Reducing economic leakages from tourism: A value chain assessment of the tourism industry in Kasane, Botswana

ABSTRACT

Retaining revenue generated by tourism within a local economy is an important issue in tourism development, especially in developing countries where tourism is used as a tool for development. This research aims to quantify the value and proportion of tourism expenditure retained in this destination in order to inform national-level decision-making. It applies a value chain analysis (VCA) approach through semi-structured questionnaires with 117 stakeholders in Kasane, Botswana. The VCA demonstrates that the total gross revenue generation of the tourism industry within Kasane was USD 39.5 million in 2014. Excursions and transport generated nearly half of this revenue (USD 19.2 million; 49%), followed by accommodation and food and beverages, at around USD 10 million each (26%). Of the gross revenue accrued, USD 14.5 million (37%) remained in the local economy (defined by the Botswana Tourism Organisation as a 50 km radius surrounding Kasane) in the form of local goods (production) and services (wages). Recommendations for interventions that could enhance the local retention of revenue from tourism in Kasane are presented.

KEYWORDS:

• Economic assessment
• sustainable tourism
• value chain analysis
• Kasane
• Botswana

1. Introduction

Globally, tourism generated an estimated USD 1245 billion in international tourism receipts in 2014, amounting to 9% of global gross domestic product (UNWTO, 2015). Notably, tourism supported 277 million jobs in 2014, one in 11 of the world’s total (WTTC, 2015). The flow of money from the sector provides opportunities for tourists to act as conduits to re-distribute wealth from the rich to the poor. For example, when travellers visit developing countries they spend money on transport, accommodation, excursions, shopping, and food and drink. Much of this money can be captured by local poor people if they are able to supply the products and services that tourists need, or by being employed in tourism companies (Spenceley & Meyer, 2016).

In developing countries, tourism generates substantial foreign exchange. In 2014, emerging and developing countries accounted for 45% of total international tourism arrivals. However, of this, sub-Saharan Africa accounts for only 3.2% (UNWTO, 2015). Many developing countries are rich in cultural and natural attractions, and their economies rely on tourism. For example, tourism in Samoa in 2005 accounted for 80% of total goods and services exports (Meyer, 2010). These foreign exchange earnings from tourism are particularly important in developing countries, where government strategies aim to reduce the proportion of their population living in poverty. It is estimated that approximately 20% of the world’s population (1.4 billion people) are currently living in ‘extreme poverty’, on under USD 1.25 per day (Chen & Ravallion, 2008; Wroughton, 2008). Poverty is particularly prevalent in situations where people lack key capabilities, such as inadequate income, lack of access to education, poor health, insecurity, low self-confidence, a sense of powerlessness, and the absence of rights such as freedom of speech (Sen, 1999). Poverty is related to inequality and vulnerability, in that inequality considers the distribution of economic factors across a population and vulnerability is a risk of falling into poverty in the future (Haughton & Khandker, 2009).

Bennett et al. (1999) suggested that the tourism sector had promising potential to contribute to development in low and middle-income countries, for reasons including the following:

• the market comes to the producers, thus providing additional sales opportunities in the destination;

• inter-sectoral linkages can be created, especially with agriculture, artisan production, and additional services, which are essential for livelihood diversification;

• tourism is generally labour intensive (although often less so than agriculture);

• tourism takes place in marginal areas, areas where the majority of the poor live; and

• tourism has rather limited barriers to entry when compared with manufacturing or other export activities.

Conversely, in practice local communities can often be excluded from accessing tourism value chains because tour operators keep tourists inside a ‘tourism bubble’ (Adiyia et al., 2015). As an illustration, package tours potentially limit the opportunities for tourists to distribute their spending across a wider range of local businesses, resulting in a limited impact on local communities (Mitchell & Faal, 2008). A survey of 17 marine protected areas in Thailand identified that local communities stated they received negligible benefits from tourism livelihoods (Bennett & Dearden, 2014). Therefore, whilst the rhetoric advocates tourism as a tool for development, it is important to be able to quantify the impact in order to verify these claims.

