Travel and Tourism Growth in Northern Africa Sharing the same Mediterranean coast, ethnic cultural and linguistic identity, the North African region - comprising of Morocco, Egypt, Libya, Tunisia, Algeria, and Sudan, - have been experiencing novel growth dynamics in the field of travel and tourism. Half of the North African region, namely Egypt, Libya, and Tunisia, have been greatly affected by political instability and their repercussions. Along with this, the oil price crisis in the Middle East led to a slow down in a number of projects intended to spur tourism in the countries. However, despite these complications, North Africa is forecasted to be a major touristic destination in comparison to other regions in the Middle East and Africa. The above-mentioned countries are seeking new real-estate investments and infrastructure developments in the hospitality and tourism sector reaching an average of USD 2.3bn in 2016 compared to the world average USD 4.4bn. In Egypt, travel and tourism investments have reached USD 4.6bn accounting for 11.9% of total investment. It is forecasted to grow on average of 6.4% reaching USD 9.3bn in the next ten years. Morocco has reported a value of USD 4.1bn for its travel and tourism investments followed by Tunisia USD 0.8bn and Sudan USD 0.4bn, according to the World Travel & Tourism Council 2017 Report. In addition to this, the North African region saw an increase of 5.4% in hotel occupancy. Morocco promises the most prospective future in the North African region with the increased tourist demand which is positively correlated to growth in the real estate and hospitality sectors. It is the top performing country in the North African region and third in Africa. Based on the Travel and Tourism Competitiveness Index in 2017, Morocco is ranking 65, followed by Egypt at 74, Tunisia at 87, and Algeria at 118 out of 136. They aim to be one of the top 20 world tourist destinations by 2020. In 2016, Morocco had contributed to 8.1% of travel and tourism’s direct to GDP followed by Tunisia 6.6%, Egypt 3.2%, and Sudan 2.5%. Cumulatively, the North Africa region is contributing about 4.4% of Travel & Tourism’s Direct to GDP. However, Libya doesn’t depend on Tourism & Travel as a revenue generation tool for the country. As employment is considered to be another indicator that assesses the level of growth in tourism, Egypt, Morocco, and Tunisia have seen a growth in the job market in the fields of Travel and Tourism. For the year 2016, Morocco was the leader in terms of job creation reporting 819K, followed by Egypt 773K, Tunisia 206.4 K, and Sudan 192.8K. Recently, the United Nations World Tourism Organization (UNWTO) 2017 report stated that Egypt is the world’s second-fastest growing touristic destination. Around 8 million international tourists have entered Egypt in between January - July 2017 accounting for a 24.8% growth in the number of international arrivals. Egypt further aims to attract 12.49 million international tourists by 2027, considering the fact that it reached 14.7m in 2010. Nonetheless, Tunisia is also having a comeback with an increase of 33.5% for the first half of the year. Both countries have managed to get out of the Terror threat list made by the foreign office after their recent turbulence. When taking a look at the number of arrivals driven by international tourism, Libya is the least touristic destination within the region along with Sudan and Algeria. Morocco, Egypt, and Tunisia have been evolving over the years but the numbers are within the range of 5.3M-10.M. Samia El Khodary, Analyst at Infomineo Sources: https://qz.com/1054498/nigerias-arik-troubles-sees-travel-numbers-drop-as-tunisia-egypt-and-morocco-recover-as-travel-destinations/ https://www.verdict.co.uk/emerging-tourist-destinations/ https://dailynewsegypt.com/2017/08/08/egypt-worlds-second-fastest-growing-tourist-destination-2017unwto/ https://themaghrebtimes.com/morocco-1st-tourism-destination-in-north-africa-wef-2017-report/ http://pitt.libguides.com/c.php?g=12378&p=65815 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Africa_Tourism_Monitor_2016.pdf http://unctad.org/en/PublicationsLibrary/aldcafrica2017_en.pdf https://www.thebig5constructnorthafrica.com/en/industry-media/blog/the-impact-of-the-tourism-industry-on-north-africas-infrastructure-development/ http://www3.weforum.org/docs/WEF_TTCR_2017_web_0401.pdf http://cf.cdn.unwto.org/sites/all/files/pdf/tourism_africa_tool_development1.compressed_0_0.pdf
