The effects of FDI in the tourism sector in Africa on tourism

The tourism sector in Africa has received an increasing media and academic focus as it is viewed to be a fast growing sector and a potentially substantial provider of jobs at all skill levels. With increasing numbers of tourists from developing countries the sector is set to become a major contributor to the African renaissance and growth story through higher standards of living and positive effects on the current account. Very little is understood of the actual contribution of multinational tourism enterprises and whether their investments are directly affecting the much acclaimed story of increasing tourism to African countries. In this paper we aim to address this shortcoming by investigating links between the tourism figures of African countries and inward FDI in the tourism sector. Although datasets for African countries are mostly incomplete, at best, the changing dynamics of international data collection allows for the establishment of a baseline comparison between the tourism data of the United Nations Tourism Organisation and the FDI data of Financial Times FDI-Markets as well as Bureau van Djik Zephyr databases. We find that, not only, does FDI in tourism positively affect the various tourism categories’ figures but also that the main investors are not the traditional African FDI partners that provide new insights for tourism planners. FDI in tourism is also focussed on a narrow band of highly specialized tourist destinations, which allows for highly specialized policy adaptations. These results help to focus FDI policy formulation by African governments and Investment Promotion Strategies, Investment Incentives and Bilateral Investment Agreements between home and host countries as well their respective Investment Promotion Agencies.