Wednesday, October 20, 2021

New tourists’ tax could hurt “Small Players”

A second quarter economic bulletin by local stock broking firm Motswedi Securities has suggested that a newly introduced levy, targeted at tourists could impair small local tourism enterprises.

First announced in late 2016, the new tourists’ tax will see non SADC citizens paying up to P300 at the country’s various points of entry.

In its quarterly economic commentary, Motswedi Securities says the new levy could be yet another challenge that small local tourism enterprises will contend with.

“Although the levy may been seen as trivial, or even negligible for high-end safari enthusiasts it has the potential to disrupt tourist activity, particularly in the lower segment, were a majority of locals are trying to edge out a niche, with frugal backpackers, opting to avoid the country where possible. The larger listed entities may not be severely affected in the long run, but the disruptions this may initially cause, may have short term impact,” researchers at Motswedi Securities observed.

It appears difficult for the small tourism enterprises to thrive from the niches that they have identified and carved out in the local tourism industry, bringing into question whether or not local business involvement is earnestly supported in the existing tourism framework that is largely hinged on the ‘high value, low volume’ tenet. The high value, low volume principle is mainly practiced in protected wildlife areas which in terms of tourism attractiveness are key tourist destinations. The protected areas are usually what is referred to as concession areas.

In Botswana the operation of tourism services in concession areas is granted through an international competitive bid which according to ‘Best Practices for Tourism Concessions in Protected Areas: A Review of the Field’ study businesses that are considered must possess experience, financial capacity, and demonstrated knowledge of the Botswana conservation legislation (and in particular the Wildlife Conservation and National Parks Act and its subsidiary legislation). The study defines concessions as one of a number of market-based mechanisms known collectively as Tourism User Fees (TUFs) that can be used to collect revenues from tourism-based activities which can be directed toward supporting protected areas and other conservation efforts.   

Reports indicate that small local tourism enterprises are usually excluded because of their failure to meet the criteria on which concessions are based. It was found in the case of Botswana that the majority of businesses operating from the concession areas are foreign owned. The lack of participation by local businesses in concession areas whose richness in wildlife and scenic beauty make them obvious tourist destination favorites means that the small enterprises also fail to capture the tourists’ money. One example of a report that speaks to this dynamic is that of University of Botswana Professor Joseph Mbaiwa whose work extensively covers the tourism industry. The report titled ‘Poverty or riches: who benefits from the booming tourism industry in Botswana?’ identifies a particular limitation of the current tourism policy that guides the industry’s practices. He says that the policy was mainly motivated by profit-making and the need for better economic benefits for Botswana. Though this ideal appears at surface to have good intentions it however has its shortcomings, one of which is that it largely attracts the high end tourists and seems to discourage those with lower economic status. In fact prior to the introduction of the policy Mbaiwa cites that it was identified that “foreign tourists who spend much of their time but little money in Botswana are of little net benefit to the country. Indeed, they are almost certainly a net loss because they crowd the available public facilities such as roads and campsites and cause environmental damage.” The term that was associated with such tourists is casual campers, which on the basis of the policy, is not who Botswana seeks to attract. The reason given was that it was believed that they “would potentially also cause substantial degradation of the fragile ecology on which the country’s tourism depends.” The motivation of the 1990 Tourism Policy lends credence to the belief that local business involvement

The ‘Best Practices for Tourism Concessions in Protected Areas: A Review of the Field’ study cites the experience of Zambia in contrast to Botswana. “In Zambia, privatization of game lodges and hunting concessions is regulated on an international competitive bid basis, but to encourage local investors and particularly indigenous entrepreneurs, certain leases and hunting concessions have been reserved for domestic bidders,” it says. Perhaps Botswana may need to consider such a move.

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