The African Route A Vision Economics have forever known an alchemy-like effect to an equation comprised of resources, gates to the world and logistical facilities. Application of such combination can be seen as early as the Silk Road or as recently as the Trans-European railway network. The impact of such complementary factors is usually the intensification of trade and capital gain. So, imagine a pathway which connects the Nile Valley’s wealth to the diamond rich African Heart; a track bringing together the Gold of the South with the Ancient Ports to the North or the Ivory gates of the West and the Indian Ocean Coast. Such an ambitious network connecting the world’s demand and shortage to the African supply and surplus, and vice-versa, could create a climacteric junction in the history of global economy. This vision, as poetic as it can be, could become a reality and it has been in fact sought. The Cape to Cairo Railway During the colonial era, the British Empire had managed to stretch its arms across the African continent. Seeking opportunity in such circumstances, Cecil Rhodes, a British businessman and politician had a vision of a railway that would connect edges of the Garden of Eden we call Africa. The project was named Rhodes Colossus, in reference to Greek titan statue (Phan, 2012). The main aim of the project was to facilitate the movement of the precious minerals, as well as provide a land supply line. However, due to delays caused by colonial skirmish, economic constraints and the death of Cecil, the railway construction failed, leaving some functional yet not fully linked railways (Talbot, 2015). Surely, times have changed since the conception of this African scale project. So, in order for such a scale project to take place, a feasibility test needs to be undertaken, bearing in mind the diverse range of contemporary factors, opportunities and challenges. Feasibility In terms of economies, it’s clearly visible that over the past 15 years, most African countries had experienced economic growth rates of around 5% per year. However, African states are not amongst the ranks of nations orienting their growth on competitive manufactured products but rather natural resources and domestic market growths (Zamfir, 2016). The question of “why have a trans-regional railway in Africa?” is answered by the African economic atmosphere and the opportunities an infrastructure project connecting land locked minerals to ports would bring the critical mining industry. Given the world’s constant need for African minerals and the ever-expanding global manufacturing and logistics, rapidly moving more amounts of material out of their source and nearer to demand could further improve the competitiveness of exporters. This makes the infrastructure improvement sought by both the private and public sector, as evidence suggests that African regions with longer transport corridors attract higher density of trade (African Economic Outlook, 2017). And on the contrary to how this seems to miss diversification elements developing nations might aspire, better infrastructure could facilitate future industrial projects. Regional scale railways would allow for new manufacturing possibilities owing to the speed with which minerals would travel from source to processing or manufacturing plants (Ott, 2014). A demonstration of the railway speed can be found in the new Chinese funded Standard Gauge train in Kenya. Nonetheless, there is a difference in reasons behind constructing a trans-regional railway in the East or the West and another in connecting East to West. This difference can be divided into purpose and impact. For example, the purpose behind constructing a regional railway connecting Eastern Africa would mainly be connecting the East into a fast shipping system and networking the landlocked areas with the ports that would act as trade hubs. Its impact would be further development of the Eastern African trade with other regions at a geographical marine proximity - Asia in this case. The impact of such a railway would be a surge in African-Asian trade if conducted in the East and African-Western trade if conducted with proximity to the Western shores. On the other hand, a railway connecting East to West would also be aimed at African-African trade as it is inefficient to assume that such a railway would be mainly aimed for international trade. For example, if a container ship is to move from Shanghai to Lagos, it would take 21 days on the shortest maritime route with the average cargo ship speed of 20 knots. While if such a trip was made through unloading in Mombasa and then moving by a railway to Lagos at a speed of 100 km/h, it would take no less than 15 days - assuming the most direct way between both cities can be made into a railway and excluding factors such as transit delays that could be in