Tourism in Tanzania Dr. Riccardo Pelizzo

Introduction The purpose of the present presentation is to advance two basic claims and some practical recommendations Our claims are: First, that tourism can contribute to promoting development and reducing poverty, Second, that tourism’s ability to promote pro-poor growth is conditional Our discussion of the conditions under which tourism can promote growth, development and poverty reduction will lead to a set or practical recommendations

Tourism in Tanzania The tourism industry has experienced a massive growth over the years According to the World Bank the number of tourism arrivals has increased by more than 387 percent-- from 285000 international tourist arrivals in 1995 to 1104000 international tourist arrivals in 2015

Tourism in Tanzania-2

The dividends of tourism The growth of the tourism sector yielded two basic dividends: 1) it created employment 2) it contributed to wealth creation and to the country’s GDP

The dividends of tourism-2

The dividends of tourism-3 The second benefit associated with the growth of the tourism sector is the creation of wealth and the contribution to the country’s GDP Tourism has consistently made a contribution to Tanzania’s GDP Such contribution has varied from a minimum of 3.75 per cent in 2000 to a maximum of 9.5 in 1995 In recent years, it has steadily increased—see next slide

The dividends of tourism-4

The dividends of tourism-5

The dividends of tourism-5 But while the development of the tourism sector created employment and wealth, it did not do much to reduce poverty and income inequality Why? The first reason why tourism did not contribute much to poverty alleviation is the so called ‘vertical integration’ Tour operators use their charter flights, to bring tourists, with their buses/transport, to their resorts and none of this contributes much to the local economy

The dividends of tourism-6 The second reason is that, even in the absence of vertical integration, foreign ownership can prevent Tanzania from enjoying the dividends of tourism More than 60 per cent of profits in SSA were repatriated according to various studies And in some cases profits are not even made in Tanzania—tourists buy packages back home and most of the money does not even come to Tanzania

The dividends of tourism-7 The third reason is that tourism creates employment but people working in the tourism industry are paid less than the workers working in any other sector This was true from 1995 to 2011 and it remained true from 2012 onward The average salary in 2013 was lower than in 2012 and the 2014 average salary was only 215 shillings higher than what it had been two years before

The dividends of tourism-8 To make matter worse, there is a very high level of income inequality between men and women working in the tourism sector The difference was about 30,000 shillings per month, which is nearly 20 per cent of the average monthly cash income for a woman working in the tourism sector The bad salary conditions for women are a problem because most workers in the tourism sector are women

Conclusions Vertical integration Profit repatriation Profits made elsewhere Low income for tourism workers Income inequality across gender Are the 5 main reasons why a thriving tourism industry has thus far failed to reduce poverty and inequality

Some recommendations Better salary/wages for workers in the tourism industry The elimination of differences in income across gender: women must be paid like men if they perform the same function/task Make sure profits are made and are kept locally encourage local ownership, find a way to compel foreign owners to reinvest locally part of their profits Try to reduce/eliminate vertical integration Promote use of locally-owned resorts, hotels and facilities Promote use of locally-owned transport