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Sustainable Tourism Infrastructure

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Sustainable Tourism Infrastructure

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).
20% - 25% (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.
Short Term (0–5 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.
USD 100 million - USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Responsible Consumption and Production (SDG 12) Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Climate Action (SDG 13)

Business Model Description

Provide and operate eco- and community-based tourism infrastructures, such as hotels, lodges and camp sites, that rely on the local value chain. The facilities run through community-private-public partnerships, where the private actors provide and operate the facilities, the public actor offers support infrastructure, such as roads, water and power utilities, and the communities supply products like vegetables, fruits, meat and eggs through supply contract arrangements.

Expected Impact

Support sustainable practices in tourism and strengthen local value chains serving the tourism industry.

How is this information gathered?

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

Disclaimer

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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.

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Country & Regions

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

Sector Classification

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

Services

Development need
Tourism has the greatest employment generation potential in Tanzania. However, the country has performed at a fraction of its potential. The sector is poorly managed, underinvested, under-resourced, and lacks a coordinated all-of-government approach and vision. This has reduced its competitive advantage (1, 2, 3, 4).

Policy priority
Tanzania is committed to promoting diversified tourism products in order to increase its competitive advantage. The government seeks to promote tourism since it integrates more than one service, notably transport, accommodation and food, information and communication, offering significant socio-economic development potential (4, 5).

Gender inequalities and marginalization issues
Women face challenges participating in tourism activities in Tanzania. Most women in rural communities are excluded from tourism activities and some of them are exploited without commensurate returns. Taking full charge of responsibilities in their households gives women challenges that constrain their ability to perform in businesses, including in tourism (6).

Investment opportunities introduction
Opportunities in services include a broad range of diversified tourism activities, both regarding products and infrastructure, utilising community inputs, particularly in Tanzania's Southern Circuit as a result of overcrowding and saturation in the Northern Circuit (9).

Key bottlenecks introduction
COVID-19 severely impacted Tanzania’s tourism activities due to the disruption of global travel, which resulted in a 72% drop in revenues with significant job losses and business closures. The poor performance in tourism adversely affects other sectors (8).

Sub Sector

Hospitality and Recreation

Development need
Community-based and sustainable tourism provides important opportunities to take advantage of the increasing demand for Tanzania’s eco-tourism products. It is strategically important to the national tourism industry, valued at approximately USD 725 million annually, in terms of diversifying tourism products, relieving pressure on over-crowded protected areas and offering the required infrastructure (4).

Policy priority
The government is committed empower rural communities and private land holders to manage natural resources, including wildlife, in a sustainable manner and for their own benefit. Developing co-investment and partnership arrangements to support nature-based landscape and seascape management is among the top priorities for the long-term transformation of Tanzania's tourism activities (7, 8).

Industry

Leisure Facilities

Pipeline Opportunity

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

Sustainable Tourism Infrastructure

Business Model

Provide and operate eco- and community-based tourism infrastructures, such as hotels, lodges and camp sites, that rely on the local value chain. The facilities run through community-private-public partnerships, where the private actors provide and operate the facilities, the public actor offers support infrastructure, such as roads, water and power utilities, and the communities supply products like vegetables, fruits, meat and eggs through supply contract arrangements.

Business Case

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

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

USD 100 million - USD 1 billion

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

1.28 million tourist arrivals per year (prior to COVID-19)

Tanzania’s tourism sector generated USD 2.6 billion in 2019 before COVID-19, and USD 1 billion in revenues in 2020. Revenues from tourism activities reached USD 1.25 billion in the year ending October 2021, signaling a slow recovery from the pandemic (11).

With 1.28 million tourist arrivals per year (prior to the pandemic), Tanzania is one of the most visited destinations in Sub Saharan Africa. Tourism contribution to GDP is expected to grow from 4.1% in 2017 to an annual average of 6.8% over the following 10 years – the seventh highest rate in the world (9).

Indicative Return

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

20% - 25%

The Mkomazi Nature Camp within the Mkomazi National Park is expected to generate an IRR of 23%, which is greater than the discounting rate (weighted average cost of capital, WACC) of 13.5% (12).

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.

Short Term (0–5 years)

The Mkomazi Nature Camp within the Mkomazi National Park is expected to have a payback period of 3.9 years, which is within the loan tenure period of five years (12).

Ticket Size

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

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Market - Volatile

The COVID-19 crisis severely impacted Tanzania’s tourism industry, as the disruption of global travel and tourism activity resulted in job losses and business closures. Between 2019 and 2020, Tanzania experienced a 72% drop in tourism revenue (13).

