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UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

(UNCTAD)

United Nations Inter-Agency Programme on Trade and Productive

Capacity

BUSINESS CLIMATE REVIEW

SUSTAINABLE TOURISM SECTOR

UNITED REPUBLIC OF TANZANIA

Prepared by

ROBERT TRAVERS

(Contract 47522)

October 2014

UNCTAD Sustainable Tourism Business Climate Review United Republic of Tanzania (October 2014)

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Document control

Document Name Business Climate Review: Sustainable Tourism

Language(s) English

Responsible Unit UNCTAD Division of Investment and Enterprise

Creator (individual) Robert Travers

Subject (taxonomy) Social Science, Economics, Tourism

Effective Date December 2014

Suggested Review End of project

Audience UNCTAD, UNOPS, UNIDO, ILO, World Bank, Government ministries and

agencies, tourism industry, other partners and donors.

Applicability UNCTAD

Replaces n/a

Is part of United Nations Cluster on Trade and Productive Capacity Programme

Related documents Joint programme document (2014)

UNCTAD Record

Ref. TBD

Date Author Version Change Reference

10 October 2014 Robert Travers,

[email protected] 0.0 Original draft created

NOTES

The designations employed and the presentation of material in this publication do not imply the

expression of any opinion whatsoever on the part of the United Nations concerning the legal status of

any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or

boundaries.

ACKNOWLEDGEMENTS

The consultant wishes to thank the staff of the Tanzania Investment Centre, the Ministries of Industry

and Trade, and Natural Resources and Tourism, Responsible Tourism Tanzania and the Tanzanian

Confederation of Tourism for their assistance in the United Republic of Tanzania and in the compilation

of this report.


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Acronyms

BEST-AC Business Environment Strengthening in Tanzania: Advocacy Component

BRIC Brazil, Russia, China and India

BRN Big Results Now

CSR Corporate social responsibility

EAC East African Community

FDI Foreign direct investment

FIT Free independent tourist

GCI Global Competitiveness Index

GDP Gross domestic product

ICF Investment Climate Facility for Africa

ILO International Labour Organisation

ITC International Trade Center

KATO Kenya Association of Tour Operators

MICE Meetings, incentives, conferences and exhibitions

MNRT Ministry of Natural Resources and Tourism

NCAA Ngorongoro Conservation Area Authority

NGO Non-government organisation

OECD Organisation for Economic Cooperation and Development

PAD Pre-arrival declaration

PROTECT Promoting Tanzania’s Environment, Conservation, and Tourism project

PSP Private sector participation

RTTZ Responsible Tourism Tanzania

SADAC Southern Africa Development Community

SARS Severe Acute Respiratory Syndrome

SECO Swiss State Secretariat for Economic Affairs

SIDA Swedish International Development Cooperation Agency

SME Small and medium-sized enterprise

STCAA Sustainable Tourism Certification Alliance Africa

TALA Tourist Agency Licensing Authority

TANAPA Tanzania National Parks

TATO Tanzania Association of Tour Operators

TAWA Tanzania Wildlife Authority

TCT Tanzania Confederation of Tourism

TRA Tanzania Revenue Authority

TTB Tanzania Tourist Board

TTC Tanzania Tourist Corporation

UNCTAD United Nations Conference on Trade and Development

UNESCO United Nations Educational, Scientific and Cultural Organisation

UNIDO United Nations Industrial Development Organisation

UNOPS United Nations Office for Project Services

UNWTO United Nations World Tourism Organisation

USAID United States Agency for International Development

VAT Value-added tax

WEF World Economic Forum

WTO World Trade Organisation

WTTC World Travel and Tourism Council

WWF Worldwide Fund for Nature


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CONTENTS

1 INTRODUCTION ............................................................................................................................................ 6

1.2 BACKGROUND ..................................................................................................................................... 6

1.2 MAIN FOCUS OF THE REPORT .......................................................................................................... 6

1.3 STRUCTURE AND CONTENT OF THE REPORT ................................................................................ 7

1.4 KEY FINDINGS AND RECOMMENDATIONS ....................................................................................... 8

2 STRAGIC FRAMEWORK FOR SUSTAINABLE TOURISM ......................................................................... 14

2.1 POLICIES AND STRATEGIES ............................................................................................................ 14

2.2 LEGISLATION ..................................................................................................................................... 15

2.3 ROLE OF MINISTRIES, AGENCIES ................................................................................................... 15

2.3 PROPOSED LEGISLATIVE CHANGES .............................................................................................. 17

3 CURRENT SITUATION, PROGRESS AND TRENDS ................................................................................. 18

3.1 REGIONAL TRENDS .......................................................................................................................... 18

3.2 UNITED REPUBLIC OF TANZANIA TRENDS .................................................................................... 19

3.3 SIGNIFICANT NEW DEVELOPMENTS UNDERWAY ........................................................................ 22

3.4 SUSTAINABILITY AND POTENTIAL .................................................................................................. 23

4 COMPETITIVENESS OF TOURISM ............................................................................................................ 24

4.1 PRODUCT ........................................................................................................................................... 24

4.2 ATTRACTION OF INVESTMENT ........................................................................................................ 25

4.2 BUSINESS CLIMATE .......................................................................................................................... 27

4.3 LABOUR .............................................................................................................................................. 29

5 DOING BUSINESS IN TOURISM ................................................................................................................ 31

5.1 TOURISM INDUSTRY ISSUES: FREEDBACK FROM MISSION ....................................................... 31

5.1.1 Destruction of natural assets ...................................................................................................... 31

5.1.2 Skills gap and restrictive labour laws .......................................................................................... 31

5.1.3 Incoherent policies, institutions and regulation............................................................................ 32

5.1.4 No regulatory oversight ............................................................................................................... 32

5.1.5 No meaningful public-private partnership .................................................................................... 32

5.1.6 Multiplicity of taxes, levies and fees ............................................................................................ 32

5.1.7 Inadequate marketing and branding ........................................................................................... 34

5.1.8 Limited tourism infrastructure ...................................................................................................... 34

5.1.9 Inadequate incentives for inward investment .............................................................................. 35

5.1.10 Other issues ................................................................................................................................ 35


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5.2 CONSUMER CONCERNS .................................................................................................................. 35

6 BUSINESS ENVIRONMENT REFORMS TO PROMOTE SUSTAINABLE TOURISM ................................. 36

6.1 RESPONSIBLE TOURISM .................................................................................................................. 36

6.2 MARKETING ....................................................................................................................................... 37

6.3 LEADERSHIP AND STRATEGY ......................................................................................................... 37

6.4 TOURISM TRAINING .......................................................................................................................... 39

6.5 REDUCING THE COST OF DOING BUSINESS ................................................................................. 41

6.6 STIMULATING EFFICIENCY, INNOVATION AND ENTREPRENNEURSHIP .................................... 42

6.7 GREEN GROWTH AND PROTECTED AREAS .................................................................................. 43

6.8 SUGGESTED PRIORITIZATION ........................................................................................................ 44

7 REFERENCES AND OTHER DOCUMENTS CONSULTED ........................................................................ 44

7.1 PUBLICATIONS .................................................................................................................................. 44

7.2 WEBSITES AND OTHER ELECTRONIC MEDIA ................................................................................ 46

ANNEXES ............................................................................................................................................................. 47

ANNEX 1 SUGGESTED WORKSHOP AGENDA ................................................................................... 47

ANNEX 2 CONSULTATIONS ................................................................................................................. 48

ANNEX 3: SUMMARY OF ISSUES LISTED IN TERMS OF REFERENCE............................................. 50

LIST OF TABLES

TABLE 1: International tourist arrivals and 7-year growth (millions) ..................................................... 18

TABLE 2: Percentage shares of visitors to East Africa (000s). ............................................................ 19

TABLE 3: East Africa Percentage Shares of Tourism Receipts ($ millions) ......................................... 20

TABLE 4 Visitor arrivals by region 2006-2012 ...................................................................................... 21

TABLE 5: Visitor arrivals by purpose of visit ......................................................................................... 22

TABLE 6: Overall travel and tourism competitiveness index 2013. ...................................................... 24

TABLE 7: World Bank ease of doing business rankings ...................................................................... 27

TABLE 8: Most problematic factors for doing business 2013-2014 ...................................................... 28

TABLE 9: Global corruption index and ranking ..................................................................................... 29

TABLE 10: Human resources country ranking...................................................................................... 30

TABLE 11: Licenses and charges applying to tourism businesses 2014 ............................................. 33


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1 INTRODUCTION

1.2 BACKGROUND

The review forms part of the United Nations Conference on Trade and Development (UNCTAD)

contribution to the Swiss State Secretariat for Economic Affairs (SECO) United Nations Cluster on

Trade and Productive Capacity Programme1 Market value chains relating to horticultural products for

responsible tourism market access. This SECO Trust Fund programme is implemented by United

Nations agencies, the International Trade Center (ITC)2 and national counterparts.

In August 2014 as part of Activity 3.4 the UNCTAD Division of Investment and Enterprise commissioned

this review of the Business Climate for Sustainable Tourism in the mainland of the United Republic of

Tanzania. UNCTAD is the United Nations body responsible for dealing with development issues,

particularly international trade. The organisation works to provide analyses that form the basis for

recommendations to economic policymakers, to help them make informed decisions. To this end, a

mission was conducted in September 2014, the findings of which are detailed in this report, together

with related desk research and recommendations.. A workshop is planned to present and discuss

findings (annex 1). Consultees to date are listed at annex 2.

1.2 MAIN FOCUS OF THE REPORT

The Inter-Agency Programme Document (2014) notes that the tourism sector in the United Republic of

Tanzania creates many linkage opportunities for other sectors of the domestic economy, thereby

generating demand for their output (output multiplier effects). Tourism is found to have high output

backward linkages as well as forward linkages, which are quite evenly distributed across other sectors.

This suggests that as the sector develops it provides services that can be utilized by other sectors. The

Inter-Agency Programme’s linkage analysis also shows tourism ranks second in employment linkages

after agriculture. The high multiplier and linkage effects imply that tourism can add more value to the

economy and become a strong catalyst for structural transformation. In order for this to happen the

tourism sector must develop and grow. Under output 3 of the Joint Programme it is noted that

The Tourism Sector currently has a policy and regulatory environment that has prompted sustained

concerns by the business sector. The perception is that issues are not addressed and/or misunderstood

due to a lack of objective up-to-date data, statistics and studies that inform policy decision making. The new

Tourism Act (2008) and its constituent regulations, though addressing key aspects of the industry, does not

provide provisions for the expected enabling environment or investment-friendly regulations. A

comprehensive tourism-specific review of the Business Climate, that directly addresses trade-related

Responsible Tourism issues and the concerns of the private sector, is needed. The process of arriving at a

business climate review will be anchored in the Ministry of Tourism’s newly established Public Private

Dialogue (PPD) mechanism and logistical support will be provided to the Ministry to assist with convening

1 The United Republic of Tanzania is a "One UN" country that voluntarily adopted an integrated approach in the formulation of the United Nations assistance to the country. This programme involves the United Nations Office for Project Services (UNOPS), UNCTAD, the United Nations Industrial Development Organisation (UNIDO), and the International Labour Organisation (ILO). 2 ITC is the joint cooperation agency of UNCTAD and World Trade Organisation (WTO) for business aspects of trade development.


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the necessary platform events. Given their on-going work in the area, ILO will provide specific contributions

to the Review in relation to workplace conditions.3

This report therefore explores the policy and regulatory environment to see how though better public-

private dialogue the growth of the sustainable tourism sector (with significant forward and backward

linkages and its significant employment-creation impact) might be better facilitated through the removal

of barriers identified by the consultant and consultees, and through positive Government and private

sector investment and interventions.

1.3 STRUCTURE AND CONTENT OF THE REPORT

The main body of the report is organized as follows: Chapter 2 examines the strategic framework for

tourism in the United Republic of Tanzania. Chapter 3 looks at trends, patterns and other characteristics

of tourism, paying particular attention to similarities and differences across competitor countries.

Chapter 4 focuses on competitiveness issues arising. Chapter 5 examines feedback on policy, the

business climate and attractiveness to investment, as well as other industry issues of concern,

particularly issues raised during the mission. Chapter 6 discusses the main findings and policy

recommendations regarding possible business environment reforms. Finally prioritisation and issues

for exploration in a follow up workshop are outlined.

The scope of work commissioned by UNCTAD required a wide range of sustainable tourism issues to

be addressed in the wider strategic environment. A summary of recommendations relating to these

questions is included at annex 3. The methodology adopted was a rapid situation analysis based on a

two week fact finding mission in Dar es Salaam and desk research. This report is the beginning of a

process which will be elaborated and expanded through workshops and other research being taken

forward by the SECO-United Nations Inter-Agency Programme. It is noted that the Inter-Agency

Programme and its partners have commissioned or are planning to commission the following additional

tourism-related studies:

A study on tourism labour (ILO), to be annexed to this report.

A tourism product development strategy (MNRT);

A geographical study of areas with tourism potential (ILO);

A study on e-registration of licensing in tourism (UNCTAD and the Tanzania Investment Centre

[TIC]);

A study on quality management for horticulture links with tourism (UNIDO).

These issues will be covered in detail in these forthcoming reports.

