potentiality of tourism for poverty reduction

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Lincoln Explorer, Volume 2, Number 1, September 2009, ISSN 1998-5568

Potentiality of Tourism for Poverty Reduction

Prof. Dr. Zakaria Lincoln*

Abstract

The current paper has analyzed tourism as a tool for poverty reduction. It has discussed

understanding of poverty; dimensions and causes of poverty; poverty reduction action;

challenges and some proposals for poverty alleviation through tourism.

*President & Pro-Vice-Chancellor, IBAIS University, E-mail: [email protected]

Potentiality of Tourism for Poverty Reduction 1


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Prof. Dr. Zakaria Lincoln

Introduction:Poverty alleviation has become an essential condition for peace, environmental conservation andsustainable development; besides being an ethical obligation in an affluent world, where thedivide between poor and rich nations seems to have increased in recent years.

The potential for tourism to play a significant role in the alleviation of poverty is increasinglyrecognized by international bodies and national governments. In 1999, the United NationsCommission on Sustainable Development urged governments to maximize the potential oftourism for eradicating poverty by developing appropriate strategies in cooperation with allmajor groups, indigenous and local communities.

In recent years, tourism has been increasingly recognized for its economic potential to contributeto the reduction of poverty in developing countries. Its geographical expansion and laborintensive nature support a spread of employment and can be particularly relevant in remote andrural areas, where live three quarters of the two billion people under extreme poverty conditions.Statistics show that tourism in LDCs is still limited: 2.6% of the world market share in terms ofInternational Tourist Arrivals (ITAs) and of International Tourism Receipts (ITRs). However,the growth in ITAs has been faster in LDCs than in the developing countries as a whole: 42.5%in the former and 30.8% in the latter between 2001 and 2005 (15.8% for the world). Also interms of ITRs: 50.3% growth in LDCs and 40.6% in the developing world between 2001 and2004 (33.2% for the world). Tourism is better placed than many other sectors in relating to theneeds of the poor. There are a number of reasons for this, which is presented in the UNWTOpublication on Tourism and Poverty Alleviation. Tourism is consumed at the point of production.This means that the consumers are much more aware of the production process and theconditions of those who are providing them with the benefit. There is an opportunity for directinteraction and for additional purchases to be made. Many of the poorest countries are actually ata comparative advantage over developed countries in this sector. They have capital assets ofenormous value to the tourism industry - culture, art, music, landscape, wildlife and climate. Thiscan include, for example, National Parks, where visits by tourists can generate employment andincome for surrounding communities as well as helping in their conservation. Tourismcontributes to a geographical spread of employment. It can be particularly relevant to rural areaswhere the above assets are often found. Three quarters of people in extreme poverty live in ruralareas, usually remote from the main centers of economic activity. Tourism can sometimesprovide a source of income in such locations while few other industries can do so. Tourism is amore diverse industry than many others. It has the potential to support other economic activities,both through providing flexible, part time jobs that can complement other livelihood options, andthrough creating income throughout a complex supply chain of goods and services. It is laborintensive, which is particularly important in tackling poverty. It also provides a wide range ofdifferent employment opportunities - from the highly skilled to the unskilled. Tourism employsmore women and young people than most other industries. Providing economic benefits andindependence to women is very important in terms of supporting child development and



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breaking the cycle of poverty. It creates opportunities for many small entrepreneurs and is anindustry in which start-up costs and barriers to entry are generally low or can easily be lowered.Tourism provides not only material benefits for the poor but also cultural pride, greaterawareness of the natural environment and its economic value, a sense of ownership and reducedvulnerability through diversification of income sources. The infrastructure required by tourism,

such as transport and communications, water supply and sanitation, public security, and healthservices, can also benefit poor communities.

The international community, under the aegis of the United Nations, adopted the MillenniumDevelopment Goals (MDGs) in 2000 as a blueprint for solving urgent problems affecting billionsof people around the world, saving the planet from accelerated deterioration and building a betterworld in the 21t century. The MDGs can only be achieved if all stakeholders, from the publicand private sectors and the civil society, work together and do their part. The World TourismOrganization (UNWTO) believes that tourism - which has become one of the most dynamiceconomic sectors - is in a very good position to contribute to the MDGs, especially the first oneregarding poverty alleviation.

Objectives:

The objectives of this study are:

to analysis the poverty reduction strategy through tourism for enhancing a countrysinternational profile

to open the door to new investment

to raise living standard

to stimulated economic growth and

to create new business opportunities.

Methodology:

This study is based on various books, journals and published secondary data mainly from theWorld Tourism Organization and World Bank publication.

Literature Review:

In 2007, UNWTO has further intensified its efforts to raise awareness on the SustainableTourism for the Elimination of Poverty (ST-EP) Program and to identify and implement ST-EPprojects that help the tourism sector work for the poor. At the 5 ST-EP forum in Berlin, March2007, UNWTO launched a new brochure on the ST-EP initiative titled Tourism can help inPoverty Alleviation; what can you do?. The brochure is intended to motivate all types of

stakeholders, including tourists, on different ways in which they can contribute to the ST-EPProgram. At the UNWTO General Assembly in Cartagena, November 2007, UNWTO presenteda new 40 pages brochure on the ST-EP Program, which includes ample information on thecollaboration with the Italian Government and the Italian-funded ST-EP projects.

At the beginning of 2006, UNWTO had received an initial contribution from the ItalianGovernment of 391913.00 (Euros) for the implementation of seven ST-EP projects inNicaragua, Guatemala, Ghana, Mali and Colombia. The implementation of these projects had



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started in 2006, and continued in 2007. In May 2007, the Italian Government approved a new setof 4 ST-EP projects in Guatemala, Nicaragua, Cape Verde and a Regional Project for WestAfrica, with a total budget of 330,000.00. In September 2007, another ST-EP project for Mali,with a budget of 24,500.00, was approved.

The seven ST-EP projects launched in 2006 have been completed in 2007 or are in their finalstates of completion. The projects have actively contributed to making the tourism sector workfor the poor and have in some cases resulted in the formulation of new projects that will build onthe activities carried out in 2006 and 2007. The new ST-EP projects approved for Nicaragua,Guatemala and Mali are an example of this, so are the new proposals for ST-EP projects inGhana and Senegal that have been submitted to the Italian Government in 2007.

