Tourism, once one of Zimbabwe’s highest foreign currency earners which was threatening to take over from tobacco, could be on its way to recovery following almost five years in the doldrums.
Fast food giant, Innscor Africa, whose adventure company Shearwater provides various forms of entertainment including bungee -jumping to tourists especially at the Victoria Falls, says arrival numbers to Shearwater increased by 32 percent during the year ending June compared to the previous year.
“The group is hopeful that Zimbabwe will regain its status as an attractive tourism destination and will see this operation once again contributing significantly to group results,” Innscor says in its annual report.
Available statistics show that though numbers are still down, at least earnings are going up. Zimbabwe earned US$201.6 million from tourism in 1999 but this plunged to a mere US$44.1 million in 2003.
Although the number of arrivals plunged from 613 030 in 2003 to 348 946 in 2004, tourism earned US$152 million in 2004. Preliminary figures for 2005 show that 452 328 tourists came to Zimbabwe in the first quarter.
Tourism to Zimbabwe has been on the decline since the government embarked on its controversial land reform programme in 2000. The programme has just been sealed with the passing of the Constitutional Amendment Act Number 17 that bars anyone from taking the government to court when it acquires land.
The European Union and the United States slapped Zimbabwe with what they termed “smart sanctions” and also issued travel warnings discouraging their citizens from visiting Zimbabwe which hosts the Victoria Falls, one of the seven wonders of the world.
Zimbabwe has initiated extensive promotion programmes including the “Come to Victoria Falls” video which was screened in South Africa and the Miss World Tourism pageant which it hosted. It is not yet clear whether the campaign has paid off or not.
Innscor Africa, which now has operations in 12 African countries including the continent’s most populous country Nigeria, says its overall sales grew by 278 percent from $574.6 billion to $2.2 trillion this year. Net profit more than trebled from $115.4 billion to $387 billion.
The group is divided into four operating divisions: agro-processing, manufacturing, distribution and retail.
The agro-processing sector which includes the country’s largest pork processor, Colcom, crocodile ranching firm Nilocitus and adventure company Shearwater, recorded a 592 percent growth largely because of Colcom’s results.
Colcom, which is also a listed company, saw its sales increase from $53.3 billion to $194.7 billion while net profit rocketed from $8.5 billion to $80.1 billion. The company’s financial year ended in December but it has now been realigned to June to fall in line with that of its parent company. Innscor has a 76.6 percent stake in Colcom.
There was a total take-off of 35 650 skins in its crocodile ranching. International prices for the skins continued to firm and there was a high demand for the company’s high quality grades.
The company had a carryover of 3 500 crocodiles and expects to cull 53 300 crocodiles this coming year with the eventual capacity reaching 60 000 crocodiles a year.
The manufacturing sector which includes, bakeries trading as Bakers Inn, fridge makers Capri, Iris Biscuits, Zapnax and National Foods recorded a 188 percent growth in sales with profit before tax shooting up by 318 percent.
The company says though there was improved efficiency and plant utilisation at the bakeries, profitability was affected by high input costs and price controls on bread.
There was exceptional volume growth at Capri and the company is now looking at manufacturing televisions for the local market.
Iris Biscuits and Zapnax both needed additional capacity to meet demand for their products. Management was pursuing opportunities to expand the snack business for both the local and regional markets.
National Foods faced a shortage of raw materials and price controls for its products but it still contributed satisfactorily to the group profit. Its massive underutlisied capacity, however, presented it with a fantastic potential for future growth.
The distribution division had a sales growth of 283 percent while profit before tax increased by 266 percent. Innscor Distribution is now one of the leading distributors of both international and local brands. It has just acquired distributorship of biscuits, cough mixture and some Unilever products.
The distributorships in Zambia and Malawi continue to increase their market share and there is still potential for growth in the two countries.
Zimbabwe Photo Marketing continued to maintain its market share in both photographic consumer and health imaging products through the Kodak brand.
The Spar brand continued to expand. There are now 51 Spar stores and 17 Savemor stores. An additional 8 Spar stores and 48 Savemor stores will come on stream this year. The company is also pursuing Spar’s penetration into Zambia.
TV Sales and Hire had an exceptional year with real volume growth through its retail sales and wholesaling operation. It has reintroduced limited credit facilities because prices of most of its products have skyrocketed because of spiralling inflation.
Sales in the retail division, which mostly comprises the fast food outlets, were up by 304 percent but profit before tax increased by only 166 percent. The company says growth and profitability were subdued by two factors: lack of profitability in bread retailing due to price controls and above inflation increases in human resources and other costs.
It says, however, fast food stores and retail operations in Zimbabwe continued to enjoy customer loyalty despite declining disposable incomes.
Growth in the retail sector occurred mainly in the region with three new markets opening in Malawi, Senegal and one of Africa’s best potential markets, Nigeria.
The group had a total of 325 counters in 12 countries at the end of the year, with 264 being operated by Innscor and 61 being franchised.
Ratings company Wright Quality Rating says Innscor outshown its major competitors from South Africa- Spur and King Consolidated Holdings. Spur grew by 16 percent in 2004 while King Consolidated shrunk by 0.9 percent. Innscor grew by a staggering 401.1 percent.
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