Tourism sector holds $76bn promise for Africa, despite terrorism- New report

With the promise of an estimated foreign visitor spending of $76 billion by 2027, Africa’s tourism sector has been described as holding promise for the continent. Last year, foreign visitor spending stood at $40.7 billion, an amount that is expected to grow by 5.3 percent this year to $42.9 billion, before reaching $76.0 billion by 2027 at an annual compound growth rate of 5.9 percent.

But this promise for Africa, could yet be scuttled. And itt is not difficult to see why: terrorism has cast a dark shadow across Africa’s long-awaited economic rise. Against the backdrop of continued downturn in commodity prices, rising insecurity, adverse weather effects and protracted political crises, Africa’s growth has derailed in the travel and tourism sector.

A 2017 Hospitality Report Africa on the African continent, released by Jumia recently, named Nigeria, Kenya, Tunisia, Mali, Burkina Faso, Côte d’Ivoire and Egypt as terrorism’s biggest victims, thereby hampering the continent’s travel and tourism growth. The report says terrorist attacks in these countries have negatively impacted their tourism revenue notably, since 2015.

Edmond Moukala, Director of African Department, UNESCO also admits the fragility of the continent. Moukala said challenges facing many African heritage sites range from armed conflicts to terrorism, among others.

The continent has not been spared from brutal attacks from Al-shabab in Kenya, extremist group, Boko Haram in Nigeria – famous for its kidnap of 276 school girls in 2014; Mali remains beset by political unrest led by Ansar al-din,; among others.

Instances: In Kenya – that tourism comprises 21% of its national income – Al Shabaab activities have caused income from tourism to decline by 21% in 2014, a decrease that continued into 2015, with the first five months of the year seeing a decline of 25% of visitors.

According to the World Investment Report (WIR) 2013, Foreign Direct Investment flows into Nigeria, dropped by 21.3 percent in just one year — from $8.9 billion in 2011 to $7 billion in 2012 as a result of Boko Haram attacks.

Tourism contributed to Africa’s GDP by 7.8% (USD 165.6 billion) in 2016, and it is expected to rise to 7.9% of GDP to USD 170.5billionn 2017. This contribution is predicted to grow by 4.6% per annum to reach USD 268.2billion by 2027.

In 2016, domestic travel spending generated 63.7% of Africa’s tourism GDP, and is expected to rise by 2.8% in 2017 to USD 73 billion, and then by 3.6% pa to USD 104 billion in 2027.

Foreign visitor spending, on the other hand, stood at 36.3% in 2016 (USD 40.7 billion), and is expected to grow by 5.3% in 2017 to USD 42.9 billion, and then by 5.9% pa to USD 76.0 billion in 2027.

The continent also accounts for 68.6% of Leisure spending; and 31.4% of Business spending.

Meanwhile, the Hospitality Report Africa 2017 has predicted that the continent will attract 64 million international arrivals before the end of 2017 as compared to 58 million in 2016 – an 8% growth year-on-year. Still, it is not clear how the affected countries will benefit from these figures if the terrorist attacks are not curtailed.

Though the number of international tourist arrivals in Africa is expected to attract 64 million in 2017, and grow to 110 million by 2027, having 58 million arrivals in 2016, but the major issues that the continent contends with in terms of travel are: cost, visa restriction, travel booking and flight connection, according to an African survey conducted in 2016.

However, the adoption of visa liberalization policies could increase Africa’s tourism by 5 to 25%. A common visa policy – that includes visa-on-arrival for all African citizens, and the goal of having a single African continental passport by 2020 – recently launched by the African Union, is expected to bolster tourism in the African region.

Promise for the future

The continent, despite terrorism challenge, holds a lot of promise in the tourism and hospitality sector and it is poised to be the leading contributor to the continent’s total GDP.

Tewolde Gebremariam, CEO, Ethiopian Airlines retorts that, “it’s a very exciting time for African aviation industry”.

“Though contributing little to the global aviation industry with only 3% as compared to all global traffic, nevertheless, the growth is very encouraging. With more investment coming to the continent from China and India, which is expected to drive the continent’s development; air traffic in Africa is also expected to grow,” he said.

Also see: Nigeria’s non-oil revenues already below budget, say analysts

The continent is becoming popular globally with more African destinations. The hotel industry infrastructure development has also grown tremendously, with more chain hotels (365 pipelines in 2016) coming to Africa and bringing encouraging results on the continental hospitality industry and spread across the world.

Internet and mobile penetrations have also improved significantly in the continent. In 2016, internet penetration stood at 27% with more than 300 million users (approximately 345 million internet users) while mobile penetration stood at 50% with 557 million users, and smartphone users accounted for 28% of the users.

Mobile technologies and services that generated 6.7% of GDP in Africa in 2015 (around USD 150 billion of economic value), is expected increase to more than USD 210 billion (7.6% of GDP) by 2020.

And despite the continent’s low contribution to world’s air traffic at 3%, International Air Transport Association (IATA), has predicted a 4.8% increase in number of passengers in the next 5 years starting in 2017. The feasibility of this is made firm due to the increase in international flights to the continent.

Story written by Oluwafemi Ogunjobi