Vehicle in Rainy Weather at Jalawe Rock, Nyika Plateau, Malawi, Africa

Sustainable & Eco-Tourism Sites

Photo by Shutterstock / YolLusZam1802

Sustainable & Eco-Tourism Sites

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Services
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Hospitality and Recreation
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
5% - 10% (CAGR)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12) Gender Equality (SDG 5)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Reduced Inequalities (SDG 10) Sustainable Cities and Communities (SDG 11) Life on Land (SDG 15)

Business Model Description

Develop sustainable and eco-based tourism sites particularly around attractive sites within national parks and surrounding the lake or mountainous areas in the south through concessions and possible joint ventures with local communities, covering both infrastructure and services. International and regional as well as local tourists will then book and pay for accommodation and/or leisure activities at these establishments in order to enjoy the sites.

Expected Impact

Lessen the industry-induced environmental burden on the planet and encourage the participation of local communities and actors in tourism value generation.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

Read More

Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Malawi: Southern
  • Malawi: Northern
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Services

Development need
The services sector is a major contributor to the economy, accounting for more than half of GDP (52.4%). The main activities include tourism, health services, the banking sector, telecommunications, and retail, with the government of Malawi holding significant shares in most of these sectors. The tertiary sector employs 18% of the workforce (1). Challenges include a shortage of skilled and semi-skilled labourers as an impediment to business development. Shortages are most acute in financial management, economics, engineering, law, IT, and medicine/health (8).

Policy priority
Through MW2063 vision, the Government has put emphasis on the services sector so that it can deal with both employment, as well as balance of payments. For the former, services sector has potential in increasing the employment rate, and in case of the latter, services is highest in exports with room for improvement (1, 2).

Gender inequalities and marginalization issues
Services are key to promoting inclusive growth. They provide jobs for the poor and especially women, thereby forming the backbone of the economy (3).

Investment opportunities introduction
The population of Malawi is youthful, with 51% of the population under 18 years of age as of 2018. The services sector which is labour intensive has a number of opportunities which can draw from the large labour force (2).

Key bottlenecks introduction
The country has failed to harness the growing and youthful labour force such that unemployment has remained high at around 20 percent and skewed against the youth. National Poverty levels have remained high at 51.5 percent as of 2017. Inequality has also remained high with a Gini Coefficient of 0.6 (2).

Sub Sector

Hospitality and Recreation

Development need
The tourism sector in Malawi was the hardest hit by the COVID-19 pandemic and as a major foreign exchange earner for the service sector, the indirect impact of the shrinkage on the economy was significant (30).

Policy priority
Several Government policies, strategies and plans (e.g. National Tourism Policy, National Employment and Labour Policy, National Trade Policy) have prioritized services as a growth sector, with tourism, ICT and financial services as priority sub-sectors. According to Malawi 2063, Malawi aims to increase the tourism sectors contribution to GDP to 20% by 2063 and increase employment in tourism as a % of total employment to 12% by 2063(2).

Gender inequalities and marginalization issues
54% of the global tourism workforce is female, the gender-wage gap is lower in tourism, and the proportion of women in leadership roles is higher than in other sectors (29).

Investment opportunities introduction
Tourism offers those without any prior formal training or professional experience to enter the industry and gain skills on the job. Through their engagement in tourism, in addition to becoming economically empowered, women can benefit from cultural interactions (4)

Key bottlenecks introduction
Some promising sites for tourism and resorts development lack the infrastructural connectedness to the main airports and other entry points into Malawi. Additionally, the tourism sector in Malawi faces a big challenge in terms of limitations in data gathering, analytical and storage capacity to support and inform decision-making in the sector. This greatly affects policy and investment decisions in the sector.

