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Project: Tourism

 I. Introduction

The Millennium Challenge Account (MCA) Namibia Compact, providing grant funding for public investments in Education, Tourism and Agriculture (livestock and indigenous natural products), was signed on 28 July 2008 between the Republic of Namibia and the US Government, acting through the Millennium Challenge Corporation (MCC). An amount of US$304.5 million will be available for development in the target sectors, over and above current Government allocations and assistance from other development partners.

Namibia is the first MCC country that will benefit from a Tourism Project. Consistent with Namibia’s national development strategies, the GRN aims to develop one of its fastest growing "export" industries with its focus on tourism. Export earnings from international visitors and tourism goods are expected to generate 15.6% of total exports (US$ 650.6 million) in 2008 and are expected to grow in nominal terms to 22.6% (US$2,092.8 million) by 2018. The Namibian Government also recognizes that tourism is an important generator of employment, particularly in rural areas where most tourism occurs. While the tourism industry in Namibia has enjoyed steady growth since independence in 1990, Namibia has lagged behind relative to regional competitors despite its abundance of natural eco-tourism assets and relative political stability. Compared to South Africa’s 9.2 million international visitors in 2007, Namibia received less than 1 million international visitors in the same year. 1 Despite these modest numbers, Namibia has the potential to become one of Africa’s leading tourism economies over the next decade. The contribution of travel and tourism to GDP is expected to increase from 14.5% (US$1,051.7 million) in 2008 to 20.7% (US$2,967.9 million) by 2018 and from 18.2% (77,000 jobs) to 23.7% (129,000 jobs) of total employment in that same period. According to the World Travel and Tourism Council, growth in the travel and tourism economy is expected to be 5.9% in 2008 and to average 7.7% per annum over the coming 10 years, which ranks the Namibia tourism industry 8th out of 176 countries in growth forecast.2The MCA Namibia Programme seeks to address the following three obstacles to more rapid growth in the tourism industry and to greater participation by Namibia’s rural communities in the tourism sector:

1) Etosha National Park (ENP), the jewel that attracts tourists to Namibia, is not fully developed in terms of its tourism potential and faces management challenges relative to competing regional parks;

2) Namibia is relatively unknown as a tourism destination with little diversification of source markets for long-haul international tourists; and

3) Low levels of private investment on communal land due to high transaction costs and difficulty in securing long-term access to land limit benefit streams to Namibia’s formerly disadvantaged communities.

By functionally establishing the Namibia Tourism Board (NTB) in 2002 and recently undertaking reform efforts regarding National Park management and the award of concessions3, the GRN has recognized the strategic importance and the potential contribution of tourism to economic growth and poverty alleviation. The MCA Namibia Programme aims to build on these measures and increase the overall number of tourist arrivals to Namibia and direct tourism income to formerly disadvantaged communities in communal conservancies. The first objective is to make ENP a more attractive destination through institutional and infrastructure improvements and by strengthening marketing efforts by NTB. The second objective of directing benefit streams resulting from tourism to the formerly disadvantaged will be achieved through support to develop the capacity of communal conservancies to attract investment and to participate in ecotourism income-generating enterprises.

According to the 2007 Management Plan for ENP, the park’s mission statement is ‘the effective management and sustainable use of biodiversity to develop and enhance socio-economic benefits through the development of appropriate opportunities, especially tourism, for present and future generations, locally, nationally and internationally."’ Through the implementation of this plan, ENP will serve as a model for increased participation by the adjacent conservancies in the tourism activities supported by this and other national parks. The Tourism Project aims to facilitate access to the Park for the

conservancies around it through the granting of exclusive access concessions, to be awarded in accordance with the 2007 Concession Policy. Improving access to public resources for the economic empowerment of formerly disadvantaged Namibians takes centre stage in the Concession Policy. Concessions also generate additional revenue for the State to finance the upkeep of the protected areas. Namibia has over 15 years of experience promoting community-based tourism and the MCA Namibia Programme will capitalize on the best practices developed to date.

II. Project Description and Cost

The MCA Namibia Programme will support three priority activities in the tourism sector:

1) Improve management and infrastructure of ENP;

2) Enhance the marketing of Namibia tourism; and

3) Develop the capacity of communal conservancies to attract investments in ecotourism and capture a greater share of the revenue generated by tourism in Namibia.

Together, these activities will generate income and create employment opportunities for some of the less fortunate communities in Namibia, while conserving the natural resources that serve as the foundation of the tourism industry. The table below presents the Tourism Project Multi-Year Financial Plan, with activity descriptions presented below.

 

Tourism Budget (in US$ millions)

CIF

Y1

Y2

Y3

Y4

Y5

Total

(1) ENP Activity

1.00

2.05

5.57

15.97

8.76

7.12

40.51

(2) Marketing Activity

0.50

1.40

2.37

2.42

1.58

-

8.26

(3) Conservancy Support Activity

0.98

1.27

5.10

4.98

4.45

1.42

18.19

Total

2.48

4.71

13.04

23.36

14.79

8.58

66.96


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