OVERVIEW Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods THE WORLD BANK Iain Christie, Eneida Fernandes, Hannah Messerli, and Louise Twining-Ward Why Tourism? ourism is a powerful vehicle for economic growth and job creation Tall over the world. The tourism sector is directly and indirectly responsible (WTTC 2011) for 8.8 percent of the world’s jobs (258 million); 9.1 percent of the world’s GDP (US$6 trillion); 5.8 percent of the world’s exports (US$1.1 trillion); and 4.5 percent of the world’s investment (US$652 billion). The World Travel & Tourism Council estimates that 3.8 million jobs (including 2.4 million indirect jobs) could be created by the tourism industry in Sub- Saharan Africa (SSA) over the next 10 years. Tourism’s main comparative advantage over other sectors is that visitor expenditures have a “flow-through” or catalytic effect across the economy in terms of production and employment creation. During the construction phase of tourist accommodation and services, tourism creates jobs in that sector. If the country is sufficiently developed, the investment can generate demand locally for furniture and furnishings, and even for capital equipment. Tourism also generates a demand for transport, telecommunications and financial services. Through consumption of local products in tourist accommodation, restaurants and food markets, and through the additional expenditures outside the accommodation, tourists stimulate demand for agriculture, fisheries, food processing, and light manufacturing products, such as the garment industry, as well as for handicrafts and the goods and services of the informal sector. Estimates of such expenditures vary according to the local circumstances but can range from half to nearly double expenditures in tourist accommodation. Similarly, tourism can act as a catalyst for the development of small businesses in related production and service sectors. Notably, tourism can provide an economic base for a region whose only development options are its cultural and natural resources, whether coastal, mountain, or wildlife or a combination of these. However, tourism’s catalytic effect on an economy and its multi- sectorial nature is also a reason for its complexity. Tourism is dependent for its success on numerous actors, both domestic and international, with very different interests in the sector, including, in most cases, the international visitors that determine its success. 2 Vicki Brown, Solimar International Solimar Brown, Vicki Africa Rising Tourism Product Development Opportunities SSA This more than any other time is the moment for pursuing tourism as a dynamic development option in SSA. Although Africa was badly hit by the global crisis, the continent avoided an even worse growth cultural heritage shortfall in 2009, thanks to prudent macroeconomic Diaspora tourism policies by governments and financial support from tourism multilateral agencies, and rebounded in 2010. Africa’s private sector is increasingly attracting investment intra-regional from the United States and Europe, with China, India tourism and others also investing heavily in the region. Private capital flows are higher than official development assistance and foreign direct investment is higher than in India. Returns to investment in Africa are among the highest in the world. The public sector has set the conditions for the exponential growth of information and communications technology (ICT), which could business safari tourism also help to transform the continent. With incomes tourism rising, SSA countries’ poverty rate declined from 59% in 1995 to 50% in 2005. Given this scenario, the World Bank concludes that SSA could be on the cusp of an economic takeoff, much like China was 30 years nature/adventure tourism ago, and India was 20 years ago. beach tourism Tourism is one of the key industries driving the current Source: World Bank, AFTFP 2011. change and tourism could be a transformative tool within this takeoff. From a small base of just 6.7 million visitors in 1990, SSA attracted 33.8 millions visitors in 2012. Receipts from tourism in 2012 amounted to over US$36 billion and directly contributed 2.8.% to non-profit entities, and local communities. The the region’s GDP (total contribution, including direct, government must also address market failures that indirect and induced, stood at 7.3% of GDP). (WTTC, affect the tourism sector and should create an 2013) enabling environment for private investment and, above all, must provide political and social stability. The government will also have to supply basic infrastructure and assist in the promotion of the Tourism as an Economic country for marketing and investment. Without the Development Tool private sector’s investment in accommodation, attractions, and tourism services and facilities, and its Managed sustainably, tourism is an effective knowledge transfer, there can be no tourism sector. development tool. When tourism’s environmental, Local communities must be receptive to the tourists social, and economic and other constraints are that intrude into their communities and, to be so, they addressed, tourism energizes economies. With the must participate in the benefits of tourism. External full knowledge that tourism is a complex sector with donors can provide the critical capital and technical tentacles into a myriad of other economic activities, all assistance to support the sector and help raise it from of which require careful management, countries with one development level to another. Without any one of tourism assets are fully justified in deciding to prioritize these active participants, the sector cannot grow to its tourism as a development tool. full potential—or even, in the early stages, begin to put together a tourism package for visitors. Several entities are primarily responsible for the success of the sector. The government’s political The potential for tourism growth in SSA is significant. support at the highest level for tourism is essential. The region has abundant assets, with expansive The government’s role is to initiate the formulation of a beaches, plentiful wildlife, extensive natural and strategy for the sector and then play the crucial cultural attractions, and adventure opportunities. coordinating role among the different public sector Considerable opportunities for expansion exist in safari, agencies involved, the relevant private profit and beach, business, and diaspora tourism, including Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods 3 From a small in regions of destination countries that have not yet and South Africa are examples of destinations that benefited from tourism. Furthermore, SSA has great through consistent investment in infrastructure are base of just potential to expand products that are more recently in now able to attract large numbers of self-drive tourists. 6.7 million greater demand, such as nature/adventure tourism, visitors in cultural heritage tourism, and travel for wellness, Tour operators. UK and US tour operators report health and retirement purposes. that a higher proportion of tourists to SSA use tour 1990, SSA operators (some 50-70%) than in other parts of the attracted world (10-15%) because of the greater complexities of obtaining visas, booking accommodation and Constraints making tour arrangements when travelling to SSA. The 33.8 To achieve its tourism potential SSA will have to tour operators considered that the countries with the address a number of existing constraints: land highest potential for tours during the next five years to million availability, investor access to finance, taxes on tourism be: Botswana, Cape Verde, Namibia, South Africa and investments, low levels of tourism skills, lack of security, Tanzania, plus ten other emerging destinations. visitors safety and high crime, public health, visa requirements, and red tape and bureaucracy. Fortunately, individual Accommodation. Just 10% of the region’s 390,000 in 2012 . countries can provide successful examples of policies hotel rooms are estimated to meet international and actions that have resolved these issues; most standards, and South Africa has about half of depend on the political will of governments for their this stock. Kenya, Mauritius and Seychelles have resolution. Other critical constraints, where the established hotel investment/development markets; resolution is dependent on the actions of government maturing hospitality markets are in Nigeria, Senegal, and of external service providers include: Tanzania and Zambia. Unbranded guesthouses and 33.8 6.7 lodges comprise the largest share of accommodation Air transport. SSA’s distance from source markets 1990 2012 facilities. High hotel costs are primarily due to high creates an acute need for higher quality and more hotel development costs and the cost of debt financing. competitive air access. Despite having 15% of the In Nigeria, hotel construction costs are upwards of world’s population, the continent is served by only 4% US$400,000 per room for a mid-market hotel; in of the world’s scheduled air service seats. Nevertheless, Ghana the cost is US$250,000 per room. Median this seat supply grew by 6.5% between 1998 and hotel development costs elsewhere in the world are 2009, and Cape Verde, Ethiopia, Mozambique and US$200,000 per room for a full-service hotel. The Tanzania experienced double-digit growth. A few occupancy rates and profitability of hotels in SSA foreign carriers dominate long-haul connections; only show great disparities.