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Tourism: How to unlock huge tourism potentials in Africa

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by Memory Dube
Tuesday, September 27, 2016 marks World Tourism Day, organized by the World Tourism Organization which is a special United Nations agency dedicated to the promotion of responsible, sustainable and universally accessible tourism. World Tourism Day 2016 was celebrated under the theme, “Tourism for All: Promoting Universal Accessibility”.

The theme for this year could not have been more apt, given the various sub-themes that it incorporates and what it means to actually ensure universal accessibility of tourism – and particularly, from an African perspective. It is about getting the tourists to the attraction destination, but, on the flip side, it should also be about ensuring the participation and economic engagement of local communities in the tourism industry. Looking at the tourism value chain, the potential and opportunities in tourism are endless as this is a very dynamic sector. However, harnessing the potential requires an awareness of the economic linkages and willingness to undertake the necessary policy actions and/or reforms to realize the opportunities.

The African Economic Outlook 2014 notes that tourism is among the three service sectors (together with financial intermediation and business services as well as retail – both of which are have linkages with tourism) in Africa that have massive potential for upgrading in both regional and global value chains. Despite the growth potential, the World Travel and Tourism Council reports that tourism in Africa is already contributing significantly to the economy, with travel and tourism accounting for 8.1% of the GDP in 2015 at USD 180.0 billion, at the same time generating 9,083,000 jobs directly in 2015, which accounted for 3.0% of total employment on the continent. The graduation of countries like Botswana and Cape Verde from Least Developed Country (LDC) status to developing country, is argued to have been mainly facilitated by the growth and development of the tourism sector.

In considering the economic significance of the tourism sector in Africa, the following can be observed: it is a fast-growing and generally labour-intensive sector, with plenty of opportunities both for skilled and unskilled workers, and especially for women and the youth. It is also a sector with massive linkage potential with other economic sectors, which, if realized, would encourage diversification of other economic sectors while ensuring the retention of tourism revenue, thus reducing leakage in the sector. The tourism sector puts African countries at an advantage, particularly when considering Africa’s endowment with natural resources as well as its rich cultural heritage. The cultural heritage creates opportunities for small and medium enterprise (SME) development in small and rural communities. The development of tourist towns can turn otherwise remote and isolated areas into commercial centres, competing with light manufacturing and attendant service sector development, thus creating more opportunities for local communities.

The sectoral linkages in the tourism value chain are very wide and diverse, for both direct and indirect linkages. The figure below sets out in detail the various linkages, but, looking at the most basic and most direct linkages, the economic benefits of developing the tourism sector are very clear. Transport infrastructure development, telecommunications, finance and energy are crucial as these facilitate backbone services for any sector, and are especially essential in the tourism sector to expand both regional and global value chains as well as reduce the costs of access to tourist destinations and services. Looking at the accommodation aspect of the tourism industry, such industries as construction and manufacturing, agriculture, and food processing play a huge role as suppliers to the tourism industry. Add to that list the utilities, entertainment and art and craft industry. These are but some of the examples of the inter-industry linkages. It is quite clear that tourism is a low-hanging fruit when it comes to economic growth, employment creation and the improvement of social welfare, particularly as Africa struggles with industrialization and other development challenges.

Accessing this low-hanging fruit has been challenged by a number of factors and a few will be highlighted here. In its Doing Business 2016 report, the World Bank has given Sub-Saharan economies an average ranking of 143 out of 189 and this has to be improved. In the tourism sector, a conducive business environment is a catalyst for value chain participation and investment. A difficult business environment punctuated by very high operational costs is partly responsible for keeping the African tourism sector relatively captive and producer driven, with the sector dominated by a few large developed country travel agencies.

Political instability, combined with the regional spillover effects of unrest is another challenge, although the region has made significant progress over the past few years, it still remains fragile. Poor infrastructure and limited connectivity is another issue, especially when it comes to backbone service sectors. Linked to this, the high costs of road and air transport in Africa, mostly due to market restrictions, are particularly problematic and estimates are that even a moderate opening of the markets could lead to a 25% increase in the number of flights. ICT development is another challenge – access to information technology could assist with such functions and services as marketing, distribution, professional services and various other logistical arrangements that African service providers could undertake and which are currently dominated by international players. The African Economic Outlook 2014 reports that a higher population of tourists to Sub-Saharan Africa (SSA) use tour operators from other parts of the world because of the complexities involved in making travel arrangements to Africa. Complex visa arrangements, as distinct from, and in addition to, high visa costs, is another barrier to growth in the tourism industry.

Dealing with the challenges above and others will ensure the development of the tourism sector and associated industries in Africa. However, as stated above, such development also depends to a large part on governments taking the lead in developing the sector and particularly from a policy perspective. African governments need to deal with the regulatory barriers to services trade in their countries, particularly in the key service sectors of transport, communications and business services. These services are integral to the development of the tourism value chains as well as to investment in the sector.

Air transport restrictions in particular are a course for concern. Countries need to implement the Yamoussoukro Decision of 1999 which sought to liberalize air transport in Africa. Liberalization of the movement of people is another policy imperative, making it easier for skill to operate across borders as well as for tourists to travel. Some African countries, such as Zambia and Zimbabwe when it comes to the Victoria Falls, have a shared natural asset that is also a tourist attraction. The importance of harmonized policies cannot be overemphasized. Africa’s regional economic initiatives are an important vehicle for the achievement of harmonized policies and regulations. Investment is another important element and governments need to work on policies and strategies that attract investment into the right economic activities and sectors, including the tourism sector, but also in other sectors that feed the growth and development of tourism.

Source: businesswiseng.com

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