3 SECO-United Nations Inter-Agency programme document


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1.4 KEY FINDINGS AND RECOMMENDATIONS

The United Republic of Tanzania has a good underlying competitive advantage for sustainable over

other countries because of the quality of its wildlife, nature, coastline and landscapes. In addition it has

a rich, varied and interesting culture. These advantages are however undermined by inadequate

planning at both national and regional levels, poor infrastructure and insufficient investment in

marketing, quality and training, all of which are necessary to deliver growth and poverty reduction. The

biggest questions for the tourism sector are

Can the country’s wildlife, natural and coastal environment be protected to ensure the future of

the country’s primary tourism assets; and

Can sustainable tourism spur job creation and economic benefit to improve the living conditions

of the country’s rapidly expanding population?

At present the climate for doing business in tourism is encumbered by a confusing array of licences and

charges, cumbersome systems, policy changes and uncertainty at national and local levels. These,

together with increasingly limited incentives, undermine the industry’s ability to attract investment both

internationally and domestically. Tourism is not a Government priority. A steady loss of competitive

advantage is the result. The following primary recommendations are made (chapter 6 outlines these in

more detail):

A more responsible tourism approach needs to be facilitated in the United Republic of Tanzania.

Responsible tourism seeks to create better places for local people to live in, in addition to better

places for people to visit. Responsible Tourism focuses on a triple bottom line approach

(environment, society and economy) based on establishing collective responsibility for

destination planning, management and marketing involving real partnership between

Government, the industry, host communities, and tourists. Developing consensus on the role

of tourism in the economy and how it can better benefit Tanzanians will require considerable

effort.

It is recommended that a comprehensive planning process be initiated for tourism through a

new and significantly expanded tourism master plan. This process needs to bring about and

agreed vision and action plans at both national and regional levels. Policy clarity based on

consensus is an essential goal. The country’s tourism product portfolio is presently limited, and

there is scope for business tourism, incentive tourism, cultural tourism and domestic tourism to

be added to the existing wildlife and beach product, and for the development of high quality

niche products. A new master plan adopted by the Government should

o Make clear all tax incentives for tourism and their objectives and targets

o Provide incentives through the tax law

o Communicate incentives clearly and consistently

o Ensure incentives are endorsed by parliament

o Regulate and administer incentives fairly and transparently


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o Set clear annual targets for tourism revenues and jobs (in addition to visitor arrivals),

and record and broadcast results annually.

Despite many years of donor support for tourism training in the United Republic of Tanzania,

lack of adequately trained staff at all levels remains a major business constraint. Training is

needed in all areas, vocational and managerial. Having an educated, skilled labour force is at

the core of tourism innovation and competitiveness and the United Republic of Tanzania is

lagging behind competitor destinations.

Effective and well targeted national tourism marketing is key to driving growth. It is very

important that the Tourism Levy and proposals for its disbursement are quickly and effectively

actioned so that it can achieve widespread support and grow. The Tanzania Tourist Board

(TTB) and the industry, with support from Business Environment Strengthening in Tanzania

Advocacy Component (BEST-AC) project, have put in place a national tourism marketing

strategy: This now requires the implementation of robust annual marketing plans based on

actual resources available. Targets need to be set and progress monitored.

Licencing policies are in urgent need of rationalisation. This is possible to achieve relatively

easily if there is a political will, both in terms of speeding up procedures and collection through

e-Registration. It will be important to ensure justification for licenses exit and that they give

benefit, and to minimise cost and ensure transparency. Licencing needs to become a means

of business-enabling, and not be seen as primarily a source of Government revenue.

The issue of VAT is currently contentious, but there would be merit in reducing the multiple

charges in inputs with one main tax on outputs, paid by the consumer and collected centrally.

Agreeing a common VAT rate across the East African Community (EAC) would make sense in

terms of competitiveness.

It is difficult to start a legally-compliant tourism business in the United Republic of Tanzania due

to the regulation maze. It is also difficult to borrow money in-country to get started or to expand.

Access to finance can be a critical constraint to tourism growth for new players, in addition to

those seeking to expand businesses without international funding partners. Commercial banks

are reluctant to fund tourism projects due to a lack of confidence and the policy vacuum. There

is a lack of realisation that the underlying trends for tourism to sub-Saharan Africa are very

positive, of opportunities are grasped and business facilitated.

Tourism can play an important role in a green economic strategy. The Tanzanian hotel industry

has yet to catch up with global trends in reducing carbon footprints and ensuring environment-

friendly design and operation. These approaches can also help to reduce operating costs.

Protected areas and their buffer zones have particular a market incentive to go green: Their

client base increasingly expects it.

The following business reform initiatives are recommended:

Responsible tourism


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Representative associations should gather industry data on corporate social responsibility

(CSR) initiatives by their members and publicise this activity through annual reporting and press

releases.

Larger tourism businesses should be encouraged to introduce CSR accounting, and allowed to

write of expenditure on improving local facilities and education against taxation.

A high profile national Responsible Tourism Awards scheme should be initiated. The awards

should be licensed by the World Responsible Tourism Awards.

Training programmes and a tool kit for Responsible Tourism should be developed, bringing

Government agencies engaged in tourism at all levels and private sector operators together.

The process of Responsible Tourism certification through the non-government organisation

(NGO) Responsible Tourism Tanzania (RTTZ) should be expanded through training more

auditors and creating greater industry awareness of the benefits of certification.

To monitor the effectiveness of responsible tourism certification, case studies should be

undertaken of companies which adopt the RTTZ Sustainable Tourism criteria, in order to help

measure the impact of sustainable tourism in the United Republic of Tanzania.

Linkages between organic agriculture suppliers and certified Tanzanian suppliers should be

highlighted and promoted. More businesses should be encouraged to take part in these

schemes.

Leadership and planning:

Establish at the highest level a tourism master plan steering group involving Government and

private sector representative associations. It is important that all relevant ministries are

engaged, not just MNRT. This body should agree terms of reference and secure donor support.

Issue international tender. The master plan should be more strongly focussed on socio-

economic objectives to benefit Tanzanian people than the 2002 strategy: It should centre on

market-led initiatives which will preserve the environment and wildlife, create employment for

Tanzanians in tourism, crafts and other linked sectors, and lift people out of poverty across the

country through creating more tourism clusters.

Following master plan consideration of future demand for existing and new products,

commence a comprehensive process of regional planning for tourism in line with master plan.

This should include both regions and protected area administrations.

Identify special tourism investment zones to spread tourism and establish market-competitive

incentives.

Develop incentives for local participation, for example a consortium that includes local investors

might secure longer leases.

Initiate web-based Land Administration Information System for processing land transactions.

Develop business incubation support for new zones and regions with developing tourism

clusters.

Various appeal processes are not effective (Village Land Councils, Ward Tribunals, Courts of

Appeal, etc. under different ministries) and this requires review and a tourism-specific policy.

Compensation for displacement should also be reviewed.


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Review TTB Cultural Tourism Programme to ensure marketability of product and enhance

linkages with private sector.

Consider introducing a digital approach to hotel classification based on consumer reviews in

order to raise standards and highlight best practice. Hotel classifications and online guest

reviews can be combined incorporated to reduce the gap between guests' expectations and

experiences, and to ensure greater objectivity and transparency.

A Government International Cooperation Department should coordinate donor aid for tourism

following the master plan agenda.

Training

There is a need for a concerted, coordinated and comprehensive national strategy for tourism

which is practical to implement, and which learns from the failure to sustain previous donor

support initiatives in tourism training.

A key need is ensure that training is employee-benefit centred. I.e. it should result in a globally

recognised qualification which leads to opportunities not only in the United Republic of

Tanzania, but also in the EAC, and further afield. The industry will need to adapt to give positive

career paths to more staff so as to retain and develop them.

In the context of a future master plan projecting the expansion of accommodation supply and

staffing numbers required, it will be necessary to establish the extent of human resource needs

in terms of employment by category, and the ways to resolve a key constraining issue.

An updated national tourism Training Needs Analysis is needed, in coordination with tourism

training institutions and the Ministry of Labour, Employment and Youth Development, the

Ministry of Education and MNRT. Apprenticeship programmes should be reviewed and possibly

expanded.

Investment incentives should be offered to the private sector to develop internationally

accredited tourism training colleges.

The National Tourism Training College’s targets and performance should be subject to

continual review.

Tourism curricula at all levels require constant review and update.

All tourism staff need to meet high hygiene standards, and be educated about the benefits of

improved hygiene and protection from mosquitos. The tourism sector can have a positive ripple

effect in improving the basic health of its employees and their associates.

Provide training to MNRT and TTB on market research, and to the National Bureau of Statistics

on tourism satellite accounting.

Work permit approval processes for tourism staff need to be put on line and speeded up. Costs

of work permits should be brought into line with competitor destinations.

Marketing

Strengthen tourism research capabilities at MNRT, TTB, National Bureau of Statistics and the

Central Bank of Tanzania.

Develop target-driven annual action plans for TTB (and the new Tourism Authority).


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Upgrade national tourism website and develop mobile technology versions. Enhance

information technology and e-marketing skills across the industry.

In terms of domestic tourism a communication toolkit and campaign should be initiated to target

corporate (mining companies, diplomatic missions, NGOs) to encourage the use of use

Responsible Tourism certified products in urban centres in the United Republic of Tanzania to

help influence their decision on purchasing of both sustainable tourism and organically certified

products.

Reducing the cost of doing business

Tax issues need a coordinating mechanism between Government and the private sector.

Establish a Government-mandated review body to rationalize the current cumbersome

licensing and tax regime. Government should also discuss any proposed tax increases on

tourism entities in this forum before introducing them.

Strengthen and empower regulatory authorities by increasing their independence and oversight

powers, and providing capacity building for staff.

Ensure each license applying to tourism has a clearly defined benefit: Work to illuminate

nuisance licenses and petty regulations.

Work towards replacing multiple licences and input charges with one tax on outputs, centrally

and transparently collected by the Tanzania Revenue Authority (TRA).

Introduce electronic tax filing system to tourism businesses and reduce frequency of VAT

returns.

Allow CSR contributions to be written off against tax.

The Tourism Agency Licencing Authority (TALA) charge and work permit licenses should be

reviewed, benchmarking against other EAC countries.

Following development of a master plan which sets clear policy priorities, reintroduce selective

investment incentives for tourism, focussed on new areas away from existing honey-pots and

on increasing the supply of internationally accredited tourism training facilities and language

schools.

Delay implementation of VAT on tourism businesses owing to the likely impacts of Ebola on

African tourism.

Set an internationally competitive VAT rate for tourism enterprises.

With EAC, work towards common VAT rates for EAC countries on various categories of tourism

businesses.

Discuss further the rationale and possible macroeconomic consequences of the dual currency

payment systems in tourism, which demand that some licenses, levies, and fees be paid in

United States dollars and others in Tanzanian shillings. Introduce equity between foreign and

international charge levels.


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Enhance One Stop Shop services for tourism investors at TIC. Develop links with investment

expertise at MNRT, TTB, Tanzania National Parks (TANAPA), etc. and establish a tourism desk

at TIC linked to an investment desk at MNRT.4

Stimulating entrepreneurship

Accelerate the simplification and on line processes for business registration and licensing.

Allocate specific funds for tourism entrepreneurs from

o Mwananchi Empowerment Fund

o President’s Fund for Small Entrepreneurs

o Small Entrepreneurs Loan Facility

o National Entrepreneurship Development Fund

Secure donor support for a Tourism Enterprise Loan scheme, to offer tourism finance at a

lower interest rate and administered through a development bank. Funds might be mobilised

from the World Bank or the African Development Bank, borrowed as lines of credit to the

Central Bank and then channelled through commercial banks and blended with the

commercial banks’ own funds and administered by them.

Train micro-finance institutions in business dynamics of tourism and encourage them to

finance tourism SME projects.

For larger projects in urban areas, consider tax incremental financing, which involves using

writing off capital gains taxes on future increases in real estate value to fund expansion.

Secure donor support for a Tourism Challenge Fund targeting new businesses and business

expansion

Green growth and protected areas

Accelerate RTTZ activity and aim for zero carbon tourism products.

MNRT bring together TANAPA, Ngorongoro Conservation Area Authority (NCAA), Tanzania

Wildlife Authority (TAWA) and the Tanzania Association of Tour Operators (TATO) to discuss

ways to streamline fees to parks, such as using a single debit-card payment system.

Revisit the Wildlife Management Area model to ensure tourism benefits adequately reach

communities.

4 At present the Department of Immigration, Ministry of Labour, Business Registration and Licensing Agency, Ministry of Industry and Trade, TRA and the Ministry of Lands and Human Settlement Development have officers with approval authority based at TIC, but not tourism.


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2 STRAGIC FRAMEWORK FOR SUSTAINABLE TOURISM

2.1 POLICIES AND STRATEGIES

The United Republic of Tanzania was formed 50 years ago, on 26 April 1964, as a result of the union

of mainland Tanganyika and the Zanzibar archipelago. Tourism is not a union matter and Zanzibar has

a separate tourism ministry and tourism policies. This report focuses on mainland Tanzania, where

tourism began with the establishment of game in the 1920s for hunting. Following independence and

the union, between 1967 and 1985 the country followed policies based on ujamaa (communality) and

kujitegemea (self-reliance). A state body, the Tanzania Tourist Corporation (TTC) was established to

oversee the main tourism functions like promotion, running of hotels and travel services. Since then the

United Republic of Tanzania has made progress in moving from a centrally planned economy to a

market-based regime. A National Tourism Policy was adopted in 1991 and reviewed in 1999 to take

into account the increasing role of the private sector in tourism development. In 1997 the Tanzania

Investment Act opened up the country to foreign investment.5 In 2009 the Government Roadmap for

Improving the Investment Climate was launched.