Research on ‘pro-poor tourism’ (PPT) has influenced a new way of thinking about tourism, with a series of studies that quantified the impact of tourism on poverty in a series of destinations (e.g. Ashley et al., 2001; Braman & Amazonia, 2001; Mahony & Van Zyl, 2001; Nicanor, 2001; Poultney & Spenceley, 2001; Renard, 2001; Saville, 2001; Williams et al., 2001; Bah & Goodwin, 2003; Holland et al., 2003; Spenceley & Seif, 2003). Subsequent interventions piloted pro-poor actions, and generated a set of guiding tools (see McNab, 2005), some of which addressed boosting local supply chains by tourism enterprises (e.g. Ashley et al., 2005, Ashley & Haysom, 2008). In one of the pilots, the local spend by the South African tourist resort Spier was evaluated, and opportunities were identified to improve local expenditure and enterprise development. Subsequent interventions created greater local employment and revenue retention from tourism, and also established cost savings and greater profit margins (Ashley & Haysom, 2008). However, the extent to which tourism businesses meet the criteria of ‘ecotourism enterprises’ or ‘pro-poor’ is debatable and tourism businesses may be attracted to PPT because of the rhetoric and implement interventions as ‘window dressing’ (Scheyvens, 2009). As a result, some have argued that PPT has not been transformative for the tourism industry but merely implemented in order for tourism operators to avoid unwanted regulation (Higgins-Desbiolles, 2006).

Increasing the proportion of tourist spend with local enterprises helps to reduce the leakages and potentially improve its pro-poor impact. Economic leakages effectively represent the share of tourism receipts from international tourists that accrue overseas (Mitchell & Ashley, 2010). Leakage is based on the funds that are spent in the destination country but not expenditure before international tourists arrive (e.g. on booking fees, flights). Furthermore, it does not consider expenditure by domestic tourists. Leakages can be high in situations where a country has considerably high levels of imports to supply the tourism sector (e.g. equipment, building supplies, vehicles, food, drink, etc). Where there are higher levels of local production of tourism supplies and better inter-sectoral linkages, a greater proportion of international tourism receipts are retained in the destination country’s economy. Leakages can be reduced by increasing the direct commercial linkages with local producers and tourism operators. For example, farmers neighbouring Bwindi Impenetrable National Park in Uganda received training in bulking and grading their produce, and in marketing it to tourism camps. The Bwindi Advanced Market Gardeners’ Association programme now has over 100 member households and supplies vegetables to nearly every tourist camp at Bwindi (Sandbrook, 2008).

1.1 Value chain analysis and tourism

Many development organisations and research institutes have invested in research on how tourism can be used more effectively to reduce poverty in developing countries, and several have used value chain analysis (VCA) approaches (e.g. the World Bank, Gesellschaft für internationale Zusammenarbeit, the US government Overseas Aid Program [USAID]). Value chains are described as ‘a sequence of related business activities from the provision of specific inputs for a particular product to primary production, transformation, marketing and up to the final sale of the particular product to consumers’ (GTZ, 2007:6). Value chains include the enterprises and entrepreneurs that undertake these activities, including producers, traders, and distributors (GTZ, 2007:6). VCA is used to map the value chain in order to understand how actors interact and who captures the value (Spenceley et al., 2010).

A great deal of previous research has described VCA processes (e.g. Kaplinksy & Morris, 2001; Freeman, 2005; Humphrey, 2005; Joosten et al., 2006; Vermeulen et al., 2006; Hawkins & Mann, 2007; Bolwig et al., 2008). For example, the Overseas Development Institute has used VCA in 12 destinations in developing countries (e.g. Cabo Verde, Cambodia, Ethiopia, Ghana, Laos, Namibia, South Africa, Tanzania, Gambia, and Vietnam) and there is a rich database of case studies that can be used to compare the impacts of tourism in different destinations (Mitchell, 2012). Other researchers have used VCA to identify challenges in strengthening local supply chains, such as poor record-keeping, limited quality and diversity of products, and difficult access to local enterprises (Spenceley et al., 2010); poor management, capacity, and organisational difficulties of community farming projects (Rogerson, 2012); and unreliable supply due to a lack of transport options (Rylance & Spenceley, 2013). The difficulties faced by the private sector that wish to procure more local products have been considerable in some destinations. For example, 61% of safari lodges interviewed in the Sabi Sands Game Reserve in South Africa reported that they had tried to purchase locally in the past, but their attempts had failed, including challenges such as local entrepreneurs not holding the necessary health and safety certificates for food products (Rylance & Spenceley, 2013). Additionally, communities have also faced difficulty gaining access to tourists who are isolated by tour operators and receive limited opportunity to interact and spend with local communities (Adiyia et al., 2015).

