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

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 5^th 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’.

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 – Elicia Grandcourt.#SABCNews #ATL2022 pic.twitter.com/bwZV26jgvo

— Sipho King K Kekana (@KingKAzania) October 26, 2022

“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.

Embrace local culture by eating at local restaurants, buying local products and selecting locally owned boutique accommodation: Elicia Grandcourt#SABCNews #ATLF2022 pic.twitter.com/vyMqUiMUtS

— Sipho King K Kekana (@KingKAzania) October 26, 2022

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

I urge each and everyone of you the next time you are planning your holiday make sure that you eat local, stay local and buy local as you will be helping to make that difference. The more you choose local, the less leakage occurs: Elicia Grandcourt#SABCNews #ATLF2022 pic.twitter.com/uOjQpR0nhB

— Sipho King K Kekana (@KingKAzania) October 26, 2022

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.

We shouldn’t talk about SMMEs as the other side of the sector and not the sector. If you check the number you would realise SMMEs outnumber other companies. SMMEs are the industry: Tshifhiwa Tshivengwa#SABCNews #ATLF2022 pic.twitter.com/gcfSDhqOPB

— Sipho King K Kekana (@KingKAzania) October 26, 2022

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.

Culture shouldn’t be confined to a particular place. You don’t go to Europe and be transported to a cultural village, but we do that in Africa: Tshifhiwa Tshivhengwa #SABCNews #ATFL2022 pic.twitter.com/eSvaQmPXVV

— Sipho King K Kekana (@KingKAzania) October 26, 2022

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

There are always weeds that grow and how do they do that? That’s because they don’t ask for your permission. I see that as part of being African entrepreneurs. We need to grow in places we are not wanted. We need to grow in a desert: Tshifhiwa Tshivhengwa#SABCNews #ATLF2022 pic.twitter.com/CUro5tSujB

— Sipho King K Kekana (@KingKAzania) October 26, 2022