Tanzania: What It Will Take to Revive Tanzania's Tourism Sector

Dar es Salaam — The World Bank (WB) yesterday mentioned five priorities that could support sustainable recovery of Tanzania's tourism sector which was also hard hit by the Covid-19 pandemic.

Tourism was Tanzania's leading foreign exchange earner by 2019. But the earnings dropped to $1 billion in 2020, down from $2.6 billion in 2019 following the outbreak of the viral Covid-19 which disrupted economic activities around the world.

Accordingly to the Bank of Tanzania (BoT), foreign tourist arrivals in 2020 declined to 616,491, from 1.5 million in 2019.

Tourism earnings decelerated further, reaching $795.8 million in the year to May 31, 2021, BoT says.

In its 16th Economic Update which focused on the sector, WB said that Tanzania can prioritise the five aspects which include creating an efficient, reliable, and transparent business environment.

"Tanzania's tourism sector has long suffered from mutual distrust between the government and private firms, with the former complaining of widespread tax evasion and the latter citing government inefficiencies and misunderstanding of the way the sector functions. The pandemic has created an opportunity to reset this relationship," states the report which also calls for reforms to improve climate for business and investment.

Tanzania is one of the top countries around the world with natural attractions but the World Bank says regulatory reforms will be necessary to improve the competitiveness of the tourism sector by reducing uncertainty and lowering the cost of doing business.

It also proposes formation of a special taskforce which will suggest the reforms related to taxes and fees, licenses requirements, labor regulations, and investment incentives.

The second priority relates to improving tourism information management system where the government establish a system that consolidates data from tourists and firms, enabling policymakers to improve sectoral planning and create viable investment opportunities.

The new system will help to understand customer behaviors, preferences, and spending patterns and to connect them with demographics and market segments.

Currently, the World Bank says there are multiple data-collection systems and institutions that do not share information. The official statistics are also said to not clearly distinguish between international leisure tourists and temporary visitors from neighboring countries.

The third priority calls for ensuring that all firms across the sector, as well as those in downstream value chains, have access to affordable transitional finance to protect jobs.

Suppliers and subcontractors working with tourist operators, hotels, and restaurants have experienced a severe decline in demand, resulting in a 50 percent drop in the total number of workers and a 30 percent drop in the share of full-time employees in the sector, the World Bank said.

The fourth priority relates to Covid-19 management with the WB proposing a consistent promotion, monitoring and reporting on adherence to health and safety protocols.

"To reestablish confidence among consumers and the business community, the authorities must demonstrate Tanzania's adherence to global health and safety protocols in close collaboration with the private sector," the WB stated.

The fifth aspect is developing co-investment and partnership arrangements to support nature-based landscape and seascape management.

The WB says Tanzania is well positioned to take advantage of nature-positive investment opportunities and the additional revenue derived from global climate programmes, could ease the government's fiscal constraints while also supporting the livelihoods of local communities.

'Bringing business back'

Speaking during the virtual launch of the report, the experts and tourism stakeholders said all challenges in the tourism sector must be addressed now to bring back the businesses.

"What is most important for now, I think we should focus on bringing the business back and make sure we survive first," said the chief executive officer of Tanzania Tour Operators Association, Sirili Akko.

"Allowing vaccination, talking of Covid-19 issues and any support in that particular line should be the immediate thing. After that, we can have proper framework of consultations and dialogues on what we want to see in the sector like taxes and create predictability," he said.

"I think public-private partnerships are very important in making this industry come back," said Prof Wineaster Anderson of the University of Dar es Salaam.

"They need serious dialogue on each and everything they are intending to do in this industry. We do have a lot of suffering on the ground and perhaps they can think about soft loans, how to offer stimulus packages, how to make these businesses opening up again.

"It is not easy to give capital to all the businesses but how can they do to bring the sector back," she said.

"I would also like to suggest giving incentives to existing tourism-related businesses which are now strictly thinking of survival.

"No one is talking growing or expanding for now. We can have a dialogue how to get incentives in terms of tax burden and compliancy we do," said Kennedy Edward from the Hotels Association of Tanzania.

"We can have waiver or grace period until when the situation is better," he said.

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