In 2002 an Integrated Tourism Master Plan was published, centring on sustainable tourism

development. It was acknowledged in the Master Plan that coastal tourism and tourism in other areas

outside national parks needed to be the focus of tourism expansion and diversification along the coast

and the pristine Southern regions. The Master Plan has now passed the end of its forecast scope (to

2011), and while much was achieved, many strategic issues relating to access, accommodation,

diversification, marketing and geographic spread remain to be addressed.

In 2010 the Second National Strategy for Growth and Reduction in Poverty (MKUKUTA II) was

launched.6 It seeks to s to reduce poverty through three broad outcomes: growth and reduction of

income poverty; improved quality of life and social well-being; and good governance and accountability.

The vision is to move Tanzania to middle income status by 2025 by modernizing agriculture and

increasing “supportive industrial and service activities in the rural and urban areas…,” which will require

a 6 to 8 per cent annual rate of economic growth. The National Five Year Development Plan resulting

seeks to scale up the role of the private sector in economic growth by improving the business climate,

investing in people and infrastructure development.

A World Bank review of tourism policy highlights tourism’s employment potential:

Tourism is potentially a significant force for growth and poverty reduction consistent with MKUKUTA II’s

overall objectives.7 From 2002 to 2008, every two to three tourist arrivals directly generated at least one

new job and another less directly in the broader “tourism-related economy”. This has been a fairly consistent

trend, and one which can be counted on to continue as long as industry growth can be sustained. Thus

taking direct and indirect employment impact, every one tourist creates one job in the economy.8

5 Its provisions are now considered to some extent overly complex and outdated (OECD, 2013) 6 Tourism is hardly mentioned in MKUKUTA II (only one short paragraph).

7 Although, as noted above, tourism was not a priority in MKUKUTA II. 8 Wayne, S. (2009).

http://en.wikipedia.org/wiki/Tanzania


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Despite this potential, tourism was once again not among the sectors chosen as priorities by the national

initiative Big Results Now (BRN)9 however NMRT is are grouped as resource facilitators meaning a

sector to generate resources to fuel BRN in its second phase. It remains an industry without significant

Government support.

In 2013 in a public-private initiative the Tourism Development Levy (TDL) was established and that

intends to channel funding collected in the form of a levy from the private sector into developing the

industry. The resulting public-private Tourism Trust Fund will focus on support to four priority areas:

I. marketing;

II. research and development;

III. training; and

IV. tourism development (e.g. allocating land investments).

According to MNRT, it is envisaged that up to 60% of the funds will be used for marketing, however the

detail of strategy for expenditure is not clear. At present the levy is being collected, although expenditure

mechanisms are not yet fully agreed. An International Tourism Marketing Strategy has been drawn

up.10

2.2 LEGISLATION

As part of its policy review process over the past decade the Government of mainland Tanzania has

replaced the Hotel Act, 1963, and the Tourist Agency Licensing Act, 1969, with the Tourism Act, 2008.

Regulations issued under the Act will elaborate legal authority to charges applying to the industry. The

Tourism Act is the primary legal instrument governing tourism, although as in any country business is

bound my many other laws which govern cross cutting areas. These include commerce, the

environment, health and safety, employment and employee relations,11 planning, wildlife protection and

many other areas.

2.3 ROLE OF MINISTRIES, AGENCIES

Ministry of Industry and Trade

The Ministry of Industry and Trade works to create an enabling environment for the sustainable growth

of industry, trade, marketing and small and medium-sized enterprise (SME) sectors through effective

policies and strategies, private sector participation (PSP), entrepreneurship development, and

facilitating diversification of production, services and markets thereby creating employment, generating

income and improving quality of life. The Ministry is the lead Government partner in the United Nations

Cluster on Trade and Productive Capacity Programme

Ministry of Natural Resources and Tourism

9 The BRN initiative commenced in 2013 and is supported by the Government of Malaysia and is based on the Malaysian model of development. It has a strong focus on Key Performance Indicators. The initiative focuses on six priority areas of the economy: (i). Energy and natural gas (ii). Agriculture (iii). Water (iv) Education (v). Transport (vi). Mobilization of resources. 10 TTB & TCT (n/d) 11 ILO report (to follow)


16

MNRT is the highest institution charged with tourism matters in mainland Tanzania. The ministry's

mission is to

formulate policies and strategies that would lead to sustainable conservation management of natural,

cultural resources and environment, promote and diversify tourist attractions and increase sector

contribution to national income and foreign exchange earnings.12

MNRT has a strong regulatory role and issues tourism licenses.

Tanzania Tourist Board

TTB was formed to replace the TTC following its dissolution in 1992. TTB and was charged with the

main function of marketing and promoting domestic and international tourism. It has information offices

in Dar es Salaam, Arusha and a representative office in New York. It also has a basic website, and

represents the United Republic of Tanzania in various promotional tourist fairs.

The Board also operates the Tanzania Cultural Tourism Programme, a community-based tourism

initiative originally initiated in 1996 with SNV, a Dutch NGO. There are some 50 communities involved.

Most communities focus on offering cultural experiences including: experiencing people’s way of life,

traditional dances/ceremonies, sampling of local cuisines, home-stays, daily homestead chores,

handicrafts, community development initiatives, indigenous knowledge, historical heritage, nature

walks, and local folklores.

TANAPA

The primary role of TANAPA is conservation. Fifteen national parks have been set aside to preserve

the country’s rich natural heritage, and to provide secure breeding grounds for fauna and flora. Tourism

provides valuable revenue used to support the conservation work of the national parks, as well as

wildlife research, and the education and livelihood of local communities. In addition, tourism helps to

generate international awareness of conservation issues, while the physical presence of tourists can

help deter illegal poaching activity, assisting the park rangers with their game management work. Most

tour operators are dependent on continued sustainable management of TANAPA assets.

A percentage of park revenues is used to assist community development initiatives, such as schools,

health dispensaries, water schemes and roads. Villagers are encouraged to develop cultural tourism

projects to cultivate their own financial returns from park visitors.

Throughout the Tanzania National Parks system there has been a steady growth in nature-based

tourism. Tourist attractions have been diversified to enhance visitor experience. New products include

walking safaris, canoeing, and night game drives. Traditional products such as day game drives,

ballooning, sport fishing, chimpanzee tracking and mountain climbing.

12 Mussa, I., 2011


17

Tanzania Investment Centre

TIC is under the Prime Minister’s Office and promotes and facilitates investment in all economic sectors

including tourism. The Centre was established in 1997 by the Tanzania Investment Act to be the Primary

Agency of the Government to coordinate, encourage, promote and facilitate investment in the United

Republic of Tanzania and to advise the Government on investment policy and related matters. TIC

provides one-stop advisory services to potential investors, including tourism investors. TIC attends

investor fairs and advertises the United Republic of Tanzania as an investment location.

The agency deals with all enterprises whose minimum capital investment is not less than US $ 300,000

if foreign owned or US $ 100,000 if locally owned. Enterprises engaged in tourism follow the approval

process contained in the Tourism Act, however TIC seeks to assist all investors to obtain permits,

authorization etc. required by other laws to set up and operate investments in mainland Tanzania.

2.3 PROPOSED LEGISLATIVE CHANGES

Tanzania Tourism Authority

It is planned to totally reform the Tourist Board into a larger semi-autonomous body called the Tourism

Authority. The Tourism Development Fund will be used to support this Authority and it will be charged

with overseeing the effective delivery of the fund. MNRT hopes that the legal framework will be in place

by 2015. Once operational, the Ministry will then focus primarily on policy issues.

VAT changes

The first revenue policy measure announced in the 2013/2014 Citizens’ Budget was

To reduce tax exemptions including abolishing VAT exemptions on tourism services; reviewing the

Tanzania Investment Act in order to reduce exemptions and retain only few which will attract strategic

investments.13

This implies a strong determination to phase out exemptions from VAT, although the Deputy Minister

for Natural Resources and Tourism, reacting to the operators' concerns, recently said here recently that

the VAT issue was still open for debate and suggestions from players in the industry. According to the

Tanzania Association of Tour Operators

Tourism-related segments that will be in future subject to VAT include tour guided game viewing, water

and sea sports, animal and bird watching, (tented) accommodation, park fees, tourist charter services,

ground transport or transit services. 14

Hotels already pay VAT and micro-businesses under the VAT threshold will remain exempt.

The draft budget outlines proposals for development expenditure (31% of total expenditure, the rest

being recurrent expenditure) on the following sectors:

Education

Health

13 <http://www.mof.go.tz/mofdocs/budget/Citizens%20Budget/CITIZENS%20BUDGET_%20Final_English_2013_14.pdf> 14 TATO September 2014


18

Agriculture

Water

Transport

Energy and minerals

Industrial sector

Employment creation

Tourism is not specifically mentioned as an area for development expenditure.

3 CURRENT SITUATION, PROGRESS AND TRENDS

3.1 REGIONAL TRENDS

In terms of visitor arrivals, sub-Saharan Africa has performed well through the global economic crisis of

2008-2012: An annual increase of 7.1% was achieved over these seven years. This is close to double

the world average.

TABLE 1: International tourist arrivals and 7-year growth (millions)

2005 2010 2011 2012 2012/2005

growth

Europe 449 486 516 534 2.5%

Asia and the Pacific 154 205 218 234 6.2%

North America 90 99 102 107 2.5%

Sub-Saharan Africa 21 31 33 34 7.1%

Middle East 93 128 126 107 2.1%

World 807 949 995 1,035 3.6%

Source: United Nations World Tourism Organisation (UNWTO)

Horwath Hotel, Tourism and Leisure’s August 2014 review of hotel performance in East Africa reports

a continued diversification of niche tourism products, ranging from the development of resort cities,

increased number of premium safari parks, adventure, religious, eco or food tourism as well as golf

courses and conference facilities development, however few of these developments are taking place in

the United Republic of Tanzania. Other capital cities in the region have experienced a steep increase

in hotel room supply over the last few years, also due to the large demand stemming from the worldwide

meetings, incentives, conventions and exhibitions (MICE) industry that has earmarked the region. The

MICE market is valued at $30 billion, with hotels accounting for 60% of the total value. Hotel operators

such as Marriott International, Carlson, Rezidor, Protea Hotels and Kempinski are constructing

additional guestrooms to come onto the market within the next 18 months. Recognizing that tourist

attractions in their countries to a large extent complement each other, the six EAC partner states have

agreed to work together to promote the industry and maximize gains. Horwath reports that funding

remains one of the biggest challenges for the tourism sector in East Africa, despite the what been

identified for Tourism potential the region.


19

3.2 UNITED REPUBLIC OF TANZANIA TRENDS

Overview

The United Republic of Tanzania has also performed well, particularly in comparison with Kenya which

has seen increasing political violence. The outlook in the short term is admittedly less positive: Flight

bookings to sub-Saharan Africa may drop as much as 50 percent over the next four months as a result

of geographic misconceptions about Africa and fear of the Ebola virus.15 This is likely to have a

significant negative impact on the business environment for tourism in 2015. However the tourism’s

rapid recovery in 2004 after a global scare regarding Severe Acute Respiratory Syndrome (SARS)

illustrates the tourism industry’s ability to recover quickly. Underlying long term growth projections for

tourism to and within Africa are positive. Investment in the United Republic of Tanzania’s busiest

airports is taking place, and more carriers are featuring the destination: These are important

developments for tourism, however taxes and landing fees, as well as fuel costs, are higher than

competitors, in particular Nairobi.16

Market share

Regional tourism statistics are published by the EAC. While this data does not report purpose of visit,

it shows that the United Republic of Tanzania’s performance is none-the-less volatile and vulnerable to

wider East African events. Although the country is the largest in Africa, visitor volumes reported are

similar to Rwanda, one of the smallest (table 2). This highlights the United Republic of Tanzania’s

potential.

TABLE 2: Percentage shares of visitors to East Africa (000s).

2008 2009 2010 2011 2012

Burundi 2%

(165)

2%

(183)

2%

(195)

4%

(228)

3%

(205)

Kenya 19%

(1,203)

16%

(1,490)

15%

(1,609)

34%

(1,823)

32%

(1,874)

Rwanda 19%

(704)

16%

(651)

15%

(666)

17%

(908)

18%

(1,076)

Uganda 33%

(844)

36%

(1,095)

36%

(1,275)

29%

(1,530)

28%

(1,634)

United Republic of Tanzania 23%

(764)

26%

(714)

28%

(783)

17%

(868)

18%

(1,077)

Total 100%

(3,681)

100%

(3,844)

100%

(4,236)

100%

(4,978)

100%

(4,961)

Sources: EAC and National Statistics Offices

In 2011 and 2012 Kenya made significant gains, however this is because Kenyan tourism has been

recovering following a sharp decline as a result of post-election violence in December 2007, assisted

by a European Union (EU) funded global advertising campaign in 2008. Kenyan tourism figures have

been negatively impacted by the fire at Nairobi airport in August 2013, the September 2013 attack on

15 Euromonitor PLC tourism forecasts (2014). There was an Ebola outbreak in the Democratic Republic of Congo (which borders the United Republic of Tanzania) in 2014, and in Uganda in 2012. 16 OECD (2013).


20

the Westgate shopping mall and the country’s growing terrorism threat. Uganda is also showing a

decline.

Tourism revenues

In terms of revenue performance the United Republic of Tanzania claims a higher percentage share

than simple visitor arrivals would indicate. As shown in table 2 above and table 3 below, the United

Republic of Tanzania attracts 18% of East African arrivals, but is estimated to capture 31.5% of tourism

receipts. The rates of growth over the past four years however indicate that tourism receipts in other

East African countries have all been growing faster than in the United Republic of Tanzania: The

average total growth in tourism receipts for the five countries is 58% from 2009 to 2012. The highest

percentage and absolute growth in tourism receipts is 82% for Kenya; the lowest growth is 35% for the

United Republic of Tanzania. This indicates a loss of market share in terms of inward revenues.

