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Economic Development in Africa

Following the United Nations Conference on Trade and Development (UNCTAD) held in Geneva, Switzerland in January 2017, an in-depth report has been published on tourism for transformative and Inclusive growth in Africa.

Here are a few of the startling findings contained in the report.

The Economic Development in Africa Report 2017: Tourism for Transformative and Inclusive Growth examines the role that tourism can play in Africa’s development process. It argues that tourism can be an engine for inclusive growth and economic development and that it can complement development strategies aimed at fostering economic diversification and structural transformation within the right policy context.

The report does not focus on climate change or financing aspects as these have been taken up in much greater detail in recent publications on the sector. The focus is rather on enhancing the role that tourism can play in socioeconomic development, poverty alleviation, trade, fostering regional integration and structural transformation. To achieve all of this, Africa must tackle key impediments to developing the tourism sector, such as weak intersectoral linkages.

Since the United Nations designated 2017 as the International Year of Sustainable Tourism for Development, the tourism sector has been praised for its capacity to stimulate economic growth through the creation of jobs and by attracting investment and fostering entrepreneurship, while also contributing, if properly harnessed, to preservation of ecosystems and biodiversity, protection of cultural heritage and promotion of empowerment of local communities.

Tourism can be an engine for inclusive growth and sustainable economic development. Since the 1990s, tourism has increasingly contributed to Africa’s growth, employment, and trade.

During 1995–2014, international tourist arrivals to Africa grew by an average of 6 percent per year and tourism export revenues, 9 percent per year. The average total contribution of tourism to gross domestic product (GDP) increased from $69 billion in 1995–1998 to $166 billion in 2011–2014, that is from 6.8 per cent of GDP in Africa to 8.5 percent of GDP.

Furthermore, tourism generated more than 21 million jobs on average in 2011–2014, which translates into 7.1 percent of all jobs in Africa. This means that over the period 2011–2014, the tourism industry was supporting 1 out of every 14 jobs. At the same time, tourism has also been associated with operating in isolation from other parts of the economy, suffering from high financial leakage, generating sociocultural tensions and environmental damage. History suggests that countries cannot rely on tourism as the sole avenue out of poverty or the only pathway to sustainable economic development.

Tourism’s potential has been recognized by policymakers at the national and international levels and is increasingly reflected in national and international policy frameworks. At the global level, Sustainable Development Goals 8, 12 and 14 highlights the central role of tourism in job creation, local promotion of culture and economic development. However, as tourism covers several sectors and is a cross-cutting issue, the development of tourism has an impact on many Sustainable Development Goals, for example, poverty, decent work, gender and infrastructure development.

Some of the key questions addressed in the report include:

  • How does tourism contribute to structural transformation and more inclusive growth?
  • How can linkages between tourism and other productive sectors be harnessed to create additional economic opportunities and provide sustainable livelihoods?
  • How can the economic potential of intraregional tourism be fostered and better exploited through deeper regional integration?
  • What is the relationship between tourism and peace?

The main findings are as follows:

First, tourism can promote economic diversification and structural transformation in Africa, with linkages between tourism and other productive sectors playing a fundamental role in this regard. To unlock the potential of intersectoral linkages to contribute to structural transformation, cross-sectoral issues need to be aligned with, and integrated into, policy frameworks at the national, regional and continental levels.

Second, tourism is critical to the continent’s inclusive growth and can play an important role in the global fight to reduce poverty and achieve the Sustainable Development Goals. Beyond generating economic benefits and boosting productive capacities, tourism has the potential to foster inclusion by creating employment opportunities among vulnerable groups such as the poor, women and youth.

Third, continental and intraregional tourism in Africa is increasing and offers opportunities for economic and export diversification if its potential is exploited at the national and regional levels. African countries would benefit if they made further progress with the free movement of persons, currency convertibility and liberalizing air transport services. This would facilitate greater access to tourism destinations and boost the competitiveness of destinations. It also requires regional economic communities and countries to comprehensively plan for intraregional and continental tourism.

Fourth, peace is essential for tourism, and the development of tourism can foster peace. African countries with tourism potential should implement policies that strengthen the sector as these policies will contribute to both peace and development. The analysis and findings of the report also confirm the bidirectional causal relationship between peace and tourism and further show that the effect of peace on tourism is much greater in magnitude than the impact of tourism on peace.

And finally, Chapter 6 of the report recapitulates some of the main findings, key messages and policy recommendations. The chapter concludes that there is an urgent need to address the lack of tourism data and suggests that this could be undertaken as part of ongoing efforts to improve macroeconomic data collection.

African Governments, in collaboration with development partners, need to develop and implement effective methods of collecting tourism data to accurately assess the sector’s contribution to social and economic development. However, at present, many countries are experiencing a severe shortage of basic tourism statistics. There is little information on how different components of the tourism sector contribute to its aggregate impact, the distribution of such impacts or how they may be increased.

Considering the large amount of data required for evaluating supply- and demand-related aggregates, it remains a challenge to effectively disaggregate available data to evaluate how economic impact varies by type of tourist, type of tourism or the structure of the sector. There is a dearth of available data on tourism activities categorized by gender and an inconsistent measurement of flows of cross-border traders (a sub-category of business tourists) on the continent.

In part, accurate measurement of the effects of tourism policy analysis is also hindered because the sector is not designated as an industry in standard economic accounts. This highlights the need of government for improved data, for enhanced quantitative and economic policy analysis of the sector.

The full Report can be downloaded as a PDF file HERE.