Africa: Africa Tourism Report

Africa Tourism Statement 2013

OVERVIEW TOURISM IN AFRICA

Tourism is a powerful vehicle for economic increase and job creation all over the world. The tourism sector is due and not instantly responsible for 8.8 % of the world’s jobs (258 million); 9.1 % of the world’s GDP (US$6 trillion); 5.8 % of the world’s exports (US$1.1 trillion); and 4.5 % of the world’s investment (US$652 billion) (WTTC 2011).The World Travel & Tourism Council (WTTC) estimates that 3.8 million jobs (inclunding 2.4 million indirect jobs) could be created by the tourism industry in Sub- Saharan Africa (SSA) over the next 10 years.

The potential for increase in tourism in SSA is significant and compelling. World hotel chains are poised to spend hundreds of millions of dollars in Africa over the next few years to meet increased request from both international tourists and the continent’s own fast- growing middle class.1 World international tourist arrivals have been growing steadily at 4-5 % per year since the 1950s. Between 2009 and 2010, despite the world financial crisis, international tourist arrivals to SSA increased by 8 %, making SSA the second fastest growing region in the world next the Asia Pacific (UNWTO 2010).

Tourism is growing faster in the world’s emerging and developing regions than in the rest of the world (UNWTO 2010).The examples of CapeVerde, the Dominican Republic, Egypt, Indonesia, Mauritius, Mexico, Morocco, South Africa, Tanzania, Thailand, Tunisia, and Turkey show how proactive government support can make tourism a powerful and transformative development tool (see Part 2 for these individual case studies). In Thailand, tourism barely existed in the 1960s; in 2010 it employed 15-20 % of the workforce. The Dominican Republic had 1,600 hotel rooms in 1972; in 2011 it had over 66,000. Tourism accounted for 31.4 % of exports of goods and services, and 7.9 % of GDP in 2011 (see case study 4 in Part 2). Bali, a small island in Indonesia, received 95,000 international tourists in 1973. In 2010, it attracted 1.96 million tourists who spent US$1.9 billion (see case study 8). Cancún in Mexico grew from an uninhabited peninsula into one of the majority visited resorts in the world in just 35 years. In Egypt, from 1990 to 2005, visitor arrivals grew from 2.9 million to 8.6 million and by 2010, total international arriv- als were just short of 15 million.

Mozambique has managed a seemingly impossible transformation of its tourism indus- try. International tourist arrivals grew by 284 % between 2005 and 2010. The gov- ernment expects 4 million tourists a year by 2025.The dramatic increase has been attributed to legislative reform, the development of a tourism strategic plan, and the elimination of visas for Southern African Development Community (SADC) nations. CapeVerde (case study 2) has as well seen a boom in its tourism sector as a result of market-oriented policies, political and banking reforms, and investment incentives. Receipts from tourism in Cape Verde were US$432 million in 2008, comprising 72 % of all service exports, 15 per- cent of GDP, and employing due and not instantly an estimated 21 % of the work- force (27,800 people).

A lot of other nations in SSA are on the verge of tourism success. In 2011, tourism due generated 2.7 % of the GDP of nations in SSA and due and not instantly accounted for additional than 1 in 20 of the region’s jobs (12.8 million) (WTTC 2012). SSA has abundant tourism resources. It has expansive beaches, plentiful wildlife, and extensive nature, culture, and adventure opportunities. As disposable incomes increase, domestic travel for leisure purposes is expected to rise. Between 2001 and 2010, GDP grew an aver- age of 5.2 % a year and per capita gain grew 2 % a year, up from ‒0.4 per- cent in the previous 10 years. By presently additional than 10 million people are traveling across international borders each year within Africa for shopping, medical needs, sports, religious gatherings, business meetings and conferences, and visiting friends and relatives. For exam- ple, 58 % of all arrivals to Namibia in 2010 were from South Africa and Angola. Regional arrivals to South Africa increased by 12.8 % between 2009 and 2010 (South African Tourism 2010).

From presently on it is by no means easy to develop and sustain a successful tourism destination. African destinations compete for tourists against venues in Asia and South America. It is not enough to have interesting natural and cultural attractions and “friendly people.” In a lot of African nations a deep-rooted skepticism about the economic and social benefits of tourism prevails, due to a lack of accurate economic data about the sector, a genuine concern about the environment, and a discomfort with foreign investors and visitors.

