Wednesday, October 20, 2021

No solution in sight for tourism revenue leakages

As it stands, the government has not undertaken any deliberate move to stop the current set up where a bulk of Botswana’s tourist bookings is handled outside the country.

However the government has admitted that liberal foreign exchange regulations are costing the government millions of Pula as the tourism industry bound revenue continues to get lost due to leakages.

The Minister responsible for Wildlife and Tourism Tshekedi Khama has joined the choir that sings a song which preaches against ‘the most liberal foreign exchange regulations in Africa’.

Tshekedi and his choir are convinced that Botswana could still make a lot more money from tourism if its tourist bookings were done locally. Available figures show that currently, that is not happening and the result is that leakages of foreign revenues from tourism amount to over 70 percent.

Tshekedi said that when bookings are made for tourist activities in Botswana there is no guarantee that the funds paid make their way into the country. “We know for a fact that only less than 50 per cent of tourism revenue makes it into the country,” the minister said.

As part of the process to find a permanent solution to the matter, Tshekedi says he has since engaged the Ministry of Finance on the issue.

“I have asked them to sort out the issue of regulations to ensure they know just how much of the revenue paid to tourism remains outside.  We need these figures because if only 20 percent of the funds come into the country it means we are paying communities a small percentage of the small amount that has managed to make its way into the country.”, Tshekedi said in December 2017.

He said it was also ethically wrong for private concessions to take advantage of the loopholes in the system. Khama said beginning next year his ministry will work with the Finance ministry to ensure they get the true picture of exactly how much is being lost through leakages.  “It is something we shall ask the ministry of finance to attend to because the financial aspect of our tourism industry as far as cross border movement is concerned is under the auspices the Ministry of Finance,” Tshekedi said, adding “I have no authority to ensure the money does come in.”

In his research paper, ‘Poverty or riches: who benefits from the booming tourism industry in Botswana (2017)’ Professor Joseph Mbaiwa attributes the leakages to tourist accommodation ownership.

“In Botswana the hotel and accommodation sectors are largely owned by foreign companies, with payments being made elsewhere,” he says. “Most high-end tourist accommodation is paid out as part of a package deal in the tourists’ home countries.”

As a result, Mbaiwa argues, 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. “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.”

He says it due to policies which promote Foreign Direct Investment that ownership of Botswana’s tourism facilities is dominated by foreign companies. Mbaiwa (Professor of Tourism Studies at the Okavango Research Institute, University of Botswana) says because these foreign companies are headquartered outside Botswana, obtaining tax revenue becomes a challenge for the government since their financial books are kept and audited outside the country. “Although the tourism industry in Botswana is making a valuable contribution to Botswana’s economy through employment creation and payment of licenses and other fees, it is failing through taxation,” Mbaiwa.

Earlier this year Member of Parliament for Maun and also Paramount Chief Kgosi Tawana Moremi expressed his frustration with such leakages blaming it on arbitrary land allocation. Moremi spoke against what he called the usefulness of the Community Based Natural Resources Management (CBNRM).

He said the model blatantly ignored the socio-economic dynamics of the communities that were to form beneficiaries of the trusts due to the arbitrary demarcation and allocation of the concessions land. Moremi blames the Land Board for the flawed land demarcation. The role of the Land Board is to hold land in trust for the tribe as well as to allocate land to citizens and residents of Botswana for residential, commercial, agricultural and industrial use. “You get a Land Board that’s vested in managing this land, and holding it in custody for this community that does not know how these community areas were demarcated,” he told Sunday Standard. Moremi said the land bank denies communities to benefit from their land. “If they (citizens) take it (land) to the market place and use that as a negotiating tool, that will ensure in the first instance that the business is based in Botswana, it will ensure that the money is paid to the business in Botswana, then you get 90 percent of revenue to be taxed here, to be disbursed from here, so the trickle effects start here.”

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