Tourists at the Kenya Coast. Kenya’s travel and tourism sector is ranked as the most competitive in East Africa. PHOTO | FILE
By CHRISTINE MUNGAI
In Summary
Rwanda recently increased fees for gorilla trekking permits —
to target high-end tourists and raise money for development of
communities living around the Virunga Mountains.
Foreign tourists will now pay twice as much
as before for visiting the gorillas, from $750 to $1,500, while East
Africans will pay the same amount as foreign tourists, up from $36 — a
comparative increase of 4,000 per cent.
The move has been criticised for potentially locking out local
tourists, and it is feared it will dampen Rwanda’s competitiveness
against the gorilla experience in neighbouring Uganda and Democratic
Republic of Congo.
Still, that is not the whole story. Attracting tourists and
generating tourism revenues in East Africa is not as straightforward as
that — there is some method in the madness, and it sometimes seems more
of an art than a science, if recent data from the World Economic Forum
is anything to go by.
WEF’s Travel and Tourism Competitiveness Index is an annual
ranking of over 130 economies, analysing a host of factors that have an
impact on the tourism sector, including a country’s overall business
environment, infrastructure, safety and security, labour market, visa
regulations, environmental sustainability and price competitiveness.
Punching far above its weight
A scrutiny of the four East African countries with the most
vibrant tourism sectors (Kenya, Tanzania, Uganda and Rwanda) brings up
some surprises.
The research reveals that Uganda is punching far above its
weight, despite (or perhaps, because of) government neglect of the
sector, and although Kenya has some of the strongest fundamentals and
logistics, it is underperforming for a country of its potential.
Tanzania, on the other hand, has majored in the high-end
approach — which is highly lucrative and efficient from a business
perspective, but with fewer jobs created on the ground, Tanzania’s
tourism model may suffer from lack of meaningful linkages with local
communities.
And Rwanda — now looking to double down on Tanzania’s strategy —
has the greatest aspiration, with dazzling marketing campaigns and
strategic positioning, though may find itself constrained by factors it
has little control over — such as its small size.
Overall, Kenya’s travel and tourism sector is ranked as the most
competitive among the four East African economies, according to the
2017 Index, at 80th position globally (see table titled “WEF 2017 Travel
and Tourism Competitiveness Index”). Second is Tanzania at 91st place,
followed by Rwanda at 97th place. Uganda is in fourth place at position
106.
However — and perhaps paradoxically — even with Uganda’s low
ranking overall, the country had the highest number of international
tourism arrivals in 2015, which is the year with the latest available
data (see table titled “International Tourism Arrivals”).
Uganda hosted over 1.3 million international visitors in 2015,
surpassing Kenya and Tanzania, both of which recorded just over 1.1
million international arrivals.
Rwanda, despite its small size, was not far behind, hosting an impressive 987,000 visitors in 2015.
When it comes to earnings from tourism, Tanzania is in first
place. In 2015, Tanzania made $2.2 billion from the tourism sector, the
highest in East Africa (see table titled “International Tourism Inbound
Receipts”). Uganda is in second place at $1.1 billion; Kenya is third at
$723 million. Rwanda clocks in fourth, at $317 million.
Tanzania seems to have successfully developed a premium tourism
model that targets high-spending tourists; the country makes an average
of $2,020 per arrival, the highest by far in East Africa (see table
titled “Average receipts per arrival”)). This is more than twice that of
second-placed Uganda, where the average visitor spends $881.
And when it comes to jobs, Kenya is clearly the most dependent
on employment created by or associated with the industry (see table
titled, “Travel and tourism employment”). Tourism accounted for more
than half a million jobs in Kenya, or 3.5 per cent of the country’s
total employment.
Uganda is second in absolute terms at nearly 470,000 jobs,
making up 3.1 per cent of its total labour force. Tanzania comes in
third at just over 386,000 jobs, corroborating the view that the country
has developed a particularly high-end product offering that does not
require as many local jobs to bring in foreign exchange from visitors.
What is driving these highly divergent performances in the
tourism sectors of the four countries? What are the unique strengths and
competitive advantages of each country? And which opportunities can
each of the four seize going forward? The factors underlying performance
in the index give us a hint.
Findings
In the preface to the 2017 edition of the Travel & Tourism Competitiveness Report, four key findings are highlighted.
First, tourism and travel (T&T) competitiveness is
improving, especially in developing countries and particularly in the
Asia-Pacific region. As the industry continues to grow, an increasing
share of international visitors are coming from and travel to emerging
and developing nations.
Second, in an increasingly protectionist context, the T&T
industry continues building bridges rather than walls between people, as
made apparent by the increasing numbers of people travelling across
borders and the global trends toward adopting less restrictive visa
policies.
Third, in light of the Fourth Industrial Revolution,
connectivity has increasingly become a must-have for countries as they
develop their digital strategy.
Finally, despite the growing awareness of the importance of the
natural environment to tourism growth, the T&T sector faces enormous
difficulties in developing sustainably, as natural degradation proceeds
on a number of fronts.
KENYA
KENYA
KENYA'S HIGH ranking in the index overall is supported by the
fact that it performs best in the region in at least seven of the 14
indicators, foremost of which is its bureaucracy. The country scores
best in terms of government prioritisation of the industry, spending 7.1
per cent of its budget on the sector, the highest relative to the other
three countries in the region.