Performance

Africa’s share of world arrivals, though still small, is growing. From a small base of just 6.4 million visitors in 1990, Sub-Saharan Africa attracted 30.7 million visitors in 2010. Between 2008 and 2009, tourist arrivals to SSA increased by 4.4 percent while arrivals worldwide dropped by 3.8 percent. Between 2009 and 2010, tourist arrivals to SSA increased by 8 percent; the world average was 6.6 percent.Africa was the only region whose tourism sec- tor grew during the world economic crisis.The sector is expected to keep growing.

Tourism is a job-intensive industry. A study by the Natural Resources Consultative Forum found that a US$250,000 investment in the tourism sector in Zambia generates 182 full-time formal jobs.This is nearly 40 percent more than the same investment in agricul- ture and over 50 percent more than in mining. Zanzibar president Dr.Ali Mohamed Shein has asserted 50 percent of the island’s population would be involved in tourism activities by the year 2020. He also said that the sector would be a major catalyst in promoting agricul- ture, employment, and fisheries and in creating more jobs in local industries.Already tour- ism in Zanzibar provides 11,500 workers with direct employment. An additional 45,000 people are engaged indirectly in tourist activities (Hamilton and others 2007).

There are already 5.3 million direct tourism jobs across SSA (WTTC 2012). By 2021, the WTTC forecasts 6.7 million direct jobs in tourism in SSA. As travel and tourism touches all sectors of the economy, tourism’s indirect employment effects are almost three times as large.The WTTC calculates that the total direct and indirect employment impact of tourism in SSA is 12.8 million jobs. In 2021, more than 16 million people are expected to be employed directly or indirectly as a result of travel and tourism (WTTC 2012).

But tourism is not a panacea. Like other economic activities, it comes with a set of environmental, social, and political risks. If tourism growth goes unmanaged, the natural, cultural, and social asset base on which tourism depends can deteriorate. Cape Verde and Kenya (case studies 2 and 11) are both feeling the impact of rapid, poorly planned coastal development. It is important to clearly identify the risks and challenges of tourism devel- opment and compare these with alternative development options at the outset.

Constraints

The main constraints to tourism development vary by country, but similar patterns of constraints and challenges were found to occur in each of the three stages of tourism development.

In countries initiating tourism development, important constraints include basic concerns with security and health issues associated with political instability and underde- veloped health care infrastructure.The 2010 AFTFP survey of hotel developers found that the main areas where SSA fell short in investment attractiveness compared with Asia and the Middle East markets were the level of risk (political, economic, security), the image of the region from an investment perspective, air transport service, and government policy (Ernst and Young 2010). Infrastructure development is a crucial part of initiating tourism development. Air and road connections are the most commonly mentioned constraints to growth for tourism in SSA.Africa’s distance from generating markets creates an acute need for higher quality and more competitive air access.The cost, frequency, and routing of air- lines in SSA reduces the competitiveness of its destinations.Visas can also be a basic con- straint for many countries. If the visa is too expensive or too difficult to obtain, tour operators may opt to not include the country in a regional tour.Where visa requirements have been eased, as in Madagascar and Mozambique, tourism growth surged.

Countries scaling up their tourism industry, like Malawi and Zambia, often need to convince policy makers that tourism is of value. Despite the impressive multipliers and track record that tourism has in SSA, the economic and social importance of the sector is widely underappreciated. An understanding of how tourism works, what it is worth, and why it is important is crucial to achieving “destination readiness” for tourism. South Africa has poured resources into its tourism statistics unit and reaped significant results. Basic data include international and domestic arrivals and departures, and tourist expenditures. Once the basics are in place, the next level of data for different subsectors of the industry is needed: transportation (load factors, costs per passenger per kilometer, for instance); lodg- ing (including capacity, occupancy, room rates); small and medium-sized enterprises; national parks (visitation and entry fees); and other areas. More market research, surveys, and system- atic monitoring (including benchmark development) are needed to supply these data.

In addition to data, land is often a sticking point during the scaling up of tourism. Fundamental land issues include how land is accessed, what tenure is available, what land uses are permitted, and whether investors are treated in a fair and consistent manner. In many countries in SSA, such as Angola, it is difficult to access land for development due to unclear ownership. In Maldives, however, long-term leases for domestic and foreign inves- tors, through a unique leasing program of one resort per island, are available (see case study 13). A similar solution has been used in Cape Verde (case study 2). A number of countries are identifying specific sites dedicated to tourism development.

As tourism grows, planning, standards, and regulations become vital. But too much reg- ulation and unpredictable behavior by government can inhibit growth and ultimately make tourism less sustainable. In Namibia, for example, more than 50 permits and certificates are required for lodging owners who want to register or extend the registration of their accom- modation establishment (HAN 2010).This is expensive and time-consuming and inhibits business growth. A study in South Africa found compliance costs were three times as high for tourism businesses as for other sectors of the economy (Meny-Gibert 2007).