Capital - CapEx Intensive

Inadequate infrastructure could hinder tourists coming to the new hotels. This is still a major barrier for the industry, with poor roads and power shortages adversely affecting the tourist experience. Despite its high tourism potential, the Southern Safari Circuit currently attracts only 1% of all tourists to Tanzania due to a lack of transport links, such as roads and airstrips, with visitors preferring to visit the country’s well-established northern circuit (34).

Impact Case

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

Sustainable Development Need

Tourism, which plays a prominent role in the Tanzanian economy, accounting for nearly 12% of GDP, has been the most severely affected sector from the COVID-19 pandemic due to travel restrictions (3, 8).

The growing tourism industry has put pressure on people and the planet. Areas and adjacent lands to the tourism activities have been subjected to a number of emerging issues and challenge, including failure of conservation to compete effectively with alternative land uses, habitat degradation and blockage of wildlife corridors, overexploitation and illegal resource extraction, wildfires, and human population growth (30).

The tourism industry has the potential to generate significant backward links to local values chains, including horticulture, livestock, poultry, and fisheries. However, such linkages are yet to be established. Poor product quality and irregular supply limit the linkages (3, 24, 25).

Gender & Marginalisation

Women make up 72% of all workers in the tourism industry, and surveys show that households with a member employed in tourism are far less likely to experience poverty than other households. Women involvement in the diversified tourism products and activities will make them pivotal players in family livelihoods and can make significant contribution to household economies (7, 9, 31).

Tourism based activities and products have not adequately benefitted poor communities because of weak linkages to the local economy. Most communities need to be economically empowered through strategic linkages with the facilities in order to improve their livelihoods (32).

Expected Development Outcome

Sustainable tourism infrastructure accelerates rate of economic growth through the tourism sector, which is estimated to have generated USD 2.6 billion in 2019 before COVID-19, and USD 1 billion in revenues in 2020 (14). Tanzania could use this potential to position itself in view of the competition in the region and utilize its competitive advantage of being the first in Africa and 12th worldwide for the quality of its community- nature-based tourism resources, and 32nd in Africa and 112th in the world for its cultural resources (33).

Hotels, lodges and campsites promote rural development through employment of local communities in such facilities, residents selling products and services directly to tourists (31, 32). They reduce pressure on people and the planet through effective conservation measures and sustainable exploitation (30).

Gender & Marginalisation

Expanded tourism infrastructure spread touristic activities across the country, particularly the Southern Circuit, which is economically marginalized. They offer income generating opportunities for the rural communities where touristic activates are located, including women (3, 8).

Primary SDGs addressed

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

12.b.1 Implementation of standard accounting tools to monitor the economic and environmental aspects of tourism sustainability

Current Value

Number of tourist arrivals estimated at 1,527,230 in 2020/21. Total employment in tourism estimated at 1,500,000 in 2020/21 (4).

Target Value

Number of tourist arrivals projected at 5,000,000 in 2025/26. Total employment in tourism projected at 11,750,000 in 2025/26 (4).

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

8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate

8.4.2 Domestic material consumption, domestic material consumption per capita, and domestic material consumption per GDP

Current Value

Tourism real growth rate estimated at 1.5% in 2020/21. Tourism contribution to GDP at current prices estimated at 17.5% in 2020/21. Contribution from sustainable tourism to GDP estimated at 6% in 2020/21 (4).

N/A

Target Value

Tourism real growth rate projected at 2% in 2025/26. Tourism contribution to GDP at current prices projected at 11% in 2020/21. Contribution from sustainable tourism to GDP projected at 11% in 2025/26 (4).

N/A

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.3.1 Proportion of small-scale industries in total industry value added

Current Value

N/A

Target Value

N/A

Secondary SDGs addressed

1 - No Poverty
13 - Climate Action

Directly impacted stakeholders

People

Communities living around the hotels, lodges and campsites benefit from supply of products and services need by the facilities and the visiting tourists.

Gender inequality and/or marginalization

Inland and rural populations benefit from the integration into the tourism industry, which brings about economic opportunities.

Planet

The environment benefits from sustainable tourism practices, and the wildlife enjoys greater protection resultant from economic value generation.

Corporates

Tourism product and service providers enjoy greater demand, and tourism industry actors, such as hotels and tourism agencies, benefit from enhanced economic activity.

Public sector

The Government enjoys economic growth, enhanced environmental conservation and improved rural development through linkages promoted between tourism facilities and local communities.

Indirectly impacted stakeholders

People

Rural populations benefit from increased economic activity and reduced environmental harm, supporting sustainable livelihoods.

Gender inequality and/or marginalization

Women, youth and people with disabilities benefit from improved working conditions.

Planet

The environment enjoys increased awareness on sustainable business practices in other industries.

