“Despite of growing evidence of the beneficial impacts of tourism in developing countries and good practices in some individual firms, critics still question whether the overall balance of impacts is positive, particular as regards large holiday complexes and international hotel chains.” “As it has been the case of many other industries, tourism companies thus have so far focused most of their corporate responsibility efforts on environmental issues and philanthropic contributions to social programs. Much less attention has been paid to managing their economic multipliers and impacts along local and global value chains.” “The potential for innovative business practices that deliberately expand economic opportunities for the disadvantaged has not been fully realized.” Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007 On CSR: “…shows tourism lagging behind other industries.”

B4D - THE BEGINNING SADC Conference on Poverty and Development in Mauritius (2008) B4D Pathfinder = most appropriate project Partnership for poverty reduction B CG Jointly with SADC Employer Group Inclusive Business

THE DEFINITION Inclusive business aims to overcome poverty by incorporating low income communities into a company's value chain… …while maintaining profitability and upholding the principles of Corporate Social Responsibility (CSR). …sound environmental, health and safety management, fair labour conditions, good governance preservation of human rights. Inclusive Business

THE APPROACH It’s not “another problem”. It’s about profits of companies! Financial benefits How can business practices of tourism companies be adapted to achieve long- term commercial profit and deliver greater benefits to the poor?

MODEL OF THE B4D PROJECT Uses knowledge, skills, resources and strengths of the private sector Charter Barometer Toolkit Focuses on ‘inclusive business’ Core Business Including low income communities into a company’s value chain Profitability Contains mechanisms for self assessment People-centred, home grown Certification

BENEFITS

POOR PEOPLE AS… Workers Distributors Retailers Suppliers Consumers SMEs

BUSINESS MODEL

Manual Distribution Centers Foto: HarvardKennedySchool & IFC Second largest beer brand in Africa Over farmers involved

INCLUSIVE BUSINESS & SUSTAINABLE TOURISM Inclusive business aims at overcoming poverty. In general, sustainable tourism focuses on environmental sustainability. Environment = important component of inclusive business as being the resource base for the poor. Inclusive business also covers large-scale forms of tourism & mass tourism: it is neither equivalent only to ecotourism, nor to rural tourism, nor to community based tourism etc.

STRUCTURE OF TOURISM INDUSTRY Africa’s tourism industry = mainly SMEs lacking financial and human resources Divers range of actors involved in the tourism industry = no model solution Government: infrastructure, marketing, licensing and regulation Aspects of governance, labour, health, climate change, safety

OBSTACLES General obstacles: 1.(International) Verticalisation 2.Seasonality 3.Dependency from origination markets 4.Market trends 5.Effects of instability 6.Low linkages 7.Lack of infrastructure 8.Lack of skills Leakages: Repatriation of profits, import of skills, commodities, technology... Bookings abroad, big int. hotel chains, airlines: frequency & routes, etc. Source: Economic Commission for Africa & Economic Policy Research Centre/V. Gerosa, 2003

POLICIES At national level, tourism has been scarcely included in poverty reduction policies in Africa Source: Economic Commission for Africa & Economic Policy Research Centre /V. Gerosa, 2003 Lack of consideration and information about how tourism could contribute to produce outcomes that directly benefit the poor, (focus is on growth of the industry or its contribution to macroeconomic indicators.)

EXAMPLES OF GIVEN POLICIES Source: Economic Commission for Africa & Economic Policy Research Centre /V. Gerosa, 2003 South Africa: White Paper, Poverty Relief Programme, TEP, NQ, FTTSA, CPPP, etc. In addition, Zambia, Malawi, Lesotho, Tanzania give relevance to tourism in their PRSPs

TOURISM OVERCOMING POVERTY Labor-intensive, esp. in low labour cost countries Less vulnerable than traditional sectors Non-cyclical and resiliency Catalytic effect on other economies Creates better & more gender concerned jobs Lower barriers to entry (e.g. tariff barriers) Built on natural & cultural assets and consumed onsite Source: Economic Commission for Africa & Economic Policy Research Centre/V. Gerosa, 2003 Great potentialities Outsourcing of services (e.g. food, transport, handy-crafts)

THE STARTING POINT Best case: Direct earnings of unskilled/semi-skilled workers = 25% of the tourist spending at destination level Indirect earnings (supply chain) adds an extra % on top of the direct effects of tourism. Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007 Dynamic effects of tourism have to be taken into account Livehood strategies of local households Business climate for SME development Patterns of growth of local/national economy Infrastructure Natural resource base

THE BUSINESS CASE Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007 Business benefits center around: 1) mitigating risks (security, reputation, policy, regulatory risks) 2) building opportunity Enhancing customer satisfaction Improving staff morale & service quality Offering a more diverse range of unique products Improving community attitudes and interactions with guests Building the brand and improving marketing capacity Decreasing operating costs (sourcing locally) Increasing access to finance (e.g. IFC) Collaborating more effectively with governments FTTSA

REQUIREMENTS High knowledge and understanding of local employment practices Willingness to e.g. link hotels and local SMEs Collaborate with other markets (formal and informal) Policy Innovation Patience Resources

Examples Mt. Plaisir Estate Hotel, Trinidad Siwa Oasis and Example of Traditional Siwan Architecture Source: UNDP

OPTIONS Training/mentoring (staff, locals, SMEs) New employees Procurement (New) products (New) services Marketing Transport Quality insurance Packaging Microfinance systems/incentives Community revenue/profit sharing schemes Industry-wide training centers (talent pool) Building up institutional capacities Think tanks on joint development etc. (TEP)

B4D BAROMETER Toolkit Charter

ROAD MAP

ODI (Overseas Development Institute), IIED (International Institute for Environment and Development) ICRT (International Center for Responsible Tourism ). SNV

“Tourism’s current role in expanding economic opportunity in developing countries presents a paradox. Resolving this paradox offers tourism companies the potential to play a leadership role within the industry and the business community as a whole.” Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007