Tanzania Has an Opportunity to Ignite Inclusive Economic Growth by Transforming Its Tourism Sector

DAR ES SALAAM: As Tanzania’s tourism sector recovers from the harsh effects of the COVID-19 (coronavirus) pandemic on businesses and employment, the latest World Bank economic analysis says the country also has a unique opportunity to revamp the tourism industry to drive inclusive growth over the long term, and promote climate adaptation and mitigation.

The 16th Tanzania Economic Update, Transforming Tourism: Toward a Sustainable, Resilient, and Inclusive Sector notes that the near-cessation of tourism activities globally due to the pandemic deeply affected Tanzania’s tourism sector. Economic activity in the sector contracted sharply in 2020, resulting in job losses and business shutdowns which has had negative knock-on effects for inter-related sectors. While partial recovery is underway, business revenues and derived taxes for government still remain below pre-pandemic levels.

“The latest news point to the fact that we are not out of the wood yet, as the third wave of COVID-19 with a more deadly variant seems to be spreading,” said Albert Zeufack, World Bank Africa Chief Economist. “The countries that have weathered the storm more successfully so far have moved quickly and decisively to protect their people, strengthen their health systems, safeguard human capital gains, increase intra-reginal trade, and embrace digitalization, therefore laying down the basis for much needed economic transformation.”

Amid the ongoing crisis, the report says Tanzania’s GDP growth decelerated to an estimated 2.0 percent in 2020. Surveys of businesses and households, conducted by the World Bank in collaboration with the National Bureau of Statistics between June 2020 and March 2021, revealed that business slowed across a wide range of sectors and sizes of firms, especially export-oriented sectors such as tourism and manufacturing, and job creation has deteriorated. Overall business performance and expectations indicators have partially rebounded but remain subdued, emphasizing the gravity of the shock and sluggish recovery. The slowdown in GDP growth and the deterioration of business sales and financial security is estimated to have increased the number of poor Tanzanians by 600,000 in 2020. Zanzibar’s economy was even more severely impacted with GDP growth slowing to an estimated 1.3 percent, driven by a collapse of the tourism industry.

“This Economic Update spotlights the pandemic’s impact on the Tanzanian economy through the sharp decline in tourism in 2020 and sluggish recovery in 2021. It is a call to action to help the sector recover, ‘build forward better’ and support private sector development more broadly. This is a critical agenda to protect the welfare of poor and vulnerable households, attract new foreign and domestic investment, and support an employment-intensive recovery,” said Bill Battaile, World Bank Lead Economist for Tanzania.

The economic update proposes priorities for sustainable recovery for Tanzania’s tourism sector, including creating an efficient, reliable and transparent business environment, improving tourism information management system, ensuring affordable financial support to struggling businesses across the value chain, strengthen adherence to health and safety protocols and data transparency, and supporting nature-based landscape and seascape management through development of co-investment and partnership arrangements.

 

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