TABLE 3: East Africa Percentage Shares of Tourism Receipts ($ millions)

2009 2010 2011 2012

Burundi 0.1%

(2)

0.1%

(2)

0.1%

(4)

0.1%

(3)

Kenya 34.9%

(1,124)

41.3%

(1,620)

42.0%

(1,844)

40.1%

(2,044)

Rwanda 6.9%

(223)

5.7%

(224)

6.8%

(298)

6.6%

(337)

Uganda 21.2%

(683)

20.4%

(802)

22.0%

(967)

21.7%

(1,105)

United Republic of Tanzania 37%

(1,192)

32.6%

(1,279)

29.2%

(1,283)

31.5%

(1,605)

Total 100%

(3,224)

100%

(3,927)

100%

(4,396)

100%

(5,094)

Source: World Bank

Although loss of market share is occurring, tourism is one of the United Republic of Tanzania’s

significant success stories. It accounts for an estimated 5% of GDP17, generates over US$ 1.26 million

for the economy, employs over 430,000 people (making it one of the country’s top three employing

sectors) and all sources agree that it the potential to grow very significantly, if it receives investment

and is responsibly managed.

Visitor numbers

In terms of visitor numbers, the United Republic of Tanzania’s tourism economy has weathered the

recession well.18. Statistics from the Immigration Department indicate that the number of tourists visiting

17 WTTC 2013 18 A detailed case study on impacts of the global recession on tourism in the United Republic of Tanzania is

contained in UNWTO’s 2013 publication Economic Crisis, International Tourism Decline and its Impact on the

Poor.


21

in 2012 was 24.1% up on 2011, passing one million for the first time. The majority of overnight visitors

come from Africa itself (in order of numeric importance Zambia, Burundi, Uganda, South Africa,

Zimbabwe, Rwanda and Mozambique), however the largest single markets were the United Kingdom

of Great Britain and Northern Ireland (183,269), the United States of America (69,680) followed by

Zambia (65,110). Other major non-African markets are Italy (51,187), Germany (43,194) and France

(28,091).

Table 4 illustrates the trend in arrivals to the United Republic of Tanzania over in recent years.

TABLE 4 Visitor arrivals to the United Republic of Tanzania by region 2006-2010

2010 2011 2012 2012/2011

growth

Africa 392,137 445,750 448,756 9.6%

Americas 70.558 95, 503 103,064 7.9%

Asia and the

Pacific

66,655 61,550 133,694 117.2%

Europe 242,828 249,910 330,207 32.1%

Middle East 10,521 15,281 21,348 39.7%

Total 782,699 867.994 1,077,058 24.1%

Source: MNRT Tourism Statistical Bulletin (2010); National Bureau of Statistics and Central Bank of Tanzania

(2011 and 2012).

Table 4 shows the impact of the global recession (and recovery) on North America and Europe, and

growth from some buoyant Brazil, Russia, China and India (BRIC) economies. In particular China was

up 53% 2012 on 2011 to 13,760. India is the largest Asian source market (22,862 arrivals in 2012, up

29%) with strong ethnic and business ties. In addition displacement of safari tourism demand for Kenya

to Tanzania is likely to be a factor (although regional violence and health scares undoubtedly supress

international demand for all East African countries).

A very high proportion of visitors come for leisure purposes: business tourism is by contrast weak (and

was even weaker during the economic crises of 2008/2009). Purpose of visit is illustrated in MNRT data

in table 5:


22

TABLE 5: Visitor arrivals by purpose of visit

2006 2007 2008 2009 2010

Leisure, recreation, holiday 81% 87% 90% 90% 86%

Business and professional 11% 8% 5% 4% 7%

Other 8% 6% 5% 6% 7%

Total 100% 100% 100% 100% !00%

Source: MNRT

Other indicators

Length of stay has declined very slightly during this period, from 11 to 10 days. Visitor arrivals to the

United Republic of Tanzania as a whole are not markedly peaked: The busiest months are July, August,

September and December; the least busy months are March to May. Across the United Republic, tourist

accommodation is highly concentrated in Zanzibar, and on the mainland in Northern Tanzania and Dar

es Salaam (the business hub). National Parks and other reserves lay a significant role in spreading

tourism, although there is widespread agreement that Southern Tanzania and much of the coastline

has particular unexploited tourism potential. The forthcoming Inter-Agency Programme study on

geographical areas with tourism potential will explore these matters further.

3.3 SIGNIFICANT NEW DEVELOPMENTS UNDERWAY

An international convention centre was opened in Dar es Salaam in 2013, and hotel development is

zoned on the coast immediately south of Dar es Salaam. Some business tourism opportunities may

arise from mining and natural gas (mostly during the construction phase). Regional airports are being

developed, including Mwanza on Lake Victoria, and major airport expansion is underway in Zanzibar

and Dar es Salaam.

It is important to note however that in comparison to most leading tourism destinations in the world,

mainland Tanzania does not currently have significant strategic tourism developments or many major

hotel and resort complexes in the process of construction. With tourism numbers to sub-Saharan Africa

forecast to grow steadily in the medium and longer term, there is a danger that Tanzania’s

accommodation sector will become increasingly uncompetitive due to limited supply and lack of

competition. A lack of forward strategic planning to capture the significant long term global growth in

tourism to Africa forecast is evident and a paucity of investment incentives. The country’s most recent

overall Tourism Master Plan was written in 2002, however global tourism demand, consumer needs

and marketing methods have changed very considerably since that time, not least due to the rise of the

sharing economy19 with peer-to-peer networks becoming the dominant information source for travel and

tourism.

19 Technologies such as mobile devices, social media, the internet, and networked communications allow individuals and organizations to directly share existing resources rather than wait for third-party businesses or governments to deliver the desired goods and services. These people-to-people or peer-to-peer models create a new opportunity for individuals, communities, Governments and corporations to transact and collaborate.


23

3.4 SUSTAINABILITY AND POTENTIAL

While visitor numbers are currently buoyant and revenues from tourism are strong, there is a

widespread view that the United Republic of Tanzania’s tourism potential is not being maximised.

Tanzania is ranked as one of the top ten countries in terms of natural World Heritage for tourism, but is

ranked 70th in the world in terms of Government prioritisation of tourism.20 In addition this natural

heritage is reported to be gravely threatened by poaching on land, deforestation and dynamite fishing

at sea.21 Mining and pollution may also present long and short term threats to tourism, as can poor

planning and management of tourism itself. Commentators on sustainability note that tourism

development in the United Republic of Tanzania is shaped in fundamental ways by the political–

economic forces governing many post-colonial African states.

Politics in Tanzania are characterized by a highly centralized and weakly accountable state, a prevalence

of informal rent-seeking interests, institutionalized corruption in government at all levels and the

intermingling of a developmental discourse built on foreign and private investment with the patronage and

accumulative rent-seeking interests of political elites. Natural resources including land, forests and wildlife

are central to these political processes, as is tourism as a major source of foreign exchange and investment.

The resultant limitations on local communities and ordinary citizens to be able to create tourism enterprises

that capture tourism's value as a poverty alleviation instrument are largely a function of the wider political

economy, and the dependence of tourism on state-owned and controlled resources such as national parks

and wildlife.22

There are growing conflicts over land tenure, wildlife revenues and access to tourism benefits. There

are many vested interests (public and private) which seek to protect existing tourism and revenue

distribution patterns rather than expand participation and benefits.

20 WEF (2013) 21 TCT 22 Nelson, F. (2012) Blessing or curse? The political economy of tourism development in Tanzania. In JOURNAL

OF SUSTAINABLE TOURISM, Vol. 20, Issue 3.


24

4 COMPETITIVENESS OF TOURISM

4.1 PRODUCT

The WEF Travel and Tourism Competitiveness Index for selected competitor countries in 2013 is

illustrated in table 6.

TABLE 6: Overall travel and tourism competitiveness index 2013

Country

Overall

(of all countries)

Regulatory

framework

Business

environment and

infrastructure

Human, cultural and

natural resources

Rank Score Rank Score Rank Score Rank Score

East Africa

Burundi 138 2.82 130 3.40 139 2.33 138 2.37

Kenya 96 3.66 108 3.98 105 2.98 60 4.01

Rwanda 105 3.56 78 4.46 117 2.74 104 3.49

Uganda 116 3.39 116 3.71 121 2.70 79 3.76

United Republic

of Tanzania

109 3.46 118 3.67 125 2.68 59 4.02

Other

Botswana 94 3.7 84 4.4 91 3.3 112 3.4

Namibia 91 3.8 89 4.3 70 3.6 115 3.4

South Africa 64 4.1 81 4.4 59 3.9 57 4.0

Source: WEF (2013)

The Tanzania and Zanzibar associations of tour operators commissioned detailed market research into

competitiveness in 2008 which concluded that the United Republic of Tanzania’s natural tourism

product is in many ways unparalleled in Africa. The research undertaken during this study identifies a

number of issues that are constraining the development of tourism in the country. Broadly speaking,

these can be categorised into two groups:

Tanzania is not competitive enough as a destination: it does not consistently offer value for

money.

Low awareness and poor perceptions: too little is known about Tanzania as a tourist destination

in the key source markets. Perceptions of the country are also poor, often unnecessarily putting

tourists off visiting.23

In terms of diminishing value for money and hence competitiveness, issues identified were as follows:

Service delivery – generally poor training and experience

Hotel standards – below standards experienced by tourists in other countries

Air access – limited carriers linking European markets

Airport infrastructure – poor airport facilities

High park fees, concessions and other taxes – poor park facilities

Seasonality – diminished tourist experience in high season/overcrowding

Price – fairs poorly when compared with other destinations

23 TATOTZ/BEST-AC (2008)


25

Poor roads – increases time to travel between destinations

Development of the beach product – scope to improve Zanzibar & mainland

Poorly developed cultural product – considerable scope for improvement

Lack of activities that provide “value added” to the destination.24

Similar findings emerged from a Tourism Confederation of Tanzania (TCT) tourism value chain study

in 2009.25 This study concluded that a new culture of quality needed to be instilled in the industry if the

United Republic of Tanzania is to be seen as a high revenue-high value destination. The difference

between being a just a high cost destination as opposed to a high quality destination needed to be

brought home. The study also noted that the United Republic of Tanzania is only partially a stand-alone

destination for safaris: It was estimated that between 30-50 percent of safaris taking place in the United

Republic of Tanzania combine the country with other another African destination.

For independent travellers and business tourism, the main constraints identified by the TCT study

related to product supply and quality rather than price.

4.2 ATTRACTION OF INVESTMENT

Tourism is one of the largest and fastest growing sectors of the world economy, and tourism in Africa

is ripe for development. The World Bank’s 2013 Tourism in Africa report notes that the number of

tourists arriving in sub-Saharan Africa has grown over 300% since 1990, with 2012 marking a high of

33.8 million tourists who visited the region. Income generated from tourism has also climbed: Receipts

from hotels, tours and other attractions in 2012 amounted to over US$36 billion and directly contributed

just over 2.8% to the region’s gross domestic product (GDP). By 2022, the World Travel and Tourism

Council (WTTC) forecasts 6.8 million direct jobs in tourism in sub-Saharan Africa and more than 16

million people could be employed directly and indirectly through tourism; but to generate the potential

new jobs that are forecast in tourism, investment needs to grow.

TIC’s 2012 report on foreign direct investment (FDI) shows that mining and quarrying dominate (an

inflow of US$ 406.5 million in 2012): Accommodation investments (including hotels) accounted for an

inflow of US$ 165 million. Since 2012 however hotel investment is reported to have slowed. South

Africa, the United Kingdom and Canada accounted for an average of 71.5 percent of the total FDI

inflows to the United Republic of Tanzania between 2008 and 2011 (all sectors).26

Consultations with TIC confirm that there are no longer any special incentives for tourism, which is

treated like any other industry sector. Approved investors can receive refunds of 75% on excise duty

and 45% of VAT on capital goods and “deemed capital goods” however the list of deemed capital goods

for tourism has been very significantly reduced: It no longer includes start-up fixtures and fittings for

example. There are Special Economic Zones, but these are not designed around tourism. It publishes

an investment project portfolio, entitled Now its Tanzania aimed at the Unites States of America market.

This features opportunities in National Parks, but does not cover investment opportunities the wider

24 Ibid. 25 TCT (2009) 26 TIC (2012)


26

tourism industry.27 The TIC brochure summarises the investment package on offer to tourism investors

as non-fiscal incentives, fiscal incentives and strategic investor status, as follows:

Zero percent (0%) import duty and VAT exemption on capital goods and Import Duty Back Scheme28,

Refund of duty charged on imported used for producing goods for export and goods sold to foreign

institutions like the United Nations and its agencies operating in Tanzania,

The recognition of private property and protection against any non-commercial risks,

Allowed to repatriate all your profits, gains and dividends from investment after tax,

Favourable Investment allowances and deductions.29

In addition to existing investment incentives a potential an investor may apply for strategic investor

status30 to seek additional investment incentives.

Local Government has responsibility for zoning land for tourism investment, but few have detailed

spatial plans.31 Land allocation and land dispute resolution are very complex and hinder investment in

tourism by both domestic and foreign investors. In 2013 only 3% is land was registered, and the process

involved is complex and costly.32 The State retains land ownership and the Commissioner of Lands has

the power to reallocate land and confiscate land rights. Land conflicts are increasing.