Corporates

Secondary enterprises serving industries linked to the tourism sector, such as curio manufacturers and sellers, enjoy greater demand.

Public sector

The Government benefits from greater international attention and enhanced foreign currency income.

Outcome Risks

Excessive levels of touristic interventions may cause damage to the environment and wildlife as well as disturb cultural and traditional practices of communities, if the number and tourism infrastructure is not well managed (3, 4, 7, 8).

Impact Risks

If the communities' interest and priorities are not take into account sufficiently, touristic infrastructure may not experience a significant uptake and / or benefit the communities, which may limit the expected impact.

Skill gap among service providers, such as technicians, may limit the impact of the tourism infrastructure. The number of technicians graduating from technical institutions in the tourism sector is still very low compared to the demand. This has resulted in companies having to employ unskilled to low skilled staff and offer on-the-job training (17).

Impact Classification

B—Benefit Stakeholders

What

Sustainable tourism infrastructure supports sustainable practices in tourism and strengthens local value chains serving the tourism industry.

Risk

While the model of sustainable tourism infrastructure is proven, communities' interests and priorities as well as service providers' skills require consideration.

Impact Thesis

Support sustainable practices in tourism and strengthen local value chains serving the tourism industry.

Enabling Environment

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

Policy Environment

Tanzania Tourism Policy, 2021: Outlines the government's commitment to promote diversified tourism products and associated services, including infrastructure facilities (5).

Tanzania Tourism Master Plan, 2002: Emphasizes that the government is committed to promote tourism infrastructure, such as hotels, lodges and campsites, particularly targeting the Southern Circuit as a result of the saturation of the Northern Circuit (7).

Third National Five-Year Plan (FYDP 3), 2021: Outlines the government's plan to promote tourism as one of the sub-sectors that integrates more than one services, notably accommodation services, food, local culture and natural endowments, transport, information and communication (4).

Financial Environment

Financial inceptives: The World Bank has offered a credit of USD 150 million to Tanzania to operationalize the REGROW project, which focuses on the promotion of alternative livelihoods for household around the protected areas of the Southern Circuit, including community-based tourism products. There is a special embedded package for identifying suitable joint economic opportunities between investors and communities (21).

Fiscal incentives: Tanzania offers import duty and VAT exemption on deemed capital goods, including building materials, utility vehicles and equipment. This applies to tourism infrastructure, among others (22).

Regulatory Environment

Tourism Act, 2008: Provides the institutional framework, administration, regulation, registration and licensing of tourism facilities and activities, and for related matters (18).

Tanzania Investment Act, 1997: The Government allows private entities to utilize public-private partnership models to invest in hotel construction, leisure parks, ground golf courses, conference tourism, air/ground transport, wildlife farming, tour operations, trophy hunting, sea and lake cruising, deep sea fishing, development of ecotourism activities, beach tourism, and cultural and historical sites (28).

Marketplace Participants

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

Private Sector

Four Points by Sheraton, Best Western, Gran Melia Hotels and Lodges, BlueBay Hotels & Resorts, Fairmont, Golden Tulip, Hilton Hotels. Millennium, Nikko Hotels International, Sopa Hotels, Serena Hotels.

Government

Ministry of Tourism and Natural Resources Management (MNRT), Tanzania Wildlife Authority (TAWA), Ministry of Economy and Finance, Ministry of Industry and Trade, Tanzania Tourism Board (TTB).

World Tourism Organisation, Global Tourism Council, World Bank Group (WBG), African Development Bank (AfDB), World Travel and Tourism Council (WTTC), World Tourism Forum Institute.

Non-Profit

Tanzania Wildlife Protection Fund, Wildlife Conservation Society of Tanzania, Community Wildlife Management Areas Consortium (CWMAC), Tanzania Association of Tour Operators, Hotels Association of Tanzania (HAT), Tanzania Natural Resource Forum (TNRF).

Public-Private Partnership

Chumbe Island Ecotourism is a PPP between the government and a special purpose company, Chumbe Island Coral Park Ltd. (CICP), to restore the coral reef that was endangered by overfishing and unsustainable fishing practices.

