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FDI and Tourism: the Development Dimension East and Southern Africa UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT FDI and Tourism: The development dimension East and Southern Africa UNITED NATIONS New York and Geneva, 2008 ii FDI and Tourism: The Development Dimension Note UNCTAD serves as the focal point within the United Nations Secretariat for all matters related to foreign direct investment, as part of its work on trade, finance and development. Through its Division on Investment and Enterprise (DIAE), UNCTAD also assists developing countries to attract and benefit from FDI and to build their productive capacities and international competitiveness. The emphasis is on an integrated policy approach to investment, technological capacity building and enterprise development. The term “country” as used in this study also refers, as appropriate, to territories or areas; the designations employed and the presentation of the material do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. In addition, the designations of country groups are intended solely for statistical or analytical convenience and do not necessarily express a judgement about the stage of development reached by a particular country or area in the development process. The reference to a company and its activities should not be construed as an endorsement by UNCTAD of the company or its activities. The boundaries and names shown and designations used on the maps presented in this publication do not imply official endorsement or acceptance by the United Nations. The following symbols have been used in the tables: Two dots (..) indicate that data are not available or are not separately reported. Rows in tables have been omitted in those cases where no data are available for any of the elements in the row. A dash (-) indicates that the item is equal to zero or its value is negligible. A blank in a table indicates that the item is not applicable, unless otherwise indicated. A slash (/) between dates representing years, e.g., 1994/95, indicates a financial year. Use of a hyphen (-) between dates representing years, e.g., 1994-1995, signifies the full period involved, including the beginning and end years. Reference to “dollars” ($) means United States dollars, unless otherwise indicated. Annual rates of growth or change, unless otherwise stated, refer to annual compound rates. Details and percentages in tables do not necessarily add to totals because of rounding. The material contained in this study may be freely quoted with appropriate acknowledgement. UNCTAD/DIAE/IA/2008/6 UNITED NATIONS PUBLICATION Sales No. E.08.II.D.28 ISBN 978-92-1-112761-4 ISSN 1818-1465 Copyright © United Nations, 2008 All rights reserved UNCTAD Current Studies on FDI and Development Part A: East and Southern Africa iii Acknowledgements This report is part of the UNCTAD research and policy analysis project, FDI in Tourism: the Development Dimension. The East and Southern African phase of the project was made possible with generous financial support from the International Development Research Centre (IDRC), Canada. This report has been prepared by Diana Barrowclough and Hafiz Mirza with an overall guidance by Anne Miroux. It is based on desk research and fieldwork lead by Ramesh Durbarry (Mauritius), Happy Fidzani (Botswana), Moses Ikiara (Kenya), Josephat Kweka (United Republic of Tanzania) and Francis Nsonzi (Uganda). Stephen Gelb and Kate Rivett- Carnac (South Africa) also contributed to an early phase of the research. We also acknowledge with thanks the intellectual support and encouragement given by Basil Jones and Susan Joekes (IDRC) and Mondher Sahli (University of Victoria); editing by Praveen Bhalla, final research assistance by Rosie Pinnington and desktop publishing by Teresita Ventura. Finally, UNCTAD thanks the government officials, tourism practitioners, investors, and civil society groups and individuals who helped at various stages of the project, giving their time and expertise generously, and agreeing to be interviewed. Drafts of country studies and preliminary findings have been reviewed and disseminated at national and international workshops, and we also thank participants for their comments. Current Studies on FDI and Development The UNCTAD Series on Current Studies on FDI and Development was launched in 2005. It aims to contribute to a better understanding of transnational corporations and their activities, and especially their impact on development. The series also aims at stimulating discussion and further research. Titles in the series include: 1. UNCTAD (2005), TNCs and the removal of textiles and clothing quotas. (New York and Geneva: United Nations). 2. UNCTAD (2006), Measuring restrictions on FDI in services and transition economies (New York and Geneva: United Nations). 3. UNCTAD (2007), The universe of the largest transnational corporations (New York and Geneva: United Nations). 4. UNCTAD (2007), FDI and tourism: the development dimension. (New York and Geneva: United Nations). 5. UNCTAD (2007), Elimination of TRIMS: The experience of selected developing countries (New York and Geneva: United Nations). 6. UNCTAD (2008,), FDI and tourism:the development dimension –East and Southern Africa (New York and Geneva: United Nations). UNCTAD Current Studies on FDI and Development Contents Part A: FDI and Tourism in East and Southern Africa I. FDI and Tourism in East and Southern Africa: an analytical overview.................. 3 Executive summary................................................................................................................. 3 A. Introduction.................................................................................................................... 7 B. FDI patterns and trends................................................................................................ 9 C. Development impact of tourism-related FDI ............................................................ 12 1. Contribution to earnings .................................................................................................. 13 2. Employment and incomes................................................................................................ 14 3. Technology and skills ...................................................................................................... 15 4. Linkages to the local economy ........................................................................................ 16 5. Social impacts: implications for poverty alleviation ....................................................... 18 6. Environmental impacts .................................................................................................... 21 7. Boosting tourism through regional integration................................................................ 22 D. Institutional and policy framework.............................................................................24 1. Investment and tourism policy......................................................................................... 24 2. Investment regulations..................................................................................................... 25 3. Legal and institutional framework related to tourism FDI .............................................. 27 4. International arrangements .............................................................................................. 29 E. Conclusions and recommendations............................................................................ 31 F. References ............................................................................................................................... 35 Annex ............................................................................................................................... 37 Boxes 1. The UNCTAD project, FDI in Tourism....................................................................................... 5 2. What is – and is not – foreign direct investment?........................................................................ 8 3. How investors’ procurement standards have helped development of local suppliers................ 19 4. Support for cultural tourism in northern Tanzania..................................................................... 20 5. Botswana: Community initiatives in the tourism sector ............................................................ 20 6. Incentives for local and foreign investors in Tanzania .............................................................. 29 Figures 1. FDI inflows as a percentage of GDP, 2000 and 2004.................................................................. 9 2(a). Share of tourism receipts in total export earning, selected countries, 2005............................... 13 2(b). Share of tourism in total GDP, selected countries, 2005 ........................................................... 13 vi FDI and Tourism: The Development Dimension Part B: County Case Studies II. Botswana country case study .................................................................. 43 Executive summary ............................................................................................................................ 43 A. Introduction.............................................................................................................................. 44 1. Background.....................................................................................................................
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