Report outlines tourism sector key constraints

Lack of access to electricity and piped water pose key constraints in the tourism sector despite it being a high-growth sector with potential for job creation, the FinMark Trust has said.

Published figures from the independent non-profit organisation show that while tourism businesses (82 percent) have access to water, only 40 percent have access to piped water and a small proportion at six percent have access to electricity.

In its assessment of the sector, FinMark Trust said currently, there are approximately 4 392 tourism businesses in Malawi and are predominantly small businesses accounting for 86 percent.

Reads the assessment in part: “The tourism sector, overall, has among the highest levels of access to financial services: 73 percent of firms in the tourism sector have access to credit, for example, and 90 percent are banked.

“Financing access to piped water and electricity would boost tourism sector. Thus, products that finance access to electricity such as pay-as-you-use solar and access to piped water [municipal infrastructure finance] would benefit the tourism sector.”

It further said that a key feature of the tourism sector in Malawi is that its most attractive locations are rural, which means that low-cost financial services solutions are needed, including bank agents, insurance agents and mobile money agents, given the high costs of servicing rural areas by traditional means.

Reacting to the report, Malawi Tourism Council board chairperson Jones Malili said although the Malawi Government has accorded tourism priority status and is among the key sectors that have potential to make significant contributions to the country’s economy, there is need for more investments in the energy sector.

He said: “We would also appreciate if government considered subsidising eco-friendly solar electricity systems imports which is easier, reliable and cheap to install. This will reduce the burden on the national grid distribution.

“At the same time, government should explore means of taping and purifying gravity-fed water systems from the mountains as well as natural springs.”

In December 2020, Minister of Tourism, Wildlife and Culture Michael Usi said that while small and medium enterprises (SMEs) dominate the tourism sector in terms of numbers, the few foreign-owned and large operators account for over 70 percent of international tourism receipts.

He said empowering SMEs will not only ensure the country creates a stable and resilient tourism sector, but also provide a springboard for developing domestic tourism.

Currently, the tourism sector is hard-hit by the Covid-19 pandemic and its recovery, according to the ministry, is partly dependent on the SMEs performance.

Tourism contributes about seven percent to the country’s gross domestic product and accounts for six percent of the country’s total employment, according to the National Statistical Office.