International tourist arrivals in Africa went up by 8% in 2016 according to UNWTO Tourism Highlights 2017 Edition, which cites comparatively limited data available to date. This represents a strong rebound, following two years (2014 and 2015) of weaker performance due to various geopolitical, economic, and health challenges.
As compared to 2015, 2016 saw a 4 million increase in international tourists, to reach 58 million (5% of the world total). This earned the region US$ 35 billion in international tourism receipts (3% share), representing an increase of 8% in real terms. The report further indicates that Sub-saharan Africa led the continent’s recovery by +10%. Attributed partly to simpler visa procedures, South Africa recorded a 13% growth in international arrivals, with Kenya and Tanzania also enjoying double digit growth of +17% and +16% respectively in 2016. Yet, domestic travel spending still had the biggest share according to a Jumia Travel Hospitality Report for Africa, generating approximately 64% of Africa’s Tourism GDP. This is in comparison to 36% of foreign visitor spending in 2016.
UNWTO notes among others strengthening of security, improved air and sea connectivity, and the redirection of tourism flows from other troubled destinations, as major contributors to the improved tourism performance in most African countries. “An ever-increasing number of destinations worldwide have opened up to, and invested in tourism, turning it into a key driver of socio-economic progress through the creation of jobs and enterprises, export revenues, and infrastructure development.
Over the past six decades, tourism has experienced continued expansion and diversification to become one of the largest and fastest-growing economic sectors in the world. Many new destinations have emerged in addition to the traditional favourites of Europe and North America,” reads the UNWTO report.
According to the same report, tourism has boasted virtually uninterrupted growth over time, despite occasional shocks, demonstrating the sector’s strength and resilience. International tourist arrivals have increased from 25 million globally in 1950 to 278 million in 1980, 674 million in 2000, and 1,235 million in 2016. Likewise, international tourism receipts earned by destinations worldwide have surged from US$ 2 billion in 1950 to US$ 104 billion in 1980, US$ 495 billion in 2000, and US$ 1,220 billion in 2016.
The report states that tourism is a major category of international trade in services. In addition to receipts earned in destinations, international tourism also generated US$ 216 billion in exports through international passenger transport services rendered to non-residents in 2016, bringing the total value of tourism exports up to US$ 1.4 trillion, or US$ 4 billion a day on average.
The UNWTO notes that International tourism represents 7% of the world’s exports in goods and services, after increasing one percentage point from 6% in 2015. Tourism has grown faster than world trade for the past five years. As a worldwide export category, tourism ranks third after chemicals and fuels and ahead of automotive products and food. In many developing countries, tourism is the top export category.
“International tourist arrivals (overnight visitors) in 2016 grew by 3.9% to reach a total of 1,235 million worldwide, an increase of 46 million over the previous year. It was the seventh consecutive year of above-average growth in international tourism following the 2009 global economic crisis. A comparable sequence of uninterrupted solid growth has not been recorded since the 1960s,” reads the UNWTO report.
It states that the demand for international tourism followed the positive trend of previous years, with many destinations reporting sound results, while a few faced security incidents. Some redirection of tourism flows was observed, though most destinations shared in the overall growth due to stronger travel demand, increased connectivity and more affordable air transport.
“By UNWTO region, Asia and the Pacific led growth in 2016 with a 9% increase in international arrivals, followed by Africa (+8%) and the Americas (+3%). The world’s most visited region, Europe (+2%) showed mixed results, while available data for the Middle East (-4%) points to a decline in arrivals. International tourism receipts grew by 2.6% in real terms (taking into account exchange rate fluctuations and inflation) with total earnings in the destinations estimated at US$ 1,220 billion worldwide in 2016 (euro 1,102 billion).”
France, the United States, Spain and China continued to top the international arrivals ranking in 2016. In receipts, the US and Spain remain at the top, followed by Thailand, which climbed to number 3 last year, and China, which is fourth. France and Italy moved up in receipts to 5th and 6th position respectively, while the United Kingdom, Mexico and Thailand moved up to 6th, 8th and 9th place in arrivals. China, the United States and the Germany led outbound tourism in their respective regions in 2016, and continue to top the expenditure ranking in that order.
International tourist arrivals worldwide are expected to increase by 3.3% a year between 2010 and 2030 to reach 1.8 billion by 2030, according to UNWTO’s long-term forecast report Tourism Towards 2030. Between 2010 and 2030, arrivals in emerging destinations (+4.4% a year) are expected to increase at twice the rate of those in advanced economies (+2.2% a year). The market share of emerging economies increased from 30% in 1980 to 45% in 2016, and is expected to reach 57% by 2030, equivalent to over 1 billion international tourist arrivals.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”