Tourism and the budget – a marketing conundrum

Daniel Kavishe - Namibia continues to enjoy decent growth in the tourism sector despite a weaker and more volatile global economic environment. Currently the sector’s growth has been underpinned by the high incidence of return visitors. Furthermore, the sector’s growth has been anchored on a weak currency and a stable political environment compared to competing destinations. The country’s reputation remains supportive of further growth and is expected to stay this way provided we maintain a stable policy backdrop. Key areas of addressArguably, the sector lacks diversity in ownership and governance of most of the registered institutions within it. There has been a view that this could be the cause of poor policy direction over the years. The industry is however changing and a stronger narrative now exists that as a sector, tourism contributes substantially both directly and indirectly to overall GDP. Tourism remains a significant employer in the country and therefore without surprise, remains a key focus area across all national development plans and Vision 2030. However, the recently tabled national budget does not allocate sufficient funding to finance further sectoral development, transformation or inbound tourism demand.Insert Figure 1Lower allocations have been made to the Ministry on Environment and Tourism compared to the 2016/17 year. Furthermore, the Namibia Tourism Board (NTB), Namibia Wildlife Resorts (NWR) and the Zambezi Waterfront project all received lower allocations than in previous budgets. While cuts were experienced across the board, especially due potential leakages from these SOEs and projects, the nominal amount that has been dedicated to these institutions may be insufficient if government is to align long-term objectives for the tourism sector to performance, transformation and growth.Insert Figure 2Importance of NTBThe NTB regulates the sector, while assuming the responsibility to market Namibia as a vibrant tourist destination to the rest of the world. The regulations, however, are more on policy and ensuring that new establishments are registered. Pricing in the sector is left to global market supply and demand forces and prices are therefore not regulated. Despite the free will in pricing, there are potential leakages in the revenue line within the process of receiving levies from the industry. Potential under-reporting of income may thrive under legally unenforceable regulatory oversight, resulting in revenue leakages to the NTB to fund increased marketing efforts and the day-to-day operations of the Board. While there is a strong drive to reformat policy to enable the regulator to audit registered establishments, this only partly deals with some of the sectoral issues. Notwithstanding, the total budget to run the NTB is but a fraction of the required budget to fund a global marketing campaign. Namibia may not attract its fair share of the global tourism market due to persistent under-marketing compared to its neighbouring countries. A stronger drive is needed to ensure the view of the country from the external market remains strong.Marketing in NamibiaThe FNB/Fenata Tourism Report has repeatedly cited poor marketing of the sector over the past few years. There are strong considerations that need to be taken if Government plans to meet its targets as stated within the draft NDP5 policy, as increased visibility becomes crucial. The overall spend on tourism and tourism related activities should be taken seriously, as the offerings in the sector provide a first point of reference for visitors or investors into the Namibia. Globally, marketing on tourism has grown rapidly as a greater proportion of the world values travelling and its inherent experiences, attracting tourists from non-traditional destinations. However, this has also meant that the booking time has shortened significantly.Is Government too big in tourism?A critical concern amongst industry players is the size of Government in various sectors. Companies that have extensive exposure to government services have had to close down or streamline as Government consolidates. The same applies to the tourism sector where survey respondents in the FNB/FENATA’s Tourism Report for the fourth quarter of 2016 detailed their financial woes. However, in line with the bigger strategy, Government’s involvement in this sector should be focused on ensuring broad-based diversity of both ownership and governance. Furthermore, the whole sector needs a stronger drive in implementing PPPs such that lower budgetary allocations to SOEs and ministries alike do not translate to a slowdown in the current momentum garnered within the sector. With the current fiscal environment, the private and public sector will need to shoulder the responsibility of ensuring that traction is maintained given the prevailing economic climate. Currently it is estimated that 24 000 people are employed within the sector with an expected annual growth rate of 7%. Therefore, as Government consolidates, a strong consideration should be made to potential impact on the overall economy.

Tourism and the budget – a marketing conundrum

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Republikein 2025-12-23

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Tourism and the budget – a marketing conundrum

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