1. Step 5 : Tracking Revenue Flows and Pro-Poor Income $ $ Adapted by Dr Trevor Sofield Professor of Tourism University of Tasmania $ $ $ $

2. PhaseStepWhat to do?Why? Phase 1: Diagnosis Step 1Preparation To define the destination, target group of poor, and the project team Step 2 Map the big picture: enterprises and other actors in the tourism sector, links between them, demand and supply data, and the pertinent context To organise a chaotic reality, understand the overall system Step 3Map where the poor participate To avoid erroneous assumptions about poor actors To take account of the less visible suppliers Step 4 Conduct fieldwork interviews in each node of the chain, with tourists and service providers To provide data and insights for Steps 5 to 8 Step 5 Track revenue flows and pro-poor income Estimate how expenditure flows through the chain and how much accrues to the poor Consider their returns and factors that enable or inhibit earnings To follow the dollar through the chain down to the poor, and how assess how returns can be increased Phase 2: Opportunities Step 6 Identify where in the tourism value chain to seek change: which node or nodes? To use Steps 1 to 5 to select areas ripe for change To focus Steps 6 to 8 down to specific areas Step 7 Analyse blockages, options, and partners in the nodes selected, to generate a long list of possible interventions To think laterally and rationally in generating the range of possible projects Step 8 Prioritise projects on the basis of their impact and feasibility To generate a project shortlist, comprising projects most likely to deliver impact Phase 3: Planning Step 9Project planningHow to package selected projects for funders Step 5

3. Income that accrues to any poor or low-income participant in the tourism chain Staff: wages/salaries plus tips Micro business (e.g. boat man, guide): net revenue Vendor, producer, processor (fruit seller, artisan): sales revenue or net revenue, value capture Community business or partnership: collective income received NB: avoid double counting Can be renamed as ‘Income to Low-income People (ILIP)! ‘Pro-poor income’ (PPI)

4. Who is poor? If based on current income (a pragmatic approach but consider argument about trajectories as a caveat): Extreme poverty line: fish porters and cleaners in Zanzibar, farm hands and fishers’ assistants in Ethiopia Basic poverty line: gardener in mid-market rural hotel International poverty line ($1 pp, p day, or $150 pm for family of 5): waiter in 4* hotel Or based on the area and HH that they come from?

5. PPI – example 1: beef in Ethiopia Farmer Price$283 % final value captured52% % gross margin18% Local market trader Price$311 % final value captured5% % gross margin9% Addis Ababa market trader Price$424 % final value captured21% % gross margin27% Butcher (sells to hotel) Price$547 % final value captured22% % gross margin22%

6. PPI – example 2: craft in Accra Carver Price$2 % final value captured40% % gross margin97% Trader Price$2.50 % final value captured10% % gross margin20% Finisher Price$3.50 % final value captured20% % gross margin29% Retailer Price$4.00 % final value captured30% % gross margin30%

7. PPI – example 3: conference excursions in Accra DestinationTransportDriverGuides Entry fees Boat trip Food & drinkMarginTotal Cape Coast1413.6720017.314.070.0 Lake Volta813.6701017.38.040.0 Accra City50.53.670005.025.0 Costs in USD of three excursions offered to delegates

8. Step 6 : Analyse Where in the Value Chain to Intervene PhaseStepWhat to do?Why? Phase 1: Diagnosis Step 1Preparation To define the destination, target group of poor, and the project team Step 2 Map the big picture: enterprises and other actors in the tourism sector, links between them, demand and supply data, and the pertinent context To organise a chaotic reality, understand the overall system Step 3Map where the poor participate To avoid erroneous assumptions about poor actors To take account of the less visible suppliers Step 4 Conduct fieldwork interviews in each node of the chain, with tourists and service providers To provide data and insights for Steps 5 to 8 Step 5 Track revenue flows and pro-poor income Estimate how expenditure flows through the chain and how much accrues to the poor Consider their returns and factors that enable or inhibit earnings To follow the dollar through the chain down to the poor, and how assess how returns can be increased Phase 2: Opportunities Step 6 Identify where in the tourism value chain to seek change: which node or nodes? To use Steps 1 to 5 to select areas ripe for change To focus Steps 6 to 8 down to specific areas Step 7 Analyse blockages, options, and partners in the nodes selected, to generate a long list of possible interventions To think laterally and rationally in generating the range of possible projects Step 8 Prioritise projects on the basis of their impact and feasibility To generate a project shortlist, comprising projects most likely to deliver impact Phase 3: Planning Step 9Project planningHow to package selected projects for funders

