Southern Africa’s tourism industry receives significant investment in its hospitality sector. However, there is a need to ease certain obstacles to encourage more diverse tourism investment.
This was the focus of discussion during the Africa Tourism Investment Conference, held alongside WTM Africa in Cape Town last week, where UN Tourism, JLL Africa, Africa’s Eden and analysts highlighted both the opportunities and constraints shaping tourism investment in the region.
“In 2024, Africa attracted over US$50 billion (R824 billion) in foreign direct investment (FDI) and since 2019, the continent has attracted 105 greenfield tourism projects worth US$6,6 billion (R99 billion) and generating over 15 100 direct jobs,” explained Michelle Masperi, Project Specialist at UN Tourism, referring to data published in UN Tourism’s ‘Tourism Investment Trends and Opportunities in Africa’ report.
“The top investors for Africa are the US, China, Spain, UAE, Morocco and France. But where is the money going? The main destinations for tourism FDI are South Africa, Morocco, Tanzania, Tunisia, Kenya and Nigeria.”
However, Masperi noted that investment in tourism accommodation, including hotels, resorts and branded hotel chains, accounts for 90% of all tourism FDI on the continent, leaving little left for other sectors in the industry.
The report details that there is a need to rapidly diversify beyond traditional offerings into investment-ready niches spanning urban tourism, MICE, cultural, religious and diaspora travel, to gastronomy, wellness, sports, coastal and maritime experiences.
Regional value proposition
South Africa remains the largest tourism FDI recipient and, alongside Botswana, Namibia, Zambia and Zimbabwe, offers a strong combination of attractions. However, experts noted saturation in certain sectors and a lack of FDI and local investment in other essential tourism infrastructure.
During a seminar on ‘Tourism Readiness in Botswana, Namibia, Zambia and Zimbabwe’, Bernadine Galliver, JLL Africa’s Head of Tourism Advisory, noted that these destinations, while offering world-class nature and ecotourism products, lack investment in cultural, adventure and MICE tourism.
“There's a very high reliance or dependence on the leisure pillar, particularly on safari as the main tourism offering and nature-based tourism as the anchor for the leisure pillar of the destinations. But, of course, this presents a risk, because they have all their eggs in one basket and so, if something comes along to undo that basket, it is obviously a risk to the destination,” said Galliver.
However, experts indicated that challenges with infrastructure, policy, preparedness and information impact the region’s attractiveness to foreign investors.
Ease obstacles to unlock investment
Galliver explained that African countries face many obstacles that discourage investors from considering tourism projects on the continent.
The challenges include:
- Weak urban infrastructure that is essential to maintaining a tourism economy,
- A restrictive policy and legislative environment for investors to enter and for tourism to grow,
- A lack of strong long-term tourism development strategies,
- Limited tourism resilience and sustainability planning,
- And a lack of readily-available data on African tourism markets.
“Anyone who works in tourism and hospitality in this continent will know that it's a major challenge getting good quality data and finding information about the performance of the sector,” said Galliver. “I would hazard a guess that if an investor wants to know something, they want to find it easily and they want the answer to their questions without spending six months searching around for basic tourism statistics.”
Africa needs to invest in itself
Daniel Silke, the Director of Political Futures Consultancy, noted that while Africa needs to improve its value proposition to attract FDI, it also needs to improve its investment in itself.
“We don't trade enough with ourselves. One day I would like to see Africans trading with each other, rather than solely prioritising the promotion of the African economy to other parts of the world,” said Silke.
“Whether it's from a travel, aviation, or finance perspective, this could be the core driving feature for Africa and make its markets more shock-absorbent to the changes in the world.”