The International Trade Centre (ITC) has used VCA approaches to design interventions to strengthen indirect benefits for the poor from enterprises that support tourism. One of their analysis tools, the Opportunity Guidelines (Ashley et al., 2009), applies a pro-poor VCA approach to design targeted tourism project programmes. VCA is a valuable tool particularly because it is not narrowly focused on the evaluation of direct economic impacts, but also encompasses indirect impacts on support sectors (e.g. agriculture, transport, maintenance, etc.). However, although VCAs provide a mechanism to quantify tourism’s financial impacts in detail, one of their weaknesses is that they do not consider environmental, socio-cultural, and political and governance aspects of sustainable development (Spenceley & Meyer, 2016).

The aim of this research is to describe and quantify the tourism value chain in Kasane, Botswana. This small town near Botswana’s international borders of Namibia, Zambia, and Zimbabwe is the administrative centre for Chobe District. Kasane was prioritised for research by the Botswana Tourism Organisation (BTO), who envisaged it as an emerging destination for Meetings, Incentives, Conferences and Events (MICE) tourism that could promote local employment and enterprise development. No previous economic assessments of tourism had been conducted in the destination.

This research describes the underlying economic context of tourism in Botswana, followed by a description of the research destination itself. The VCA approach and results are outlined, followed by a discussion of how the VCA of this destination contributes to the literature, and expands the body of knowledge in this field.

1.2 Tourism in Botswana and Kasane

The economic impact of the travel and tourism sector describes its direct, indirect, and induced contribution to the economy. The World Travel and Tourism Council estimates that in 2014 leisure travel spending in Botswana generated 77.9% of direct travel and tourism gross domestic product (USD 985 000) compared with 22.1% for business travel spending (USD 280 000) (WTTC, 2015).

In terms of global competitiveness, Botswana ranks 88 out of 141 countries in the World Economic Forum’s Travel & Tourism Competitiveness Index. Although pitched as a low-volume–high-value destination, it ranks 14th under price competitiveness. In terms of its natural resource base and its commitment to sustainability, the country ranks 41st and 37th respectively (World Economic Forum, 2015).

In 2013 there were an estimated 528 accommodation facilities in Botswana, with an estimated 8362 rooms and 15 697 beds. About 66% of accommodation facilities in the country are small, with between five and 19 rooms, and room and bed occupancy rates for 2013 were 47% and 37% respectively (DoT, 2013). The revenue accrued by the accommodation sector in Botswana is estimated at BWP 1.7 billion. An additional BWP 754 million represents further expenditure on food and beverages, communication, and other services. Total wages and salaries from accommodation were estimated at BWP 513 million (or 21% of total revenue) (DoT, 2013:12).

Botswana is particularly well known as a wildlife tourism destination, with a history of sustainable tourism practices and activities. These include a domestic certification programme for accommodation and tours run by the BTO (the Botswana Ecotourism Certification System; BTB, undated a, undated b), development of an ecotourism best practices manual (McHugo & MacGregor, undated), and benchmarking the sustainability of the Okavango Delta against the Global Sustainable Tourism Council’s Destination Criteria (Wilkinson, 2012).

Kasane is a small town near Botswana’s northern international borders of Namibia, Zambia, and Zimbabwe, which for tourism purposes acts as a gateway for tourists visiting Chobe National Park and Chobe River. For example, many visitors travel 15 km up the Chobe River from the Victoria Falls in Zambia and Zimbabwe to Kasane, to view the rich wildlife of the destination. The town has an estimated population of 7000 people (MLH, 2014), and offers 36 accommodation facilities, 10 restaurants, and an impressive 84 different excursion options (which are mainly nature based). The vision for Kasane to become a ‘renowned tourism hub’ is described within the Kazangulu–Kasane Redevelopment Plan (MLH, 2014:4). Part of this opportunity lies in its central location within the Kavango Zambezi Transfrontier Conservation Area (KAZA TFCA). The KAZA TFCA spans approximately 520 000 km² where the borders of Angola, Botswana, Namibia, Zambia, and Zimbabwe converge. Notably it is the world’s largest transfrontier conservation area, and includes 36 protected areas with 36 national parks, game reserves, and community conservancies. The KAZA TFCA has several objectives for the Kasane VCA, which include: to provide opportunities, facilities, and infrastructure to transform the area into a premier tourist destination; to facilitate a healthy and competitive economic environment; and to build capacity for and within the area (Anon, 2015). Furthermore, the draft KAZA TFCA Master Integrated Development Plan includes a tourism investment facilitation project, which aims to provide mechanisms for investors to explore and catalyse commercially viable opportunities, and in Kasane proposes to address the congestion, unregulated tourism, and associated pollution on the Chobe River (Anon, 2015).

