Tourism and poverty alleviation

Previous chapters have shown that the tourism sector in Africa contributes significantly to GDP and employment. Several arguments support the notion that the sector can also support pro-poor growth – that is, growth “that enhances the ability of poor men and women to participate in, contribute to and benefit from growth” (Organization for Economic Cooperation and Development, 2006). Specifically, a range of tourism economic activities can provide a fairly high share of revenues to the poor (UNCTAD, 2013a). The ways in which tourism achieves this, and how this can be improved, is examined in this section.

First, the tourism sector is labour intensive. Compared with other sectors, tourism generates comparatively more jobs than other sectors, except agriculture (Overseas Development Institute, 2006). This is due to its capacity to create strong backward and forward linkages, as discussed in chapter 2. The International Labour Organization (ILO) estimates that for every 1 job created in the core areas of hotels, catering and tourism, approximately 1.5 additional jobs are created in sectors indirectly linked to tourism (ILO, 2010a); hence tourism is among the world’s top creators of jobs (ILO and UNWTO, 2009). Tourism jobs further require various skill levels, with a relatively high proportion being low-skilled positions (World Travel and Tourism Council, 2015). This is particularly relevant to the poor who may be excluded from other work due to a lack of sufficient employment experience or education. The pro-poor impact is however dependent on the wage level of employment opportunities (UNCTAD, 2013a).

Second, the “out-of-pocket expenditure” of tourism is more likely to reach the poor.

Studies suggest that 25–50 per cent of spending in restaurants, shopping and handicrafts, and local transport and excursions reaches the poor, particularly when supplies for those pursuits are sourced locally (Overseas Development Institute, 2006).²¹ If leakages are adequately minimized (see chapter 2) and local people are integrated well into the tourism value chain, tourism provides opportunities for poor people and small businesses to sell goods and services directly to tourists. Tourism can provide access to income-generating opportunities, though these opportunities may constitute vulnerable employment (see below).

21 While out-of-pocket expenditure can be a low share of total tourist expenditure, this figure ap-pears to vary across Africa. Out-of-pocket tourist expenditure on items such as food, shopping and excursions constitutes one third of the tourism value chain of the Gambia, whereas the figure is lower in markets such as Ethiopia, Mozambique and Uganda where these discretionary prod-ucts are less available. The level of out-of-pocket expenditure also varies by tourists, with package tourists spending less out of pocket than non-package tourists (Mitchell and Faal, 2008).

Tourism for transformative and inclusive growth

83 22 Traditional knowledge is “knowledge, know-how, skills and practices that are developed, sus-tained and passed on from generation to generation within a community, often forming part of its cultural or spiritual identity” (World Intellectual Property Organization, 2017).

Third, agriculture has the strongest linkage to tourism owing to the demand for food and agricultural products generated by tourists. Agriculture is the most labour intensive sector and the mainstay in rural areas where poverty is most pervasive and deepest; indeed, more than 70 per cent of the poor in Africa live in rural areas and rely on agriculture for food and livelihood (International Fund for Agricultural Development, 2011). Agricultural income is reported to sustain more households than jobs in hotels and restaurants (UNCTAD, 2013a), particularly when local agricultural products are effectively integrated into the tourism value chain. Increasing the demand for agricultural products through increased tourism may thus provide many additional income opportunities for poorer people, especially in rural areas.

Fourth, tourism tends to place great value on the warm climates, new environments and cultural products and history that often gives rural areas a comparative advantage over cities in attracting tourists (UNWTO, 2010). This is particularly likely among international tourists; while domestic and continental African tourists may be more interested in opportunities such as shopping tourism, international tourists more often travel to Africa for holiday purposes and so are likely more interested in experiencing new cultures, activities and environments (see chapter 4). As tourism brings its market directly into rural areas and communities, it offers opportunities to communities that are traditionally disconnected from the economic opportunities that cities create. Tourism can, of course, pose a risk to the natural and cultural resources of local communities. It is thus imperative that the development of tourism should include local communities from an early stage, as identified for example in the United Nations Educational, Scientific and Cultural Organization “Tourism, culture and development in West Africa” Programme (United Nations Educational, Scientific and Cultural Organization, 2004).

Finally, investment requirements for some tourism-related activities are relatively low.

For instance, the production of handicrafts requires traditional knowledge²² and local materials but comparatively little finance or infrastructure. Similarly, the tourism sector has much demand for traditional music and tours of local areas, which depend on traditional knowledge and skills. Acquiring such local and traditional skills is not investment intensive and is conducive to providing opportunities for the poor.

The value of tourism jobs for poverty reduction can be appreciated through the case of Cabo Verde. Tourism in Cabo Verde has experienced strong growth over the past 15 years, with tourism export revenues increasing from $64 million in 2000 to more than $450 million in 2014. The sector’s contribution to GDP exceeded 43 per cent on

Economic Development in Africa Report 2017

84

average during 2011–2015. The income generated by a booming tourism sector led to a notable decrease in poverty rates and enabled the country to graduate in 2007 from the least developed countries category. Whereas in a 2001/02 survey, Cabo Verde had a poverty rate of 37 per cent, this fell to 27 per cent by 2007 (Overseas Development Institute, 2012). Poverty rates were lowest on the two islands which are the country’s main tourist destinations.

Tourism offers a relatively high share of low-skilled jobs that provide access for population groups with lower levels of education, which has benefits and risks. Low-skilled work runs the risk of not being decent work.²³ One study, for example, argues that much employment from tourism is low-skilled employment and characterized as temporary and casual, with high staff turnover, long and difficult working hours and locations far from typical residential areas (Ferguson, 2009). Furthermore, harassment, stress, low wages and exploitation are often a concern (Baum, 2013).

However, the categorization of certain tourism jobs as “low-skilled” may be more representative of developed than developing countries. For example, frontline staff and receptionist positions require skills in information technology and foreign languages, while small tourism operators and traders require accounting and stock-management skills. These skills are more abundant in developed than in developing countries, making them thus more valued in developing countries. Furthermore, in developing countries, high staff turnover in the tourism sector may not necessarily reflect a negative aspect of that particular labour market. Skills gained by tourism employees may be transferable and contribute to regular job changes to exploit wage differences and seasonal tourist movements (MacCarthy, 2014).

Another concern relating to tourism work is whether it constitutes vulnerable employment. Vulnerable employment is defined by ILO as the sum of own-account workers (self-employed individuals who do not have any employees) and contributing family workers (individuals working for an establishment operated by a related person in the same household). In these positions, workers are less likely to have formal working arrangements; the positions thus lack key elements of decent work (ILO, 2010b).

However, tourism could alleviate this concern, as ILO finds that in countries where the tourism sector is dominant, the vulnerable employment rate is lower. Tourism provides many wage and salaried positions, and thus could assist the many vulnerable workers in Africa (ILO, 2012a).

23 Decent work requires dignity, equality, a fair income and safe working conditions for all workers (ILO, 2015), as reflected in Sustainable Development Goal 8. It is distinct from the vulnerable work indicator, which focuses only and specifically on own-account workers and contributing family work.

Tourism for transformative and inclusive growth

85 What matters for tourism’s capacity to alleviate poverty is that the poor do not get trapped in vulnerable tourism jobs with poor working conditions and jobs that are low-skilled and have low value added. Public policy can play an important role in promoting better working conditions. Governments can also help those in low skilled and vulnerable jobs move into higher, more value added positions through better training, both within and outside of private tourism enterprises. A similar role should be expected from national and international tourism firms, i.e. by creating incentives to invest in employee training.

For instance, several countries have FDI policies with provisions for local content and employment and training of employees to promote skills and knowledge transfer.