Massive tourism revenue leakages in Africa
On average, of each US$100 spent on a vacation tour by a tourist from a developed country, only around $5 actually stays in a developing-country destination's economy.
This was highlighted by Elcia Grandcourt, Director, UNWTO Regional Department for Africa, speaking at the Africa Tourism Leadership Forum (ATLF) 2022 in Gaborone, Botswana, this week.
She noted that tourism was one of the fastest-growing and most resilient socio-economic sectors, accounting for 7% of global trade.
“Tourism could be a feasible option for cushioning the local communities through the creation of direct and indirect employment or encouraging environmental protection and conservation in areas where local communities have low incomes.
Nevertheless, tourism has many hidden costs, which can have unfavourable economic effects on the host community,” said Grandcourt.
She pointed out that, while the least-developed countries had the most urgent need for income, employment and a general rise in the standard of living by means of tourism, they were, unfortunately, least able to realise these benefits.
“Among the reasons for this are large-scale transfer of tourism revenues out of the host country and exclusion of local businesses and products,” she said.
Leakages in tourism
Grandcourt explained that the direct income for an area was the amount of tourist expenditure that remained locally after taxes, profits and wages were paid outside the area and after imports were purchased. These subtracted amounts are called leakages.
According to her, leakages in tourism result when revenues obtained from tourism economic activities in host countries are not available for circulation or consumption of goods and services in the same countries.
“There is growing evidence that most of the tourism receipts in developing countries have no impact on local economies because they are spent on imports or earned by foreign workers or businesses, resulting in high leakages,” said Grandcourt.
She noted that, with the majority of all-inclusive package tours, about 80% of travellers' expenditures went to the airlines, hotels and other international companies – who often had their headquarters in the travellers' home countries – and not to local businesses or workers.
“The average import-related leakage for most developing countries today is between 40% and 50% of gross tourism earnings for small economies and between 10% and 20% for most advanced and diversified economies,” said Grandcourt.
“Leakages in tourism deeply affect African countries’ economies across the continent, with severe and negative impacts on local communities’ livelihoods by fostering inequalities and producing cultural erosion.”
Mitigate effects of leakages
For the tourism industry to mitigate the negative effects of leakages in Africa’s tourism they can do the following:
- Encourage guests to embrace local culture by eating at local restaurants, buying local products and selecting locally owned boutique accommodation or resorts, as this allows international tourists to better connect with the destination they are visiting and to live real and authentic tourism experiences that prevent excess leakage;
- Create strong sustainable linkages by providing locals with more opportunities to offer their products and services to the tourism industry using the skills and systems that are already established in their country;
- Support governments in implementing capacity-building programmes to train high-level tourism professionals locally without having to rely on external knowledge and expertise;
- Engage with and involve local communities as a way to retain much of the revenue from tourism activities and for them to help the sustainable use of natural resources, especially forestry and wildlife.
- Leverage product diversification and digital transformation of tourism to maximise economic benefits derived from the sector and reduce leakages and increase linkages.
UNWTO initiatives
To this end, UNWTO has put in place two initiatives that contribute to showcasing Africa’s uniqueness and diversity.
The first is the publication of a book, ‘A Tour of African Gastronomy’ which promotes local gastronomy as the core component of African intangible heritage and showcases top chefs from the continent, the recipes and the wide variety that the cuisine of all the countries across the continent can offer.
Secondly, the ‘Best Tourism Villages by UNWTO’ initiative looks for the best examples of rural villages worldwide, harnessing the power of tourism to provide opportunities and safeguard their communities, local traditions and heritage.
The challenge aims to identify villages taking innovative and transformative approaches to tourism in rural areas in line with the Sustainable Development Goals and to maximise the contribution of the sector to reducing regional inequalities and fighting against rural depopulation.