For all the above reasons, Tanzania’s investment incentives for tourism are not internationally

competitive. Namibia and Botswana for example offer lower tax rates and a tax holiday to approved

tourism investors, and offer a menu of desired investment projects by region. Thailand is exempting

priority tourism sectors for development (golf and wellness) from excise and turnover taxes. Some other

African countries will even offer free sites as designated tourism development zones, and provide

infrastructure and utilities. 33 Unless tourism development is well planned and facilitated, many

opportunities will be lost. As the investment promotion agency itself points out, outside of Dar es

Salaam, Arusha and Zanzibar, most of Tanzania (the largest country in Africa)

remains with little or negligible hotel investments. Investment is required for additional hotel capacity in

existing tourist locations and new investment in untapped areas34

Consultations also indicate a shortage of camp sites and air strips in and near National Parks for high

end tourism.

An example of internationally competitive tourism investment location is the Socialist Republic of

Vietnam which has moved from a centrally planned to an open economy, and which is now ranked 80

of 140 in World Bank’s Travel and Tourism Competiveness Report 2013 (the United Republic of

Tanzania was ranked 109 [table 6]). Many of the Socialist Republic of Vietnam’s provinces offer One

Stop Shop investor services. Investors in tourism in poorer provinces (both foreign and domestic) are

offered the maximum investment incentives proscribed by law. They are also presented with detailed

27 NMRT also publishes a brochure on investment opportunities in similar state-owned assets, however incentives are not elaborated. 28 Currently limited 29 TIC (n/d) Now it’s Tanzania 30 Increased to US$50m (from $20m) for foreign investors in 2014 budget. Remains at $20m for Tanzanian

investors 31 Only 7.7% of villages have land use plans (OECD, 2013) 32 Ibid. 33 For example Mauritania. Egypt also offers generous concessions on land. 34 TIC (2014)


27

and well researched Provincial Tourism Development Strategies, a free cadastral map indicating

possible land lease sites for tourism, assistance available for infrastructure to support investment, and

details of regulations regarding land clearance, compensation for displacement, etc. Vietnam has been

particularly successful in attracting tourism investment from BRIC countries and from domestic sources

to fuel its rapidly developing tourism economy.

4.2 BUSINESS CLIMATE

Looking more specifically at the business climate, the World Bank’s Doing Business surveys provide

key data on how the United Republic of Tanzania is ranked compared to other countries. Table 7

presents this data.

TABLE 7: World Bank ease of doing business rankings

Kenya Rwanda Uganda United Republic of

Tanzania

2013 2014 2013 2013 2014 2014 2013 2014

Starting a business 128 135 8 115 119 9 146 151

Construction permits 45 47 122 177 177 85 130 143

Getting electricity 163 166 52 102 102 53 177 178

Registering property 161 163 62 140 146 8 128 126

Getting credit 11 13 24 126 130 13 40 42

Protecting investors 95 98 32 95 98 22 113 115

Paying taxes 171 166 25 140 141 22 96 98

Trading across borders 157 156 160 137 139 162 164 164

Enforcing contracts 151 151 40 41 42 40 114 117

Resolving insolvency 101 123 160 132 134 137 68 79

Ease of doing business 122 129 54 136 145 32 126 132

Source: World Bank doing business indices35

The World Bank indices imply that the United Republic of Tanzania has the least business-friendly

environment in East Africa and that its competitive position for doing business is declining (as is the

global competitiveness of Kenya and Uganda). Access to finance is highlighted by the Organisation for

Economic Cooperation and Development (OECD) a very problematic factor for small businesses: In

2011 only 8% of the rural population had access to formal financial institutions and 56% of the

population was excluded from any form of financial service.36

The World Bank does however report some positive changes in the United Republic of Tanzania’s

business environment over the past three years as follows:

2014:

Getting Credit:

Tanzania improved its credit information system through new regulations that provide for the licensing of

credit reference bureaus and outline the functions of the credit reference data bank.

Resolving Insolvency:

35 OECD (2013) 36 Ibid.


28

Tanzania made resolving insolvency easier through new rules clearly specifying the professional

requirements and remuneration for insolvency practitioners, promoting reorganization proceedings and

streamlining insolvency proceedings.

2013:

Starting a Business:

Tanzania made starting a business easier by eliminating the requirement for inspections by health, town

and land officers as a prerequisite for a business license.

2012:

Trading Across Borders:

Tanzania made trading across borders faster by implementing the Pre-Arrival Declaration (PAD) system

and electronic submission of customs declaration. 37

The report also comments negatively on changes that have resulted in a more difficult construction

permitting process with additional procedures and cost. It is also important to note TIC’s eRegistration

initiative and its initiatives moving towards a “one-stop-shop” information centre; and that the Investment

Climate Facility for Africa (ICF) has supported strengthening capacity to deliver commercial justice more

fairly through training of judges and court staff and the application of modern technology in courtrooms.

ICF has also worked with the Ministry of Lands, Housing and Human Settlements Development to

improve land registration processes. These improvements are not yet reflected in World Bank indices.

OECD in its review of investment policy in the United Republic of Tanzania (2013) reports a slowing of

the momentum of business reform, since the country was listed as one of the World Bank’s top ten

performers in reform in 2007. A need to rationalise the business reform process was suggested.

The most problematic business reform areas identified in are table 8:

TABLE 8: Most problematic factors for doing business 2013-2014

Issue % of survey responses

Access to finance 24.2

Corruption 16.9

Inadequate supply of infrastructure 11.5

Inefficiency of government bureaucracy 10.2

Inflation 7.6

Tax rates 5.6

Inadequately educated workforce 5.2

Foreign currency regulations 4.8

Tax regulations 3.3

Work ethic 3.0

Crime and theft 2.8

Policy instability 1.9

Insufficient capacity to innovate 1.0

Source: WEF Global Competitiveness Report (2013)

TIC’s work on eRegistration is supported by UNCTAD. It clearly illustrates the complications which all

entrepreneurs face: For example to register a foreign company takes nineteen steps and is likely to

37 <http://www.doingbusiness.org/reforms/overview/economy/tanzania>


29

take many weeks and will visits to eight different offices, resulting in six different required certifications

(at considerable time-cost to the entrepreneur).38 This is a major disincentive to compliance, investment

and economic progress, and a significant competitive disadvantage. It is also an issue which can be

relatively easily solved (as other EAC experience shows, if there is political will).

Finally, the corruption perception index (table 9) issued by Transparency International also outlines

independent views relevant to the United Republic of Tanzania business environment: While the

country’s index has improved and is better than Kenya and Uganda, it is far behind Rwanda, and is

still reported in the bottom half of the international corruption league.

TABLE 9: Global corruption index and ranking

Kenya Rwanda Uganda United

Republic of

Tanzania

Ranking of 177 countries 2013 (2008) 136 (146) 49 (89) 140 (130) 111 (126)

Sore out of 100 2013 (2008) 27 (22) 53 (33) 26 (25) 33 (26)

Source: Transparency International

Industry feedback on the business and policy climate for tourism specifically is examined in more detail

at chapter 5.

4.3 LABOUR

As noted above tourism is one of the top three employing industry sectors in the United Republic of

Tanzania. Even in its present state travel and tourism is estimated to provide 434,600 jobs, 39 the vast

majority of which are held by Tanzanians. This represents 4.2% of the workforce.40 As an existing (and

future) force for poverty reduction the United Republic of Tanzania’s tourism industry makes a

significant contribution.

Tourism is however a service industry and requires highly trained staff with good linguistic skills and a

very positive work ethic if it is to expand successfully. Despite many years of technical support in this

area and a new tourism training college, service providers still report difficulty recruiting staff with even

basic hospitality skills. Other consultees suggest that there may be a preference for hiring foreign-

trained staff, particularly for management positions. The WEF Travel and Tourism rankings illustrate

these problems, placing the United Republic of Tanzania in 2013/4 towards the bottom of the global

league for tourism human resources (116 of 140 countries), despite the country’s other natural assets.

Table 10 illustrates this.

38See < http://www.tic.co.tz/procedure/207/95/step/622?l=en> 39 Source WTTC (2003). Note: Treat with caution: may be over-stated. This figure includes transport, and corresponding figures quoted in the WTTC report are Kenya 317,400 industry jobs (based on 1,469,000arrivals); Namibia, 37,000 industry jobs (984,100 arrivals ); Botswana 20,300 (2,1451,000 arrivals) and South Africa 536,700 jobs (8,339,400 arrivals). ILOs’ annex to this report examines labour issues in more detail. 40 Ibid.


30

TABLE 10: Human resources country ranking

Kenya Rwanda Uganda United

Republic of

Tanzania

Quality of educational system 37 50 68 79

Secondary education enrolment 107 125 131 133

Local specialised research and

training

37 50 68 79

Extent of staff training 69 68 98 76

Overall rank for education &

training

102 106 121 116

Overall rank for human resources 106 110 114 116

Source: WEF (2013)

Large deficits in skills are reported by consultees in both the public and private sectors and in all areas

of tourism except perhaps hunting and wildlife guiding. As a result it is likely that at times quality service

is inferior to neighbouring states and not consistent with the quality image with the country wishes to

project. The problem can only get worse if visitor numbers grow, as is projected.

Upskilling is required for tourism officials at all levels, as well as hotel managers and staff including

chiefs, waiters, and other service personnel. There are also gaps in guiding skills (including languages

of key inbound markets).

By 2022, the WTTC forecasts there will be 6.8 million direct jobs in tourism in sub-Saharan Africa and

more than 16 million people are expected to be employed directly and indirectly through tourism. The

United Republic of Tanzania itself could at least double its tourism workforce with investment in tourism

expansion. This is a huge opportunity for the Government and the tourism industry to help Tanzanian

youth.


31

5 DOING BUSINESS IN TOURISM

5.1 TOURISM INDUSTRY ISSUES: FREEDBACK FROM MISSION

The following issues were highlighted in consultations undertaken: They are examined in approximate

order of importance to the industry.

5.1.1 Destruction of natural assets

The continued destruction of the wildlife upon which much of the United Republic of Tanzania’s tourism

industry has been built emerges as a key barrier identified stakeholders to the business climate and

industry viability. Elephants are particularly highlighted as poaching and corrupt practices allowing some

hunters to exceed game quotas take an increasing toll. In addition loss of habitat due to deforestation

and agricultural expansion are mentioned, as is the dynamiting of coral reefs by fishermen. Many

complex factors are at play and areas to be explored further were suggested of as follows:

Better planning and management of protected areas

Better policing pf poaching and policing of corruption

Increased presence of tourism interests in reserves to help preservation of wildlife

More air strips for tourism purposes (and less emphasis on building roads in wildlife areas)

Stronger linkages between communities and the private sector in Wildlife Management Areas41

to improve performance and returns from tourism.

Commitment from Government.

Better partnership.

5.1.2 Skills gap and restrictive labour laws

Industry consultees report significant problems in obtaining suitable local staff to work in the tourism

industry. Levels of numeracy and literacy are very low in many areas, and English speakers difficult to

find. Workers with other foreign language skills are virtually impossible to find. There is felt to be no

short term solution, and that addressing training at all levels will require a massive and long term

commitment to raise standards. As a result there is a reliance on staff from outside the country where

better tourism training is available. This is regretted but the need to maintain standards is a key issue

in terms of competitiveness and meeting the needs of the markets the country’s tourism product attracts.

Existing and recent training programmes are felt to have been ineffective or too small scale to have

impact.

The chief weaknesses noted in consultations are

business skills,

understanding visitor needs and expectations,

customer service,

languages,

41 Sixteen pilot Wildlife Management Areas were established in 2003, however the prolonged, time-consuming and costly establishment process, inequitable benefits, lack of entrepreneurial skills and poor governance are some of the serious challenges facing this initiative (Mwakaje, 2008)


32

marketing and online communications.

In the absence of Tanzanians with the skills the industry needs, the high cost and complicated

procedures for work permits are identified as a barrier to business. At present a TIC Certificate of

Incentives allows investors to an automatic quota of up to five non-Tanzanian persons during start up

(five years). Subsequent requests require Immigration Department approval. Government authorities

can intervene in decisions beyond the five-person quota. In other countries with developing tourism

industries there is extensive reliance of foreign-trained staff until the industry and Government establish

robust training systems.

In addition, contrary to international practice, Section 58 of the Tourism Act 2008 requires 100%

Tanzanian ownership for several activities including mountain hiking, car rental and travel agencies.

License fees are also often higher for foreigners.

5.1.3 Incoherent policies, institutions and regulation

There is widespread agreement that the national tourism policy is in need of thorough updating and that

real public private partnership (as opposed to dialogue) is necessary. Many complex issues need to be

reviewed and structural change, while very difficult to achieve consensus on, is necessary. This might

include change to the four categories of protected areas and how they are managed and marketed. The

proposed new Tourism Authority and the Tourism Levy are seen as steps forward, but there is much

scepticism as to whether they will deliver.

Regulation Tanzania-style is identified as a key barrier that needs thorough review, so that regulations

make sense and empower rather than restrict tourism industry growth. It is recognised that tourism

should be an important source of Government revenue, and that there is great scope for simplification

and reform, making tax collection more efficient.

5.1.4 No regulatory oversight

In addition to excessive regulation, a lack of effective oversight emerges as a key issue. Oversight is

felt to be needed to address incoherence, ensure adherence to policy (such as it is), and address issues

of corruption and mismanagement.

