Tourism overtakes gold in foreign exchange earnings in Tanzania

According to the East African News, tourism has now overtaken gold to become the chief foreign exchange earner for Tanzania. USD 2.05bn in earnings was generated in tourism in the 12 months to January 2015. This was an increase of 8.47% from the US$1.89bn earned in the 12 months ending January 2014, overtaking gold as Tanzania’s leading foreign exchange earner.

The Bank of Tanzania’s February Monthly Economic Review indicates that gold exports plunged from USD 1.64bn to USD 1.31bn in the period under review, as both export volume and price in the world market dropped. Approximately, one million tourists are estimated to have visited the country during the period. Tanzania Association of Tour Operators chief executive Sirili Akko told The East African News that Tanzania remains competitive “as the government suspended implementation of new value added taxes and entry fees.” Tour operators were previously being subjected to 23 different taxes, 12 being business registration and regulatory licenses fees as well as eleven duties for each tourist vehicle per annum. “This is how things will look like, when private and public sectors work together,” he added. 

Tanzania hopes tourist arrivals will hit 1.2 million this year, up from the estimated one million visitors in the Jan 2014-Jan 2015 period, earning the economy close to US$2.25bn. According to the five-year marketing blueprint rolled out in 2013, Tanzania expects two million tourists by close of 2017, boosting the revenue from the current US$2bn to nearly US$3.8bn. According to the latest Tanzania Economic Update by the World Bank, the industry can grow and create more jobs. However, in order to realise this opportunity, the bank advocates that the government should simplify its tax system and make its revenue allocations more transparent. 

“There is no doubt Tanzania is in a good place with tourism but it could do considerably better,” said Philippe Dongier, World Bank country director for Tanzania, Burundi and Uganda. “Tanzania has abundant natural tourism attractions and is well recognised internationally.” 

Tourism directly employs close to half a million Tanzanians and contributes to almost 25% of its total exports earnings and represents approximately 17.5% of Tanzania’s total GDP. 

To increase tourism’s benefits to the economy and the public, the World Bank’s update proposes diversification of tourism activities from the current emphasis on high-end tourism to include more modest travel budgets, local and regional visitors. Other recommendations contained in it are to further integrate local communities and small operators into tourism activities through benefit-sharing processes, and revisiting the current complex system of taxes and fees, and the non-transparent use of revenues collected from tourism. 

The improved revenues earned from tourism in Tanzania illustrate its importance and capability of providing employment for Tanzanians and the region. However, we believe that the potential of the sector region is currently being hindered by the unhealthy competition and lack of co-operation and coordination that seems to exist between Kenyan and Tanzanian authorities. As recently as December 2014, Kenya started barring Tanzanian tour operators from picking up and dropping tourists from its airports in a tit for tat spat with Tanzanian authorities. With the high stakes involved in the industry, we believe that the two countries would be better off finding ways to cooperate and harness the potential of tourism in the region rather than try to hinder each other’s progress and growth as this will lead to greater benefits for the region as a whole.