Tourism on the Rocks, Dress-up Won’t Save It

Amongst the candidates for the coolest places to visit this year, in a travel feature published in Forbes magazine, were Medellin and Brazzaville. While the former is an infamous Colombian city that, as recently as two decades ago, was dubbed the murder capital of the world, the latter is the capital of the Congo, a country that saw deadly clashes in the wake of the national elections in 2016.

Addis Abeba has also made it on the list, featured mainly for its “atmospheric underground jazz clubs,” with no mention of the adverse political climate that surrounds the capital’s immediate surroundings. Indeed, Addis Abeba`s consistent calm in the face of such political upheaval gives it an edge as the political and diplomatic capital of Africa.

It is, thus, unfortunate that an emergency decree has recently been reinstated, legislated by the majority of parliamentarians last Friday, on March 2, 2018. No doubt that the decree is a red flag for tourists the world over who may be planning a visit to the “Land of Origins.”

The decree may have been necessary given the deadly violence that has transpired across the country, but it comes at an inopportune moment for the tourism industry in Ethiopia.

The global economy is improving, and the countries whose people Ethiopia wants to attract as tourists, from the United States to members of the European Union, are seeing unemployment rates fall and real wages rise, encouraging them to travel more with their disposable incomes. For the tourism industry, developments in Ethiopia that could scare away potential travellers could not have come at a worse time.

Just as political unrest follows economic downturns, it is inevitable that socio-political upheavals lead to a stagnation of critical parts of the economy. Governments often avoid emergency decrees since they can potentially damage positive images of stability and prosperity that may have taken decades to fashion.

The economy will suffer at least on two fronts, one being investments in general, and the other being foreign direct investments in particular. Fortunately, Ethiopia was able to wither the negative effects brought on foreign investments by previous political upheavals and a 10-month State of Emergency. It still kept climbing, albeit at a slower rate.

It is a different story for tourism. The emergency decree two years ago saw earnings from the tourism sector drop by over eight percent in the past fiscal year to 3.3 billion dollars, if the figures given by the computation experts at the Ministry of Culture & Tourism are accurate.

Given the present predicaments that result from a severe hard currency shortage, such as the scarcity of medicines, a further decrease of hard currency reserves as a result of the reinstated emergency decree would be keenly felt. However, that is just an indirect effect. Tour and travel agencies, hotels and over a million people who are either directly or indirectly employed in the industry will see earnings and incomes plummet.

That business will not continue as usual has been noticed by the authorities and lobby groups in the industry. They have taken the initiative to portray the current state of affairs in a less odious light. At times, they argue that the political climate is not as bad as the emergency decree makes it seem. At other times, they state that martial law means better security, making it even safer to visit and travel across the country.

It is doubtful, however, that such marketing tactics can take the industry far in the face of all that has happened this past couple of years. It is not only the State of Emergency that stands in the way of the industry’s robustness but sporadic unrests as well. A similar attempt has been made before, with little success to show for it. The coping mechanisms should, instead, be more innovative and forward-looking. They should be able to take into account previous shortcomings and come up with solutions that are more permanent and unsusceptible to political shocks.

The authorities can start by paying better attention to a segment of the tourism sector that has been neglected: domestic tourism. Many think of tourists solely as international travellers. However, there remains another significant part of the market that is relatively untouched.

Domestic spending does account for a higher share of revenues in the industry, with only 53.6pc coming from it. In countries such as Kenya, where tourism contributes more to the gross domestic product (GDP), however, it is higher. Sub-Saharan Africa’s average domestic spending is over 62pc. This shows that countries that receive higher revenues, as a share of their GDP, from tourism also have higher domestic spending.

The most significant challenge, here, would be to spark the culture of travelling domestically. This cannot happen if Ethiopians do not find their destinations attractive. More importantly, however, Ethiopians must find their destinations to be affordable.

Domestic tourism must be encouraged through the use of preferential rates for land transport for families and young people, since domestic tourists often travel by land and in groups. Policymakers should also be able to incentivise the rise of cheaper, more abundant and lower storey accommodations that allow longer stays and that appear preferable to domestic travellers through land costs and credit.

Another modest boost could include encouraging employers to give holiday vouchers, instead of just bonuses, as a way of fostering the travelling culture.

Although domestic tourism can help the industry stay above water, it would still not bring much-needed hard currency to the country. Here, filling gaps that have become evident before can help.

There are cracks in the industry, although there is potential for it to become healthier. It was only a month ago that the head of the Ethiopian Tourism Organization (ETO) was removed from office and the World Economic Forum (WEF) published tourism numbers that were in stark contrast to the ones presented to parliament by the Ministry. The numbers by the WEF show that tourism earnings were over three times less than what was reported by the Ministry.

Improving those numbers is a matter of investment. While the sub-Saharan average for investment in the tourism sector stands at 5.6pc of GDP, in Ethiopia, it is half of that amount. Although Ethiopia is a country that boasts nine world heritage sites, it is rare to see such attractions promoted in airports, hotels or on international television outlets.

Investments must be smart, focused on countries that can respond to such marketing. Most of the international tourists come from China and the United Kingdom, but, most importantly, the United States.

With the weakening of the dollar against  other major currencies, which will continue for the better part of this year, it is prudent to reorient focus to the Europeans, the Canadians and the Japanese. Stronger currencies, which will mean more robust purchasing powers, can encourage them not just to travel more, but become liberal in their spending.

In an increasingly prosperous continent, where the race to attract the most tourists is heating up, an Ethiopia under an emergency decree will find it challenging to maintain the viability of the industry. The solutions the government comes up with should not be confined to the effects of the current states of affairs. They should instead strive to create a country that comes to terms with itself.

Political concessions and compromises within the ruling EPRDF and with its political foes are crucial. There is a limit to what displays of brute force can do in controlling and calming an angry component of society. The size of the restless in Ethiopia`s society is swelling by the day and should be frightening. In the end, deploying large amounts of force and sophisticated instruments of coercion matter little. If a society is pushed to the edge and rises up in arms, the tourism sector, foreign investment, and every segment of the economy is bound to face the backlash.

Published on Mar 03,2018 [ Vol 18 ,No 931]



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