Tourism tops gold in foreign exchange

What you need to know:

  • Tourism used to be Tanzania’s major source of foreign exchange, bringing into the country some $ 2.52 billion during the year ending November 2019.

Dar es Salaam. Tourism has returned to its position as Tanzania’s leading foreign exchange earner, almost four years after it started dropping.

Tourism used to be Tanzania’s major source of foreign exchange, bringing into the country some $ 2.52 billion during the year ending November 2019.

But the advent of the global Covid-19 pandemic towards the end of 2019 saw the sector’s contribution to forex earnings drop significantly, reaching a meagre $1 billion in the year ending December 2020.

As such, gold, which brought in $2.958 billion during the year ending December 2020, rose to become the major forex earner.

That was the time when various countries across the world were implementing lockdowns and travel bans in their efforts to prevent the further spread of the coronavirus that causes Covid-19.

But in what sends a good message to pundits and tourism stakeholders, figures from the Bank of Tanzania (BoT) now show that earnings from tourism rose to $2.999 billion during the year ending July 2023 from $1.95 billion during the year ending July 2022.

At the same time, gold earned the economy $2.939 billion, up from $2.707 billion during the year ending July, 2022.

This was the major factor behind an improvement in Tanzania’s service earnings, which surpassed $5 billion in revenue for the first time in the country’s history.

This was a 33 percent surge in service receipts, reaching an impressive $5.49 billion in the year ending July 2023 compared to $4.12 billion as recorded in the year ending July 2022.

 “The increase in travel receipts reflects the recovery of the tourism sector, as tourist arrivals rose by 37.2 percent to 1,658,043 during the year—the highest level ever recorded,” the BoT says in its August MER.

During the same period, the country’s transport sector improved its economic contribution, with receipts climbing to $2.05 billion from $1.87 billion, a 9.6 percent increase.

The highest tourism earnings ever to be realised were $2.5 billion, which Tanzania registered during the pre-pandemic period when the country received 1,527,230 tourist arrivals in 2019, while the country’s international receipts were around $2.5 billion.

The subsequent two years saw a struggle in the tourism sector worldwide as the pandemic woes, including travel restrictions, a health scare, and an economic crunch, saw a plummeting of international visit levels. A further challenge to travel and tourism’s recovery came in 2022, with a squeeze on the cost of living for many consumers.

This was driven by rising inflation and interest rates, turbulent currency markets, and global energy shocks.  Understanding the pivotal role of the tourism sector in economic growth, the government left no stone unturned with promotional and incentive campaigns.

Promoting its unique attractions both domestically and abroad, and initiatives like the Royal Tour showcase, have all contributed to this renaissance.

Speaking to The Citizen, the chief executive officer of the Hotel Association of Tanzania (HAT), Mr Kennedy Edward, said the commitment from the high-level government had been a contributing factor in the recovery of the tourism sector.

He said the initiatives specific to tourism, such as the royal tour and others like the foreign investment drive, have been attracting a flock of international visitors, both for leisure and business.   “These government efforts have stimulated even us in the private sector to pull our socks up and find creative ways to serve the tourists,” said Mr Edward.

The HAT’s chief executive added that with the easing of global economic headwinds and despite recession fears, international travel had improved.   “Overall the year had been better compared to the previous two or three years.

The numbers had improved significantly,” he said.

In tabling the ministry budget for the 2023/2024 fiscal year in June this year, the then minister for Tourism and Natural Resources, Mr Mohamed Mchengerwa, stated that the government is working hard to promote and transform tourism to achieve the $6 billion revenue and 5 million tourists target by 2025.

Europe and the United States of America continue to be the primary wellsprings of tourists drawn to Tanzania for leisure and holidays, as affirmed by the National Bureau of Statistics (NBS).

The Chief Executive Officer of the Tanzania Association of Tour Operations (TATO), Mr Sirili Akko, told The Citizen that despite some ground-breaking infrastructural challenges, the industry is doing well and is poised to perform even better.

“The success is attributed to great support from Her Excellency President Samia Suluhu Hassan; the industry is forever indebted to her for the efforts and commitment she is putting in to get it to work for the country,” he said.

The sector’s contribution to foreign exchange is 25 percent and holds a 17.5 percent share in the Gross Domestic Product (GDP).

On the other hand, the forest sector injects 5.9 percent of the foreign currencies and contributes 3.3 percent of the GDP.

 The future

Tourism stakeholders advise that there is a need for the national agenda for tourism to align with both private and public sector goals.

From the hoteliers’ association, Mr Edward urged that this must also go hand in hand with the diversification of the tourism products, considering the changing environment for nature tourism.

“We need to create more tourism products to make Tanzania a unique and premium tourism destination,” he said.

During budget tabling for 2023/2024 then-Minister Mchengerwa had also promised that the government, in developing strategic products, would continue the effort to promote beach tourism, ecology, history, cruises, and resorts, as well as meetings and big events.

“The ministry will also continue to coordinate the process of advertising Tanzania in major international leagues such as football and basketball in countries like the United Kingdom, Spain, and the United States of America, in major concerts, and in global tourism awards,” Mchengerwa told the national assembly in June.