The State Minister for Tourism, Martin Mugarra Bahinduka, has asked Ugandan tour operators and hoteliers to focus on capitalising the domestic market to sustain the sector, as the global economy slowly recovers. 

Bahinduka said it is counterproductive for sector players to focus on foreign guests, as hotel rooms and other facilities gather dust, yet the potential in local guests can be fully exploited to sustain the sector.  

He said since Uganda has a young population and a rising middle income, sector players should design packages that attract local tourists, because only then can sustainability of the sector be guaranteed, even in times of crises. 

“Our young population loves to have fun because they are young, and with some incentives, they can sustain the sector going forward,” he said. He was speaking during the launch of the second call of application for the Tourism Development Intervention Fund (TDIF), a grant attached to a loan, to enable the tourism sector soar through the hardship of COVID-19. 

Before the pandemic outbreak, tourism and hospitality was considered the biggest contributor to Uganda’s Gross Domestic Product (GDP) accounting for more than 7.75% and approximately 6.7% of total national employment. 

But as guests stayed away in compliance to the global lockdowns instituted as a measure to fight the spread of the pandemic, the sector performance greatly reclined to the end that hotel booking slid to 2% at the time, and recovery has been slow since then. 

Bahinduka said the local population can create a critical mass if given proper awareness and incentives, and charged the hotels and other hospitality players to respond accordingly. 

The TDIF seeks to stimulate businesses operating in the tourism sector, which has been heavily impacted by COVID-19 by providing a soft loan with flexible terms aligned to the current needs of the sector. 

It is intended to give operators access to working capital to fast track recovery post the Covid-19 devastating effects and support initiatives to become more environment friendly. 

The total facility is over Sh62 billion made up of Sh40 billion ring-fenced funds from UDB and complemented by a grant of Sh21.8 billion from the European Union. Under this facility, only customers that qualify for the loan will be eligible for the grant. 

UDB's Patricia Ojangole said the beneficiaries must be members of the hotel industry. Photo by Edward Kayiwa

According to Uganda Development Bank (UDB) executive director, Patricia Ojangole, the call to access the facility was first made in 2020, in which 90 applications were received, out of which 44 were successful. 

Ojangole said more applications are expected in the second call, now that the economy is in a much better place than it was in 2020. 

“The beneficiaries must be members of the hotel industry registered under AUTO. The money must also not be for expansion of infrastructure or refinancing loans. Maximum amount one can get is sh1b.” 

Carolyne Adriaensen, head of corporation, EU said the grant component in the facility is meant to bring down the interest on the loans down and make them affordable. 

She said the facility was developed in the spirit of corporation between the EU, Uganda government, UDB and other partners to ensure it benefits the beneficiaries. 

“Today, activity in the sector is slowly returning and the new call seeks to help the sector players recover. The second call has been designed to in close consultation with stakeholders,” she said.