In 2007, officials of the UNWTO Development Assistance Department have been on missions toBenin, Ghana, Guatemala, Nicaragua, Mali, Togo and Senegal to meet with Italian NGOs, theItalian Embassies, and National Tourism Administrations to review the implementation ofongoing ST-EP projects, as well as to identify and make preparations for new ST-EP projects.

The Brussels Program of Action for the Least Developed Countries (LDCs) for the Decade 2001-2010 clearly recognized the central role of tourism as one of the few economic sectors throughwhich LDCs have managed to increase their participation in the global economy. It can be anengine of employment creation, poverty eradication, ensuring gender equality, and protection ofthe natural and cultural heritage. These facts principally result from the existence, in most LDCs.of significant comparative advantages that are conducive to viable tourism specialization. InBrussels, governments agreed on a number of actions to be taken by development partners tosupport LDCs in their development efforts. This strong acknowledgement of the Brussels PoAon the role of tourism in the development of LDCs, and the corresponding recommendations forinternational support included in the Program of Action, are an integral part of a growingrecognition of the key contribution that tourism development can make to equitable economicand social progress and poverty alleviation. Tourism development, if properly developed andsupported, can indeed be a quick-win in overcoming the economic and social conditions thatprevail in LDCs and in accelerating their integration into the world economy.

Understanding Poverty:

There are differing definitions of poverty from those that deal strictly with economic conditionsto those that are broader in nature and consider a comprehensive view of the living conditions oftime less well-off portions of a society. This chapter provides various definitions of poverty usedby the World Bank, the Asian Development Bank and the United Nations who have a commonmission to reduce poverty and improve living standards through sustainable growth andinvestment in people.

Since the 1950s attempts have been made to understand poverty at different levels. The mostcommonly used measure of poverty has been income levels. However, there is now a recognitionthat the definition of poverty goes far beyond this simple measure.

ADB in Fighting Poverty in Asia and the Pacific: Poverty Reduction Strategy (1999) definespoverty as the deprivation of essential assets and opportunities to which every human is entitled.



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The document argues everyone should have access to basic education and primary healthservices. Poor households have the right to sustain themselves by their labor be reasonablyrewarded and have some protection from external shocks. Beyond income and basic services,individuals and societies are also poor, and tend to remain so, if they are not empowered toparticipate in making the decisions that shape their lives.

The World Bank describes poverty in a similar holistic manner through its various dimensions:levels of income and consumption, social factors, vulnerability to risks and access to soundsocio-political conditions. However, even today poverty is most commonly understood byincome levels and is measured against the poverty line set by the World Bank of one dollar perday. There is a general consensus among development organizations and workers that toeffectively carry out the mission against poverty it should he understood in all its forms anddimensions.

ESCAP looks at the various dimensions of poverty and states Poverty essentially has threeclosely interrelated aspects: poverty of money, poverty of access and poverty of power. These

make the working, living and social environments of the poor extremely insecure and severelylimit the options available to them to improve their lives. Without choices and security, breakingthe cycle of poverty becomes virtually impossible and leads to the marginalization and alienationof the poor from society.

If tourism planners and policy-makers accept these broader definitions, then it is clear the taskfacing tourism is more challenging than simply identifying how many people have been raisedfrom the basic income definition of poverty.

Different Dimensions and Causes of Poverty:

If tourism is to be an effective tool for poverty reduction it is important to understand thedimensions and causes of poverty, and to identify what dimensions realistically can be addressedby tourism development. Poverty can be observed in various forms and changes from place toplace, and over time, and personal insecurity perspective.

According to the World Development Report 2000/2001 (2001) the board causes of poverty are:

Lack of income and assets to obtain basic necessities (e.g. food, shelter, clothing andacceptable levels of health and education). Assets can be described as good health, theskills necessary for achieving employment, access to basic infrastructure, money insavings or access to credit. In addition, social assets such as a network of contacts andreciprocal obligations which can be called on in a time of need can be essential in moving

from poverty to a state of well-being. A sense of being powerless and unheard in various social institutions. These concerns

include unfair sociological conditions where the poor are faced with inhumane treatment,lack of protection against violence, intimidation and lack of civility and predictability intheir interactions with public officials.

A vulnerability to adverse shocks linked to an inability to cope with them. The poor aresusceptible to various risks of health, natural of human-made hazards and often are



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incapable of economically, socially, physically and emotionally recovering from theshocks.

While these are the immediate causes of poverty, there are also global causes of poverty, whichencompass issues such as national and regional economic growth, the impact of globalization,

inequality of income distribution and instability in governance. At the local level povertymanifests itself in the form of poor health and access to good medical facilities, illiteracy,irregular income, informal employment, lack of land tenure for housing, lack of basicinfrastructure, etc. At the national level it is reflected in GDP of the country.

Understanding the Difference between Urban and Rural Poverty:

An important dimension to understanding poverty is assessing the difference between urban andrural poverty given that the characteristics of poverty in both areas are significantly different;therefore the approaches and strategies to reduce poverty in these areas should be different. Thedifference is especially important when determining appropriate measures and poverty reductionstrategies. While the dimensions of poverty in both urban and rural areas are not different, their

causes and manifestations are (as described in Table 1). There are many ways of defining urbanand rural areas and these vary from country to country. This paper defines rural areas as placeswhere the basic economic activity is agricultural in nature while in urban areas economic activityis largely non agricultural.

In cities, the World Bank estimate of a dollar a day per person is often too low when consideringthe urban poor has other non food-related costs such as transportation, education, housing, water,sanitation, health care and medicines, etc. Due to the complexities of urban systems the highercost of living in urban areas and a diversity of factors such as tenure insecurity, urbangovernance and policies and various other factors, urban poverty measures and strategies forpoverty reduction have to be different from those in rural areas.

Table 1: Dimensions and Causes of Urban and Rural Poverty

Dimensions of

Poverty

Cause in Urban Areas Causes in Rural Areas

Income Dependence on cash to purchaseessential goods and services.