5.1.5 No meaningful public-private partnership

Consultees feel frustrated that they have been involved in public-private dialogue for a least a decade

(much of it NGO and aid driven), but that actual results are not to be seen. It is felt that Government is

not really committed to partnering with the tourism industry which is seen as foreign-owned.

5.1.6 Multiplicity of taxes, levies and fees

In August 2014 the following licences apply to tourism businesses (table 11):


33

TABLE 11: Licenses and charges applying to tourism businesses 2014

Charge

Certificate of Registration

Business license

TALA license

VAT

Corporate Tax

Capital Gains Tax

Skills development levy

Municipal service levy

National Social Security Fund

Non-consumptive wildlife permits

Tolls for passing through villages and districts

Work permits (various categories)

Tourism Development Levy (currently suspended42)

Garbage fee

Liquor license

Internet license

OSHA license

Road license

Fire certificate

Souvenir license

Hand held radio license

High frequency radio license

TV license

Traffic police fees

MWENGE Levy

Village Development Levy

Sources: World Bank (2014), TIC, consultant

TCT reports that the following licenses apply to different sectors of the industry43:

Tour operators

TCT reports that tour operators face as many as 23 different licences and charges to operate. In

addition to their Certificate of Registration and Business License, the TALA process is applied to

different activities such as tour operations, camps, mountain climbing, etc. annually. TALA charges

are much higher for foreign-owned businesses. Changing license, tax, and fee regulations and

frequent and visits by different government officials are a feature of the system. Tour Operators

also incur 11 duties, licenses, and fees for each vehicle they employ. In addition unregulated and

42 PwC (2014) Understanding Tanzania's 2014/2015 National Budget: PwC insight and analysis. PowerPoint

presentation 43 Data based on BEST-AC (2010) and updated 2014 for the Tanzania National Business Council.


34

uncoordinated “gate fees” collected by villages along national and other roads are reported to be

increasingly being applied.

Hunting Operators

Hunting Operators operating in Game Parks are reported to face 25 licences, and in addition the

hunting guides they employ must each have their own TALA.

Hotels

Hotels pay a minimum of 14 taxes, licenses, and fees, including those for VAT; corporate tax;

dividend withholding tax; stamp duty on rent; payroll levy; property tax; municipal service levy; land

rent; work permits; TALA; Occupational Safety and Health Authority fees; Copyright Society of

Tanzania fees; Tanzania Food and Drug Authority permit; and sign board fees. Changing license,

tax, and fee regulations and frequent and visits by different government officials are a feature of the

system. Individual hotels require a TALA and other licenses, not each holding company.

Airlines

Some airlines44 which carry tourists require 115 different licences to operate including TALA and

Civil Aviation requirements.

The Government’s plan to remove VAT exemption from safari operations (VAT at 18% is proposed) is

a key issue for the Tanzanian Association of Tour Operators (TATO) at present. They are calling for

tourism to be seen as an export in the tax regime. TATO has warned that VAT on tourism products will

make Tanzania a very expensive destination and foreigners may start opting for other countries where

prices for safaris are cheaper. TATO reports that tourism-related segments that will be subject to Value

Added Tax include tour guided game viewing, water and sea sports, animal and bird watching,

accommodation, park fees, tourist charter services, ground transport or transit services.45

5.1.7 Inadequate marketing and branding

Although it is recognised that TTB has a new marketing strategy which the industry helped to draw up,

there is disappointment that it has not been substantially implemented due to lack of resources. Lack

of effective national marketing (TTB has only one overseas representative) including advertising and e-

marketing are identified as key business barriers, particularly in comparison with other EAC countries.

5.1.8 Limited tourism infrastructure

Progress with airports is recognised, as is the construction of the international convention centre in Dar

es Salaam, however apart from protected areas and hotels concentrated in Dar es Salaam, on the

Northern Circuit and on the Zanzibar archipelago, the country is felt to have a massively under-

developed tourism infrastructure, and to lack plans for addressing this issue. This results in a very

44 Some licenses do not apply to national carriers 45 16% VAT applies to tour operations in Kenya. The Kenya Association of Tour Operators (KATO) is circulating a petition to revoke the VAT imposed on tourism services in 2013. The petition is targeted at that country’s President. Uganda reinstated its VAT exemption on the supply of hotel accommodation in tourist lodges and hotels outside Kampala in 2014, following industry pressure. The move was supported by the Uganda Tourism Board. Many other countries do apply VAT to tourism services, usually excluding transport and usually at lower rates, for example the rate is 10% in the Socialist Republic of Vietnam; Egypt is considering the introduction of a single rate VAT (10-12%) to replace the sales tax on hotels, restaurants and tourist transport services. Further information is available from EY’s Worldwide VAT, GST and Sales Tax Guide (2014)


35

limited tourism product portfolio. Museums and other attractions are poor, even by East African

standards. Access to the country’s 800 km of coastline is also poor and most utilities are not available

for much of the country. Unreliable energy supply was highlighted as the top barrier to business by the

Tanzania Private Sector Foundation in 2013.

5.1.9 Inadequate incentives for inward investment

Incentives for tourism investment have been steadily eroded in the United Republic of Tanzania over

recent years. This is partly due to a need to maximise state revenues, but also because FDI in tourism

is poorly understood and at times controversial. Foreign ownership in tourism, it is argued, is

widespread, preventing pro-poor growth because of the leakages that occur and the lack of backward

linkages from the investment. Yet tourism plays a key role in earning foreign exchange for the country:

Without tourism’s foreign exchange earnings the value of the Tanzanian shilling would fall, making

imports of food and fuel more expensive with massive negative impacts on the poor. Tourism (and the

construction of tourism facilities) can become far larger employers, if policies are put in place to

stimulate and to train. Lack of investment is evident right across the industry at present, with even

existing long established players pulling back on future expansion and product upgrade due to the poor

business climate.

5.1.10 Other issues

Other issues raised as barriers to business and which increase business costs include

Congestion in Dar es Salaam: Traffic congestion significantly slows down both tourists and

tourism entrepreneurs trying to do business, as well as blocking fast access to the convention

centre.

A growing crime problem is also mentioned, as more unskilled people migrate to Dar es Salaam

and seek to survive. Increasing violent and petty crime is also a key issue raised by the Zanzibar

Association of Tourism Investors (ZATI).

Streamlined visa processing is a crucial enabler for tourism. UNWTO has found a clear

correlation was found between ease of visa processing and tourism performance. There is

scope to put the Tanzanian visa approval process on line, so that visa purchase can be better

facilitated. Reductions in visa fees can also be used to stimulate key markets; indeed countries

with more mature tourism sectors often remove visa requirements for their key source markets.

The United Republic of Tanzania has recently opted out of the common EAC visa and this

situation needs review.

5.2 CONSUMER CONCERNS

The 2012 International Visitor Exit Survey46 indicates that the area tourists identify as being most in

need of improvement is

Improvements to infrastructure and facilities are by far the greatest need identified by tourists

(66.5%)

46 National Bureau of Statistics and Bank of Tanzania (2014)


36

Other issues identified are the quality of services (6.9%); high prices (3.7%); conservation measures

(1.7%) and the acceptability of credit cards and lack of ATMs and Internet facilities. This highlights that

infrastructure planning issues and their implementation need to be a priority.

6 BUSINESS ENVIRONMENT REFORMS TO PROMOTE SUSTAINABLE TOURISM

6.1 RESPONSIBLE TOURISM

Responsible Tourism is about making better places for people to live in, in addition to making better

places for people to visit. It recognises that in order for tourism to be sustainable there must be clear

benefits to the host community from all types of tourism. There is a Tanzanian NGO promoting

responsible tourism based in Arusha, Responsible Tourism Tanzania.47 Much of its focus is presently

on certifying responsible tourism operators to help them to be internationally marketable. A challenge

is to educate Government and the industry as to how the tourism sector might be developed to benefit

local people (and the environment) more, and become more financially viable; and in particular to

commit all parties to action and the sharing of responsibility.

Most tourism businesses in the United Republic of Tanzania are deeply committed to the country and

to helping its people. They are dependent on environmental protection. Many make significant

contributions to their communities, helping schools, maintaining roads, supporting young people, etc.

Much of this good work is not recognised, adding to the under-appreciation of positive social and

economic impacts of tourism. Tourism businesses themselves need to be to highlight their CSR

initiatives more, and in increase their number and scope.

The following initiatives are suggested:

Representative associations should gather industry data on CSR initiatives by their members

and publicise this activity through annual reporting and press releases.




should be licensed by the World Responsible Tourism Awards that take place annually on

World Responsible Tourism Day at London’s World Travel Market.



These programmes should sensitize and raise awareness of responsible and sustainable

tourism issues in both the United Republic of Tanzania and Southern Africa Development

Community (SADAC) countries. Courses might be run in partnership with the Sustainable

Tourism Certification Alliance Africa (STCAA).

The process of Responsible Tourism certification through RTTZ should be expanded through

training more auditors and creating greater industry awareness of the benefits of certification.

47 <http//:www.rttz.org>


37






schemes.

6.2 MARKETING

Effective and well targeted national tourism marketing is key to driving growth. It is very important that

the Tourism Levy and proposals for its disbursement are quickly and effectively actioned so that it can

achieve widespread support and grow. TTB and the industry with support from BEST-AC have put in

place a national tourism marketing strategy: This now requires robust annual marketing plans based on

actual resources available. Targets need to be set and progress monitored.

The public health situation in a destination is critical to a tourist’s welfare. Many travelers will be put off

from undertaking a journey due to current fears (and lack of good geographical knowledge) regarding

Ebola for example, although malaria and other health risks may be more relevant in Tanzania. Clearly,

improvements in public health are of primary value to the local population but, without them, the

numbers of foreign visitors will not expand and they will be less willing to explore more remote parts of

the destination. Accurate information needs to be communicated.

The following actions are recommended:



Develop target-driven annual action plans for TTB (or the new Tourism Authority).



In terms of domestic tourism a communication toolkit and campaign should be initiated to target

corporate (mining companies, diplomatic missions, NGOs) to encourage the use of use

Responsible Tourism certified products in urban centres in the United Republic of Tanzania to

help influence their decision on purchasing of both sustainable tourism and organically certified

products.

6.3 LEADERSHIP AND STRATEGY

The lack of a driving policy and long term vision for the sector clearly emerges as a fundamental issue

undermining the business environment. Without such a strategy there are no incentives to invest in

priory products and spread tourism and create jobs, and a general lack of consensus on how tourism

should be developed. The result is an industry which is becoming increasingly uncompetitive, failing to

attract inward investment and losing market share in a buoyant global sector. If the Government wishes

to capture this growth opportunity, it is essential the United Republic of Tanzania to estimates how

many rooms and camp sites it would need over the next decade to meet targeted demand, decide


38

where they should be, and then facilitate their development. A significant expansion of hotel and camp

provision and of other services to meet growth in tourism could be undertaken (including demand from

a growing domestic middle class). Tourism, if facilitated, has the potential to create hundreds of

thousands of jobs in Tanzania both in construction and hospitality.

A market-focussed tourism master plan is needed to identify high-value areas for tourism development,

as well as new products and areas that could be developed in successive stages. Environmental impact

assessment and environmental management capacity enhancement need to be covered. If

Government commitment to tourism can be secured, a tourism master plan to 2030, undertaken by a

consulting firm which a strong track record for spatial planning and funded by a donor, will need to

identify prime tourism land for development of new product and expansion of existing successful

products. Because nationwide, comprehensive land reform is, at best, a long-term endeavour (only 3%

of land is registered at present) practical solutions to facilitate access to secured land for investors

(domestic as well as international) will be needed. Adequate compensation is essential so that no

stakeholders feel alienated from the tourism development.

An effective institutional framework for the implementation of a new tourism master plan will be

essential, learning from past failures. The highest level engagement will be needed to coordinate

multiple Government departments. The plan should suggest sources of financing, including potential

donors. Robust stakeholder engagement is essential, including the coordination of the multiple donor

agencies currently identifying tourism potential and commissioning strategies on it.48

Tax incentives for investment should only be granted in accordance with a comprehensive policy which

lays down principles and policy objectives for each incentive. Justification for tax incentives might

include regional development, employment creation, etc. Expected benefits and results need to be

defined in advance and objectives and rationale should be publicly communicated through the Master

Plan. As part of the master plan’s outputs Government should

Make clear all tax incentives for tourism and their objectives and targets

Provide incentives through the tax law

Communicate incentives clearly and consistently

Ensure incentives are endorsed by parliament

Regulate and administer incentives fairly and transparently

Record and broadcast results annually.

The following initiatives are needed to address these issues:







48 In addition to SECO-United Nations


39




commence comprehensive process of regional planning for tourism in line with master plan.


Identify special tourism investment zones to spread tourism (example of Madagascar and

Mozambique).


can secure longer leases.



Appeal, etc under different ministries) and this requires review.


clusters.


linkages with private sector.




experiences, and to ensure greater objectivity and transparency.49

Lack of policy coordination also applies to agencies and donors operating in the United

Republic of Tanzania. For example, the business climate has also recently been studied by

the World Bank and USAID. Labour issues are about to be studied by both ILO and the

Swedish International Development Cooperation Agency (SIDA). There have been multiple

initiatives on tourism training. The coordination of donor support and follow up on

recommendations needs to be more strongly focussed by Government. An International

Cooperation Department should coordinate donor aid for tourism following the master plan

agenda.

6.4 TOURISM TRAINING

Having an educated, skilled labour force is at the core of tourism innovation and competitiveness.

