WeeklySA_AdminUnlock: Key policies including improved water supplies could unlock the potential for sustainable economic growth
By Isaac Moledi
African travel and tourism industry could boost the continent’s economy by R3, 192 trillion and create more than 18 million new jobs over the next decade.
This potential growth is, according to a new report, dependent on three key policies to unlock annualised growth of 6.5%, reaching a contribution of more than R6, 650 trillion over the same period.
The new report, ‘Unlocking Opportunities for Travel & Tourism Growth in Africa’, was released earlier this week at the World Travel & Tourism Council (WTTC) Global Summit, in collaboration with VFS Global, the world’s largest outsourcing and technology services specialist for governments and diplomatic missions.
The report, which includes a policy package focused on improving Africa’s growth based on air infrastructure, visa facilitation and tourism marketing, highlights the opportunities for the African travel and tourism sector. These opportunities include strategic investments’ improved connectivity, streamlined visa processes, reducing carbon footprint through low-carbon energy adoption and enhancing water efficiency.
These key policies, according to the report, could unlock the potential for sustainable growth, job creation and economic development in the African Travel & Tourism sector.
The report highlights travel and tourism as a powerhouse sector in Africa, with a contribution of more than R3, 534 trillion to the region’s economy in 2019, welcoming 84 million international travellers. The sector is also essential for employment, providing livelihoods to 25 million people, equating to 5.6% of all the jobs in the region.
According to the report, travel and tourism in Africa has expanded significantly since the new millennium. In 2022, it accounted for nearly 6% of the region’s economy and supported 22 million jobs. This report brings a much-needed focus on Africa’s Travel & Tourism and underscores its role in promoting economic, environmental, and social progress across the continent.
Speaking during the launch of the report at the Global Summit on Monday, Julia Simpson, WTTC President and CEO was quoted in a statement as saying: “Africa’s Travel & Tourism sector has witnessed an extraordinary transformation. In just two decades, it has more than doubled in value, significantly contributing to the continent’s economy.Growth potential for Travel & Tourism in Africa is massive. It has already more than doubled since 2000, and with the right policies could unlock an additional R3, 192 trillion in the next decade’’.
According to Simpson, Africa needs simplified visa processes, better air connectivity within the continent and marketing campaigns to highlight the wealth of destinations in this breathtaking continent.
Zubin Karkaria, Founder and CEO of VFS Global, was also quoted in a statement: “We are excited to partner with WTTC to uncover the extensive opportunities that Travel & Tourism offers in Africa.
“Having established our presence in Africa since 2005 we are today the trusted partner of 38 governments who we serve across 55 cities in 35 countries in Africa. VFS Global recognises the tremendous potential of Africa and remains deeply committed to supporting the continuing development of travel and tourism to and from the continent.
“This report not only highlights the diverse prospects for economic growth, sustainable tourism, and cross-cultural collaboration but also provides valuable insights for governments to formulate policies and offers businesses a well-defined roadmap for expansion in this thriving market.”
This report delves into the historical journey of the Travel & Tourism sector in Africa. It is a story of facing challenges head-on, from the Global Financial Crisis in 2008 to the setbacks caused by disease outbreaks and political instability.
Despite all of these challenges, the Travel & Tourism sector is on a path to recovery. According to the global body, 2023 is projected to be a year of near-full recovery, only 1.9% shy of 2019 levels, as well as the creation of nearLY 1,8 million jobs.
WORD OF CAUTION TO CONSUMERS USING INSURANCE POLICIES AS LOAN SURETY
Debt: South Africa leads the world in loan usage with 86 percentage of its population being heavily indebted
By Isaac Moledi
Is using a life insurance policy as collateral for a loan the right way to go? This method has been a subject of interest in financial circles. In South Africa, you can use your life insurance policy as surety for a loan, tapping into its cash value. However, eligibility varies and loan terms depend on the policy’s value and the lender’s policies, according to renowned financial advisor, Michelle Austin, who advises that interest rates and coverage impact are factors to consider.
Austin, who is also Director of Keegor Group of Companies, calls for thorough research and careful planning before using this option. “In a financial landscape that demands innovative solutions, South Africans are discovering a hidden opportunity within their life insurance policies. In South Africa, individuals have the opportunity to leverage their life insurance policies as collateral for loans, including home loans.”
Austin is an esteemed luminary in the business world and boasts a remarkable array of accolades, inclu===ding the coveted SEIFSA 2022 Businesswoman of the Year Award.
The cession of a life insurance policy offers a unique avenue for securing financing while tapping into the value of your life cover.
This avenue is not without its complexities and considerations. It is therefore essential to thoroughly assess the loan terms, interest rates and repayment plan to ensure they are in alignment with your individual financial goals.
A report from the World Bank, part of the Global Findex database, mentions a notable statistic emerging, indicating that South Africa leads the world in loan usage, with a substantial 86% of its population having taken out loans. Interestingly, these loans serve diverse purposes: 9.2% for home purchases, 7.5% for agriculture or business ventures, 18% for education and another 18% for healthcare expenses.
“This statistic underscores the significance of insurance as a financial safety net for many South Africans. Many life insurance policies, such as whole life and endowment policies, accumulate a cash value over time.
This cash value can be utilised as collateral to secure loans. Lenders in South Africa accept these policies as a form of surety, making it possible for policyholders to access funds when they need them most. This unlocks financial opportunities that may have otherwise remained dormant within the policy.”
While there may be advantages to taking out life insurance loans, Austin says it is essential to weigh potential drawbacks when borrowing money from your life insurance policy. Here are some points to be cognisant of before taking out life insurance loans:
- Policy Eligibility
Not all life insurance policies can be ceded as collateral for loans. Most policies, such as term life insurance or whole life insurance, are eligible, but you need to check your specific policy’s terms and conditions or talk to your broker.
- Cash Value.
Your life insurance policy must have accrued a substantial cash value to be used as collateral. This value grows over time as premiums are paid, so it is essential to be aware of your policy’s cash value.
- Loan Amount and Terms
The amount you can borrow against your life insurance policy and the terms of the loan will depend on the policy’s cash value and the lender’s policies. Typically, you can borrow a percentage of the policy’s cash value.
- Interest rates and fees.
Life insurance loans often come with interest rates, varying and depending on the policy and isurer.
Accumulating interest can result in a higher repayment amount over time, impacting the overall value of your policy. Carefully review the terms and conditions to understand the total cost of borrowing.
- Impact on Coverage.
When you cede a life policy as collateral, it may affect the coverage amount and benefits paid to your beneficiaries if you pass away before repaying the loan. Make sure to understand how this will impact your policy and your family’s financial security.
- Loan Repayment Plan.
Establish a clear repayment plan that fits within your budget. Ensure you can comfortably meet your monthly instalments.
- Default Consequences.
If you fail to repay the loan, the lender can claim the proceeds from your life insurance policy to cover the outstanding debt. This can reduce or even eliminate the death benefit for your beneficiaries.
“While tapping into your life cover cash value, it comes with responsibilities. Borrowers must be aware that the loan can impact the death benefit paid to beneficiaries in the event of the policyholder’s demise before the loan is repaid. It is vital to understand the terms of the loan, compare offers from different lenders, and have a clear repayment strategy in place.”
Before embarking on this financial journey, individuals are encouraged to conduct thorough research, consult with professionals and carefully weigh the risks and benefits.”
