Oil Price plunge: Time to Prioritise Tourism Above Oil
OIL revenue is declining globally. According to OPEC daily basket price, the crude oil price has slipped down to$44 a barrel yesterday. This figure representing about 61 percent decline compared to $115 for which the price was sold in June 2014. With this slump, GDP of many oil-producing countries will shrink. Already countries such as Russia, Iran, Venezuela and Nigeria appear to be the worst hit.
Russia, for instance, relies on revenues from energy exports, which constitute half of the government’s budget and a quarter of its GDP. Earning from oil contributes 80 percent to energy revenue of Russia, making price slump a serious threat to the Russian government’s financial stability. The situation is similar for Nigeria where oil and natural gas account for 80 percent of total government revenue.
Due to the falling world oil prices, the Federal Government has cut down its oil price forecast on which its 2015 budget is benchmarked to $65 a barrel from $78. In spite of further reduction from the price proposed in the budget, the Co-coordinating Minister of Finance, Dr Ngozi Iweala has assured Nigerians that the government does not intend to revise the price further down. “Price intelligence indicates that prices might average between $65 and $70pb in 2015,” she said.
Notwithstanding, austerity measures have been proposed even as the government plans to focus on the non-oil sectors of the economy. But before the government becomes inundated with several proposals on how to grow economy, it may be worthwhile to give tourism sector a serious consideration. The huge income earning from tourism globally should offer enough motivation.
According United Nations World Tourism Organisation (UNWTO), tourism is one of the fastest growing economic sectors in the world. In 2013, international tourism generated US$ 1.4 trillion in export earnings. The total tourism receipts in Africa for the year are estimated at US$ 34 billion. A World Bank report shows that Africa’s tourism industry could create 3.8 million jobs.
The report, Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihood , says tourism accounted directly or indirectly for one in every 20 jobs in sub-sahara Africa in 201., and is one of the few industries on the continent in which women are well represented as employees and managers.
Countries such as South Africa, Kenya, Gambia and Tanzania are making remarkable earnings from tourism.
In 2013, South Africa earned about N130bn (R8, 4 billion) from the domestic tourism sector, which reflects a 25percent growth from 2012. Tourism contributed about 9 percent to South Africa GDP in 2012. Tourism revenue in Kenya remains the country’s second-biggest foreign exchange earner, according to Kenya Tourism Board.
In Gambia, tourism has now surpassed the export of groundnuts as the country’s biggest foreign exchange earner, and now accounts for some 16 percent of the gross domestic product (GDP), according to government figures.
Even oil producing countries such as Saudi Arabia, Kuwait, the United Arab Emirate (UAE), their earnings from tourism surpass that of oil in some cases, said the National President of the Hospitality and Tourism Management Association of Nigeria (HATMAN)
Nigeria though does not have accurate record of tourism contribution to GDP, as the tourism minister, Edem Duke once hinted in during a TV interview, it appears the sector does not generate anything close to the tourism earning in South Africa and Dubai, even with almost 500 tourist attractions in the country.
According to Bismarch Rewane, publisher of a tourism publication, Travelnomicks, Nigeria still remains one of the countries yet to begin nurturing its historical and anthropological assets to position them to become attractive. It means therefore the country stands a good chance to improve its revenue generation if the government shows greater commitment to the development tourism sector.
Director General, Nigeria Tourism Deveropment Corporation (NTDC), Dr. Sally Mbanefo illustrated the potential of tourism this way at a stakeholder meeting held recently: “If we assume that a low estimate of 20 million out of 160 million Nigerians travel locally for business, leisure , culture, religion, or sports annually and they spend only 10 percent of Nigeria’s per capita income of $2000 annually, we will have a $ 4 billion domestic tourism market.”
Now N650bn (approximated to$4bn) is still a far cry from the gross oil revenue receipts, which was N1.796 trillion in 2014. But if this added to the potential earnings accruable from international tourism, the figure amounts to huge fortunes. And considering the bourgeoning population of Nigeria, it is expected that Nigeria should at least be performing much better than Kenya, Uganda, Tanzania, Egypt and Morocco. These are other African countries reaping the gains of tourism industry.
This calculation may have spurred the Fascinating Nigeria campaign by tourism ministry to articulate a strategic brand positioning for Nigeria in the international arena. But the initiative is yet to cause positive growth in the tourism sector.
To be continued.