Service standards are a critical constraint to operations, particularly in premium destinations, such as

Tanzania. Training is both a public and private sector responsibility. It is usual in any country for hotel

managers accept employees trained in formal hotel or tourism training programs but to consider their

training complete only when they have gone through the hotel’s own training program; in addition in any

country hotels will train some of their own staff without their having any formal training at all.

49 UNWTO & QualityMark Norway (2014)


40

The private sector can also provide training as a commercial venture in its own right: Examples of

private sector tourism training programs include Accor Academy50 and Sun International’s training

centre for its staff in South Africa.

The World Bank’s Tourism in Africa report notes that low education levels, lack of prior experience,

cultural differences, and poor health mean that employees are less productive in many sub-Saharan

African countries. Another factor is that an employee’s first language may not be English, but usually is

a tribal language. Tourism ministries frequently lack the know-how and leadership to implement

effective training plans. In addition, disconnects often exist between tourism school curricula and the

skills needed by tourism businesses. As a result, the level of service is often inadequate. Despite many

years of donor support for tourism training in the United Republic of Tanzania, it remains a major

constraint.

Training is needed in all areas and at all levels, from vocational to managerial. The informal sector can

also benefit from training, such as for handicrafts, which can boost the incomes of local communities,

particularly when hotel and protected area managers have a positive attitude and allow them to sell

their crafts within the hotel grounds. Government staff at all levels also need more training.

In the absence of core skills, the use of foreign workers in inevitable, however the processes for work

permits are slow and expensive.

There is a need for a concerted, coordinated and comprehensive strategy which is practical

to implement, and which learns from the failure to sustain previous donor support initiatives

in tourism training.

A key need is ensure that training is employee-benefit centred. I.e. it should result in a

globally recognised qualification which leads to opportunities not only in the United

Republic of Tanzania, but also in the EAC, and further afield. The industry will need to adapt

to give positive career paths to more staff so as to retain and develop them.

In the context of a future Master Plan projecting the expansion of accommodation supply

and staffing numbers required, it will be necessary to establish the extent of human

resource needs in terms of employment by category, and the ways to resolve a key

constraining issue.

An updated national tourism Training Needs Analysis is needed, in coordination with

tourism training institutions and the Ministry of Labour, Employment and Youth

Development, the Ministry of Education and MNRT. Apprenticeship programmes should be

reviewed and possibly expanded.



The National Tourism Training College’s targets and performance should be subject to

continual review.

Tourism curricula at all levels require constant review and update.

50 Accor Academy trains 135,000 students a year using video game modules.


41

All tourism staff need to meet high hygiene standards, and be educated about the benefits

of improved hygiene and protection from mosquitos. The tourism sector can have a positive

ripple effect in improving the basic health of its employees and their associates.

Provide training to MNRT and TTB on market research, and to the National Bureau of

Statistics on tourism satellite accounting.

Work permit approval processes for tourism staff need to be put on line and speeded up.

Costs of work permits should be brought into line with competitor destinations.

6.5 REDUCING THE COST OF DOING BUSINESS

Planning for and regulation of tourism development is crucial to sustainability, but too much regulation

and unpredictable behaviour by government and others inhibits growth and ultimately makes tourism

less sustainable. This is a particular concern in the United Republic of Tanzania where high levels of

taxation (including hidden taxes through license fees) are undermining private sector reinvestment in

the future of Tanzanian tourism.

The extent to which high end tourism to the United Republic of Tanzania suffers from price elasticity is

unproven, but there is no doubt that as investment in high end product is increasingly attracted to other

countries rather than Tanzanian hunting, safari and beach product, the country will continue to lose

competitiveness. In other areas, such as meetings, incentives, conferences and exhibitions (MICE)

where there is room for expansion, and in business and free independent tourism (FIT) and more mid-

range safaris and nature tourism, price is a key factor. In beach tourism it is a key determinant of choice,

particular for group buyers. Distances for supplies can be huge and transport infrastructure is poor. It is

essential that the cost of doing business comes down if tourism industry is to grow.

UNWTO’s Tourism Taxation: Striking a Fair Deal points out that taxes can either stimulate or stifle

tourism growth. Clearly, a balance needs to be struck between the need for survival and profitability of

private sector investments, and revenues for central and local Government and the preservation of

tourist assets. When tourism operations are sufficiently profitable to pay reasonable taxes, they are

warranted.

The following measures would help to reduce the cost of doing business in the United Republic of

Tanzania:












42


returns.


Costs of TALA and work permit licenses should be reviewed, benchmarking against other EAC

countries.

Following development of a master plan which sets clear policy priorities, reintroduce selective

investment incentives for tourism, focussed on new areas away from existing honey-pots and

on increasing the supply of internationally accredited tourism training facilities and language

schools.


African tourism.

Set an internationally competitive rate for VAT on tourism services.


businesses.



United States dollars and others in Tanzanian shillings.


expertise at MNRT, TTB, TANAPA, etc. and establish a tourism desk at TIC linked to an

investment desk at MNRT.51

6.6 STIMULATING EFFICIENCY, INNOVATION AND ENTREPRENNEURSHIP

It is difficult to start a legally compliant tourism business in the United Republic of Tanzania due to the

regulation maze. It is also difficult to borrow money in-country to get started or to expand. Access to

finance can be a critical constraint to tourism growth for new players, in addition to expanding

businesses without international partners. Commercial banks are reluctant to fund tourism projects.

Smaller types of tourism establishments essential for enhancing visitor experiences and creating

indigenous jobs, such as restaurants, craft manufacturers, artists and gift shops, face challenges in

accessing finance. Small businesses such as lodges and bed-and breakfast operators also require

heavy up-front funding. There are few investment incentives and returns on investment can be volatile.

For larger projects land is not designated for tourism, and with zoning delegated to regions, there is a

real danger of poorly planned investments copying one another in the absence of a national tourism

development plan driven by future market needs and emerging international tourism trends. This,

together with a small industry dominated by relatively few players, tends to stifle entrepreneurship and

innovation. Visitor numbers for many tourism businesses are small, making economies of scale difficult

to achieve. The existing industry tends to operate to its traditional formula, rather than innovating and

significantly investing in new trends and products.

51 At present the Department of Immigration, Ministry of Labour, Business Registration and Licensing Agency, Ministry of Industry and Trade, TRA and the Ministry of Lands and Human Settlement Development have officers with approval authority based at TIC, but not tourism.


43

To address these issues the following initiatives are suggested:

















expansion.

6.7 GREEN GROWTH AND PROTECTED AREAS

Tourism can play an important role in a green economic strategy. While safari camps are almost entirely

eco-friendly, the hotel industry has yet to catch up with global trends in reducing carbon footprints and

ensuring environment-friendly design and operation. These approaches can also help to reduce

operating costs. Protected areas and their buffer zones have particular a market incentive to go green:

Their client base increasingly expects it.

The planning and management of protected areas (and their wildlife) are key to maintaining the

country’s unique selling point in tourism. Industry consultations report a slow but steady decline in

management standards since the 1990s, particularly in relation to the granting of concessions. There

are four different systems of management applying (TANAPA, hunting reserves, NCAA, and Wildlife

Management Areas, and with different governing ministries involved the situation is complex. How to

maximize positive returns from tourism while protecting national parks and providing equitable returns

to the community remains and is central to sustainable tourism development in Africa. The United

Republic of Tanzania has amazing wildlife resources, but because user fees are seldom sufficient to

finance the multiple sustainability needs of parks and protected areas and to contribute to the well-being

of the surrounding communities, other financial strategies must be devised to raise additional revenues.

Typically, these consist of concessions for minimally invasive businesses, opportunities for tourists to

donate to the park’s upkeep or to the local community, and tour operator charges through parks’ annual

operating license fees


44

As the World Bank’s Tourism in Africa report points out, making land available for tourism development

is essential but often involves conflicting political, socio-economic, technical, legal, and institutional

vested interests. Serious opposition can come from local people with traditional rights to the land but

no legal title. The questions of who owns land, who owns the resources on it, and how rights are

transferred are central to the business climate and tourism development. The land has to be available

on a long-term basis, either through ownership or lease, and clear of legal and other claims.

Initiatives suggested are as follows:

Accelerate RTTZ activity and aim for zero carbon tourism products.

MNRT bring together TANAPA, NCAA, and TATO to discuss ways to streamline fees to parks.


communities.

6.8 SUGGESTED PRIORITIZATION

A thorough review of strategic planning for tourism and for tourism training is overdue: This

should be the first priority, so as to set the policy agenda. There is no fast way of doing this if a

genuine public-private partnership (as opposed to an open-ended dialogue) to take (i) tourism

master planning and (ii) tourism training forward is to be the outcome. The implementation of

these policies needs to follow. Zoning and identification of development lands will take some

time: Incentives need to follow clearly defined policy objectives (such as job creation).

SUGGESTED TIMEFRAME: 2 years, immediate commencement

Better protection of wildlife is an urgent need. This review can be taken forward in parallel with

the review of protected area policy.

SUGGESTED TIMEFRAME: 6 months, immediate commencement.

The national marketing approach has already been agreed. Disbursement of the Tourism Fund

is an immediate priority to raise confidence in the partnership process as well as raising the

profile of the destination internationally.

SUGGESTED TIMEFRAME: Immediate and continuous.

The issue of reform of licences and taxation review are being taken forward by TCT. This activity

will continue, and more focus can be applied through UNCTAD’s e-Registration support.

Lobbying and capacity building regarding tourism’s potential economic benefits need to be

intensified and sustained.

SUGGESTED TIMEFRAME: 6 months.

Entrepreneurship, innovation and new players in tourism need to be encouraged. This will

require a lobbying and educational process with potential financing bodies.

SUGGESTED TIMEFRAME: 6 months and continuous.

7 REFERENCES AND OTHER DOCUMENTS CONSULTED

7.1 PUBLICATIONS

BEST-AC (2010) Regulatory Constraints to the Competitiveness of the Tourism Sector in Tanzania:

Platform for Advocacy. TCT, DAI.


45

Institute of Resource Assessment & WWF (2007) Assessment and Evaluation of the Wildlife

Management Areas in Tanzania, Dar es Salaam.

Mariki, S., Hassan, S., Maganga, S, Modest, R. and Salehe, F. (2011) Wildlife-Based Domestic

Tourism in Tanzania: Experiences from Northern Tourist Circuit. In: ETHIOPIAN JOURNAL OF

ENVIRONMENTAL STUDIES AND MANAGEMENT, Vol. 4 No.4

Government of the United Republic of Tanzania (2008) The Tourism Act 2008

Horwath HTL (2014) Special Market Report: East Africa

Mwakaje, A (2008) Wildlife Management Areas in Tanzania: A Study of Opportunities and Challenges.

In TANZANIA JOURNAL OF DEVELOPMENT STUDIES, Volume 8, Number 2.

Ministry of Finance (2013) Citizens’ Budget 2013/2014

MNRT (2002) Tanzania Tourism Master Plan. Dar es Salaam.

MNRT (n/d) Tanzania’s Tourism Sector: Investment Opportunities.

Mussa, I (2011) An Overview of Tourism Policy and Plans for Tourism Development in Tanzania.

Paper for Regional Seminar on Tourism Policy and Strategies, Dar es Salaam.

Rogerson, Christian M.; Rogerson, Jayne M (2011) Tourism Research within the Southern

African Development Community: Production and Consumption in Academic Journals, 2000–2010. In:

TOURISM REVIEW INTERNATIONAL, Volume 15, Numbers 1-2, 2011

National Bureau of Statistics & Bank of Tanzania (2014) The 2012 International Visitors’ Exit Survey

Report.

Nelson, F. (2012) Blessing or curse? The political economy of tourism development in Tanzania. In

JOURNAL OF SUSTAINABLE TOURISM, Vol. 20, Issue 3.

OECD (2013) Tanzania Investment Policy Review.

Overseas Development Institute (2014) An update on the political economy of Kenya, Rwanda,

Tanzania and Uganda

Planning Commission (n/d) The Tanzania Development Vision 2025

TATOTZ/BEST-AC (2008) Tourism Market Research Study for Tanzania

TCT (2009) Tanzania Tourism Value Chain Study . Dar es Salaam.

TIC (n/d) Now it’s Tanzania: Offering maximum returns on investments.

TIC (2012) Tanzania Investment Report 2012: Foreign Private Investment and Investor Perception. Dar

es Salaam.

TIC (2014 i) Tanzania Investment Guide 2014-15. Dar es Salaam.

TIC (2014 ii) Tanzania Special Country Report

TTB & TCT (n/d) Summary International Marketing Strategy for Tanzania as a Destination. BEST-AC

UNCTAD (2014) Economic Development in Africa Report 2014. New York & Geneva.

UNCTAD (20I1) Report on Investment Policy Review: United Republic of Tanzania.

United Nations Inter-Agency Cluster on Trade and Productive Capacity, Ministry of Industry and

Trade, SECO (2014) Trade Sector Development Programme: Market Value Chains Relating to

Horticultural Products for Responsible Tourism Market Access Project. Programme Document.

UNWTO (1998) Tourism Taxation: Striking a Fair Deal. Madrid.

UNWTO (2011) Tourism towards 2030: Global Overview. Madrid.

http://tnrf.org/en/resources/library/all?page=1&f%5bsearch%5d=tourism&f%5bauthor%5d=934

http://tnrf.org/en/node/7651

http://tnrf.org/en/node/7651

http://www.ingentaconnect.com/content/cog/tri


46

UNWTO (2013) Economic Crisis, International Tourism Decline and its Impact on the Poor. Madrid.

UNWTO (2014i) World Tourism Barometer. Volume 12 August 2014. Madrid.