Employment insecurity.

Unskilled wage work.

Lack of qualification to get good

jobs.

Inability to hold jobs clue to poorhealth

Inability to hold jobs clue to poorhealth.

Lack of access to job opportunitiesdue to the distances between work

Dependence on agriculture, naturalresources that depend on climaticconditions.

Poor access to markets to sell produce.

Poor productivity.

Lack of access to job opportunities.



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place and housing.

Health Overcrowding and unhygienicliving conditions.

Living in residential areas that areprone to pollution and natural and

human made hazards.

Exposure to diseases due to the

poor quality of air water and tack ofsanitation.

Occupational risks.

Poor nutrition.

Lack of access to health care facilitiesdue to tong distances.

Low quality of public sector facilitiesand Services.

Low quality of public sector facilitiesand services.

Poor nutrition.

Education Constrained access to education dueto insufficient school size in rapidlygrowing cities.

Inability to afford school expenses.

Personal safety/security risks deterschool attendance.

Lack of access to schools of highereducation due to long distances.

Low quality delivery of education.

Inability to afford school expenses.

Security Tenure insecure for housing.

Drug and alcohol abuse anddomestic violence.

Family breakdown and reducedsupport for children.

Social and income inequalities incities can lead crime.

Drug and alcohol abuse and domesticviolence.

Property rights.

Exploitation of labors by landlords.

Employment Lack of housing.

Lack of Legitimate work permits.

Social exclusion.

Lack of access to job information.

Lack of rights and responsibilitiesas citizens.

Lack of access to information on rights

and responsibilities.

Lack of access to transport, electricityand other communication links.

Lack of formal business andcommunity organization.

(Source: World Bank, 2000)

In rural areas, most livelihoods depend on access to land and/or water for raising crops andlivestock or access to forests and fisheries. In urban areas the poor depend more on income tosatisfy their basic needs; in rural areas the poor have access to various assets to satisfy their basicneeds such as self production of food and exchange of goods for other necessary goods.

Tourism in Poverty Reduction:

As a tool for poverty reduction, the challenge that remains is how and where tourism canintervene to provide better opportunities, empowerment and security to the poor at the locallevel, and boost economic growth at the national and regional level. Tourism can be an effectivetool to bring about these synergies. Pro poor tourism can be introduced simultaneously in rural



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and urban areas opening various opportunities and access not only for tourists but for localresidents. Since tourism operates through different geographical areas (e.g. mountainous, remote,coastal, forests, and busy urban areas) it can he an important tool to affect poverty at the national,local urban and rural levels. Tourism can increase opportunities for the rural poor in their owncommunities. It has the potential to help reduce rural out-migration to urban areas, increase

employment opportunities for the urban poor and give them additional income to provide to theirfamilies in rural areas. Also, tourism-related skills learned by the urban poor can he applied inrural areas, helping to reverse the migration process.

Tourism is therefore an appropriate mechanism for poverty reduction. It not only contributes toeconomic growth but can also have social, environmental and cultural benefits and costs.Tourism provides employment opportunities by diversifying and increasing income whichreduces the vulnerability of the poor. Through increased national income (foreign exchangeearnings and taxation), additional funds can he diverted to poverty reduction programs. There areseveral advantages due to inherent characteristics of tourism which make the sector conducivefor pro poor growth. These advantages are (as stated in Tourism and Poverty Alleviation. WTO,

2002):

Tourism is consumed at the point of production increasing opportunities for individualand micro-enterprises to sell additional products or services.

The restriction of access to international markets as faced by the traditional sectors ofdeveloping countries is not applicable to tourism.

Tourism depends not only on financial, productive and human capital but also largely onnatural and cultural capital which are often assets possessed by the poor.

Tourism is labor-intensive providing the poor, who have large labor reserves, withopportunities.

Tourism thrives on diversity, drawing from a large resource base which increases scopefor wider participation.

Tourism provides important opportunities for women to find employment.

Tourism directly respond to poverty reduction objectives since it:

Unlocks opportunities for pro poor economic growth by providing formal andinformal employment.

Creates profit and collective income from locally-owned enterprises.

Facilitates social development by increasing access to infrastructure, providing

local people with the opportunity to access tourism infrastructure.

Helps increase participation of the local communities in decision-making astourism products are often assets owned by the poor.

Reduces vulnerability by helping to diversify income opportunities.

Promotes environmental protection as natural amid human environment are thelife lines of tourism development.



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Along with these advantages there are disadvantages of tourism development. Understandingthese disadvantages is important in developing local level strategies for pro poor tourismdevelopment. Some disadvantages are:

Tourism can create high levels of foreign ownership which can lead to high levels of

economic leakage and minimized local economic benefits. However it must berecognized that this is no industrial sectors.

Tourism can impose high levels of non-economic costs on the poor, e.g. loss of access toresources, displacement from agricultural and housing land.

Tourism is vulnerable to economic and political changes at the originating market as wellas social and political changes at the destination. The causes and characteristics ofpoverty (discussed above) create certain barriers to pro poor tourism development. Someof these barriers are identified by Jamieson et. al. (2002) and include:

Lack of education and training.

Lack of access to credit to finance tourism development

Lack of organizations to coordinate activities.

Relatively poor access to tourism infrastructure and assets at times.

Lack of tourism market knowledge.

Regulations and red tape.

Inadequate access to available. as well as potential tourism markets.

Lack of government programs targeted to the tourism-related informal sector.

Using tourism as a tool for poverty reduction in urban areas is more challenging than in ruralsettings, due to the complexity of the decision-making environment, nature of the urbaneconomic system and the nature of urban poverty. When one considers that within the Asian

region more than 50 percent of people now live in urban areas and the proportion of poor in theseareas is steadily growing, there is an urgent need to understand the use of tourism as a tool fordevelopment. There is a great deal of research and demonstration that must be carried out tobetter understand how to include participation of the urban poor in the tourism industry. There isalso a pressing need to understand how to ensure equitable income and benefits distributiongenerated by tourism in complex urban settings. While participation of the urban poor in tourismactivities may he perceived as difficult on one hand, there are examples on the other hand of theindustry taking the initiative to set up systems to distribute food and items to the poor therebycontributing to their quality of life.

