An investigation of factors that affect investment decisions in the tourism sector in Namibia
A thesis submitted in partial fulfilment of the requirements for the Degree of
Master of Science (Accounting and Finance)
Around the globe, tourism has become a strategic tool for the realization of long-term
developmental goals because of its impact on job creation, income generation, rural
development and poverty reduction. It is regarded as a priority sector with potential for socio-economic development and social cohesion. Being a competitive industry,
destinations employ innovative strategies to capture a significant market share, resulting in an increasing inflow of investment, revenue and tourists. Namibia's Vision 2030 and NDP 4 also recognize tourism as one of the strategic economic sectors which need to be promoted and marketed extensively. The country has some of the most enviable attributes that can make it a formidable competitor and an exquisite destination. However, Namibia fails to feature as a prominent investment
destination and continues to rank low on various competitiveness ratings. The
investment climate has on many occasions been raised as needing attention and this is evidenced by an inability to significantly draw investment particularly in the tourism industry, commensurate with the potential it offers. This study unravels why the Namibian tourism industry is struggling to draw investment albeit its potential. It
interrogates the investment climate covering incentives, regulatory framework, skills,
government support and characteristic features of the destination.
The study used secondary and primary sources of data from tourism organizations and authorities. A questionnaire was emailed to business owners/managers while selected government officials were also interviewed.
This research concludes that the investment climate in Namibia is in general neither bad nor good; it is rather moderately conducive but attractive when compared to South Africa. However, it needs major adjustments in order to attract investment. lnvestors encounter major challenges with regard to complying with business regulations as these are cumbersome, compounded by the fragmentation of a family of government support services applicable to the tourism sector. Tourism business entities are registered with the Ministry of Trade and lndustry and then with the Namibia Tourism Board, as well as the Receiver of Revenue and Social Security Commission, which applies to all sectors. Those operating in pristine wildlife areas are expected to have environmental clearances and for communal areas leasehold certificates apply, not to mention lengthy negotiations with local communities before any business activities could commence.
These processes are seen by some as unnecessary red tape which increases the
transaction cost of tourism businesses, discourages potential investors from pursuing investment in the country while existing investors would out of limited options persevere and attempt to stick to the rules of the game. At times, these rules entail officers soliciting bribes from investors to facilitate the issuance of certificates in a more efficient manner. Tourism has a relatively longer product development cycle and a need for targeted incentives in the initial lean. years of business in rather profound. Such incentives are the type that only government can provide. Tourism is a labour intensive business and discerning tourists' needs are dynamic, demanding services of the highest quality. This requires a skilled workforce, versatile and flexible enough to adjust to this dynamism.
Namibia currently is unable to supply the needed workforce at the right time and in the quantity and quality demanded. More sponsored training opportunities need to be availed to close this demand and supply gap.
Excellent customer care service is at the center of a memorable tourism experience to enable marketing through word of mouth and to generate repeat visits. The provision of good service in Namibia is sporadic and in most cases absent especially where it matters most. Specific reference is made at the points of entry into the country, where visitors are at the mercy of unfriendly officials, which creates an unpleasant first impression for visitors. Through a multi-disciplinary approach, the country can sharpen its competitive edge and earn itself a reputation for warm hospitality, rendering it a ' home away from home' .
Inadequately trained and unskilled officials at strategic points of service (with specific
reference to business registration) worsen the situation further as investors end up being send to and from and subjected to the interpretation of rules and procedures which varies from individual to individual based on their work experience and commitment to duty.
It appears that a centralized point of service where most of these support services can be provided as well as incentivizing tourism investment would go a long way in removing a multitude of investment barriers, including better alignment of policies and legislation affecting tourism development in Namibia.
Tourism sector in Namibia; Socio-economic; Ministry of Trade and lndustry
University of Namibia
Type of publication|
Windhoek - University of Namibia
Added to C-A: 2022-09-07;12:28:06|
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