Nigeria: Seeking tourists

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While Nigeria’s economy has posted impressive headline growth rates in recent years, its tourism sector has remained relatively underdeveloped. Largely overlooked by a government and investors with other priorities, the industry currently contributes only a small share of GDP. However, calls for greater investment are increasing in volume, with sector leaders pointing out the potential for growth and identifying policies that could support it.

The Nigerian tourism and travel sector’s direct contribution to the economy amounted to N623.6bn ($6.23bn) in 2012, equivalent to 1.5% of GDP, according to the World Travel and Tourism Council (WTTC), a global industry body. But including indirect effects, the sector accounted for 3% of GDP, the report added. Tourism is a relatively small part of the economy by global standards, ranking 181th in the world in terms of its size relative to GDP.

However, Nigeria’s tourism industry is expected to be one of the fastest-growing in the world this year and over the next decade. The WTTC forecasts that it will rack up 13.5% growth in 2013, with its broader contribution to GDP rising by 13.9%. Between 2013 and 2023, it expects the sector to average annual growth of 6.2% and its overall impact on the economy to rise by 6.8% per year.

Nigeria’s first Tourism Investors Forum and Exhibition was held in May, bringing together industry stakeholders to promote the sector’s growth, at an event in Lagos organised by the Federation of Tourism Associations of Nigeria (FTAN) in collaboration with the Federal Capital Territory Administration. As its name suggests, the event focused on ways the industry can access funding for development. Specific areas addressed include: promotion; the role of tourism in driving economic growth; creating products and establishing destinations that can be marketed to domestic tourists before being offered on the international market; and enhancing the relationship between investors and tourism companies.

Speaking at the event, the minister of culture, tourism and national orientation, Edem Duke, said the federal government would provide incentives to investors but stressed the role of state and local authorities. “Tourism development should not be left in the hand of the federal government alone but there should be a synergy between all sections of the government and stakeholders,” he said.

According to the president of FTAN, Samuel Alabi, the federal government should establish a tourism development fund to tap into national and international sources of financing to support the sector’s evolution. Nearby Ghana, where tourism directly contributes nearly 2.3% to GDP, has recently established a similar fund based off a bed tax, with the revenues helping fund development and promotional efforts. In January Alabi said that FTAN was in the process of negotiating with authorities over the possibility of establishing such a fund, which could provide attractive financing options for tourism enterprises, some of which find it difficult to access bank credit.

The need for financing has also been noted by Goodie Ibru, president of the Lagos Chamber of Commerce and Industry, who in May said that without a federal tourism fund, growth in the capital-intensive sector would remain below its potential. In addition, he emphasised the importance of improving broader infrastructure and utilities to support the sector’s development. As in other sectors, business owners in the tourism industry sometimes have to maintain electricity generators and build their own roads, driving up costs and discouraging investment.

Other challenges facing the industry include double taxation, the need to encourage the domestic tourism market and reforming the restrictive visa regime. The latter has already been partly relaxed, with visitors now able to apply for visas-on-arrival online – a change that Richard Robaix, general manager of the Ibis Lagos Airport hotel, recently told the local press will be a significant boost for the sector.

The call for greater investment to enhance Nigeria’s tourism competitiveness is growing louder. In an interview in May, Derek Drew, managing director of Epe Resort and Spa, a new facility located near Lagos, said that Nigeria was “far behind” in the tourism sector, adding that “government support and huge amounts of money” are necessary to ensure its development.

As Drew noted, the sector is competitive with an increasing number of African countries establishing themselves as destinations, from traditional stalwarts such as Kenya and South Africa to relative newcomers including Gabon and Ghana. Nigeria has been held back not only by underinvestment, but also by the security situation in some parts of the country. Like many of his counterparts, Drew says that developing domestic tourism – which naturally is less susceptible to Nigeria’s international image – should be a priority.

However, Nigeria’s range of potential tourist destinations, its international flight connectivity and a large diaspora all suggest that the country could attract more visitors from abroad. These are early days yet, and there are several obstacles left to navigate, but as the WTTC’s forecasts suggest, the potential for tourism development is clear.

 

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