Approach to Pro Poor Tourism Growth:

Pro poor tourism intervention requires the development of approaches which reduce the negativeimpacts or costs of tourism development and enhance the positive impacts of tourism on thelocal community and the national economy as a whole. Pro poor tourism can have the followingimpacts:

Increase demand for goods and services provided by the poor.

Increase the asset base of the poor.

Support diversification.



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However, there are some conditions that need to he fulfilled for successful pro poor tourismwhich include the following actions:

Strategies must be supported by national level plans.

Strategies must be adapted to local conditions, target markets and interests of the poor.

Involvement of stakeholders is essential with recognition of the poor as legitimatestakeholders.

Holistic development and poverty reduction efforts should be adopted.

Pro poor tourism product development must be linked with mainstream tourism sillproducts.

The Role of Local-Urban Authorities in Promoting Pro Poor Tourism:

In meeting the challenge of pro poor tourism it is important that local governments view tourismas an essential element of the overall management and planning process. It is important that theyadopt tourism planning and processes that support sustainable and pro poor tourism, local area

officials must build their capacities to participate effectively in tourism destination managementprocess. There are a number of areas where capacity must be developed (mentioned later in thismanual).

It is important for local officials to work effectively with both the public and private sectors inthe planning, management and creation of visitor experiences and attractions. Officials mustmonitor and assess the impact of tourism in order to guide policy and the plan-making process.Some of the overall planning and management roles they can play are illustrated in Figure.

Based on these potential roles some of the undertaken by local level officials are:



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Figure: Local Level Involvement in Tourism Planning and Management

Specific Local, Neighborhood & District Level Interventions:

Local governments must developed policies and programs that work at both the local level as

well as the neighborhood and local district levels. The overall policy framework andadministrative structure must create an environment that enables the principles of sustainable propoor tourism to occur. It is important that poverty reduction using tourism work at both thecitywide and neighborhood/local levels.

Specific Poverty Reduction Actions:

While there can be no argument that well planned and managed tourism can provide social andcultural benefits for the poor, it must also he recognized that accomplishing that task will be


Safety and

Security

Information

Service

Events and

Attractions

Planningof Events

DevelopmentAttractions

ManageAttractions

Quality Control

Environmental

Management

Housekeeping

Public

EnvironmentalImprovement

Organization

and

Management

FacilitatePartnerships

FacilitatePublicEnvironment

Set upTourism

SustainableManagement ofTourism at LocalLevel

Policy

Development

Planning and

Regulations

PlanningCoordination

Regulations

Position and

Marketing

ResearchSegmentation

BrandingPackagingPolitical

Commitment


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complex and difficult. To meet the challenges related to poverty reduction in tourism thefollowing actions should be considered:

Development of demonstration projects designed to enable tourism professionals and thepoverty reduction interests to assess appropriate strategies to adopting a pro poor tourism

approach. Training packages designed to assist a range of stakeholders to be more effective in

encouraging and supporting pro poor tourism development.

Development of specific training programs and technical assistance approaches that canbe employed in poor communities with a tourism potential.

Development of planning aids such as workbooks and videos to assist in the managementprocess.

Development of indicators that will allow governments, aid agencies and industry tomeasure success in poverty reduction.

Regional workshops to share experiences and provide an opportunity for convincing keydecision-makers on the need for poor tourism development.

Infrastructure Development:

Meeting tourism demands requires investment in infrastructure that may also meet communityneeds. Tourism planning must look ahead to infrastructure needs, ensure that priorities and timelines are established and funding obtained. There is little point in developing attractions if thereis a deficiency in basic services that will lead to problems for residents or visitors. As well thepublic sector must anticipate infrastructure needs resulting from private developments, otherwisecapacities will be exceeded and both the private and public sectors will consequently suffer.Details on infrastructure issues can he seen in Chapter IV.

Developing Pro Poor Products and Attractions:

Since the primary involvement of the poor in the tourism industry can be with the operation andmanagement of tourism facilities and products, it is important to carefully consider the pro poordevelopment of products.

Tourism an Efficient Tool to Fight Poverty in Developing Countries:

There are two main types of reason that make tourism an especially suitable sector fordeveloping countries sustainable economic development. The first one refers to the very natureof tourism:

Tourism is consumed at the point of production; the tourist has to go to the destination,opening opportunities for local businesses of all sorts, and allowing local communities to

benefit through the informal economy, by selling goods and services directly to visitors; Tourism is a more diverse industry than many others, having the potential to support

other economic activities, both through providing jobs that can complement otherlivelihood options, and by creating income throughout a complex supply chain of goodsand services;

Tourism is labor intensive, which is particularly important in tackling poverty. It providesa wide range of different employment opportunities especially for women and young



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people - from the highly skilled to the unskilled - and generally it requires relatively littletraining;

It creates opportunities for many small and micro entrepreneurs, either in the formal orinformal economy; it is an industry in which start-up costs and harriers to entry aregenerally low or can easily be lowered;

The infrastructure required by tourism can also benefit poor communities (transport andcommunications, water supply and sanitation, public security, and health services);

Most developing countries have a comparative advantage in tourism over developedcountries. They have assets of enormous value to the tourism industry - authentic culture,art, music, natural landscapes, protected areas, wildlife and climate;

Tourism provides not only material benefits for the poor but also cultural pride. It createsgreater awareness of the natural environment and its economic value, a sense ofownership and reduced vulnerability through diversification of income sources.

The second group of reasons refers to the evolution of tourist movements over the last twodecades:

Firstly, tourism is taking an increasing importance in the economy of poor countries. In 2005,international tourism in developing countries generated foreign exchange earnings for more than200 billion US$, a huge amount for these economies, and four times the amount earned in 1990.

Table 2: International Tourism Receipts (US$ billion)

1990 2000 2005

World 273 483 682

High income countries 223 357 477

Developing countries 50 126 205

Source: UNWTO, 2006 (based on the World Bank Atlas classification, July 2006)

Secondly, tourist arrivals are growing much faster in developing countries than in developedcountries, as shown in the following tables.