The country's high ranking is also driven by its human resource
and quality of the labour market. With a gross secondary school
enrolment rate of 67.6 per cent, the best by far of the four economies,
there is a pool of relatively highly skilled personnel that the tourism
industry can draw from, and staff training in the sector is high.
The quality of hotels, resorts and ICT infrastructure in the
country is regarded highly, the data shows, and although still low by
international standards, Kenya’s air transport infrastructure is also
better developed than other countries in the region.
But Kenya is let down in two important indicators – safety and
security, and price competitiveness. The country has often been the
target of negative travel advisories owing to the threat of terror
attacks.
WEF’s surveys indicate that local and international perceptions
of the business costs of terrorism is by far the highest in the region
and even globally, at a dismal 135 out of the 136 economies surveyed in
the index.
Kenya, tied with Rwanda, also performs poorly in price
competitiveness. The major deterrent is in the relative strength of the
Kenya shilling compared with its neighbours, and the high cost of living
in Kenya.
It means that purchasing power is much lower in Kenya than in
Uganda and Tanzania, meaning that every dollar spent in the latter two
goes “further” than in Kenya, negatively impacting its attractiveness
for the price-conscious traveller.
TANZANIA
THE COUNTRY comes close to Kenya but its outright strength is in
its natural resources, where it is ranked 15th globally for it is well
known for its rich natural beauty and abundant wildlife.
Although spending much less than Kenya, comparatively, on the
T&T sector (5.7 per cent of Tanzania’s government budget compared to
7.1 per cent of Kenya’s) Tanzania’s country brand strategic rating far
outshines that of Kenya, highest in East Africa and at an impressive
position 8 globally, according to WEF expert surveys.
It suggests that Tanzania is more established in the global
consciousness and so government apparatus doesn’t have to work so hard
to attract any “Average Joe” visitor.
Instead, Tanzania has focused on attracting high-spending
tourists, such as those who pay top dollar to go on hunting safaris of
big game. A 21-day full hunting safari would cost about $60,000,
excluding flights, gun import permits and trophy fees.
And because of its weak currency and relatively lower cost of
living compared with Kenya and Rwanda, Tanzania also scores highly in
price competitiveness.
But Tanzania is let down by a number of logistical factors,
including its business environment, tax regime and competitiveness. It
takes 26 days to start a business in Tanzania on average, and 205 days
(more than six months) to deal with construction permits — the slowest
turnaround times for these important business processes in the region
Tanzania’s human resource and labour market readiness is also
creating a drag on its competitiveness. Staff training, and the degree
of customer orientation, is ranked lowest among the four countries. It
means it is difficult to find skilled employees suitable for the tourism
industry.
RWANDA
RWANDA'S BEST showing is in the safety and security indicator.
The business cost of crime and violence is by far the lowest in the
region, an indicator for which Rwanda is fifth globally. Rwanda’s police
force is perceived to be the most reliable in the region, and the
business costs of terrorism are also very low, at an impressive ninth
globally.
Rwanda also shines in terms of its efficient business
environment and logistics. It takes just four days to start a business;
the country has attractive rules around FDI (eighth globally), an
efficient legal framework for settling disputes, and an attractive
taxation regime. The country also has a highly effective marketing
campaign to promote Brand Rwanda, a testament to the government’s
laudable capacity to shape and manage the country’s international
perception.
Rwanda’s main weakness is in the lack of natural assets, mainly
because it is such a small, densely populated country. Tourist service
infrastructure, broadly speaking, is much less developed, including the
low number and quality of hotel rooms.
Rwanda is also let down by its price competitiveness; the
Rwandan franc is relatively strong against major international
currencies compared with the Tanzanian and Ugandan shilling. This, plus
the high cost of living, means Rwanda (tied with Kenya) has the least
favourable price competitiveness in its tourism offerings. The recent
gorilla price hike is likely to have an even worse impact on the
country’s price competitiveness.
UGANDA
ALTHOUGH RANKED lowest overall in the T&T index among the
four countries, Uganda’s comparative advantage is in its international
openness, having favourable visa terms for most incoming international
visitors.
Along with Tanzania, a weak shilling means that purchasing power
parity rank it best in East Africa, meaning that a dollar in Uganda
goes further than in the other three countries. It means that Uganda is
attractive to the price-conscious traveller, possibly explaining the
visitor volumes it has been able to turn over – despite its overall low
ranking, the country impressively attracted the highest number of
international visitors in 2015, at over 1.3 million.
Uganda’s major weakness is in its infrastructure, ranked lowest
both in air and ground infrastructure. The density and quality of roads
as well as ground transport efficiency is perceived to be the poorest in
East Africa, according to survey respondents.
Uganda also scores lowest on the prioritisation of the tourism
and travel sector in East Africa — the sector doesn’t seem to be on the
radar of government policymakers. Brand Uganda’s marketing campaign does
not seem to attract visitors effectively; its marketing and branding is
perceived to be the weakest in the region.
Still, it could be argued that this is a form of “benign
neglect” that has allowed the sector — free from government attention —
to organically develop an affordable tourism product that can attract
higher numbers of visitors than you would expect.
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