Massive tourism revenue leakages in Africax

Source: Tourism Update, 07/11/2022

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.