Table 3: Average Annual Growth in International Tourist Arrivals by

Type of Countries, 1990-2005 (%)

0

1

23

4

5

6

7

World Developing

Countries

High Income

Countries



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Source: UNWTO, 2006 (based on the World Bank Atlas classification, July 2006)Table 4: Market Share in International Tourist Arrivals

71.4064.80 59.70

28.60 35.20 40.30

0102030405060

708090

100

1990 2000 2005

High Income Countries Developing Countries

Source: UNWTO, 2006 (based on the World Bank Atlas classification, July 2006)

Tourism is the Primary Source of Foreign Exchange Earnings:

In spite of many difficulties that have affected tourism over the last few years - including naturaldisasters, health scares, oil price rises, exchange rate fluctuations, military conflict and terrorism,as well as other economic and political uncertainties - international tourist arrivals worldwidehave continued to grow steadily, exceeding all expectations in 2006 to reach 842 million. Thetourism receipts corresponding to these arrivals reached US $735 billion in 2006. These figuresdemonstrate once again the resilience of the industry; they reflect the unstoppable desire ofpeople to travel and devote part of their income to this purpose.

Tourism growth in recent years has been characterized by two main trends; firstly, theconsolidation of traditional tourism destinations, like those in Western Europe and NorthAmerica; and secondly, a pronounced geographical expansion. Indeed, there has been asubstantial diversification of destinations, and many developing countries saw their touristarrivals increase significantly. The growth rate in international arrivals for the low and lower-middle income countries between 1990- 2006 was 271.9 per cent. Among the 30 countries withthe largest poor populations, there were ten countries with a growth in international arrivalsbetween 1990 and 2001 of over 200 per cent. It is notable that this rate of growth is significantlygreater than that achieved by developed countries.

Figures from the year 2000 indicate that tourism was the primary source of foreign exchangeearnings in the 50 Least Developed Countries (LDCs). This excludes the petroleum industry

which is a source of revenue in only three of the LDCs. Significantly, tourism ranked thirdamong the major export sectors for both developing countries and LDCs. Tourism is a principalexport for 83 per cent of developing countries, and the principal export for one third ofdeveloping countries.



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Table 5:

Source: World Tourism Organization (UNWTO)(Data as collected by UNWTO, September 2007)

UNWTOs Activities in the Field of Poverty Alleviation Through Tourism:

At the Johannesburg World Summit on Sustainable Development in 2002, UNWTO launchedthe initiative Sustainable Tourism as an effective tool for Eliminating Poverty (ST-EP),inviting UN agencies, governments, donor agencies, NGOs and other stakeholders to join in aconcerted effort to make these mechanisms work. Since 2003, UNWTO has undertaken anumber of activities to materialize the ST-EP program and make tourism work in favor of thepoor.

The Organization has aimed, in the first place, at improving the capacity of national tourismadministrations and local authorities in developing countries to devise and implement povertyreduction policies, plans and projects, through the development of sustainable forms of tourism.

With this purpose, UNWTO has organized eleven regional training seminars on tourism andpoverty reduction between 2004 and 2006, in order to build capacities among public officials,NGOs and communities in developing countries, with a total participation of over 1,000 officialsso far.


(million) Market Share

(5%)

Average Annul

Growth (%)

1990 2000 2006 1990 2000 2006 1990-2000

2000-2006

World 436 684 846 100 100 100 4.6 3.6

Developing Countries 112.8 233.8 333.4 25.9 34.2 39.4 7.6 6.1

50 Least DevelopedCountries (LDCs)

2.9 6.3 11.4 0.7 0.9 1.3 7.9 10.5

Other low & low middleincome countries1

43.8 100.5 162.5 10.0 14.7 19.2 8.7 8.3

Upper-middle incomeeconomies1

66.1 127.0 159.5 15.2 18.6 18.8 6.7 3.9

High income countries andother

323.2 449.7 512.8 74.1 65.8 60.6 3.4 2.2

15


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Continuous research activity by UNWTO has led to the publication of four reports, providingevidence of the impact of tourism in reducing poverty levels, as well as recommendation on howto maximize these impacts.

UNWTO has established the ST-EP Foundation in December 2005, whose sole aim is to

promote poverty elimination through the provision of assistance to sustainable tourismdevelopment projects. The ST-EP Foundation is based in Seoul, Korea, whose government hasprovided the first 5 million US$, plus the office and administrative facilities.

The ST-EP Foundation works in close cooperation with UNWTO, coordinating its research andproject activities with those of UNWTOs Departments. It also cooperates with otherinternational organizations, development agencies, governments, foundations, corporations,associations and individuals willing to contribute to poverty alleviation through sustainabletourism.

UNWTO Recommendation to Governments in Connection with Tourism and Poverty

Alleviation:

1. Mainstreaming: ensure that sustainable tourism development is included in generalpoverty elimination programs. Include poverty elimination measures within overallstrategies for the sustainable development of tourism;

2. Partnerships: develop partnerships between international, government, nongovernmental and private sector bodies, with a common aim of poverty alleviationthrough tourism;

3. Integration: adopt an integrated approach with other sectors and avoid over- dependenceon tourism;

4. Equitable distribution: ensure that tourism development strategies focus on moreequitable distribution of wealth and services - growth alone is not enough;

5. Acting locally: focus action at a local/destination level, within the context of supportivenational policies;

6. Retention: reduce leakages from the local economy and build linkages within it.focusing on the supply chain;

7. Viability: maintain sound financial discipline and assess viability of all actions taken;8. Empowerment: create conditions which empower and enable the poor to have access to

information and to influence and take decisions;9. Human rights: remove all forms of discrimination against people working or seeking to

work in tourism and eliminate any exploitation, particularly against women and children;10. Commitment: plan action and the application of resources for the long term; and11. Monitoring: develop simple indicators and systems to measure the impact of tourism on

poverty.

Each Stakeholder can Help for Poverty Reduction:

Have considerable influence on government policies, and can therefore require that specificpublic measures are in place to address poverty through tourism development. Bilateral andinternational agencies should:



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Recognize tourism as an economic force in tackling poverty and promote the inclusion ofit as a key sector within PRSPs, supporting tourism as a form of sustainable development.

