotels in South Africa, famous for its imposing Michelangelo Towers conveniently located in the Sandton Mall.
Zimbabwean companies have for the better part of the past two decades faced immense challenges mainly as a result of the local business environment, but also the global recession.
African Sun has been no exception to that as the hospitality industry as a whole has suffered from an economic embargo which has seen tourist arrivals and room occupancies drop significantly.
However, even with such a battered past, which at one time included a failed attempt to grow 12 000 rooms and $1 billion market cap by 2012 and the erosion of shareholder value after a very expensive rights issue, Afrisun under new shareholders has managed to attract a reputable hotel chain.
The benefits that will be brought into the country by the coming in of Legacy are immense. The hotel group will bring synergies to Afrisun, new skills, experiences and a new business culture.
By virtue of association, people will feel some sense of familiarity as Legacy is a brand that is known particularly in South Africa. To a certain extent, this will boost investor confidence and raise the bar for local competition, in the process improving service delivery. This will overall sell the Zimbabwean story better because a new benchmark would have been set.
In the words of Mr Dorrestein, Zimbabwe has potential to become one of the world’s best tourist destinations. He said months of negotiations and interaction with Government convinced the global brand that Zimbabwe was on the road to recovery.
We cannot agree more.
Zimbabwe is ripe for investment. What is needed is for the country to identify its low hanging fruits and to clearly articulate its investment policy. Recently, Reserve Bank of Zimbabwe Governor Dr John Mangudya said it was high time the country identified low hanging fruits in well-managed productive sectors such as mining and tourism.
The move by the Legacy Group brings to the fore two low hanging fruits.
Firstly, tourism is a low hanging fruit as the country has abundant natural beauty and infrastructure which only requires minimal maintenance and upgrade. Zimbabwe can easily reach Minister Walter Mzembi’s $5 billion industry target by 2020.
The second low hanging fruit for the country is that we need not look much further for investment than our neighbours down south. There has been much talk about re-engagement with the West and promotion of the Look East policy that we have often-times overlooked the South African investor.
Yet some of the South African companies such as PPC and Pick n Pay have seen opportunities in Zimbabwe even when all risk analysis templates advised against it.
With the weakening of the South African rand and most African currencies, Zimbabwe, which is dollarised, is more attractive to investors and tourists alike from across the Limpopo.
We believe Zimbabwe could benefit immensely if it paid more attention to African companies in search of regional expansion rather than seeking to court big European multi-national companies who almost always are just happy to keep an office open and immediately close shop once they perceive so-called “economic and political troubles”.