President Lt Gen Ian Khama benefits personally from tourism revenue leakages which have resulted in Botswana missing out on millions of Pula from high end tourists.
A new report brings to light fresh information on how a tourism company in which President Ian Khama and his close circle of friends have a financial interest is a major beneficiary of the tourism leakage.
While the report by University of Botswana’s Professor Joseph Mbaiwa does not mention the owners of the company, it singles out Okavango Wilderness Safaris, a subsidiary of Wilderness Safaris which is leaking millions out of Botswana.
The study titled “Poverty or riches: who benefits from the booming tourism industry in Botswana?” points out that Okavango Wilderness Safaris is the biggest player in Botswana’s tourism sector, leading the pack with 22 hotels/lodges across the country, while other foreign tourism companies have less than eight lodges each.
President Ian Khama has a financial interest in Linyanti Investment, a subsidiary of Wilderness Safaris. The President’s lawyer, Parks Tafa, chairs the Wilderness Holdings board while Khama’s nephew, Marcus Patrick Khama Terhaar, is an independent non-executive board member.
The study shows that in prime tourism areas such as the Okavango Delta and Chobe regions, tourism is predominately owned by foreign companies with Okavango Wilderness Safaris owning 22 hotels/lodges.
The report says that investors with 53.8% of accommodation facilities were found to be 100% owned by foreign safari companies, and around 28% jointly owned between Botswana-owned and non-citizen companies, leaving just 18.5% fully owned by Botswana citizen companies.
“This means that foreign companies and investors have an influence in about 82% of the accommodation facilities in the Okavango Delta. Most of these companies are foreign owned and do not have headquarters in Botswana (e.g. Okavango Wilderness Safaris),” the study says.
It says “In Botswana the hotel and accommodation sectors are largely owned by foreign companies, with payments being made elsewhere. Most high-end tourist accommodation is paid out as part of a package deal in the tourists’ home countries.”
It further states that this means that tourists do not necessarily spend much in Botswana as they fly into the country and are immediately shuttled out to wilderness areas either by small aircrafts or by vehicle.
The report says most of the tourists who stay in luxurious accommodation facilities in the Okavango Delta, Chobe, Makgadikgadi and Central Kgalagadi game reserves do not interact with locals or visit local businesses to spend money.
“In this regard, it is difficult for much of the tourism revenue to be retained in Botswana.
By contrast, a more locally owned accommodation sector within Botswana’s tourism industry would significantly increase net foreign exchange receipts for the country,” the study found.
The Ministry of Environment Wildlife and Tourism has however tried to downplay the problem.
When he had to tackle a question in parliament recently about how the Botswana government benefits from hotel reservations made outside the country, the Minister of Lands and Housing, Prince Maele (who was standing in for his colleague at the Ministry of Environment, Wildlife and Tourism) provided information that will be contested by another Motswana in another part of Africa.
“In instances where a holiday is booked through foreign operators or agents, about 30 to 40 per cent of revenue remains in the source countries as fees for wholesalers/tour operators/travel agents/travel insurance and long haul flights, whereas the remaining 60 to 70 per cent of revenue is remitted to this country, in this case Botswana. This loss of revenue is referred to as structural leakage due to the very nature of the tourism sector itself,” Maele said in response to a question by Okavango MP, Bagalatia Arone.
However, according to the African Natural Resources Centre, the figure is much higher than that. In a report it has published, the Centre, whose current director is Sheila Khama, the former Chief Executive Officer of De Beers Botswana, says that leakages of foreign revenues from tourism amount to over 70 percent. That confirms the findings of two other independent studies, one by Botswana Institute of Development Policy Analysis (BIDPA) and another by Professor Mbaiwa. BIDPA said that while foreign earnings from tourism were “substantial”, the leakages were also very high.
Khama supervised the editorial team that put the report together and the former CEO of the Botswana Tourism Organisation, Myra Sekgororoane, was one of the three peer reviewers. A non-lending entity of the African Development Bank (AfDB), the ANRC was established in November 2013 to bring additional expertise and services to the Bank and its regional member countries – like Botswana.
According to Maele, these leakages occur because Botswana’s tourism industry is not fully developed to capture all the revenue in the value chain.
“Therefore, purchases are generally made through intermediaries in the tourist’s country of origin, hence the leakage,” he said.
The ANRC says nothing about Botswana’s tourism industry not being fully developed; instead, confirms findings by Professor Mbaiwa that it is foreign-dominated. It refers to a collaborative research work paper that was conducted by AfDB, the OECD Development Centre and UNDP which indicates that the leakages occur partly because the bulk of Botswana’s tourist bookings are handled in South Africa.
“At the same time, Botswana’s tourism sector supply chain is foreign-dominated, which is said to be contributing to the loss of revenue,” says the ANRC report which is titled “Maximising Benefits from Water for Tourism in Africa”.
Mbaiwa who is a Professor of Tourism Studies based at the University of Botswana’s
Okavango Research Institute in Maun says Research has established that, in general, over 70% of the tourism revenue from developing countries leaks out to developed countries.
“This happens to be the case in Botswana, where more than 70% of Botswana’s tourism revenue is being repatriated to parent countries of foreign-owned tourism companies, especially those operating in Botswana’s prime tourism areas,” Mbaiwa says in his the report.’
The study says revenue leakages and the foreign domination of the hotel industry in Botswana’s wilderness areas contradict sustainable tourism’s ideals of equitable distribution of revenue and participation in resource use by all stakeholders.
In this regard, the likelihood of local communities supporting tourism development in their local areas becomes a challenge, the report says.
“For example, in 1999, the BTDP noted that tourists who visited Botswana spent an estimated P1.1 billion. Of this gross expenditure, 55% (P605 million) was spent outside Botswana (representing payment to external agents) and a further (16%) P175 million was first-round leakages of receipts due to tourist-related imports (e.g. food, equipment and wages of expatriate staff). Only 29% (P320 million) was spent in Botswana on local goods, wages, taxes and other activities,” the report says.
The report explains that a tourism industry that is largely owned and controlled by outsiders (e.g. international companies) as is the case in the Okavango Delta can be described as a form of ‘enclave Tourism’.”
“Enclave tourism has also been referred to as ‘internal colonialism’, a situation where natural resources in a host region mostly benefit outsiders, while the majority of the locals derive little or no benefits,” says the report.
The accommodation sector is one of the primary sectors in the tourism industry that determines who gets the most benefits ÔÇô based on who owns these businesses and where are they located.
“Local people and citizens currently view the foreign-dominated tourism industry in Botswana’s wilderness areas negatively because they perceive the dominance of noncitizens to be ‘selling out’ their resources, that is, they consider their natural resources to be usurped from them by foreign tourism investors,” says the report.
It found that the 1990 Tourism Policy, coupled with government’s liberal foreign investment policies, created conditions in which citizen companies and investors are economically disempowered as they cannot compete with international tourism companies.
“For example, citizen companies often fail to win tenders in prime tourism concession areas due to the limited skill, experience and capital they have in the tourism business when compared with foreign companies,” it says.
The report suggests that local residents may also suffer a loss of sense of place as their surroundings are transformed to accommodate the requirements of a foreign-dominated tourism industry.
In this regard, the Tourism Policy and its associated policies can be singled out as laying the foundation for the development of enclave tourism in the Okavango Delta, the report says.
“Enclave tourism cannot be described as sustainable tourism mainly because it excludes the host populations from deriving meaningful economic benefits and access to the decision-making process on the use of resources in their local environment,” the report explains.