Industry

Hotels and Lodging

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Sustainable & Eco-Tourism Sites

Business Model

Develop sustainable and eco-based tourism sites particularly around attractive sites within national parks and surrounding the lake or mountainous areas in the south through concessions and possible joint ventures with local communities, covering both infrastructure and services. International and regional as well as local tourists will then book and pay for accommodation and/or leisure activities at these establishments in order to enjoy the sites.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

5% - 10%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Malawi's tourism sector served more than 980,000 international visitors annually

Prior to the COVID-19 pandemic, the tourism sector served more than 980,000 international visitors annually. Tourist numbers are expected to return to pre-Covid-19 levels, with the Government's efforts to market tourism aggressively through destination branding and the development and implementation of the Tourism Marketing Strategy Framework for Malawi (4).

After plummeting by almost 80% due to the pandemic, tourist arrival numbers recovered in 2022. In the first seven months of the year, the number of tourists increased by 62.7% compared to the same period the previous year (1, 3).

Between 1999 and 2018 the numbers of international tourists increased from 254,000 to 871,000, growing at an average of almost 8% per annum (28).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

IRR expectations for three eco-lodge investments in Malawi average 16% based on 2001 values (28). Considering the current status of Malawi's economic situation, costs of operations and construction will affect return profiles in the short to medium terms while performances are likely to improve significantly in the long-term (26).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

A Ugandan Eco-tourist establishment reported reaching a break even point after 2 years of operation (31). In Malawi, the price sensitivity of international tourist is lower than for regional tourists. Rates can be relatively fixed for periods to recoup initial investment. There are also concession periods for lake locations ranging from between 5 to 20 years. (27)

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 500,000 - USD 1 million

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

Malawi's current economic situation with the inflation rate spiking over the course of 2022, driven by high global prices of food commodities and energy, coupled with the 25% devaluation of the national currency in May 2022, amplified the impact of the elevated international prices. This means construction and other leisure related inputs will be significantly costlier in the short to medium term (1).

Market - Volatile

Recent health crises such as Covid-19 have shown the local markets vulnerability to macro-economic shocks. Malawi's vulnerability is even greater considering its under developed domestic infrastructure and population density (1).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Tourism in Malawi is a major employer, representing almost 7% of overall employment prior to the pandemic. Due to the pandemic, the total contribution to the GDP decreased from 6.7% to 3.2% in 2020 and also caused a loss of 167,000 jobs in the travel and tourism sector. The amount of unemployed individuals who have experience in hospitality necessitates a resurgence of the tourism industry (5, 21).

Most of Malawi's tourism attractions, and activities are centred around rural areas where the majority of the country’s poor are based. The Malawi Growth and Development Strategy II 2011-2016 recognized that as much as tourism is linked to integrated rural development, it is also directly dependent on other priority areas. These include agriculture and food security; irrigation and water development; transport and infrastructure development; energy generation and supply and management of nutritional disorders and HIV/AIDS in the country (32).

Gender & Marginalisation

Malawi's Labour Force Survey of 2013 shows that 21.7% of the nation’s youth aged 15-24 are neither in employment, education or training, and approximately 27% of those with a job are underemployed. Women are especially disadvantaged due to lower earnings than men and with two-thirds among those of working age in vulnerable employment (33).

Globally, tourism is a female-dominated sector. The United Nations World Tourism Organisation (UNWTO) reports that women account for 54% of persons employed in tourism globally. In many countries, tourism’s female employment rate is above the average rate of other sectors (34).

Of Malawi’s 192 mammal species, 8 are listed as threatened on the International Union for Conservation of Nature (IUCN) Red List of Threatened Species (13). Lack of finance is a serious concern, affecting national park management effectiveness as national parks and their surrounding communities are benefitting from the income generated by tourist concessions (14).

Expected Development Outcome

Sustainable and eco-tourism sites will absorb some of the thousands of unemployed Malawians who were laid off due the lack of tourist numbers during the Covid-19 period.

Sustainable and eco-tourism sites also increase the local economic development for surrounding villages through jobs and local procurement.

Gender & Marginalisation

Tourism overall offers numerous avenues for female economic empowerment and advancement, and by extension, has the potential to be a tool for gender equality. Tourism is a labour-intensive industry, and as such, growth in tourism over the last few decades has provided women with various entry points for employment (34).