2. Methodology

The main guiding methodological framework for the analysis was the ITC’s Opportunity Study Guidelines (Ashley et al., 2009). The Opportunity Study Guidelines apply a three-phased approach: diagnosis; identification and appraisal of opportunities; and programming. This analysis concentrated on the first two phases, which are illustrated in Table 1.

Table 1. Outline of the International Trade Centre’s value chain analysis approach.

Step	What to do?	Why?
Phase 1: diagnosis
Step 1	Preparation	To define the destination, the target group of poor, and the project team
Step 2	Map the big picture: enterprises and other actors in the tourism sector, links between them, demand and supply data, and the pertinent context	To organise a chaotic reality, understand the overall system
Step 3	Map where the poor participate	• To avoid erroneous assumptions about poor actors • To take account of the less visible suppliers
Step 4	Conduct fieldwork interviews in each node of the chain, with tourists and service providers	To provide data and insights for Steps 5 to 8
Step 5	Track revenue flows and pro-poor income Estimate how expenditure flows through the chain and how much accrues to the poor Consider their returns and factors that enable or inhibit earnings	To follow the dollar through the chain down to the poor, and assess how returns can be increased
Phase 2: opportunities
Step 6	Identify where in the tourism value chain to seek change: which node or nodes?	To use Steps 1 to 5 to select areas ripe for change To focus Steps 6 to 8 down to specific areas
Step 7	Analyse blockages, options, and partners in the nodes selected, to generate a long list of possible interventions	To think laterally and rationally in generating the range of possible projects
Step 8	Prioritise projects on the basis of their impact and feasibility	To generate a project shortlist, comprising projects most likely to deliver impact

Source: Ashley et al. (2009:7–8).

Field research included semi-structured interviews using a sample size of 117 stakeholders in Kasane comprising accommodation enterprises, excursion and transport operators, restaurants, suppliers, craft businesses, business support institutions, and tourists (see Table 2). Questionnaires were adapted from the ITC Opportunity Study Guidelines, and pilot tested prior to use. An online version of each of the questionnaires was also created using SurveyMonkey for enumerators to enter their data. Interviews were then undertaken with the samples of tourism enterprises (i.e. accommodation, tour operators, guides, craft outlets), support institutions, and suppliers. Tourists were also provided with questionnaires to provide information on their travel experience and their local expenditure at hotels and Kasane airport. Training on interview techniques was provided for a team of six field researchers in Kasane, and one of the authors coordinated questionnaires and verified the quality of completed interview records.

Table 2. Sample sizes.

Value chain node	Kasane
Accommodation	N = 36, n = 19 (53%)
Excursions/transport	N = 84, n = 26 (31%)
Restaurants	N = 10, n = 8 (80%)
Suppliers	N = 17, n = 12 (71%)
Craft	N = 7, n = 6 (86%)
Support institutions	N = 18, n = 9 (50%)
Tourists	n = 37
Totals	n = 117

Note: N = population; n = sample size.

In consultation with personnel at the BTO office in Kasane, populations of different stakeholders were identified, and representative samples of each stakeholder group were established in line with the ITC Opportunity Guidelines approach. The sample sizes in Kasane achieved are outlined in Table 2. Overall, the sample represented 42% of the total number of enterprises registered with the BTO in Kasane.

In Kasane, the VCA was undertaken using information from 71 completed interviews with accommodation enterprises (n = 19), tour agency and operators (n = 26), restaurants (n = 8), suppliers (n = 12), and craft retailers (n = 6). Financial information was categorised into four nodes and the service providers operating within each node: accommodation; food and beverages (independent restaurants and accommodation restaurants); excursion and transport (tour operators, agencies, car rental companies, tour guides); and shopping (craft retailers).

The VCA then tracked the flow of revenue generated from the tourism industry into the local community in order to understand what proportion of value is retained within and leaks out of the local economy. The gross revenue of each business in 2014 was determined. The revenue generated by accommodation enterprises was sub-divided between revenue from the sale of beds and conferences, and revenue from the sale of food and beverages.

