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Which countries offer the best business and investment opportunities for investors in Africa's tourism sector?
Africa’s tourism potential remains largely untapped. The continent accounts for 15% of the world population yet receives only about 3% of world tourism receipts and 5% of tourist arrivals, writes African Development Bank Group Vice-President and Chief Economist Mthuli Ncube in the foreword of the inaugural issue of the Africa Tourism Monitor in 2013.
To maximize Africa’s tourism potential, he continues, critical investments are needed in key infrastructure sectors.
Access to better roads and increased airline connections are a start. But these efforts must be followed by improved energy access and bolstered telecommunications. An ease in the complexities of border crossing and accessing information could also move the sector forward.
Many African countries are making these improvements on a national level. But, elevating levels of tourism requires a boost in investment from the private sector. This article highlights the countries offering the best countries for investment in Africa’s tourism sector.
Uganda
Uganda is one of the fastest growing countries for tourism, based on tourist arrivals, in Africa. Between 2009 and 2012, tourism arrivals grew more than 43% and tourism receipts grew nearly 62%. The “Pearl of Africa”, named top tourism destination for the year 2013, continues to generate big returns in 2014, with receipts predicted to grow nearly 15% year-on-year in 2014.
The country is home to numerous untapped rural attractions, including Lake Bunyonyi and Ssese Islands. Located in southwestern part of Uganda, Lake Bunyonyi bears a resemblance to a scene from “Lord of the Rings”, according to Lonely Planet. Ssese Islands are one of the numerous attractions sitting on Lake Victoria. These locations among other sites require a boost in hotel offerings, especially 4-star and above, and improved logistics. Navigating the country as a tourist is not necessarily straightforward, thwarting revenue potential.
The Pearls of Uganda, a tourism initiative and partnership between Solimar International and the Uganda Community Tourism Association (UCOTA), will further boost the outlook for the tourism sector. Creating a network between tour operators, hotel providers and related parties should help the country manage its brand and better coordinate the sharing of information. Still promoters of the program openly admit that the projected bump in revenues – 60% in three years – depends largely on increased private investment.
Tanzania
Tanzania is already a top five country for tourism receipts in Africa, only trailing Egypt, South Africa, Morocco and Tunisia. Arrivals and receipts grew nearly 24% in 2012 and sector experts indicate that the final numbers for 2013 will show similar growth. Those tourists most familiar with the country know the picturesque Mount Kilimanjaro and striking Zanzibar beaches. But those locations only represent a tip of the tourism opportunities in the country.
Serengeti National Park is one of many national parks in the country, but is sadly the only truly famous one. Other national parks and reserves far from Dar es Salaam, such as Arusha National Park, can be difficult to reach. Negotiating the bumpy roads and unrealistic logistics of tour operators and drivers can be a burden too big for the traveller least familiar with the country.
An increase in airline flights to Dar es Salaam and other cities will only create a heavier burden for the sector. Investing in players in the sector, including tour operators and hotel operators, will pay greater dividends as high prices skyrocket in the face of limited offerings. The country, contrary to popular belief, is not approaching a break-even threshold, according to a local investor, and will not breach that threshold for some years. That observation says a lot for a country already a top player in Africa’s tourism sector.
Tunisia
Tunisia is another country already at the top of Africa’s tourism market, based on dollars and arrivals. Yet its full potential is clearly unrecognized at today’s level. Tourism receipts are still rebounding from their demise during the Arab Spring. Numbers should pass pre-revolution levels this year and establish a new high for the sector. Renewed flare-ups in 2013 have been quelled and should not hinder continued growth.
Opening the market for airlines in the country is a move in the right direction. But efforts by the government have slowed drastically as officials look to prop up the struggling national airline Tunisair. Still a small entrance from new operators has paid some dividends in easing access to the country and attracting a more varied group of travelers. Over the next few years, the openness – even if less than desired – will nicely compliment the return of visitors who stayed away during the previous couple years.
Competition plagued the returns of operators in the sector. Engaged private investors can reap benefits through guiding companies in how to boost operational efficiencies and manage balance sheets. Poor purchases of assets and poor pricing schemes created some bankruptcies in sector but also opened way for the stronger players to take greater market share in dollars AND brand.
Senegal
Senegal is not the star on this list. But it is definitely one of the countries with the greatest upside. The country hosts numerous picturesque sites, including Île de Gorée (one of U.S. President Obama’s previous visits in Africa). Yet most sites slide under the radar of persons not from Belgium or France.
Local operators argue that the sector benefited during the Arab spring as French travelers happily traded in an unsafe North Africa, specifically Tunisia and Egypt, for Senegal. Untouched beaches and deserts will nevertheless stay relatively bare over the long term until investment in hotels and related facilities begin to match sector demand. The government consequently has promoted expansive tax incentives and custom exemptions to buoy investor interest. Yet these efforts will not pay its truest dividends until the country’s infrastructure improves. Current plans to renovate the international airport in Dakar and introduce new toll roads is definitely a start in the right direction.
Namibia
Namibia is a personal favorite. It is definitely overshadowed – by word of mouth and number of arrivals – by Mozambique, a fellow southern African country on the opposite coast. But the growing violence in the north of Mozambique and uncertainty with safety led to a decrease in days stayed by the typical South African tourist and equally boosted the popularity of Namibia as a result. Yet, the popularity has yet to spread beyond South Africa and neighboring Angola. And sites, such as Swakopmund and neighboring Cape Cross, only make headlines in a Lonely Planet travel guide.
Between 2009 and 2012, tourism receipts grew approximately 40%, based on projected numbers for 2012. Tourists generally travel beyond the quite mellow country capital of Windhoek to the aforementioned tourist sites and other related sites along the coast. The country’s vast landmass in between sites requires tourists spend more time and money than that spent in regional competitors. A boost in foreign investment can help the facilities, including lodging, throughout the country capture greater profits.
A push in strategic marketing and tour packaging could also reap rewards. Betting mainly on South African and Angolan travelers will only sell the sector short. Messages coming from the government indicate that officials and investors are taking notice. The boom in mining and the travel companions associated with sector definitely helps interested parties take notice.
This article is re-published with permission from Frontier's content partner, Ventures Africa.