Primary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth

8.5.2 Unemployment rate, by sex, age and persons with disabilities

Current Value

Total: 18.5% (22) (2018), male: 16.6% (2018), female: 20.3% (2018) (22).

Target Value

Total: 5%, male: 5%, female 5% (22).

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.2.2 Domestic material consumption

Current Value

1.16 (2014) (22).

Target Value

N/A

Gender Equality (SDG 5)
5 - Gender Equality

5.5.2 Proportion of women in managerial positions

Current Value

N/A

Target Value

N/A

Secondary SDGs addressed

Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities
Life on Land (SDG 15)
15 - Life on Land

Directly impacted stakeholders

People

International tourists benefit through increased variety and quality due to increased competition between various eco-tourist sites. Unemployed tourism industry workers, who have previous experience, can now be absorbed by the growing industry and contribute skills transfer activities. Community members have the opportunity to benefit as increased tourist numbers provide additional trading opportunities.

Gender inequality and/or marginalization

Unemployed females previously employed in the tourism industry can now also be absorbed by additional establishments being developed. Rural communities can take advantage of the fact that the country’s National Wildlife Act ensures peoples’ rights to benefit from tourism and conservation (35).

Planet

The environment benefits as eco-tourism establishments aim to minimize any negative impacts to the surrounding environment and actively supports conservation efforts to protect local wildlife and biodiversity (25).

Corporates

Local suppliers of amenities found in tourist establishment benefit from the increase number of potential off takers operating in the country, car rental companies benefit through the increase of tourists needing transportation vehicles to travel within the country, tourist operators benefit through the influx of additional tourist numbers.

Public sector

The Ministry of Tourism benefits as concessions supplement efforts to improve the enabling environment that attract more tourists in the country, the Malawi Revenue Authority benefits through the added tax base that new entrants provide.

Indirectly impacted stakeholders

People

Vendors and small scale entrepreneurs benefit through increased activity around tourist sites allowing for greater trading opportunities and the chance to earn much needed foreign currency.

Gender inequality and/or marginalization

Woman in remote communities can reap the rewards of trade in arts and crafts with international tourists by earning additional income.

Corporates

Local banks benefit through increased deposits from the increased economic activity directly related to the increase of tourism in a specific area.

Public sector

The RFA benefits indirectly if tourists frequently use toll roads to reach their destination as extra user fees assist in road upgrades and maintenance; the Reserve Bank of Malawi benefits from the increase in foreign currency entering the country.

Outcome Risks

Success of tourist sites might negatively effect surrounding communities. Traditions and customs can be effected negatively by the influx of tourists. This can be often observed through social change resulting from interactions between tourists and the local inhabitants, especially in remote societies. The influence can be felt at the individual and family levels through the deterioration of conventional norms, as well as at the societal level (crime, prostitution, etc.) (37).

The seasonality of the tourism sector puts the economic security of the locals employed in the industry at risk. This is further exacerbated by the existence of a high level of dependence on the sector, coupled with an inflated cost of living for the locals (23).

Impact Risks

Enclave tourism, which refers to "tourists purchase holiday packages that are all-inclusive package deals" results in economic leakages as enclave tourism is notorious for the repatriation of revenue obtained from the running of tourism business in the host country. This would lead to little economic benefit for locals and would increase inequality (15).

As tourist activities expand, the habituation of animals to ecotourist activities can result in animals becoming vulnerable to persecution from other non-tourists that consider the animals either a nuisance or a highly prized resource (16).

Impact Classification

A—Act to Avoid Harm

What

Sustainable and eco-tourism sites lead to an influx of tourists, which will positively affect GDP and foreign currency reserves. National parks will also be served by the increase in financial resources to protect local wildlife and biodiversity.

Who

The 167,000 people active in the tourism sector who lost their jobs during the pandemic will find opportunities to be re-employed into the sector. Additionally, the environment benefits through sustainable operations that will minimise footprint.