Two areas of local spending were categorised as employment and local purchasing of products, such as food and craft. The direct local services were the value of local wages from employed staff. ‘Local’ was defined as staff originating from within 50 km of Kasane, determined by the BTO’s working definition in Botswana. The purchase of goods from indirect service providers, which are then sold to tourists through direct service providers, was calculated under two broad values: wages of local indirect suppliers; and produce produced by the local suppliers from fresh produce and crafts.

At each stage of the process an average from the number of respondents in each node was developed and extrapolated based on a business database of Kasane provided by the BTO. The total number of respondents represented 38% of the total number of tourism-linked businesses in Kasane. The final number provided represents the total value retained within the local economy or the proportion of the original total gross revenue generated in the local economy.

For the analysis of qualitative (descriptive) responses from interviewees, survey responses were reviewed regarding categories of challenges, a simple manifest coding system was developed that recognised the types of responses (Neuman, 2006). The frequency of each type of response was established (e.g. the number of times the phrase ‘training needed’ occurred) to establish how important it was to stakeholders.

2.1 Limitations of the research design

The study identified the following limitations:

• Accessing detailed financial information from tourism businesses was difficult and often involved support from the BTO, and naturally businesses were anxious about disseminating their financing data and supplier lists to potential competitors. As a result, it was agreed that all data would be aggregated and specific names and examples would not be provided.

• Financial information from the tourism business has not been independently verified and is therefore treated prima facie.

• Businesses that agreed to participate may have been more willing in order to present their efforts to spend more locally, which may have created a bias.

• Botswana tourists are under-represented in the sample size because few agreed to participate in the study. Tourists were generally approached in hotel foyers and asked to participate. Anecdotally, generally Botswana tourists were on business and may have had less time to participate, whereas international tourists may have been waiting for excursions to begin and therefore had more time to spare, increasing their willingness to participate.

3. Tourist expenditure and preferences in Kasane

Figures 1 and 2 illustrate the profile of the accommodation sector sample interviewed in Kasane (n = 19) and the types of services that are offered to guests at an additional charge (n = 18).

Figure 1. Type of accommodation available in Kasane (n = 19).

Figure 2. Services offered to guests at an extra charge (n = 18).

Comparing the purpose of visit stated by tourists interviewed in Kasane and the perceptions of accommodation and tour operators of their clients’ purpose of visit indicates that the accommodation and tourist samples are roughly compatible with each other. The majority of tourists within each sample were on holiday (63 to 76%), followed by business and MICE tourists (18 to 30%). This is compared with the national average in 2008¹ of a minority who were travelling on business (7%), a fifth on holiday (19%), and the majority of travellers visiting friends or relatives (47%) (DoT, 2010). A similar analysis for length of stay also indicates that the samples are largely compatible, with an average stay of between 2.5 and 3.4 days on average. This is also comparable with national figures, with an overall average length of stay of 5.3 nights for international arrivals in 2010 (DoT, 2010) and an average stay in accommodation of 2.2 nights in 2013 (DoT, 2013). In terms of originating markets, the tourists sampled largely reflected the international market share of South Africans, but there were major discrepancies in the number of Botswanans interviewed. The interviewers reported that when they approached Botswanans for interview they declined the opportunity to participate. This is a limitation of the tourist sample.

On average, the tourists interviewed spent the majority of their travel expenditure on accommodation (31%), followed by international airfare (28%), restaurants and meals (10%), shopping (9%), and activities (8%). In 2010, national estimates suggested that international tourists’ average spend per night was USD 40 (DoT, 2010).²

Tourists indicated the types of excursions that they had taken, while tour operators described the excursions on offer in Kasane. In all, 38% of the tourist sample reported taking an excursion (n = 14), and 86% of these did both the boat cruise and a game drive (n = 12). However, it is interesting that the tour operators offer a far greater range of excursions than those that were taken by the tourists in the sample.

In terms of the additional trips that tourists would have like to have included in their itineraries, those that were rated most frequently as ‘very important’ included natural attractions (68%), guided excursions (40%), adventure activities (39%). and local festivals and events (34%) (see Table 3). It is notable that other characteristics rated as ‘very important’ by less than 30% of the sample included visits to local markets (27%), cultural and heritage attractions (27%), visits to places where crafts are produced (27%), and business opportunities (7%). The tourists also clearly indicated other ‘very important’ trip characteristics, including restaurants with local food (35%), the opportunity to purchase ‘fair trade’ products (37%), and shopping facilities (32%).