Require from governments tourism policies that address poverty issues to be in place as acondition of finance.

Join the ST-EP Foundation as full members, taking a major role in shaping its policies

and decisions, and funding ST-EP projects. Provide technical assistance and financial support for specific tourism initiatives which

address poverty, ideally in coordination and co-operation with the ST-EP program and itsFoundation.

Share knowledge and experiences in poverty reduction through tourism.

National and Local Governments:

Are often in a position to influence the location and nature of new tourism development andshould seek to benefit poor communities in so doing.

Governments should:

Include tourism in strategies and action programs on poverty reduction and vice versa.

Use planning controls, incentives and contractual relationships with the private sector topromote sustainable forms of tourism that directly benefit the poor.

Make legislative changes that improve the ability of poor communities to benefit fromtourism.

Provide assistance to micro, small and medium- size, and community-based enterprises intourism.

Introduce guidelines and standards which encourage poverty reduction actions by tourismenterprises, and give recognition to them.

Implement a marketing strategy that promotes relevant, poverty reduction orientedtourism products.

Ensure that tourism negotiations in the CATS framework make a contribution tosustainable development.

Use appropriate indicators to monitor tourism impact on poverty.

Non Governmental and Civil Society Organizations:

Have a particularly valuable role to play in networking and forging relevant linkages, inrepresenting and championing the poor, in capacity building and in identifying social programs

that can be supported through tourism income. They should:

Represent the poor and build linkages between bodies.

Build the capacity of poor communities to take decisions about tourism.

Support MSMEs, community-based tourism enterprises and the informal sector.

Identify social projects that could he supported by tourism enterprises and visitors.

Identify and promote good practices.

If appropriate, join the ST-EP Foundation as full members and fund its projects.



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Destination Management Organizations:

Which may be local authorities, private public partnerships or possibly protected areabodies, have a critical role to play in issues such as developing local supply chains andimproving the relationships between the informal economy and visitors. They should:

Build local mechanisms for working together with the local poor. Develop local linkages with the rest of the local economy, i.e. address and enhance the

supply chain.

Help to develop and market new products that engage the poor.

Improve information to visitors and tour operators regarding tourism products that favorthe poor, and how they can help in reducing poverty levels at the destination.

Help the informal sector to engage with visitors.

Use income from tourism to support poverty related initiatives.

Tourism Enterprises:

Both local and foreign, have to engage in Corporate Social Responsibility actions:

Hotels and restaurants should focus on improving their supply chain in poordestinations, preferring local goods (furniture, food items, handicrafts, etc.) and services(transport, guides, etc.), especially those produced by poor communities.

Tour operators and tourism service providers should include concern for poverty aspart of their commitment to corporate social responsibility. This must be reflected inemployment policies, supply chain management and support for local communities.

Generally speaking, all tourism operators should:

Provide relevant information to their guests on poverty matters.

Make commitments to economic and social aspects of sustainable development.

Adopt employment policies that provide opportunities for the poor.

Work with others to develop a local, poverty reduction oriented supply chain.

Directly support initiatives and projects that benefit the poor.

Develop and sensitively promote products that involve poor communities.

Provide visitors with information about activities which will benefit local communities,and encourage their support.

Cooperate with the ST-EP Foundation in funding projects at the destinations in whichthey operate.

Tourists:

Tourists can do a lot to make their trip an enjoyable experience and a socially responsible one.They can:

Before the trip, get better informed about their potential destinations in poor countries

Select those destinations, tourism products and services that show a commitment topoverty reduction



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At the destination, purchase local goods and services at fair prices, spending moneylocally, respecting heritage, and helping to promote local employment

Help local populations develop their own social projects, or support with donations localinitiatives aimed at improving living conditions

Seven Mechanisms for Poverty Alleviation through Tourism:

In order to deliver practical benefits to the poor, a clear understanding is required of the ways toeffectively channel visitor spending and associated investment into improved income and qualityof life for people in poverty, so as to ensure that all possibilities are considered and usedeffectively.

The ST-EP Program presented seven different mechanisms through which the poor can benefitdirectly or indirectly from tourism. These mechanisms have become an important philosophy ofthe ST-EP initiative and have been widely disseminated and incorporated in ST-EP projects,studies, seminars, training and related conferences. An overview of each mechanism is set out

below:

Employment of the Poor in Tourism Enterprises:

This mechanism involves undertaking measures to increase the level of the poor working intourism enterprises. Indeed, the relationship between tourism enterprises and the employment oflocal people is symbiotic, in that both sides stand to benefit considerably. This addresses povertydirectly by enabling the poor to develop their own skills; by allowing for the possibility of alarge number of people to benefit directly; and raising the standards of service. It is importantthat the provision of education and training is strengthened so that the poor may respond to suchopportunities, and any social or cultural barriers are removed.

Supply of Goods and Services to Tourism Enterprises by the Poor or by EnterprisesEmploying the Poor:

One of the fundamental conditions to achieving poverty reduction is in ensuring that goods andservices in the tourism supply chain, as much as possible, come from local sources at all stages.The objective would be to maximize the proportion of tourism spending that is retained in localcommunities and to involve the poor in the supply process. Such a measure would help supporttraditional forms of rural activities and skills enhance the quality and identity of the local tourismproduct and help establish stable sources of business.

Direct Sales of Goods and Services to Visitors by the Poor (Informal Economy):

One of the main ways in which poor people seek to earn income from tourists is through selling

produce and services, such as fruits, handicrafts or guided tours, directly to them. Where visitorsengage with this informal economy, it can be a successful direct route to providing income to thepoor, and it can provide visitors with a colorful and rewarding experience. Information provisionto tourists on available local products is important, as well as training to local people to ensuretheir products meet the quality requirements of visitors.

