Africa's tourism potential Trends, drivers, opportunities, and strategies Landry Signé In collaboration with Chelsea Johnson DECEMBER 2018 Prof. Landry Signé, Ph.D. David M. Rubenstein Fellow, Africa Growth Initiative, Brookings Institution Distinguished Fellow, Center for African Studies, Stanford University Andrew Carnegie Fellow, Carnegie Corporation of New York Chairman, The Global Network for Africa's Prosperity In collaboration with Chelsea Johnson, Fellow at the London School of Economics and Political Science Acknowledgements The author would like to express his sincere appreciation to the people who have made this work possible or provided improving feedback, including anonymous reviewers. Special thanks to Dr. Brahima S. Coulibaly and Dr. Eyerusalem Siba for their insightful comments. The author is also grateful to Merrell Tuck- Primdahl, Christina Golubski, Joshua Miller, Molli Ferrarello, David Batcheck, Dhruv Gandhi, Nirav Patel, Mariama Sow, Amy Copley, Christina Constantine, Zezhou Cai, Genevieve Jesse, and Wilfried Youmbi. The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views of the Institution, its management, or its other scholars. This report was made possible in part by a grant from the Carnegie Corporation of New York (Andrew Carnegie fellowship) and the David M. Rubenstein fellowship at the Brookings Institution. The statements made and views expressed are solely the responsibility of the author. Brookings recognizes that the value it provides is in its absolute commitment to quality, independence, and impact. Activities supported by its donors reflect this commitment and the analysis and recommendations are not determined or influenced by any donation. I Africa's tourism potential: Trends, drivers, opportunities, and strategies Table of Contents Executive Summary 1 1. Background facts and trends 2 2. Importance of the sector to Africa’s growth 6 3. Building upon the key drivers of tourism growth in Africa 10 4. Key non-African players 14 5. Opportunities presented by the tourism industry 16 6. Challenges and risks to the development of tourism in Africa 21 7. Business strategies 24 8. Looking to the future 27 References 29 Africa's tourism potential: Trends, drivers, opportunities, and strategies II Executive Summary The tourism industry is playing an increasingly development among priority sector strategies of important role in the global economy, contributing AUDA across Africa and aims to make Africa the 5 percent of gross domestic product (GDP), 30 destination of the 21st century. The 15 members of percent of service exports, and 235 million jobs. the Economic Community of West African States Indeed, each year, approximately 1 billion people (ECOWAS) have introduced a visa policy that travel internationally. By 2030, consumer spending enables free movement of people across member on tourism, hospitality, and recreation in Africa is states, offering a larger market to international projected to reach about $261.77 billion, $137.87 travelers. billion more than in 2015. From 1998 to 2015, service exports, including of “industries without While improvements have been achieved in smokestacks” such as tourism, have grown about various areas, especially at the local level, much six times faster than merchandise exports in Africa. more needs to be done by both the public and the private sectors to fully tap Africa’s potential Given these trends, the travel and tourism industry in the tourism industry. This report starts with an has significant potential in Africa, notably due to overview of tourism development in Africa and the continent’s richness in natural resources and explores some of the key constraints that have its potential to further develop cultural heritage, prevented this sector from maturing. It identifies e.g., music. However, except in a few countries, important stakeholders and potential opportuni- such as Mauritius and Seychelles, where the ties for its future development. It also provides tourism sector’s share of the economy is particu- illustrative examples of countries representative larly large, tourism in Africa is still at an early stage of different trajectories of tourism development. of development and strongly connected with more Finally, with attention to current major policy general and longstanding development challeng- reforms, the report draws conclusions about the es, including infrastructure and security. future of the tourism sector in Africa. Aware of the potential for tourism, most countries The report aims to offer business leaders an in the region have already drafted strategic plans overview of Africa’s biggest opportunities and to develop the sector as an economic opportunity risks in the tourism sector, discussing trends, and development catalyst. For example, Gambia, drivers, perspectives, and strategies for effective Kenya, South Africa, and Tanzania are all putting investment. It also provides policymakers with significant efforts into advancing travel and tour- some solutions related to the areas that need to ism development. Botswana, Mauritius, Rwanda, be improved to attract private investors, accelerate and South Africa are particularly working hard to tourism development, and contribute to growth improve their business environment for tourism and poverty alleviation, facilitating the fulfillment investment. of the Sustainable Development Goals and the African Union’s Agenda 2063. The African Union and sub-regional communities have also put tourism at the top of their agendas. For example, the African Union has endorsed the continent’s Tourism Action Plan (TAP) developed by the New Partnership for Africa’s Development (NEPAD), renamed African Union Development Agency (AUDA). The TAP recognizes tourism 1 Africa's tourism potential: Trends, drivers, opportunities, and strategies 1 Background facts and trends Since the 1950s, the global market for international region increased by 3.7 percent in 2008-2009, travel and tourism has exhibited uninterrupted compared to the net decline of 4.3 percent in the growth. After the end of the Cold War, the sector rest of the world.4 The African Development Bank accelerated more rapidly than the global economy, (AfDB) estimates that, in 2015, Africa received 62.5 with an average annual growth rate of 4.1 percent million visitors, contributed 9.1 million direct jobs in between 1995 and 2010.1 It was during this period travel and tourism sectors, and generated $39.2 that Africa experienced its initial boom in tourism. billion in international tourism receipts.5 Africa’s tourism-based revenues increased by more than 50 percent in the 1990s—from $2.3 While the international tourist arrivals on the billion to $3.7 billion2—while the total number of whole continent increased by nearly 36 million international arrivals on the continent ballooned between 2000 and 2017, the sub-Saharan region by roughly 300 percent, from 6.7 million in 1990 to has experienced the lion’s share of this growth 26.2 million in 2000.3 (24.7 million).6 For one thing, prior to the turn of the century, North Africa already had a relatively These trends have continued into the 21st century, well-developed tourism industry. In 1995, the five bolstered by a period of impressive economic northern countries, Algeria, Egypt, Libya, Morocco, growth and improvements in political stability and and Tunisia received nearly as many international openness across the continent. In fact, during the visitors annually as the 48 sub-Saharan countries global financial crisis of 2007-2008, Africa was the combined—10.5 million versus 13 million, respec- only region in the world that continued to experi- tively. Second, since 2011, perceptions of political ence growth in the tourism industry: arrivals in the instability and insecurity associated with the Arab 1 World Bank (2011, p. 1). 2 Fayissa et al. (2008, abstract). 3 UNWTO (2018, p.3). 4 World Bank (2011, p.2). 5 AfDB (2016b, p.4). 6 Calculated by the author based on data in UNWTO (2018, p.3). Africa's tourism potential: Trends, drivers, opportunities, and strategies 2 Figure 1. International tourism arrivals in sub-Saharan Africa and North Africa, 1995-2016 Source: World Development Indicators, 2018. Spring and terrorism have made the region a less internationally in 2016, only 58 million arrived in popular destination. Thus, as illustrated in Figure Africa—roughly 5 percent of the world’s inbound 1, while sub-Saharan Africa’s tourism continues to tourism.8 Despite more than doubling over the grow, the size of the sector in North Africa is on past 20 years, the sector continues to lag behind the decline. other developing regions in terms of the number of tourists received per year (Figure 2). Moreover, There is marked variation within the sub-Saharan the size of sub-Saharan Africa’s market in terms of African region as well, with Eastern and Southern the export share of receipts—defined as spending Africa attracting the vast majority of visitors, mostly by international incoming travelers, including from Europe and the United States. Unsurprisingly, payments to national carriers for international then, in terms of GDP share, the tourism markets transport—from tourism