TOURISM AND THE NIGERIAN ECONOMY

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The sector should be given adequate attention to fully maximise its potential, argues Felix Oladeji

The importance of the tourism sector in spurring growth towards achieving the economic diversification challenge faced by developing countries and emerging markets, especially those rich in natural resources, is gaining momentum. This is a result of the capacities of the sector to generate employment and revenue and positively contribute to infrastructural development and overall economic growth.

Resource-rich countries have a long history of strong dependence on a narrow range of commodity resources as the driver of economic activities and the source of foreign exchange earnings. Nigeria, for instance, has long concentrated on crude oil, as the main source of revenue generation and the principal component of total exports. Consequently, its economy has been highly susceptible to both internal and external shocks of vandalism of oil pipes, which limits production capacity, and reduction in oil prices at the international market, respectively. This concentration on a narrow range of export products and structural stagnation have been linked with fiscal policy procyclicality and jobless economic growth. 

Economic growth has traditionally been associated with advances in agricultural and manufacturing sectors including foreign capital inflows, which is undermining the prospects of tourism in generating economic growth. However, today, the tourism sector has not just become one of the world’s fastest-growing sectors but has also turned out to be one of the prime sectors capable of spurring overall economic growth and engendering economic diversification. The tourism sector is a dynamic one and has been acknowledged as a sunrise sector capable of transforming the growth trajectory of an economy and switching it on for sound and inclusive growth. The sector, thought to be hypersensitive to shocks, has continued to witness sustained growth despite occasional shocks of global violence and terrorism, political uprisings, health pandemics and other natural disasters, signifying its strength and resilience.

In pursuit of regional and global agendas such as the African Union Agenda 2063, the African Continental Free Trade Agreement (AfCFTA) and Sustainable Development Goals (SDGs), countries are fast realizing the huge potential of tourism activities in driving the economy and giant strides are being made in the development of and investment in the sector. This is evident in the fact that the tourism sector was the world’s third leading sector in foreign trade in 2018, contributing 10.4% to global GDP, trailing behind chemicals and fuels but ahead of automotive products, accounting for 30% of global service exports (UNWTO, 2019). For the seventh consecutive year, global tourism exports have outgrown merchandise exports, helping to reduce trade deficits in many countries. The sector, apart from forming linkages with other sectors, such as entertainment, transportation and housing, also contributes significantly to employment generation, providing one in ten (10%) of all jobs globally. Besides, the 2030 projections of the sector indicate that it is expected to continue growing rapidly, through consistent increase in global tourist arrivals, which stood at 1.4 billion in 2018, and forecasted to reach 1.8 billion by 2030, representing 3.3% yearly growth (UNWTO, 2019). This clearly illustrates the growing size of the global tourist market.

Although the global tourist market is still dominated by rich countries, such as France, Spain and USA, the share of African and other developing countries in international tourist arrivals and receipts is experiencing rapid growth. For instance, international tourist arrivals in Africa in 2018 totalled 67 million (7% growth)1, generating international tourism receipts of about $38 billion (2% growth) and contributing about 8.1% to the total GDP on the continent (UNWTO, 2019; WTTC, 2019). The rapidly growing tourism sector in Africa could be attributed to the continent’s strategic intervention in the sector through the Tourism Action Plan (TAP)2 adopted in 2004, which was a strategy for ensuring sustainable tourism on the continent. The TAP recognises tourism as one of the priority sectors for catalysing growth and development on the continent and, thus, intended to turn Africa into tourists’ choice destination.

However, in order for tourism to grow in any country, certain requirements such as decent roads, reliable power, and drinkable water have to be available. In all three categories, Nigeria has failed to deliver. Movement will be hampered if the roads are terrible. According to

data, the majority of Nigeria’s famous tourism destinations are in rural areas that lack essential infrastructure. This has proven to be a significant deterrent to potential tourists. As most of our tourist locations are inadequately managed, there is also a lack of management of existing infrastructure. Our beaches are overcrowded, and other tourist destinations lack basic amenities that ensure guest comfort and contentment.  

Nigeria has become linked with terrorism, robbery, and kidnappings over the years. These vices have exacerbated Nigeria’s tourism- related concerns. Following similar difficulties, other countries have issued warnings to their nationals about the hazards of visiting Nigeria.

Zamfara State has some breathtaking tourist attraction such as the National Gallery of Art, Kwiambana Forest Reserve, Kiyawa City Walls, Bakalori Dam, etc. However, considering the persistent issues of insecurity no one in his or her sane mind will opt for such a state and by extension that would have deprived the nation of prospective revenue generation. The Nigerian Tourism Development Corporation is no exception to the fact that Nigeria has very strong legislative policies on paper. The difficulty has always been in putting the plan into action. Back in 2016, the Hon. Minister of Information, Culture and Tourism, Information Alhaji Lai Mohammed had disclosed that the government plans to establish arts and craft centers across the 774 local government areas of the country. He also disclosed that the Federal Government had concluded arrangements to retrieve all artifacts and portraits stolen from ancient Benin Kingdom and sold abroad which were found at the University of Cambridge, United Kingdom. Fast forward to 2021 and your guess is as good as mine on the implementation of the above federal disclosures. 

More importantly, given that the wealthy upper class (mainly political figures) travel abroad for medical treatment on a regular basis, it is not unusual for tourists to be put off visiting Nigeria. There is a persistent dread that in the event of an emergency, the country will not be able to save a foreign national’s life.

Hence, the global tourism industry is witnessing significant growth. It remains an undeniable fact that, when fully developed, the tourism sector can significantly contribute to employment, revenue and overall economic growth. However, empirical evidence revealed that this has not been the situation in the Nigerian case.

First, the performance of the Nigerian tourism sector has been unimpressive, with an insignificant contribution to employment and economic growth, to the point that Nigerians now pay more for international tourism than what the country receives from both domestic and international tourists. Indications are that this could be the result of sub-standard tourism assets and the underdevelopment of the Nigerian tourism sector in general, in terms of policy framework and uniqueness of the assets the country is blessed with. Secondly, the infrastructural development is key to tourism development, as security, electricity and air transport infrastructure were found to be positive determinants of tourism development. Finally, a growth- led tourism development hypothesis is visible, implying that economic growth and stability matter to engender domestic and foreign investment needed for stimulating tourism development in Nigeria. The growth-led tourism result is in agreement with the findings of those who found a tourism-led-growth result for Nigeria.

Despite the insignificant contributions of tourism to economic development in Nigeria, the sector should not be written off. Instead, the focus should be on resolving the underlying challenges hindering its development. The sector should be given adequate attention to fully maximise its potential and contribute to the economic diversification drive of the government. A great incentive for the government to invest in tourism in Nigeria can be the fact that a growth-led tourism development hypothesis is very evident. This means that, when government addresses structural bottlenecks, such as poor infrastructure and terrorism, tourism’s contribution to the GDP will come up as a positive externality. In other words, investing in Nigeria’s economic growth is the first step to boosting tourism development. 

 Oladeji writes from Lagos