Establishment and running of tourism enterprises by the poor:



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This involves the establishment and management of more formal tourism enterprises by the poor,either individually or at a community level. These may include accommodation establishments,catering, transport, retail outlets, guiding and entertainment. Advantages of enterprise formationat the local level are that it places power and control in the hands of the local people, it canguarantee investments for the longer term and it enables enterprises to establish a scale of

Tax or levy on tourism income or profits with proceeds benefiting the poor:

This mechanism relates to the revenues that are earned by national or local government fromtourism which can be used to reduce poverty, It has the advantage that all of the poor can benefitfrom tourism without being directly engaged in the sector. The extent to which state revenueearned from tourism is put towards poverty alleviation will depend on national priorities andprograms. Taxes or levies raised locally, for example through levies on bed-nights or entrancefees for protected areas, can often be used fully or partly for community benefits. Transparencyin the application of local taxes is essential, as well as consultation with the private sector toavoid deterring the industry and travelers by imposing too high taxation levels.

Voluntary giving/support by tourism enterprises and tourists:Voluntary support in money or in kind, given by visitors or tourism enterprises to the poor canact as influential drivers for local poverty reduction. Various studies have pointed to awillingness amongst tourists to give something back to the area they are visiting. Many tourismenterprises are also committed to provide sponsorship to development initiative in the areaswhere they operate. Local NGOs or trusts may help develop mechanisms for the collection anddispersal of donations. Beneficiary schemes clearly showing tangible local impact andcommunity involvement have a high chance of attracting sponsorship and visitor support.

Investment in infrastructure stimulated by tourism also benefiting the poor in the locality,

directly or through support to other sectors:

Tourism development, particularly in a new, remote or rural location, can include investment innew infrastructure, such as roads, water and energy supply, sanitation and communications. Withcareful planning, such infrastructure can also bring positive benefits to the poor, by providingthem with basic services and opening up new and faster routes to access markets. The mainchallenge is to make sure that new tourism development is not consuming resources at theexpense of local communities, but rather offering them the chance to gain new access to them.

Pending challenges and some proposals:

Notwithstanding the efforts undertaken by UNWTO, other UN and bilateral assistance agenciesand NGOs, as well as governments of LDCs to the extent of their abilities, the potential oftourism to act as an engine for sustainable development, poverty alleviation and the achievementof several other MDGs in these countries is far from being fully realized.

The main specific constraints -in addition to those of a general nature such as political instability,insecurity and corruption affecting all areas of activity- that prevent such potential to be fullydeveloped are:

1. The high proportion of economic leakages, outside the local economy. In manydeveloping countries and in practically all LDCs, a generally high percentage of the



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foreign exchange income generated by international tourist arrivals leaks out of theeconomy. This leakage can be in the form of repatriation of benefits of foreign tourismcompanies, fees to hotel management companies, remuneration of foreign staff and, lastbut not least, imports of goods and services to respond to the tourists needs.

The less diversified the economic structure of a country, the higher the level of importsand of leakages. But even in countries where the economy is capable of producing manyof the inputs required by the hotel industry, such as agricultural produce, textiles andfurnitures, the tendency is towards importing such goods to ensure quality consistencyand regularity of supply.

Much can be done by governments, and particularly by the foreign and domestic hoteland tourism companies operating in LDCs, to improve this situation in order to reducethe leakages and increase the linkages between the tourism industry and other localeconomic activities. UNWTO is currently engaged in action research projects in thisrespect, working with hotel trade associations and governments of a few developing

countries with a view to find the most suitable operational mechanisms to better integratetourism with the rest of the local economy.

Professional training of local people at middle and senior technical levels, to allow themto replace foreign staff in hotels and other tourism establishments is another way ofcontributing to reduce the leakages and retain a higher proportion of the touristsexpenditure in the country.

2. Insufficient awareness among national and international financial authorities about thereal potential of tourism, and especially about the need to carefully plan and decisivelysupport its sustainable development. It is often believed that tourism can develop andbear fruits for the host society solely through the action of private investors, which in thecase of most LDCs is mostly foreign. This concept has proved to be wrong. even incountries that have managed to attract tourism FDI and tourists. To become a sustainabledevelopment opportunity in LDCs tourism requires, in addition to natural and culturalattractions that are abundant in most countries, at least the following conditions:

a) the involvement of the local people in all aspects and stages of tourism development,management, operations and monitoring;

b) the definition of a clear long term strategy and carefully designed master plans to respectthe environmental, social and cultural constraints in each country and destination and theimplementation and respect of such plans by all concerned, including private investorsand operators:

c) intensive capacity-building and training of both, national public officials at central andlocal levels, and training and empowerment of local communities, to allow them tobecome active stakeholders and beneficiaries in the tourism development process;

d) infrastructure support -at least in terms of transport, basic utilities andtelecommunications- without which tourism development is impossible. Theresponsibility for the provision of such infrastructure is usually outside the realm oftourism authorities.



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3. Lack of coordination among the many actors that intervene, directly or indirectly, in thetourism development process. This lack of coordination is observed at the national level,firstly among different government departments that make decisions on tourism relatedissues, for instance concerning transport infrastructure, or natural protected areas, or

education, without considering the implications these decisions may have on the tourismsector.

LDC governments, at the highest political level, need to understand well the potential oftourism and especially its unique position, as compared to other economic activities, togenerate entrepreneurial and employment opportunities even in the most remote placesand suitable for everyone. They need to provide a high-powered political framework forthis potential to develop, committing the involvement of all senior ministries, and notassuming that the tourism authority alone will be sufficient to generate all the conditionsfor that development to take place.

4. Secondly, there is often a lack of cooperation and coordination between the publicinstitutions concerned with tourism and the traditional tourism private sector forestablishing social requirements associated to tourism investments and operations inLDCs. This lack of cooperation is also manifest between these two stakeholders and thecommunity-based organizations or single microentrepreneurs that have created a tourismoffer, but that remains outside the mainstream marketing and promotional channels.

National governments as well as the large tourism trade associations could do much moreto generate employment amongst the local poor in LDCs, improve the local supply chainand support traditional farming, fishing and small manufacturing activities linked totourism. This could be done through voluntary agreements, technical assistance to localsuppliers, provision of training for local people to become employees, and even throughregulations regarding employment, levels of pay, import duties and the like.

