Lesson for East Africa: In tourism, the race is not to the swift

Thursday June 01 2017

Tourists at the Kenya Coast. Kenya’s travel and tourism sector is ranked as the most competitive in East Africa. PHOTO | FILE

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.


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'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.


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'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.


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.