Sustainable Tourism Investment Financing in Eastern Africa

Using data from the United nations World Tourism Organization (UNWTO) and the World Travel and Tourism Council (WTTC), this study has established that Eastern Africa, as one of the five UNECA African regions, is ranked only ahead of the Central Africa region in terms of total capital investments in the tourism sector for the period 2010 to 2017, behind North Africa, Southern Africa, and West Africa. The study identifies the factors that contribute to this trend and proposes specific policy recommendations to reverse it.

Safety and security issues, inadequate tourism infrastructure, lack of product diversity and innovation, failure to find the political will to promote Eastern Africa as a single investment and tourism destination, and high perceptions of corruption could be deterring capital investment. Accordingly, the study proposes specific recommendations on how to address these issues.

Many Eastern Africa Member States view tourism as a sector that could attract investment. They have, therefore, included it in their investment prospectuses. Accordingly, this study reviews tourism investment and financing models that could be relevant in facilitating sustainable growth and development of the sector in Eastern Africa. The review includes public sector-led, private sector-led and public-private partnership (PPP) models of sustainable tourism investment financing. Each model offers its own sources of financing, ranging from domestic commercial banks and development finance institutions, to regional and international finance institutions, to social impact investors. The study examines policy measures that could facilitate the different types of investments. Since tourism is an industry with linkages in many other sectors and relies on many small business operators at destination level, challenges impacting SME involvement in tourism were examined and relevant strategies have been recommended to enhance their participation in tourism development projects.