Table 3. Ideal components of a trip to Kasane (top 12 rated ‘very important’).

	Not important at all	Moderately important	Important	Very important	No comment
Natural attractions (e.g. parks, wildlife)	0.00% (0)	2.94% (1)	14.71% (5)	67.65% (23)	14.71% (5)
Clean and hygienic place	0.00% (0)	6.67% (2)	23.33% (7)	66.67% (20)	6.67% (2)
Safety and security	0.00% (0)	3.57% (1)	17.86% (5)	67.86% (19)	10.71% (3)
Good tourist transportation	3.13% (1)	15.63% (5)	18.75% (6)	56.25% (18)	6.25% (2)
Availability of fresh fruit and vegetables	0.00% (0)	12.50% (4)	43.75% (14)	40.63% (13)	6.25% (2)
Tourism information point available	3.23% (1)	9.68% (3)	35.48% (11)	38.71% (12)	12.90% (4)
Guided excursions to local attractions	10.00% (3)	20.00% (6)	26.67% (8)	40.00% (12)	6.67% (2)
Restaurants with local food	0.00% (0)	6.45% (2)	51.61% (16)	35.48% (11)	6.45% (2)
Purchasing fair-trade products	10.00% (3)	23.33% (7)	23.33% (7)	36.67% (11)	6.67% (2)
Adventure activities	7.14% (2)	21.43% (6)	21.43% (6)	39.29% (11)	10.71% (3)
Shopping facilities	0.00% (0)	32.26% (10)	29.03% (9)	32.26% (10)	6.45% (2)
Experiencing local festivities or events	3.45% (1)	31.03% (9)	20.69% (6)	34.48% (10)	10.34% (3)

4. Tourism VCA in Kasane

The results from 71 completed interviews in Kasane were aggregated with financial information categorised into four nodes, namely accommodation, food and beverages (independent restaurants and accommodation restaurants), excursion and transport (tour operators, agencies, car rental companies, tour guides), and shopping (craft retailers). The responses were not aggregated into the VCA because the sample size (n = 37) was not a sufficient sample of total visitors to draw firm conclusions, as well as to avoid double counting with responses from tourism enterprises. Figure 3 illustrates the flow of revenue generated from the tourism industry into the local community in order to understand what proportion of value is retained within and leaks out of the local economy.

Figure 3. Kasane tourism value chain.

The value chain demonstrates that the total gross revenue generation of the tourism industry within Kasane was USD 39.5 million in 2014. Excursions and transport generated nearly half of this revenue (USD19.2 million; 49%), followed by accommodation and food and beverages, at around USD10 million each (26%). Of the gross revenue accrued, USD 14.5 million (37%) remained in the local economy (meaning 50 km radius surrounding Kasane) in the form of local goods (production) and services (wages). However, if the definition of ‘local’ was to be expanded to focus on revenue retained within Botswana, the total direct local services would have increased to 88% spent on Botswanan wages, displaying that a significant level of employment retains either with Kasane residents or with Botswanans from outside Kasane.

Restaurants and accommodation facilities with restaurants³ (n = 20) purchase virtually all of their food and beverage from local suppliers (n = 12). However, only 29% of the stock ordered from local suppliers (n = 12) originates from the local area. Furthermore, 62% of the value of all products sold by craft retail enterprises (n = 6) comes from local production. However, this result seems to contradict the broad perception that the majority of craft products are imported from Zambia and Zimbabwe. Therefore, it is not clear which position is correct – this would require independent auditing of craft products, which was outside the scope of this study.

Value Addition (VA) is a concept that is associated with a production activity. In this regard, VA = X – CI (where X represents the total value of the output of an activity and CI the value added). Tourism value added is broadly comprised of compensation to employees and gross operating surplus, the value of net primary income (VA). Figure 4 illustrates the direct gross value added of the accommodation sector (n = 19) in Kasane. Based on the total turnover of the accommodation sector in Kasane, 45% is retained as direct gross value added. In addition, a further 8% is indirectly retained locally from food and beverage suppliers as well as 7% from the local purchase of power and utilities. This diagram broadly categorises the major costs facing accommodation enterprises but does not provide a systematic breakdown of expenditure. However, the sample size represents 53% of the total number of accommodation businesses in Kasane and surrounding areas.

