Figures of the week: Tourism and structural transformation in Africa

The United Nations Conference on Trade and Development (UNCTAD) earlier this month released its Economic Development in Africa Report 2017: Tourism for Transformative and Inclusive Growth. The report analyzes Africa’s tourism sector at the continental, regional, and national levels, and finds that tourism can enhance Africa’s development process by functioning as an engine for inclusive growth and economic development. 

As stated in the report, sustainable development requires structural transformation, to which tourism can serve as a conduit. Tourism and structural change are interrelated as there exist links between tourism and other productive sectors such as agriculture and infrastructure. Figure 1 below shows that the growth of tourism expenditures and the change in share of value added from the agriculture sector move in opposite directions. As the contribution of a country’s tourism sector to its economy grows, the value added from the agricultural sector declines. The report thus suggests that tourism growth coincides with structural change. Notably, tourism has very few entry barriers and can serve as a viable alternative as countries aim to diversify away from agriculture.

Figure 1. Structural change and growth in tourism in Africa (1997-2013)

Tourism has linkages with other productive sectors, such as services. Figure 2 below illustrates the variety of services in the tourism value chain and possible linkages with tourism. These include services provided in the country of origin. For example, the development of travel booking agencies and the increase in travel-related websites can create jobs in the service sector. In host countries, the cross-sectoral spillovers from the tourism sector include the development of ground transportation services and retail, among others.

Figure 2. Tourism value chain

The report argues that linkages between tourism and other productive sectors can serve as a remedy to a number of economic challenges the African continent is presently facing, such as unemployment, poverty, and social exclusion. Nevertheless, due to limited productive capacity, Africa has yet to establish strong inter-sectoral linkages. This is partly due to domestic firms’ inability to provide the services that typically accompany the tourism sector. Consequently, the report recommends that issues around cross-sectoral spillovers must be aligned with and integrated into national policy frameworks at the national, regional and continental levels. 

Shobhit Kumar contributed to this post.