UNWTO (2014ii) Tourism Highlights: Edition 2014. Madrid.

UNWTO & QualityMark Norway (2014) Online Guest Reviews and Hotel Classification Systems: An

Integrated Approach

Wayne, S. (2009) Tanzania: Review of Tourism Sector Policy and Strategies (DRAFT). World Bank.

World Bank Group (2013) Tourism in Africa: Harnessing Tourism for Growth and Improved

Livelihoods

World Bank Group (2014) Productive Jobs Wanted: Tanzania. Country Economic Memorandum.

World Economic Forum (2013) The Travel & Tourism Competitiveness Report 2013

WTTC (2014) Travel and Tourism Economic Impact 2014.\: Sub-Saharan Africa.

ZATI (2010) Zanzibar Destination Marketing Strategy Final Report

7.2 WEBSITES AND OTHER ELECTRONIC MEDIA

East African Community <http://www.eac.int>

EY Worldwide VAT & Sales Tax Guide 2014 <http://www.ey.com/GL/en/Services/Tax/Worldwide-

VAT--GST-and-Sales-Tax-Guide---XMLQS?preview&XmlUrl=/ec1mages/taxguides/VAT-2014/VAT-

EG.xml>

Ministry of Industry and Trade <http://www.mit.go.tz>

Ministry of Natural Resources and Tourism <http://www.mnrt.go.tz/>

PwC (2014) Understanding Tanzania's 2014/2015 National Budget: PwC insight and analysis.

PowerPoint presentation

Responsible Tourism Tanzania <http://www. rttz.org>

Sustainable Tourism Certification Alliance Africa <www.sustainabletourismalliance.co.za>

Tanzania Investment Centre <http://www.tic.co.tz>

Tanzania Natural Resources Forum <http://tnrf.org>

Tanzania Tourist Board <http://tanzaniatouristboard.com>

Tourism Confederation of Tanzania <http://www.tct.co.tz/>

United Nations Conference on Trade and Development <http://www.unctad.org>

United Nations World Tourism Organisation <http://www.unwto.org>

World Bank <http://www.worldbank.org>

World Bank doing business indices <http://www.doingbusiness.org >

Zanzibar Association of Tourism Investors <http://www.zati.org>

http://www.sustainabletourismalliance.co.za/


47

ANNEXES

ANNEX 1 SUGGESTED WORKSHOP AGENDA

Date and venue to be confirmed Day 1 Business Climate Reform. (Day 2 Public-Private Dialogue – agenda from PPD programme) 0830 Registration 0900 Opening and welcoming remarks MNRT/UNCTAD/Resident Representative SESSION 1: TOURISM BUSINNESS CLIMATE REVIEW Chair MNRT 0915 Findings from UNCTAD mission

UNCTAD speaker or Mr Robert Travers, Consultant to UNCTAD. 1000 Findings from ILO research Speaker from ILO 1030 Coffee break 1100 Government commitment to changing the business environment

Speaker from Big Results Now

1130 Key issues for the private sector Speaker from Tanzania National Business Council or Tanzania Confederation of Tourism

1200 Summary by chair and questions on session 1 1215 Lunch SESSION 2: SOLUTIONS FOR IMPROVING THE TOURISM BUSINESS CLIMATE CHAIR: Tanzania Investment Centre 1330 Suggested high profile guest speaker presentation Examples of successful tourism business reform from around the world Mr Oliver Bennett, (retired head of tourism Deloitte Emerging Markets) 1400 e-Registration as a path to business environment reform in Tanzania Mr Kjartan Sørensen, UNCTAD 1515 Break out workshops - possible topics

Responsible tourism & national tourism policy (facilitator from MNRT, RTTZ or UNOPS)

Reducing the cost of doing business (facilitator from UNCTAD, TIC or Mr Oliver Bennett)

Training issues (facilitator from TCT or ILO)

Marketing issues(facilitator from TTB or Mr Robert Travers) 1630 Tea break 1700 Workshop feedback 1730 Summary of issues to be taken forward (Chairman)


48

ANNEX 2 CONSULTATIONS

Name Position Organisation Date

Mr Peter Donelan International Coordinator

United Nations Trade

Cluster Programme

UNOPS, SECO-

United Nations Joint

Programme

16 September 2014

17 September 2014

Ms Anna-Lyimo-

Kessy

Investment Facilitation

Manager

TIC 16 September 2014

Ms Nakuala Senzia Director of Investment

Facilitation


26 September 2014

Dr Primi Mmasi National Project

Coordinator

United Nations Trade

Cluster Programme

16 September 2014

25 September 2014

Mr Njoki Tibendra Research & Planning

Manager


Mr Richard

Rugimbana

Chief Executive TCT 17 September 2014

Ms Lathifa Sykes Chief Executive HAT 17 September 2014

Mr Adam Fuller General Manager Southern Sun Hotel 18 September 2014

Mr Kjartan Sørensen Consultant UNCTAD Tanzania 18 September 2014

Mr Deograsias

Mdamu

Tourism Licensing and

Quality Control

MNRT 19 September 2014

Mr Wilbard Chambulo Chairman TATO; Kibo Guides

(T) Ltd & Tanganyika

Wilderness Camps

22 September 2014

Mr Albert Okal National Programme

Coordinator, Skills

Development

ILO 22 September 2014

Mr Steve Lee Senior Governance

Advisor

UNDP 22 September 2014

Mr Mahesh Chandler

Langoo

General Manager Holiday Inn Dar es

Salaam

22 September 2014

Mr Robin McPhail Strategy Committee UNOPS 23 September 2014

Mr Nicola Colangelo Director Coastal Air 23 September 2014

Mr Damian Bell Director Asilia Lodges &

Camps, RTTZ

24 September 2014

Mr Obadiah Nyagiro Assistant Director

Planning and Budgeting

Ministry of Industry

and Trade

25 September 2014


49

Mr Augustino Likwelile Economist Ministry of Industry

and Trade

25 September 2014

Ms Ann Jeannette

Glauber

Senior Environmental

Specialist

World Bank Africa

Region

25 September 2015

Mr Dinesh Aryal Senior Operations Officer

Sustainable

Development

World Bank Africa

Region

25 September 2014

Mr Patrick Chome Investment Division TIC 26 September 2014

Mr John Kyaruzi Coordinator Business

Linkages

SECO-United Nations

Joint Programme

26 September 2014

Ms Devota Mdachi Acting Managing Director TTB 26 September 2014

Mr Charles Dobie Director Selous Safari Co. 29 September 2014

Ms Pamela Administrator ZATI 29 September 2014


50

ANNEX 3: SUMMARY OF ISSUES LISTED IN TERMS OF REFERENCE

Which business environment reforms can provide incentives to promote the sustainable tourism sector?

The business environment does not at present incentivise sustainable tourism. This is evidenced by the

clear lack of investment in the sector by existing players, new players and Government. In order to

address these issues the following reforms need to follow from a national tourism strategy (which at

present does not exist).

Through firstly national and thereafter regional planning, clearly identify land available for

tourism investment.

Provide competitive investment incentives for investment in new tourism areas.

Introduce incentives for small business development in identified tourism zones.

Reduce hidden taxes on tourism inputs, replacing them with a clear and transparent tax on

outputs.

Introduce training and incentives for the existing hotel sector to become more sustainable

(green technology).

Introduce incentives for the development of private sector tourism training colleges

Ensure access to finance by encouraging banks and micro-finance institutions

Which measures can reduce the cost of doing business?

Reducing cost and time needed to process licences, and reducing the number of licences

Making employment permits regionally competitive

Making employees more secure through career paths (reducing high turnover of employees)

Removal of nuisance hidden taxes

Encouraging tourism companies to buy local (less excise charges)

Continued improvements to energy supply, roads, etc.

Which measures can minimise investment risks?

Ensuring a stable policy environment (through whole-of-Government endorsed master plan)

Ensuring stable environment for public-private dialogue

Ensuring crisis management systems are in place for tourism











51


commence a comprehensive process of regional planning for tourism in line with master plan.



Appeal, etc. under different ministries) and this requires review and a tourism-specific policy.

Compensation for displacement should also be strengthened to ensure stability.

In the context of a future master plan projecting the expansion of accommodation supply and

staffing numbers required, it will be necessary to establish the extent of human resource needs

in terms of employment by category, and the ways to resolve a key constraining issue.

An updated national tourism Training Needs Analysis is needed, in coordination with tourism

training institutions and the Ministry of Labour, Employment and Youth Development, the

Ministry of Education and MNRT. Apprenticeship programmes should be reviewed and possibly

expanded.

All tourism staff need to meet high hygiene standards, and be educated about the benefits of

improved hygiene and protection from mosquitos. The tourism sector can have a positive ripple

effect in improving the basic health of its employees and their associates.

What are the key recommendations regarding current regulatory issues, such as value-added tax

(VAT), tourism fees, licences and work permits?

Work to replace taxes and inputs (licences) with transparent output tax (VAT at a reasonable

rate).

Try to encourage common practice and VAT rates across the EAC so that real competitiveness

is based on quality rather than price.

TCT with UNCTAD e-Regulation support to identify licences which are not linked to clear

benefits and nuisance licences and prioritise specific ones for reform. A more specific approach

is needed to saying “there are over 300 licenses and taxes”.

Work permit approval processes for tourism staff need to be put on line and speeded up. Costs

of work permits should be brought into line with competitor destinations.












52


returns.


The Tourism Agency Licencing Authority (TALA) charge and work permit licenses should be

reviewed, benchmarking against other EAC countries.


African tourism.

Set an internationally competitive VAT rate for tourism services.


businesses.



United States dollars and others in Tanzanian shillings. Introduce equity between foreign and

international charge levels.


expertise at MNRT, TTB, Tanzania National Parks (TANAPA), etc. and establish a tourism desk

at TIC linked to an investment desk at MNRT

Which business environment reforms can stimulate efficiency and innovation in the sustainable tourism

sector?

Encourage more market research and provide training in market opportunities.

Adopt “greening tourism” agenda

Introduce high profile awards promoting excellence.

A Government International Cooperation Department should coordinate donor aid for tourism

following the master plan agenda.



Which measures can produce entrepreneurship?











53








expansion


might secure longer leases.


clusters.

Ensure that training is employee-benefit centred. I.e. it should result in a globally recognised

qualification which leads to opportunities not only in the United Republic of Tanzania, but also

in the EAC, and further afield. The industry will need to adapt to give positive career paths to

more staff so as to retain and develop them.

Which measures will support the creation of green and social enterprises locally?

Adopt “greening tourism” agenda through MNRT and industry associations

Representative associations should gather industry data on corporate social responsibility

(CSR) initiatives by their members and publicise this activity through annual reporting and press

releases.




should be licensed by the World Responsible Tourism Awards.



The process of Responsible Tourism certification through the non-government organisation

(NGO) Responsible Tourism Tanzania (RTTZ) should be expanded through training more

auditors and creating greater industry awareness of the benefits of certification.




Develop zero carbon tourism products.

MNRT bring together TANAPA, Ngorongoro Conservation Area Authority (NCAA), Tanzania

Wildlife Authority (TAWA) and the Tanzania Association of Tour Operators (TATO) to discuss

ways to streamline fees to parks, such as using a single debit-card payment system.


54


communities.

Which measures both on the supply and demand side can facilitate the demand for the organic food

industry?



schemes.

Focus on building awareness of organic food supply amongst hotel food and beverage

managers and general managers

A communication toolkit and campaign should be initiated to target corporate (mining

companies, diplomatic missions, NGOs) to encourage the use of use Responsible Tourism

certified products in urban centres in the United Republic of Tanzania to help influence their

decision on purchasing of both sustainable tourism and organically certified products.

Identify opportunities for import substitution

Make tourists aware of organic certification and introduce themed menus in hotels and

restaurants

Introduce high profile awards promoting excellence.

Which measures can stimulate the development of cultural entrepreneurship?


linkages with private sector and identify opportunities for initiatives to become ‘stand alone’

and attract business partners.

Identify new cultural tourism centres in master planning

Establish tourism SME financial support programmes (loans, micro-finance)

Encourage the development of arts and music events and market them to tourists where

appropriate

Review operations of museums, UNECSO world heritage sites and other cultural attractions

and identify possible donor support for upgrades.

Which measures can transform national parks as catalysts for the development of sustainable tourism?

This is a highly complex area requiring more specific and lengthy study (mission was based in Dar es

Salaam and no national parks have been visited). Approach to identify measures likely to be based

around the following:

Develop spatial development and conservation plans for each national park

Review management plans and human resource needs

Review zoning in the context of conservation

Selectively encourage the development of more airstrips for non-intrusive transport

Clarify mandates regarding development


55

Which measures can improve the image of the United Republic of Tanzania as a main international

sustainable tourism destination?

Fund and implement the national tourism marketing strategy

Launch and empower new Tourism Authority



Develop target-driven annual action plans for TTB (and the new Tourism Authority).



Training to improve professionalism of marketing staff at all levels

Appoint overseas tourism and PR representatives in key markets (Europe, South Africa, India)

Further develop press office in TTB/Tourism Authority to manage press relations from a tourism

perspective

Develop marketing alliances with airlines serving the destination




experiences, and to ensure greater objectivity and transparency.

What are the priorities and how might they be sequenced?

See section 6.7.

Documents

BUSINESS CLIMATE REVIEW SUSTAINABLE TOURISM SECTOR …hat-tz.org/hattzorg/wp-content/uploads/2011/12/Business-Climate... · BRIC Brazil, Russia, China and India BRN Big Results Now