Figure 4. Accommodation sector value chain in Kasane.

5. Analysis

5.1 Maximising local spend

The results of the study indicate that retaining tourism expenditure in the local economy is important for the tourism sector generally. Detailed value chain mapping in Kasane established that 88% of tourism wages were paid to nationals. In addition, although virtually all of the food and beverages were purchased from Kasane-based suppliers, only 29% of that amount was produced in the Kasane area. One of the justifications used by accommodation enterprises was the lack of available local products as well as meeting the quality standards required for clients. This corresponds with the findings of Rylance & Spenceley (2013). The objective therefore would be to increase the numbers of locally provided products and experiences from Small, Medium and Micro-sized Enterprises (SMMEs) offered to tourists and tourism enterprises, and also therefore increase the proportion and value of expenditure locally.

In order to maximise the retention of expenditure in the local market, travellers need to be made aware of the different entertainment opportunities in the market. The results highlighted that 86% of tourist took a boat cruise or game drive, the two main tourism activities in Kasane. However, the relatively short average stay, between 2.5 and 3.4 days, meant that few tourists conducted any other activities. As the national destination marketing organisation, the BTO has been working to market Botswana as a destination; however, they have limited resources to also market the individual destinations and activities (although they do so through the BTO website). This is also highlighted through the feedback from interviews, where marketing and making tourists aware of activities and businesses was highlighted as a major challenge for the tourism industry and a barrier for entry for SMMEs. This not only applies to the attraction of end consumers to businesses, but also to the linking of local suppliers to operators in a destination. The importance of marketing and support of national tourism boards was also one of the key recommendations from an assessment of six PPT case studies in southern Africa (Ashley & Roe, 2002).

5.2 Increasing local ownership

The main aim of the Republic of Botswana (1990:2) is to ‘obtain, on a sustainable basis, the greatest possible net social and economic benefits for Batswana … from their tourism resources’, which led to a series of policy directives including to: substantially increase the share of local ownership and management; encourage high growth in entrepreneurship; and encourage community participation and ownership. Several studies have suggested that the luxury tourism industry in some developing countries (including Botswana) is dominated by foreign multinationals, resulting in few local linkages, high tourism leakages, and employment of expatriates in high-skill positions (Britton, 1982; Kusluvan & Karamustafa, 2001; Mbaiwa, 2004, 2005, 2011). For example, Mbaiwa (2005) highlighted the challenge of poverty reduction from tourism in light of the predominately foreign-owned tourism facilities in the Okavango Delta, the relatively low wages and presence within management of citizens, and the resultant repatriation of tourism revenue. By contrast, Spenceley & Snyman’s (2016) analysis of Mombo Camp and Okavango Wilderness Safaris in the Okavango Delta demonstrates that the luxury tourism sector in Botswana can, and does, contribute to the promotion of the local and national economy. Therefore, in Kasane, interventions to enhance the prevalence, quality, and competitiveness of locally owned and managed producers and suppliers to the tourism sector will undoubtedly lead to lower leakages, and greater retention of tourism revenues in the local economy.

5.3 Improving product quality

Interviews with tourism establishments indicated that one additional challenge for the tourism value chain is the mismatch between product quality and customer expectations. As Botswana is currently attracting many high-end customers, this misalignment is decreasing the potential spend directly into the local market and thereby decreasing linkages in the value chain. The lack of quality product can be attributed to two key issues: skills development and product supply. In order for both of these issues to be overcome, there needs to be a sustainable tourism demand to consume these products.

As the demand for tourism increases in Botswana, tourism enterprises will require support to ensure they are able to provide competitive and high-quality services, and a diversity of products and services required for leisure tourists and travellers. The needs and characteristics among tourists will be significantly between recreational tourists, those visiting friends and relatives, and people on business or MICE trips. For example, with less recreational time available MICE tourists will require fast and efficient service, meaning lunchtime meals delivered with shorter waiting times, tourism activities available for pre and post working hours for short periods, as well as fast and continuous Internet access and business centres with meeting and printing facilities. The objective could be to raise awareness within the tourism sector of the specific needs of different types of tourists and to ensure there is sufficient capacity and coordination to deliver them effectively. Whilst businesses might be interested to strengthen their linkages with local businesses, the initial transaction costs could be high (Ashley, 2006). Notably, the range of excursions and entertainment offered currently includes a high proportion of nature-based activities, including in protected areas. There are fewer sport, health, and cultural options available. Furthermore, the range of shopping opportunities for tourists also appears to be limited. This gap in product delivery provides an opportunity for SMMEs.