9. 6a: Based upon steps 1-5, decide roughly where to focus: a ‘pressure point’, an upgrading strategy, a target group, a strand of the chain Use common sense, a few principles and analysis of trade-offs to identify priority pressure (leverage) points Identifying where to intervene in the chain

10. Options include parts of the value chain where: Financial flows are already fairly pro-poor (in % terms) but could be expanded? How? (Food and accommodation in ET) Financial flows to poor are already high (in $ and number of poor). Is an increase in size or pro-poor share possible, even if by a small fraction? Financial flows are less pro-poor than ‘normal’? Can this be changed? (Zanzibar mass tourism) Identifying where to intervene in the chain

11. Options continued... Blockages are preventing more poor people from joining at specific points. Are these areas for potential intervention? Blockages prevent specific current participants earning more. Are there ways they can expand their sales, boost their profits, or add higher value activities? (high transaction costs, inefficiencies, barriers to entry – all sectors/countries) New opportunities or trends in the current context that can be used to develop participation of the poor? (local sourcing of food)

12. The sights and sounds of Luang Prabang Two pressure points in Luang Prabang, Laos

14. Think laterally – fish supply in Zanzibar www.worktheworld.co.uk/_img

15. Think laterally – fish supply in Zanzibar Whole -salers II Input suppliers Fishers (and boat owners) Whole -salers I Retailers Hotels, Restaurants, rural & urban HHs Wholesaling, storage, bulking, transport Retailing, transport Fishing, (transport) Input supply Consumption Auctioneers Primary processors, porters and auctioneers Extension services, govt. fisheries sector development initiatives and assistance programmes, MACEMP, research and statistics collection, IMS, NGOs, microfinance services

16. Think laterally – fish supply in Zanzibar Whole -salers II Input suppliers Fishers (and boat owners) Whole -salers I Retailers Hotels, Restaurants, rural & urban HHs Wholesaling, storage, bulking, transport Retailing, transport Fishing, (transport) Input supply Consumption Auctioneers Primary processors, porters and auctioneers But we need to be careful: in increasing income for fishermen by selling direct to the final buyer (hotels, restaurants, etc) we could be CREATING NEW POVERTY if we remove income for primary processors, porters, wholesalers, and transport operators who move the fish between the fishermen to the wholesalers to the retailers to the hotels !!! Some of these people may be just above the poverty line and if we take away their role in the supply chain we might push them below.

17. Step 7: Developing a Long List of Intervention Options PhaseStepWhat to do?Why? Phase 1: Diagnosis Step 1Preparation To define the destination, target group of poor, and the project team Step 2 Map the big picture: enterprises and other actors in the tourism sector, links between them, demand and supply data, and the pertinent context To organise a chaotic reality, understand the overall system Step 3Map where the poor participate To avoid erroneous assumptions about poor actors To take account of the less visible suppliers Step 4 Conduct fieldwork interviews in each node of the chain, with tourists and service providers To provide data and insights for Steps 5 to 8 Step 5 Track revenue flows and pro-poor income Estimate how expenditure flows through the chain and how much accrues to the poor Consider their returns and factors that enable or inhibit earnings To follow the dollar through the chain down to the poor, and how assess how returns can be increased Phase 2: Opportunities Step 6 Identify where in the tourism value chain to seek change: which node or nodes? To use Steps 1 to 5 to select areas ripe for change To focus Steps 6 to 8 down to specific areas Step 7 Analyse blockages, options, and partners in the nodes selected, to generate a long list of possible interventions To think laterally and rationally in generating the range of possible projects Step 8 Prioritise projects on the basis of their impact and feasibility To generate a project shortlist, comprising projects most likely to deliver impact Phase 3: Planning Step 9Project planningHow to package selected projects for funders

