How Tanzania could attract more tourists

TANZANIA is making major strides in tourism sector growth, with significant increase in both foreign and local tourists visiting, and exploring various tourist attractions.

The country recorded a 57.7 per cent rise in arrivals of foreign tourists in 2022, according to the latest report from the National Bureau of Statistics (NBS).

The report indicates that the number of foreign tourists who visited Tanzania between January and December 2022 increased to 1,454,920, up from 922,692 recorded during the corresponding period in 2021. The noticeable increase in foreign tourist arrivals of 532,228 is equivalent to an increase of 57.7 per cent.

However, the country could attract more visitors and tourists from various parts of the world if it will lower the Value Added Tax (VAT) rate to 15 per cent from the current 18 per cent, PriceWaterhouseCoopers (PWC) has suggested.

PWC offered the suggestions in its pre-budget newsletter on the tourism sector, saying Tanzania’s VAT rate is higher compared to other popular tourist destinations in Africa.

Statistics by the World Economic Forum WEF’s Travel and Tourism Index of 2021 shows an improvement in Tanzania’s overall rankings to 5th in Africa (from 6th) and 81st in the world (up from 86th).

African countries ranking above Tanzania were Mauritius (62nd), South Africa (68th), Botswana (76th) and Kenya (78th), and ranking immediately after Tanzania were Cape Verde (82nd), Namibia (88th), Rwanda (89th) and Zambia (98th).

A list of top ten most visited African countries with their VAT rate in brackets are Mauritius (15 per cent) South Africa (14 per cent) Botswana (14 per cent) Kenya (16 per cent) Tanzania Mainland (18 cent) and 15 per cent in Zanzibar.

Others are Cape Verde (15 per cent) Namibia (15 per cent) Rwanda (18 per cent) and Zambia (16 per cent).

“Tanzania’s VAT rate is higher compared to other popular tourist destinations in Africa; the rate for the top seven African tourism destinations is either 14 or 15 per cent,” read part of the report.

Suggesting; “A change to a lower VAT rate for the tourism sector could be an option to consider – perhaps a rate of 15 per cent so that the rate on Tanzania Mainland for certain supplies by the tourism sector is aligned with the VAT rate in Zanzibar”.

PWC urged further that a well-managed tourism sector can protect and preserve a country’s natural and cultural assets while generating fiscal revenue through taxes, licences, and fees; creating high-quality jobs; and forming backward linkages with other economic sectors.

Despite its relative underdevelopment, by 2019 Tanzania’s tourism sector contributed an estimated 17 per cent of its Gross Domestic Product (GDP) and directly employed over 850,000 workers.

This made it possible for the tourism sector to emerge as a country’s second-largest component of GDP and third-largest source of employment.

Tourism had been Tanzania’s largest foreign exchange earner since 2012, and in 2019 it accounted for over one-quarter of the country’s foreign-exchange earnings.

“Moreover, as the tourism value chain is linked to numerous other economic sectors, it plays an outsized role in growth, employment, and poverty reduction. However, the sector’s risk vulnerability is high,” the newsletter read further in part.

Noting that Tanzania’s abundant nature and rich cultural resources are a considerable economic opportunity, PWC highlighted five key priorities for a sustainable and inclusive recovery to lay the foundation for the long-term transformation of the tourism sector.

A list of priorities included a need for creating an efficient, reliable, and transparent business environment, establishing an information-management system that consolidates data from tourists and firms, and enabling policy makers.

Others are on the need to ensure that firms across the sector, as well as those in downstream value chains, have access to affordable transitional finance, consistently promoting, monitoring, and reporting on adherence to health and safety protocols as well as developing a co-investment and partnership arrangements to support nature-based landscape and seascape management.

Last year during the 13th meeting of the Tanzania National Business Council (TNBC) members were presented with a detailed report on the importance of the tourism sector to the economy.

Titled “Policy Reforms and Gender Gaps in the Tourism Sector in Tanzania, the report was conducted by the International Finance Corporation (IFC) through the Business Enabling Environment Support (BEEs) project in collaboration with Tanzania Private Sector Foundation (TPSF) and TNBC.

The sole aim of the study was to identify areas for policy and regulatory reforms in the tourism sector in Tanzania as part of implementation of the resolutions and directives from the 12th TNBC meeting.

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