The UNWTO (United Nations World Tourism Organization) has targeted tourism as one of the main income earners for developing countries. Every country in the world has something to offer and if you pack it right, eventually tourism will start to pick up and money from abroad will start flowing into government coffers. Or not..
It seems that big institutions like the UNWTO love to juggle with figures. Most of the time the tempting carrot of turn-over figures will get published, which tells little, if anything at all, about tourism moneys remaining in a country. It could therefore well be that developing countries are not doing as well out of tourism as we are made to believe.
It is not that difficult. If a government of a developing country can attract an international player in tourism, chances are there that loads of investment money will start to come in. Jobs get created and the spin-off effect towards other sectors in the economy can be highly beneficial. But now we get to the crux. What if, after the initial investment, you as a tourist have to transfer your money to the head office of a company in, let’s say South Africa, but your holiday will be spend in an accommodation of that same company in Botswana?
Right, that money will not appear in the books of the Botswana tax man, but only in those of the tax man in South Africa. Which means that for a service delivered in Botswana, no tax gets paid. If a developing countries allows a stack of foreign investors into its soils, it runs the risk of losing millions in the long run.
But it is not only tax schemes like the above that contribute to tourism leakages.
International tourists are picky and very demanding, which means that if they can’t get what they have at home, they will soon turn their backs on a developing country and go somewhere else. The result of this behavior is the need to import products from far which are locally not available or not ‘up to standard’ ( I kid you not, I know of a lodge in the Serengeti /Tanzania that imports its toilet paper from South Africa, although it is locally available and manufactured! Another example was a person of a company traveling from Tanzania to the UK to purchase items that were locally unavailable, like Marmite).
Many people working in higher positions in the tourism industry of developing countries are foreigners. This means that their salaries, which are more often than not paid in forex, eventually will leave the country or not even enter the country. I remember working in Tanzania and receiving my money from the USA directly into my Dutch bank-account. Since my money was made abroad, I did not have to pay taxes over it in Holland, nor did I in Tanzania because it never entered the country. Again loss of revenue for the poor.
Despite the Global Code of Ethics for Tourism, stopping money from leaking is virtually impossible in countries that suffer from droughts, unskilled labour , strongly fluctuating currencies and poor administrative systems. It basically boils down to (foreign) companies themselves if they want to operate in a ‘developing manner’ or that they are just in the game to fill their own pockets. Having a considerable time in tourism behind me myself, I am afraid the latter will be the case. But then again, better some development than no development at all.