Revenue ‘leakages’ in tourism deeply affect African countries’ economies: Expert

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For every 100 US dollars spent on a vacation tour by a tourist from a developed country, only around 5 US dollars actually stays in a developing-country destination’s economy, translating into a 95% loss in revenue. This was announced by the United Nations World Tourism Organisation (UNWTO)’s Regional Department for Africa Director, Elicia Grandcourt.

Speaking on Day 3 of the 5th Africa Tourism Leadership Forum (ATLF) at the Grand Palm Hotel International Convention Centre in Gaborone, Grandcourt says for Africa to realise the real value of tourism in the continent, it needs to deal with these revenue ‘leakages’.

“In most all-inclusive package tours, about 80% of travelers’ expenditures go to the airlines, hotels and other international companies, who often have their headquarters in the travelers’ home countries, and not to local businesses or workers,” says Grandcourt.

“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,” she adds.

She says this has severe consequences on African economies, something she says prevents the tourism sector from fully unleashing its potential to drive inclusive socio-economic development and advancement of Africa and from effectively contributing to eradicate poverty in line with the achievement of the UN Sustainable Development Goals.

“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,” says Grandcourt.

More than 600 delegates, including officials from the government as well as role players in the private sector, turned up for the event to look at ways to improve intra-Africa tourism. This comes on the back of the industry suffering massive setbacks during the COVID-19 pandemic which gave rise to travel restrictions.

African tourism which has been heavily reliant on foreign travelers lost billions of rands in revenue and shed thousands of jobs, prompting the need for intra-Africa travel for the sustainability of the sector.

Thought leaders in the sector have for the past three days engaged on policies that need to be introduced and collaborations that need to happen for the diversification of the sector.

Grandcourt says Africans need to start traveling to other African countries and supporting local businesses.

Earlier, the Chief Executive Officer at the Tourism Business Council of South Africa, Tshifhiwa Tshivhengwa, highlighted the importance of SMMEs, warning that small businesses need to be seen as the industry instead of entities on the periphery of the industry.

He has encouraged African to use to embrace the uniqueness of their culture and use to their advantage instead of confining it to cultural villages.

Admitting that small businesses face serious funding challenges, Tshivhengwa says all stops must be pulled out to turn SMMEs into success stories.