Sustainable & Eco-Tourism Sites
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.
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Country & Regions
- Malawi: Southern
- Malawi: Northern
Sector Classification
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).
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.
Hotels and Lodging
Pipeline Opportunity
Sustainable & Eco-Tourism Sites
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
Market Size and Environment
5% - 10%
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
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
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
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Volatile
Impact Case
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
8.5.2 Unemployment rate, by sex, age and persons with disabilities
Total: 18.5% (22) (2018), male: 16.6% (2018), female: 20.3% (2018) (22).
Total: 5%, male: 5%, female 5% (22).
12.2.2 Domestic material consumption
1.16 (2014) (22).
N/A
5.5.2 Proportion of women in managerial positions
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
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
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
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
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
Malawi: Southern
Malawi: Northern
References
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