Risk

The business model is proven but requires consideration around the exclusivity of the tourism industry and the potential that the industry can increase inequality and be of little benefit to communities.

Contribution

In contrast to eco-tourism, investment in conventional tourism is still an engine for growth for the Malawian economy, providing a number of job opportunities for Malawians across the value chain.

How Much

Tourism contributed more than 525,000 jobs, representing close to 7% of overall employment, and served more than 980,000 international visitors annually (3). The total contribution of travel and tourism to GDP is expected to rise by 4.6% per annum (41).

Impact Thesis

Lessen the industry-induced environmental burden on the planet and encourage the participation of local communities and actors in tourism value generation.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

The Zero-Draft National Tourism Policy document of 2015 is still awaiting cabinet approval and provides the direction the Government will take towards transforming the sector into a major tool for socio-economic development (32).

The revised National Environmental Policy of 2004 provides guidance and sets standards for development of sector policies in environment and natural resources. It offers an overall framework against which relevant sectoral environmental policies are revised and adopted to ensure that these are consistent with the principles of sustainable development (38).

The National Wildlife Policy of 2000's goal is to ensure proper conservation and management of the wildlife resources in order to provide for sustainable utilisation and equitable access to the resources and fair sharing of the benefits from the resources for both present and future generations of Malawians (39).

The Malawi National Cultural Policy of 2014 aims to have, preserve and protect the vibrant Malawian culture for national identity, unity in diversity and sustainable socio-economic development (40).

Financial Environment

Financial incentives: The Green Climate Fund (GCF) seeks to promote a paradigm shift to low-emission and climate-resilient development, taking into account the needs of nations that are particularly vulnerable to climate change impacts, such as eco-tourism sites. United Nations Environment Programme (UNEP) has been selected as Malawi’s Delivery Partner for the GCF Readiness Project (9).

Fiscal incentives: Investors in the tourism sector access free import duty, free import excise and VAT free importation on certain goods (11).

Regulatory Environment

The Malawi National Parks and Wildlife Act is the most comprehensive environmental law in Malawi that relates directly to tourism. The law makes it an offense for anyone to harass wildlife while inside of game reserves, unless that person is on a legal hunting expedition. The law is equally applicable to tourists and locals, and the punishments can be severe depending on the circumstance (25).

The Malawi Tourism and Hotels Act of 1968 provides for the control and management of hotels, and the establishment of a Tourism and Hotels Board (10).

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Central African Wilderness Safari (CAWS), Kutchire Lodge, Avis Car Hire, Majete Game Reserve, Kungoni Cultural Centre.

Government

Department of National Parks and Wildlife (DNPW), Ministry of Tourism, Culture and Wildlife, Malawi Tourism Council (MTC), Malawi Institute of Tourism (MIT).

Multilaterals

Scotland Malawi Partnership, GIZ, UNESCO, Green Climate Fund (GCF), United Nations Environment Programme (UNEP).

Non-Profit

Malawi Mulanje WeForest, Coordinating Union for Rehabilitation of the Environment.

Public-Private Partnership

Malawi currently has some private sector investments in eco-tourism and protected area management through concessions with the Government. The eco-tourism and protected areas in Malawi include Nyika National Park, Vwaza Marsh Wildlife Reserve, Kasungu National Park, Nkhotakota Wildlife Reserve, Lake Malawi National Park, Liwonde National Park, Majete Wildlife Reserve, Lengwe National Park and Mwabvi Wildlife Reserve (27).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Malawi: Southern

Cape Maclear entertains more than 90% of the annual visitation of Lake Malawi National Park, which include tourist accommodated in lodges in the enclave villages. Visitor activities at Lake Malawi National Park are centred mainly around aquatic sports that have little impact on the environment in the park (27).
rural

Malawi: Northern

Nyika National Park in Northern Malawi covers an area of 3200 km2, extending across the great Nyika plateau and is Malawi’s largest national park. The park has over 400 species of birds and provides activities such as trekking, mountain biking as well as more conventional 4×4 excursions and safaris (12).

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.