Zimbabwe Stock Exchange-listed hotelier, Rainbow Tourism Group (RTG), has pulled out of Mozambique, citing a worsening political situation and cuts in spending by the government of that country.
Mozambique is in the throes of a civil conflict between the government and the opposition Mozambique National Resistance (Renamo) guerrillas, that has seen thousands of people, notably in Tete province, fleeing into Malawi since October last year, reminiscent of the previous civil war which started in 1975 and ended in 1992.
The southern African country, one of the world’s poorest, is also caught up in a debt scandal involving more than $2 billion in secret loans that came to light this year, leading to the International Monetary Fund suspending lending.
Mozambique’s currency was hit hard by the debt crisis and aid suspension, with the Metical losing nearly 40 percent against the dollar since January and economic growth slowing to below 4 percent.
RTG chief executive, Tendai Madziwanyika, said that the developments forced the group to exit the country as part of a strategy to wean off loss making operations.
The hotelier, which now operates six hotels from nine a few years back, would refocus on the domestic market.
Madziwanyika, who also closed the Beitbridge Rainbow Hotel in May, said RTG would close its Mozambique operations at the end of this month. The group was only six years into a 10-year agreement to run the hotel under a management contract.
“By September 30 we will be out of Mozambique,” the RTG CEO said. “The political disturbances are quite serious.”
“We have also been affected by falling global commodity prices, which have affected spending from the mining industry. The (Mozambique) government has also cut spending, which affects us directly because this is a very large conferencing venue. Aid has also been cut. The Mozambican currency has also been falling against the United States dollar,” said Madziwanyika.
He said the effects of a falling Mozambican currency was felt when the group translated revenues from the Mozambican operation into the greenback.
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