In this column called "The Indicator", we will be taking an economic or financial statistic from East Africa and breaking it down into bite-sized nuggets of knowledge for investors.
Today's indicator figure is 3.4
3.4 of what?
With the summer holiday travel season upon those in the northern hemisphere, this month's Indicator is 3.4 or 3.4%, the percentage of foreign tourists compared to residents visiting the East African Community (EAC) countries.
How does this compare to other regions of the world?
There were approximately 1.13 billion people visiting international destinations as tourists in the most recent year studied, with approximately 5.4 million of them visiting EAC countries, and 65.3 million visiting African countries overall.
The highest density of foreign overnight visitors per country occurs in European micronations and Caribbean Islands including Andorra (3247%), Turks and Caicos (1061%), Aruba (1036%), and Monaco (874%). Beyond these categories of countries, Bahrain, Malta, Iceland, and Austria seem to attract a high number of visitors with 767%, 395%, 305%, and 296% respectively.
The African nation of Seychelles takes in 233 thousand visitors annually from a population of 91 thousand or a ratio of 255% followed by Mauritius with 82% foreign visitors and Lesotho with 51%.
So which countries in EAC have the most and which are the least tourists visiting?
Despite having numerous game parks and tourist infrastructure Kenya (1.4 million), Tanzania (1.3 million) have only a small lead on foreign visitors per year than Uganda (1.3 million) or Rwanda (1.2 million) both of which have the highest tourist to resident ratio of the EAC at 9.6%.
Tourism in East Africa
How does tourism benefit EAC countries?
The most recent total expenditure of tourists visiting the EAC was 4.2 billion USD or about $779 per tourist.
This total has doubled since 2006 showing overall strong growth in the tourism industry of East Africa, significantly in Uganda and Tanzania.
Most tourists come from developed nations and spend money in hard currency. They visit national parks and spend money on food, lodging, and handicrafts; that creates both jobs as well as tax revenue.
It sounds like tourism is good for EAC countries; what is being done to attract more?
The EAC has been promoting a region-centric plan of strategic growth for East Africa's tourism industry. Its approach is focused on creating EAC standards for classification of tourist amenities, marketing East Africa abroad, empowering a regional Wildlife Conservation Agency, harmonizing state-specific policies on wildlife conservation, and fostering capacity building in the tourism industry.
Other programs from Trademark East Africa, a not-for-profit organisation that supports the regional and international growth of trade and investments from bilateral donors such as the World Bank, are active in fostering an increase in foreign and domestic visitors to EAC countries.
If judged by the significant leap in revenue over the past ten years, it seems like these programs are on the right track.
Is tourism expected to increase or decrease?
Based on the trends we see over the past ten years it is very likely that tourism to the EAC will continue to increase on a steady basis. The World Tourism Organization expects to see an increase in tourists visiting Africa by 3% to 5%.
The recent decline in oil prices is expected to keep travel costs lower, larger adoption of visas on arrival in EAC countries, and the increase in online marketing and bookings is expected to ease travel impediments.
However, political instability and terrorism can occur in unpredictable ways and could discourage tourists from visiting. Recent threats of instability in Kenya led to a 25% decline in foreign tourists visiting over the past two years with some areas suffering significant declines.
How can I learn more?
This article uses statistics and figures from several publicly available sources. To learn more about tourism in the EAC visit:
EAC Report - http://www.eac.int/statistics/index.php?option=com_docman&task=doc_details&gid=146&Itemid=153
UN World Tourism Organization - http://www2.unwto.org/
About the authors:
David L. Ross is Managing Director of Statera Capital and US Ambassador to the Open University of Tanzania active in growing companies in Eastern and Southern Africa through primary investment, investment advisory, strategic partnerships, and executive education. Connect on LinkedIn at https://tz.linkedin.com/in/davidlross1 or at firstname.lastname@example.org.
Catherine Mandler is a Senior Analyst at Statera Capital. Connect on LinkedIn at www.linkedin.com/in/CatherineMandler or at email@example.com.