Business & Finance

AU funding model, a threat to tourism in Africa

South Africa hosted the African Union Summit in Sandton in Johannesburg from 07 June 2015 to the 15 June 2015. The AU want all member countries to impose a US$2 hospitality levy per hotel stay and a US$10 airfare levy on each international flight entering or leaving Africa. This poses a significant threat to tourism in Africa, writes Unathi Sonwabile Henama.

The 25th African Union Summit occurred at a time when the AU is facing the reality that it cannot depend on donor funding in order to facilitate its future activities. The arrivals of heads of states, their support staff, media and other interested parties in South Africa was an opportunity for South Africa to benefit from business tourism. These tourists bring a much needed financial injection as they engage in tourism consumption that includes accommodation, shopping, travel and transportation and eating out at food and beverage outlets.

Delegates attending a business tourism event such as the AU Summit are less price sensitive because the bulk of the expenses are paid for by the employer or sponsor of the delegates, which provides a substantial disposable income that can be used for shopping and other forms of tourism consumption. The delegates have an opportunity to see the beauty of South Africa and can in future return purely to come and consume destination South Africa as leisure tourists.

Efforts by the AU to raise its own funds independent of donors is imperative for the independence of the AU. It is of concern that the efforts of the AU to raise funding from member states has taken a decision that is detrimental to the tourism industry.

The former Nigerian president, Olusegun Obasanjo was tasked by the AU to look for alternative sources of funding to enable AU member states to increase their share of the budget, with a view of relaxing dependence on donor funding. The Obasanjo report was adopted at the May 2013 AU Summit that approved that member countries must all impose a US$2 hospitality levy per hotel stay and a US$10 airfare levy on each international flight entering or leaving Africa.

This is unfortunate as the AU is supposed to be funded by the treasury of each country instead of taxing the tourism industry to fund the AU. Africa receives less than 10% of global tourism receipts, which is practically a drop in the ocean when you consider the numbers of tourists that visit Europe and North America.

All countries in Africa have the ability to raise funds for their contribution to the AU if they ensure that there is appropriate governance. Governance and strong institutions for economic growth can assist a country to meet its obligations to its citizens and to continental bodies such as the AU. The poor levels of governance, and an array of failed states that lack accountability to their citizens has created the perennial African problem. The proposal of the Obasanjo report seeks to address the symptoms instead of the problems of the African countries being unable to pay their dues to the AU.

In a paper by Peter Fabricius titled ‘The AU starts to put its money (closer to) where its mouth is’, it is noted that six countries namely Algeria, Angola, Egypt, Libya, Nigeria and South Africa would each pay 10% of member state’s share of the AU budget. The resolutions taken at the 19th Session of the African Union from 15-16 July 2012, agreed on a US$5 cents levy per text message sent, US$ hospitality levy per stay in a hotel instead of a tourism levy and US$50 travel levy on flight tickets originating from or coming to Africa from outside Africa.

South Africa already has a tourism levy that is administered by the Tourism Business Council of South Africa (TBCSA) to market South Africa as a tourism destination. In terms of aviation, African countries must do more to liberalise international air transport services.

The liberalisation of African air space can increase tourism revenues, create jobs and have a social benefit to society. The revenues from increased tourism can swell state coffers that could enable member countries to meet their commitments to the AU without adding new taxes on tourism and hospitality. The Yamousoukro Declaration that sought to accelerate air transport liberalisation in Africa must be fully implemented.

In addition, member countries must not be shy to allow for domestic and international competition in their aviation sector, which would bring down prices and increase flight frequencies. Individual member countries in order to grow tourism must be bold enough to consider granting airlines the nine freedoms of the air to ensure a sustainable African aviation sector.

In a paper titled Tourism in Africa: ‘Harnessing Tourism for Growth and Improved Livelihoods’, air transportation and accommodation are identified as a constraint to the development of tourism. The AU in the recent summit has picked up the new visa regulations are a concern for Africans seeking to travel to South Africa.

Unathi Sonwabile Henama
Unathi Sonwabile Henama
About the Author: Unathi Sonwabile Henama teaches tourism in the Department of Tourism Management at the Tshwane University of Technology. The views expressed in this article are private. Unathi can be contacted via email at: or by calling: +27 (0)12 382 5507.

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