Additionally, with an increase in competition, providers will need to increase the level of financial and quality management. Along with the development of awareness of customer needs, necessary management up-skilling will need to be looked at to ensure that products and services are delivered at a quality level and pricing that is competitive to external suppliers from neighbouring regions.

5.4 Sustainably managing the impacts of increased tourism

Ensuring the growth of tourism is managed in a sustainable way is critical for Botswana to continue to offer a pristine tourism product that incorporates world-class attractions. On the positive side, growth in tourism expenditure should lead to increased job creation and business development, but conversely more development will lead to increased land-use pressure from construction, natural resource use, as well as increased waste production (Snyman & Spenceley, 2012). Therefore, it is important to include sustainability at the centre of any tourism development strategy.

6. Conclusions and implications

The aim of this research was to describe and quantify the tourism value chain in Kasane, Botswana. The VCA demonstrated that the total gross revenue generation of the tourism industry within Kasane was USD 39.5 million in 2014. Excursions and transport generated nearly half of this revenue (USD 19.2 million; 49%), followed by accommodation and food and beverages, at around USD10 million each (26%). Of the gross revenue accrued, USD 14.5 million (37%) remained in the local economy (meaning 50 km radius surrounding Kasane) in the form of local goods (production) and services (wages).

This research has demonstrated that local employment in tourism establishments is the single greatest contributor to local benefit in Kasane’s tourism sector. This is by contrast to similar research conducted in the Gambia in 2007 which identified craft markets and food supply as the greatest contributors (Mitchell & Faal 2007), but supports the results of 194 staff interviewed in six camps across southern Africa which determined that, in rural areas, employment – especially in high-end tourism businesses – can have a significant impact on local community benefit (Snyman, 2012). The findings support the conclusion that to increase benefits to the poor it is necessary to increase the slice of the proportion of revenue to communities as well as the total size of the tourism economy itself (Mitchell & Faal 2007).

The research has identified several areas where interventions could strengthen the retention of tourism revenue from value chain linkages. These include maximising local expenditure on out-of-pocket expenses (e.g. crafts, local tours and trips, food and drink), by increasing the number of locally owned and managed enterprises within the value chain and by improving the quality of products so that higher values can be captured. These actions should be embedded within a strategy framework to manage the environmental and social impacts of increased tourism, in order to grow Kasane as a sustainable tourism destination.

Given its strategic geographical location at the confluence of the Botswanan, Namibian, Zambian, and Zimbabwean borders, and in relation to the KAZA TFCA, there is scope for Kasane to emerge as a key tourism hub – for both nature-based tourism and MICE. Opportunities for local SMMEs to increase their capture and retention of tourist expenditure are likely to be found in expanding the diversity of and increasing the quality of local craft (because currently shopping opportunities are limited in relation to the demand), and by diversifying excursions to include more cultural and heritage attractions. However, more market research is needed to establish the supply and demand for local tourism products in the country, and to provide guidance and support on how they can promote their services, including within diversified tourism packages. Ensuring that the destination evolves in line with a sustainable development agenda that is promoted in Botswana will be key to the longevity of the destination.

Acknowledgements

The authors would like to thank Pablo LoMoro at the ITC for his considerable support for the research, and also Sid Boubekeur from the Centre for the Development of Enterprise for making resources available to implement it. The authors thank the BTO for their logistical support and guidance in the VCA, and in particular Mokganedi Ntana and Jannet Keretese. The fieldwork team comprising Lily Mosheti, Precious Matengu, Georginah, Tidimalo K, Ogomoditse Keitirile, and Michael Moithopedi are thanked for their considerable input and energy.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The research is funded by the Centre for the Development of Enterprise with the guidance of the International Trade Centre of UNCTAD.

Notes

1 The most recent official figures available.

2 The Kasane tourism sample did not give sufficiently detailed information to provide a comparison.

3 Direct local services for ‘accommodation’ and ‘food and beverages’ are combined because staff working within hotels were not disaggregated by role. Therefore, they have been combined to avoid creating distorted figures between revenue and costs.