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Exploring Africa’s Tourism Potentials, Investments in Covid-19 Era

The tourism sector has the capacity to contribute significantly to the agenda for social inclusion, as cultural endowments and natural assets can be leveraged to create opportunities for local communities in Africa. However, the sector is facing different obstacles such as infrastructure and security challenges in African countries. If developed effectively, tourism has the potential to accelerate Africa’s economic growth and job creation.

African governments are often overly dependent on oil revenue, even when their oil industry is playing a declining role in their national economies. In March 2020, the government of Africa’s most populous nation announced a drastic reduction in its budget of about 15 percent due to fall in oil prices to $33.8 billion. Finance Minister, Zainab Ahmed said “Nigeria is facing the double challenge of the Covid-19 pandemic and collapse of the price of crude oil”. The political economy risks of this revenue stream are higher than for other types of revenues. In Tanzania and Uganda, part of the projected financing gap could be covered by new natural resource revenues, and these revenues could be enough to achieve universal pre-primary and primary education in the high-price scenario. In the low-price scenario (with less available funding), either the financing gap in pre-primary education or about two-thirds of the financing gap needing to be filled to achieve universal primary education could be covered by these revenues. The situation in Sierra Leone is similar, but here a low-price scenario could mean cancellation of the extractives projects and thereby removal of any potential funding available for education. There is a need for more revenues from other sectors of the economy in order to fulfil governmental goals of these affected countries in the region.

The Backdrop on Reduction of Crude Oil Shipment in Nigeria

The continent remained unexplored for a fairly long period of time. Africa is home to around 18% of the world’s tropical forests. The second largest tropical forest on the planet is located in the Congo Basin in central Africa and extends for around 3 million square kilometres  which is larger than the entire land mass of Argentina. Many countries, both developed and developing, have recognized the advantages that international tourism can contribute to their development efforts. These advantages can be encapsulated in six areas: earning of foreign exchange, contribution to government revenues, creation of employment opportunities, generation of income, stimulus to inward investment and regional development.

The United World Tourism Organization (UNWTO), estimated a 3 to 5% increase in international arrivals to the continent as a result of demand for air travel and easier visa processes. One billion less international tourists travelled globally in 2020 and Africa recorded a 75-percent fall in international tourists arrivals. The situation remains dire as waves of the COVID-19 pandemic continue to rage through the African continent. Reopening tourism is a critical part of the African COVID 19 recovery.

The touristic particularity of Africa lies in the wide variety of points of interest, diversity and multitudes of landscapes as well as the rich cultural heritage. African tourism has always battled with different concepts of culture and its level of interest to tourists. Europe and Asia, for example, boast temples, museums, castles, cathedrals, impressive architecture tangible qualities that are easy to see and therefore easy to market and photograph. The cultural attractions in Africa cultural heritage, beliefs, storytelling, ancient knowledge, music, dance are intangible, making them less easy to package and sell. Since the nineteenth century, foreign tourists and resident tourism workers in Africa have mutually relied upon notions of exoticism, but from vastly different perspectives. Many of the countless tourists who have traveled to the African continent fail to acknowledge or even realize that skilled African artists in the tourist industry repeatedly manufacture “authentic” experiences in order to fulfill foreigners’ often delusional, or at least uninformed, expectations. Brookings Institute report indicate that by 2030, consumer spending on tourism, hospitality, and recreation in Africa is projected to reach about $261.77 billion, $137.87 billion more than in 2015. From 1998 to 2015, service exports, including of “industries without smokestacks” such as tourism, have grown about
six times faster than merchandise exports in Africa.

African countries such as The Gambia, Kenya, South Africa, and Tanzania are all putting
significant efforts into advancing travel and tourism development. Botswana, Mauritius, Rwanda, and South Africa are particularly working hard to improve their business environment for tourism
investment. Tourists in Africa come mostly from Europe and the US. France is the number one source, followed by the UK and the US. French tourists like to go to Morocco, Tunisia, Mauritius, Senegal and Madagascar. Tourists from the UK mostly go to Egypt, South Africa, Mauritius and Gambia, while those from the US prefer South Africa, Tanzania, Ghana, Rwanda, Ethiopia and Zimbabwe. Africa received 67 million international tourist arrivals in 2018, to record a +7% increase from 63 million arrivals in 2017 and 58 million in 2016. This gradual increase is attributed to the affordability and ease of travel especially within the continent, with spending among domestic travellers accounting for 56% as compared to 44% international expenditure. Additionally, leisure travel remains an important component of Africa’s tourism industry, taking up a majority 71% of the tourist expenditure in 2018.

The North-African nation of Morocco ranked first among the African countries with the most international tourist arrivals, accounting for 12.93 million arrivals in 2019. Following in second place was South Africa, which received around 10.23 million arrivals. In 2019, the industry accounted for about seven percent of Africa’s GDP and contributed $169 billion to its economy about the size of Côte d’Ivoire’s and Kenya’s combined GDP. More relaxed visa rules in Ethiopia coupled with improved transport infrastructure gave their tourist industry a staggering 48.6% boost in 2018, raking in a total of $7.4 billion. The majority of foreign visitors were holiday-makers with 71% of tourist spending across the continent spent on leisure activities. Last year, pandemic-induced lockdowns and grounded flights devastated the continent’s tourism industry, forcing many operators to the brink of bankruptcy or to cease operations. African Continental Free Trade Area (AfCFTA), the world’s largest free trade area by the number of participating countries, are among the pillars seen supporting the future growth of domestic and regional tourism in the continent.

Covid-19 Pandemic Will Cost Global Tourism at Least $1.2 trillion- Report

Generally, investments have been focused on countries with well-developed infrastructure, easily navigable travel policies, and business-friendly environments. There is great potential to increase tourism-related investment to the continent, particularly after the 15 member states of the Economic Community of West African States, often referred to as ECOWAS, introduced a visa policy allowing for free movement among its member states. Continent-wide efforts to increase integration and free movement, such as the impending implementation of the AfCFTA, will create a more stable business environment for investors and entrepreneurs to capitalize on the continent’s tourism potential. Potential investors in other countries’ tourism sectors will face challenges in infrastructure development and government support. Though, there will be high rewards for those who make well-informed choices and take the necessary risks to partner with policymakers and industry leaders in potentially high-rewarding countries.

UNWTO launches Global Guidelines to Reopen Tourism

In Africa, one challenge that will need to be overcome to boost continental tourism is that travellers will require easier issuing of travel visas. While significant visa facilitation improvements have taken place over the past decade, visa facilitation still needs to be a priority for African countries. This is particularly important to promote regional travel as the recovery of international tourism will be a long road. This means member countries should implement the AfCFTA for free movement of goods and services, which includes the acceptance of the African Union passport. This would entail more collaborative efforts to address the lack of harmonised health and travel protocols across the continent and beyond, especially during and post-pandemic crises to reassure tourists and build traveller confidence. If African countries implement visa reforms to better facilitate travel, work to achieve greater airline connectivity, and execute plans for growth, then WTTC estimates that in the next 10 years between 30 and 45 million jobs can be created in the region by the Travel & Tourism sector by 2028.

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