Harare — The tourism industry has immense potential to contribute significantly to economic turnaround but has been hamstrung by a variety of reasons.

A few years ago the sector was the third largest contributor in terms of foreign currency earnings and was threatening to overtake tobacco for the top post.

Although improvements have been noted over the past year or so, the sector still has some way to go before it assumes its rightful position in the economy. What had emerged of late as its greatest undoing were the price controls that made hoteliers and other operators in the sector less viable. While it was well and good to offer cheap services through price controls, issues of quality were compromised. We all made noise at some point and quickly summoned NIPC when prices in the sector shot up but at the end we would all sober up and assess the effects of the price controls on viability, except in cases where the price jumps were unrealistic.

Hence the move by the National Incomes and Pricing Commission this week to decontrol prices in the tourism industry should usher in a new era in terms of viability.

Price controls, although necessary in some instances, particularly where tendencies to profiteer become evident, often have the unintended effect of choking businesses. Of course industry and NIPC have never been the best of buddies but the concerns registered by operators in the sector pertaining to viable pricing made sense, while on the other hand, NIPC had its genuine concerns and wanted to safeguard customers, albeit at a cost.

Standards in most hotels and other tourist facilities had really gone down and we hope viable pricing will see an improvement in this regard. On the supply side, companies that had withdrawn some of their services to visitors will be expected to resuscitate them now that they will be earning real profit for doing so.

An improved product is expected to result in increased demand, a factor that should see the tourism sector picking up significantly.

Of course it is one thing to have hotels and other facilities and another to have them functioning well. The quality of food, drink, linen and the general upkeep of tourist facilities had left a lot to be desired. Operators were bemoaning low prices and the shortage of foreign currency to import some of their raw materials.

Regulated pricing had compounded challenges associated with declining aggregate demand in the sector. Owing to the controlled prices, the tourism industry had somewhat been subsidising foreign visitors many of whom were working in collusion with some operators to change their foreign currency on the parallel market and then pay a small portion of that for hotel bills and other services using local currency.

But the decontrol will allow fair and accurate pricing for the better of the sector. Although naturally the new prices might initially squeeze out the local holiday maker, the supply and demand factor will see price stabilisation in the medium term while operators will have to come up with packages to lure the domestic traveller.

The robinhood type of business will also need to be applied where you rob the rich to pay the poor. Supply bottlenecks should also be dealt with now. Many operators were selling cheap but did not have enough resources to source their requirements. The downstream effects of the price controls that saw production levels of some products declining due to reduced demand should also start showing signs of recovery.

Normal business principles should now apply. Barring any other effects, the remainder of the year should bring sunshine to the sector, a factor that will contribute significantly to economic regeneration.

The Ministry of Finance and monetary authorities have identified tourism as one of the solid pillars on which the economy can learn. It's high time the sector performed to such expectations.

Market forces can also be allowed to determine prices in other sectors of the economy, with safety nets in place for the vulnerable groups.

This will encourage self-regulation as the economy seeks to make more goods available on the market at affordable prices. Cases of profiteering can always be dealt with separately.

Special agro-cheques

Yesterday we carried a story on some shop owners who are reaping off customers by charging commission on the newly introduced special agro-cheques.

It is most unfortunate that someone is cheated of their hard-earned $10 billion charged as commission on a $50 billion cheque.

Could these shops be doing it out of ignorance on the authenticity of the new cheques or are they playing on the ignorance and desperation of farmers and other holders?

In some cases a holder of $25 billion or so would be asked to use up his money in the shop because he would not be given any change. Others are only accepting the $5 billion and $25 billion denominations leaving holders of $50 billion cheques stranded. This is unfair to the customer who may need the change for other uses or is being forced to buy things that he may not need at that particular time. Our investigations have shown that the desperate customer, who does not seem well-appraised of his rights in most instances, has had to play to the shop manager's tune.

This is an issue that the Reserve Bank of Zimbabwe needs to look into seriously. The agro-cheques, as clearly stated in statements issued by the central bank, are meant to make transactions much easier and not more difficult as is the case presently.

Assurances have been given that these will be treated as normal cash hence the shops need not panic or cheat the farmer or other users of their hard-earned money.

An alternative would be to deposit the cheques into one's account and then withdraw smaller amounts as the need arises but many bemoan the $5 billion withdrawal limit which has since been eroded by inflation.

We hope the situation is arrested sooner rather than later for the farmers and general public to start enjoying the expected convenience brought about by these special cheques.