Price competitiveness is particularly important for destinations wanting to scale up their tourism sectors.The benchmarking studies carried out for this report found that the cost of tours to SSA was 25-35 percent higher than tours to other parts of the world (Twining-Ward 2010) and flights were almost 50 percent more expensive to SSA even where shorter distances were involved. For example, an average round-trip flight to Madagascar from New York cost US$2,975 while a flight to China from New York cost US$1,173. The reasons for the higher prices include lack of competition in the airline industry and the need for imported goods and services combined with high import duties. Hotel development costs and the costs of debt financing also affect tourism competi- tiveness in SSA. In Nigeria, developing hotels costs upwards of US$400,000 per room for a mid-market hotel; in Ghana the cost is US$250,000 per room. Median hotel develop- ment costs elsewhere in the world are US$200,000 per room for a full-service hotel (Ernst and Young 2010). Higher room rates are the end result.

For countries that are deepening and sustaining their tourism success, such as Mauritius and Kenya, human resources and product innovation are particularly impor- tant. SSA has a large pool of young workers and more than 10 million new job seekers every year (World Bank Group 2010). But the level of education is low.Tourism employ- ment requires at least mid-level service-sector skills. The hotel and restaurant industry often suffers from a discrepancy between training supply and demand. Whereas tourism- training institutes often focus on hotel management, the current skills gap is often at the operational level. Keeping up with the level of demand for tourism education is a chal- lenge for some SSA countries. In Ethiopia, for example, only 32 students can be accom- modated in the Catering andTourismTraining Institute despite more than 300 applications. In Namibia, a history of underinvestment in education and of poor educational achieve- ment has left young people unprepared to take up new tourism opportunities. In The Gambia, more than 800 students are enrolled in tourism or hospitality courses through the private and public sector; only one institution, the Institute of Travel and Tourism of The Gambia, provides accredited training (Novelli and Burns 2009). Another challenge is to increase the share of local value added. For example, in Tanzania, a World Bank trade paper6 noted that most hotel furniture was imported from China and that no trade link existed between local tourism enterprises and the local furniture industry.The last main challenge is to manage and mitigate the social and environmental impact of large tourism sectors.

The Mediterranean coastlines of Spain and Italy are good examples of growth that exploded to the point where the viability of the resorts was threatened.Tanzania’s northern circuit is overloaded and the country is trying to create new areas for tourism growth in the south, in the Selous Reserve, Zanzibar, Pemba, and Mafia Islands.

Africa Rising

There are new grounds for optimism for the economic future of Sub-Saharan Africa (SSA). Until the onset of the global economic crisis, GDP growth had averaged 5 percent a year for a decade (World Bank 2011).1 Growth was widespread even among non-oil- exporting countries and countries that experienced conflict.Although Africa was badly hit by the global crisis, the continent avoided worse growth shortfall in 2009 thanks to pru- dent macroeconomic policies and financial support from multilateral agencies; it rebounded in 2010. SSA countries’ poverty rate declined from 59 percent in 1995 to 50 percent in 2005 (World Bank 2010a). Child mortality rates are declining, HIV/AIDS is stabilizing and primary education completion rates are rising faster in SSA than elsewhere.

Africa’s private sector is increasingly attracting investment with much of the funding coming from the United States and Europe. China, India and other countries are also investing large sums in SSA. Private capital flows are higher than official development assis- tance 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 expo- nential growth of information and communications technology (ICT), which could trans- form the continent.The private sector is creating an emerging middle class of hundreds of millions of consumers.The climate for market oriented, pro-poor reforms is proving robust and the voice of civil society is increasingly heard. Interregional cooperation is strengthen- ing and democracy has taken hold in several countries. Given this scenario, experts view SSA as being on the brink of an economic takeoff, much like China was 30 years ago, and India was 20 years ago.

Tourism is one of the key industries driving the change. From a small base of just 6.7 million visitors in 1990, SSA attracted 33.1 million visitors in 2011 (UNWTO, 2012). Tourism contributed US$33.5 billion to the economies of SSA, accounting for 2.7 percent of the region’s GDP (WTTC 2012). Already 1 in 20 jobs in SSA is in travel and tourism.

New analysis indicates that women manage about 50 percent of hospitality businesses in Africa (UNWTO 2011). Tourism provides multiple opportunities for economic growth and improved livelihoods.

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