In most tourism destinations of LDCs a considerable percentage of tourism revenuesleaks back to external service providers and to source markets in developed countries,due in part to the lack of quality local supply. Therefore, the development of localcapacities and the enhancement of linkages with local and national economies can greatlyimprove tourisms contribution to reduce poverty levels.

5. Similarly, the lack of coordination is also common among the UN and bilateral agencies,as well as international financial institutions and NGOs that provide assistance to LDCs,either in tourism or in sectors that affect tourism.

UNWTO has made efforts in recent years to attempt a higher degree of coordination withthe aim of increasing the effectiveness of the technical and financial assistance granted tothese countries in connection with tourism. Some progress has been made in this regard,especially with a few UN agencies and a couple of bilateral agencies. But overall, thelack of ODA coordination remains and is often expressed in the form of incompatible



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projects, or isolated projects that become unviable, or repetition of inconclusive analysis,etc.

The World Tourism Organization could certainly increase its coordinating role within theUN family, initially through the United Nations Tourism Exchange Network recently

established to exchange information among the agencies. But the Organization could alsoextend its role to act as a catalyst for consistency and synergy among all the technical andfinancial assistance granted by a myriad of organizations to LDCs in the field of tourism.Only with such a coordination and consistency the assistance granted will truly achievesubstantive objectives and realize the potential of tourism towards sustainabledevelopment and poverty alleviation. But to exercise this coordinating role effectively.UNWTO would need to be financially supported from sources other than the regular.programmatic contributions of its Member States.

6. Lack of commitment of the private sector. The private sector, especially that with aninternational vocation, though it has been active in numerous LDCs. - either as an

investor in tourism infrastructure or as an air carrier or yet as operator of tourism circuits-has not always exercised full social responsibility vis--vis the local population and thelocal economic interests. Accusations regarding bad employment and pay practices, orunfair trading terms, or the inadequate use of natural or local cultural heritage assets, orthe sudden suspension of air travel connections, among others, are common. Similarly,little efforts have been made by foreign tourism operators to intensify the use of localresources, in order to avoid the huge economic leakages that are typical of this industry inmost LDCs.

Governments as well as other stakeholders should encourage tile private corporations,and establish if necessary the appropriate mechanisms for the private corporate tourismsector to fully comply with its social responsibility vis -vis the least developed countries.For this purpose, the IJNWTO Global Code of Ethics for Tourism, and the UN GlobalCompact initiatives can be considered as reference.

Tourism in LDCs and some recommendation:

As we know that the three quarter of the two billion people under poverty are live in remote andrural areas. Most of these three quarters of two billion are live in less developed countries likeBangladesh, Somalia, Ethiopia, Angola, Sudan and so on. Tourism must be consumed at point ofproduction. That is if a American or European would like to see Everest, s/he must come toNepal. So, it is a big opportunity for LDCs to develop their tourism product and services toattract people from other part of the world. We can consider the case of Bangladesh. Bangladeshis a lower developed country with 150 million people and most of them are bellow poverty level.To reduce this poverty through tourism Bangladesh can take several strategies. For developingmechanism, we need to identify tourism product and service first. Then we should developstrategies and implement those strategies to reduce poverty. If we look the tourism product ofBangladesh, we can see that we have the longest sea beach in the world; the largest mangroveforest; mountain, wild life and so on. All of our tourism products are situated at rural areas wheremost of the people are poor. If we develop our sea beach of Coxs Bazar and Kuakata, we have



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to build so many hotels, restaurants, theme park, museum and different types of rides will createopportunity for employment that will reduce poverty. Also there is a scope for increasing tourismrelated small and medium enterprises that have create a big opportunity to poverty elimination.On the other hand, infrastructure development is also related to tourism that will createemployment opportunity as well as develop environment and control pollution which has direct

impact on poverty. At the same time, such a way we can reduce poverty by developing worldlargest mangrove forest Sunderban and hilly areas in that region. In such way, if we develop allof our tourism product and service, it is possible to alleviate our poverty as a whole by creatingemployment opportunity for the poor in the tourism enterprise, supply goods and service to theenterprise by the poor or the enterprise employing poor, direct sell product to the tourists by thepoor, establish and run tourism enterprise by the poor; impose tax or levy on tourism enterprisefor poor, voluntary support to poor.

Conclusion:

Tourism can be an effective tool to reduce poverty if it is strategically managed. An

understanding of poverty and poverty reduction strategies is essential to envision how tourismdevelopment can compliment the overall poverty reduction imperatives of accessibility,vulnerability and empowerment. Tourism can be applied as a poverty reduction tool at both thenational level to boost economic growth and at the local level in both urban and rural settings.Tourism development can be complementary to several poverty reduction programs ofemployment creation, education, SMEs etc. However the negative impacts of tourism should nothe overlooked. While it is possible for sustainable pro poor tourism development to occur at thedestination level without the conditions and mechanisms, it should be evident that pro poortourism efforts will be better supported by a national policy making process and decision-makingstructure that recognizes the importance of tourism as a tool for poverty reduction. This will alsobe dependent on the community and other stakeholders involved in the process to select whatapproaches are relevant to their situation and culture. The most important consideration is that allstakeholders from the community, the public and private sectors must be seen as essential actorsin the overall management of the tourism destination.

References:

Petra, Jordan (2002). Enhancing the economic benefits of tourism for local communities andpoverty alleviation. Madrid: World Tourism Organization (WTO).

Sharpley, Richard (2000). Tourism and sustainable development: exploring the theoreticaldivide. Journal of Sustainable Tourism, 8(1).

United Nations (2003). Poverty alleviation through sustainable tourism development,New York.

UNWTO (2004). Tourism and poverty alleviation: recommendations for action, New York.

World Tourism Organization (2002). Tourism and poverty alleviation, Madrid, Spain.



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World Tourism Organization (2005), Tourism, microfinance and poverty alleviation,

World Tourism Organization (2006), Poverty alleviation through tourism:a compilation of good practices,

World Bank, http://www.worldbank.org/poverty/strategics/chapters/prologue.htm
http://www.worldbank.org/poverty/strategics/chapters/prologue.htmhttp://www.worldbank.org/poverty/strategics/chapters/prologue.htm

potentiality of tourism for poverty reduction

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