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

Tanzania: Countrywide

Tanzania has 16 national parks, one conservation area, 17 game reserves, several marine parks, a coast and lake zone and several other tourism attractions spread across the country, where sustainable tourism infrastructure can be offered (23).
rural

Tanzania: Southern Zone

Selous Game Reserve is the largest fauna reserve in the world, spanning over 55,000 km2. Mikumi National Park offers a unique wildlife experience with a large number of herbivores and a rich variety of bird species. Ruaha National Park, is the second largest park in Tanzania, with miombo woodland, acacia grasslands, and large baobab trees. Udzungwa National Park is one of few “World Biodiversity Hotspots” and one of 200 World Wildlife Federation ecoregions of global critical importance (26).
rural

Tanzania: Northern Zone

Olduvai Gorge is the birthplace of human kind. It was here, in the early twentieth century, that the famous archaeologist Dr. Louis Leakey uncovered some of the earliest remains of fossil hominids. Mount Kilimanjaro is Africa's highest mountain and one of the continent's magnificent sights. Serengeti National Park is one of the world’s most iconic wildlife conservation areas. Ngorongoro Crater is a rare protected area where people and wild animals co-exist in harmony. Ngorongoro is technically a “caldera”, the largest sunken ancient caldera in the world. Estimated three million years old, the once-volcanic Ngorongoro is now considered one of “Africa’s eighty wonders” (26).

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
    • (1) World Bank Group, 2005. Multilateral Investment Guarantee Agency (MIGA): Tanzania's Investor Outreach Program.
    • (2) De Chazal Du M (DCDM), 2011. Tourism in Tanzania: Investment in Tourism in Tanzania.
    • (3) The World Bank, 2015. Diagnostic Trade Integration Study (DTIS) for Tanzania.
    • (4) United Republic of Tanzania, 2021. Third National Five-Year Plan (FYDP 3).
    • (5) United Republic of Tanzania, 2021. Tanzania Tourism Policy – Under Review.
    • (6) Operations Research Society of Eastern Africa, Journal Vol. 7 (2), 2017. Gender and Women Entrepreneurs’ Strategies in Tourism Markets: A Comparison between Tanzania and Sweden.
    • (7) United Republic of Tanzania, 2002, Tourism Master Plan.
    • (8) Word Bank Group, 2021. Tanzanian Economic Update, Transforming Tourisms Sector, Toward a Sustainable, Resilient, and Inclusive Sector.
    • (9) Oxford Business Group, 2017. https://oxfordbusinessgroup.com/analysis.
    • (10) HAL Open Science, 2021. Economic impacts of COVID-19 on the tourism sector in Tanzania.
    • (11) Tanzania Invest, 2022. https://www.tanzaniainvest.com/tourism.
    • (12) Jadian Company Limited, 2021. Feasibility Study Report.
    • (13) Word Bank Group, 2021. Tanzanian Economic Update, Transforming Tourisms Sector, Toward a Sustainable, Resilient, and Inclusive Sector.
    • (14) PricewaterhouseCoopers, 2019. Hospitality Outlook.
    • (15) Aman Raphael, 2013. Career Development of Women in Hospitality Industry: Insights From Double Tree By Hilton Hotel, Tanzania.
    • (16) African Journal of Hospitality, Tourism and Leisure, Volume 7, 2018.
    • (17) Tanzanian Ministry of Education and Vocational Training, 2015. Human Resource Needs and Skill Gaps in the Tourism and Hospitality Sector in Tanzania.
    • (18) United Republic of Tanzania, 2008. Tourism Act.
    • (19) United Republic of Tanzania, 2009. Wildlife Conservation Act (No. 5).
    • (20) United Republic of Tanzania, 2013. The Wildlife Conservation Act.
    • (21) The World Bank, 2017. New Opportunities for Development in Southern Tanzania Through Nature-Based Tourism.
    • (22) United Republic of Tanzania, 2022. Standard Incentives for Investors. https://investment-guide.eac.int.
    • (23) Ministry of Natural Resources and Tourism of United Republic of Tanzania, 2022. https://www.maliasili.go.tz/attractions/tanzania-tourist-attractions.
    • (24) World Travel & Tourism Council (WTTC), 2022. https://wttc.org.
    • (25) World Bank Group, 2015. Tanzania Economic Update.
    • (26) Adumua Safaris, 2022. https://adumusafaris.com/destinations/tanzania-southern-circuit.
    • (27) Inter-American Development Bank, 2011. Public-Private Partnerships (PPPs) for Sustainable Tourism in Tanzania.
    • (28) United Republic of Tanzania, 2019. Tourism Investment Guide.
    • (29) United Republic of Tanzania, 1997. Tanzania Investment Act, No. 26.
    • (30) Nature Conservation, 2013. Emerging issues and challenges in conservation of biodiversity in the rangelands of Tanzania.
    • (31) Journal of Development Studies, 2015. Gender and Livelihood Diversification: Maasai Women’s Market Activities in Northern Tanzania.
    • (32) Happiness Kiami, 2018. Effects of Tourism Activities on The Livelihoods of Local Communities In The Eastern Arc Mountains.
    • (33) World Economic Forum, 2019. Travel and Tourism Competitiveness Index Report.
    • (34) Oxford Business Group, 2018 Addressing infrastructure challenges in southern Tanzania to drive tourism growth.