Coping with the Effects of Global Economic Recession on Tourism Industry in Tanzania: Are We Prepared?

Introduction Tourism is one of the key sectors contributing to economic prosperity of many countries and the sector is regarded as an engine of pro-poor growth in developing countries (WWF International 2001; Mitchell and Ashley 2006; Okayasu 2008). It is the largest industry in terms of contribution to the global GDP, and it is second to agriculture in terms of provision of employment. Since the 1970s, the development of transport technologies and the falling of airline prices, have led to a steady growth of tourism industry (Hampton 1998). The industry experienced a new phase of growth in 2005 with unprecedented growth rates (UNWTO 2008). In 2006, international tourist arrivals recorded 846 million, and international tourism receipts reached US$ 733 billion (UNWTO 2007). Europe and the United States have for years served both as the major source markets and main destinations for tourists. The top five country source markets are USA, UK, Japan, Germany and France (UNWTO 2007). Europe receives over half of the world tourism receipts. It received 51% in 2006 (UNWTO 2007). The Third World tourism receives a mere 5.6% of international tourism shares. However, the growth rate of tourism in the Third Word is unequalled. This is especially true in Africa which was the champion of tourism growth in 2006 (UNWTO 2007). Despite its immense contribution to the world economy, tourism sector is very fragile as any external or internal shock may cause a disastrous effect to the sector. The sector is prone to socio-economic, political, ecological and climatic changes. The developing countries where domestic tourism is less developed are more vulnerable to these shocks. Examples are many to show the damaging impacts of the above factors on tourism industry. For example, the impact of economic recession on wildlife-based tourism was previously observed between 1970s and 1980s when illegal hunting brought two of Africa's charismatic species, elephant and rhino, to the verge of extinction. In Tanzania, the elephants declined from 203,000 individuals in 1977 to 57,334 in 1991 (IUCN 1998) while only 275 rhinos remained in 1992 as opposed to 3,795 individuals in 1981 (Rolfes 1997). Because of the economic meltdown, the government allocated some US$52 million (i.e., 1.2% only of the development budget) for the entire natural resources sector (i.e., wildlife, forestry and fisheries) from 1976 to 1981 (Yeager 1986). The protected areas received minimal amount for their operations. For instance, Selous Game Reserve's budget in 1987 amounted to US$3 per km2 (Baldus et al. 2003). This amount was far less than the cost which was required for effective control of commercial poaching, which ranged from US$200 to US$400 per km2 per annum (Leader-Williams et al. 1990, Bonner 1993). As a result the game scout force was inadequate, ill-equipped, unmotivated and ineffective. The damaging impacts on tourism associated with changing of the policy and political directions within a country are well demonstrated by the events in a number of African countries. For example, in Zimbabwe, negative publicity on the country for the past decade following her land reform programme, has impacted negatively on the tourism sector which has great potential for growth and development. The tourism revenues fell drastically from US$700 million in 1999 to US$60 million in 2004, and went further down to US$43.9million in 2007 (www.mtholyoke.edu/./eightth). The sector's contribution to GDP dropped from 8% in 1999 to 3.3% in 2005. As a result of inadequate funding, over 80% of the country's large game in private conservancies was illegally hunted (ZimConservation, 2004). From the late 1980s to 1999, tourism was the fastest growing economic sector in Zimbabwe, experiencing an annual average growth rate of 18.4%. For example, the sector grew from 20% in 1989 to about 40% in 1999 (www.mtholyoke.edu/./eighth). Political uncertainty in Kenya following the 2007 controversial Presidential election reduced the tourism revenues by 54% in the first quarter of 2008 (Reuters May 2, 2008). …