18. The questions of scales of impact and time...

19. The questions of total PPI and outreach...

20. An example of small and medium scale interventions Pressure point/strand/ supply chain Blockages and opportunities Target group of intervention Desired change in value chain performance Different forms of possible intervention Increase local food supplies Cheap imports Seasonality of production Chefs prefer a single wholesale contract Unaffordable transport Fruit and vegetable farmers Increased percentage of tourist food sourced from local farmers Farm extension on seasonality Farmer association for shared marketing Shared transport Financing of transport Work with chefs on logistics of local sourcing

21. Larger scale interventions: the institutional environment in Ethiopia ODI study included hierarchical institution tourism governance mechanisms, policy review and support and service environment World Bank/SNV potential interventions include mainstream work with government institutional reform It is important to have a diverse long list of options at different scales

22. Exercise Produce a long list of intervention options for Addis Ababa and Kilimanjaro Don’t forget the diverse mix! Souvenir carvings, Addis Ababa Porters in Mt Kilimanjaro

23. Step 8: Developing the Short List: Prioritisation PhaseStepWhat to do?Why? Phase 1: Diagnosis Step 1Preparation To define the destination, target group of poor, and the project team Step 2 Map the big picture: enterprises and other actors in the tourism sector, links between them, demand and supply data, and the pertinent context To organise a chaotic reality, understand the overall system Step 3Map where the poor participate To avoid erroneous assumptions about poor actors To take account of the less visible suppliers Step 4 Conduct fieldwork interviews in each node of the chain, with tourists and service providers To provide data and insights for Steps 5 to 8 Step 5 Track revenue flows and pro-poor income Estimate how expenditure flows through the chain and how much accrues to the poor Consider their returns and factors that enable or inhibit earnings To follow the dollar through the chain down to the poor, and how assess how returns can be increased Phase 2: Opportunities Step 6 Identify where in the tourism value chain to seek change: which node or nodes? To use Steps 1 to 5 to select areas ripe for change To focus Steps 6 to 8 down to specific areas Step 7 Analyse blockages, options, and partners in the nodes selected, to generate a long list of possible interventions To think laterally and rationally in generating the range of possible projects Step 8 Prioritise projects on the basis of their impact and feasibility To generate a project shortlist, comprising projects most likely to deliver impact Phase 3: Planning Step 9Project planningHow to package selected projects for funders

24. From a long list to a short list of interventions Rule out options with a mark in a box Criteria table for each intervention (or combination)

25. From a long list to a short list of interventions Rule out options with a mark in a box Criteria table for each intervention (or combination)

26. From a long list to a short list of interventions CriteriaImpact UnacceptableLowMediumHigh PRO POOR IMPACT Likelihood of impact Rule out options with a mark in a box Criteria table for each intervention (or combination)

27. From a long list to a short list of interventions Assess each option and combinations After doing all the assessing, reflect, discuss, compare, and DECIDE!

28. A ‘traditional’ intervention Example: Wild Coast community-based tourism project 2000-2005. Developed community-based accommodation (lodges & campsites) at three sites along this very rural stretch of the South African coast. Supported hospitality training; craft development; community empowerment; hiking trail development; environmental management and tourist promotion. Established community trusts to manage receipts from tourists. Cost: Funded by EU at cost of €12.9m Impact (& ROI): created 87 jobs for the 3 years the project was running – non sustainable ($50,000 cost per job per year). Generated about $20,000 in a community trust much of which did not benefit anticipated beneficiaries. Private sector concessions collapsed due to community conflict and local government resistance. Main beneficiary was urban, affluent Irish consultancy company.

29. A ‘market-based’ intervention Example: Berimbau project took place in 2006 in NE Brazil near Salvador. Private sector owners of Costa do Sauipe resort of 1,800 beds joint-financed training initiative with United Nations to raise local community access to jobs in the hotel Cost: US$1m from resort owner and US$340,000 from United Nations Export Led Poverty Reduction Programme (including support for craft and agricultural links). Impact: US$1.3m additional income yearly into poor community from 1,100 additional local people accessing jobs at resort (10% to 40% total workers raising average household income from $100 to $200 per month

30. Practical exercise Produce short lists of priority interventions for Addis Ababa and Kilimanjaro Hint: work with the market!