weeks. This can add expenses and risks to the shipping process which makes it less reasonable to use the railway for intercontinental trade, but rather African-African trade. A railway connecting Egyptian ports to South Africa also faces critical issues when approaching it for intercontinental trade. While it might in fact save time and present an eco-friendly solution to move European cargo by land across the continents poles, it remains less safe than a maritime route given the various organizational, security and legal challenges that might arise. Nonetheless, the impact of such a railway could initially be an improvement to the lagging African-African trade thwarted by the need of an improved infrastructure (Joel Ng And Densua Mumford, 2017). Governments have in fact realized the significance of such a route, which translated into the African Tripartite Free Trade Area agreement denoted to as the “Cape-to-Cairo” free trade zone. The agreement signed in Egypt encompasses nations equating about 60% of African GDP, 1 trillion dollars’ worth markets and 600 million citizens. However, the trade still faces many challenges, one of which is infrastructure (BBC, 2015). After realizing the compatibility of trans-scale railway projects with African internal and external needs, the question of funding is brought to one’s mind. Such scale projects are costly and their payoff is more visible in the long term, making it more feasible to conduct by multiple economies. This brings about the question of “How could such project be funded?” Given the positive outlook on China in Africa and the growing Chinese investment in Africa, it would be reasonable to seek Chinese funding and loans in order to move on with projects that are perhaps the next step in regionalizing African economies. Another factor pointing towards China is the Chinese institutionalization of infrastructure funds through the Asian Infrastructure Investment Bank (AIIB) which might have led the African Bank Chief to express his interest in future cooperation with the AIIB (Reuters, 2015). Moreover, since 2000, China has in fact supported inter-city railway projects in Africa with $9.9 bn worth of aids (Morlin-Yron, 2017). In Mauritania, for example, China provided the state with 70% funds, equating to US$686 mn, in 2008 to create a 430-km long railway connecting coastal Nouakchott to landlocked phosphate sources (Xinhua Agnecy, 2008). Another recent example is the $4 billion Nairobi to Mombasa railway, 90% of which is funded by the Chinese Export Import Bank (David Pilling & Emily Feng, 2017). The project comes in light of Chinese investment in a $13 billion East African railway network being built by the state-owned China Road and Bridge Corporation. The “Lamu Port Southern Sudan-Ethiopia Transport Corridor” railways are designed to connect Mobasa, Nairobi, Juba, Kampala, Kigali, Bujumbura and other East African cities. This is expected to have an impact on the African-Asian exports, imports, investment, trade and even tourism. Chinese investment is also a funding possibility, where China Railway Materials Commercial Corporation has invested £167 mn in African Minerals Limited in return for stocks. The funds were in turn used to support infrastructure projects needed by the industry (African Minerals, 2010). However, with different regional considerations of proximities and trade interests put in place, Chinese funding my not necessarily always be the answer. Nonetheless, it remains one of the most visible answers to the question. All in all, the trend suggests that regional sized projects are very feasible as some are in fact underway. The current outlook seems to favor trans-regional railways as they present themselves being the more profitable and favorable option, while trans-continental projects are less likely to take place due to the lack of cooperation among different African regions and weakness of African production of goods. Nonetheless, the impact of the ongoing projects will be more visible in the future, and the intensification of trade that happens due to it will certainly set new business grounds worthy of research. Ahmed Soliman, Business Translator at Infomineo. Infomineo is a business research provider, with a focus on Africa and the Middle East. By performing primary and secondary research, Infomineo provides its clients, which include the majority of the leading global management consulting firms and several Fortune Global 500 companies, with high quality data that leads to decision making success. For more information please contact info@infomineo.com or visit www.infomineo.com. References African Economic Outlook. (2017). Trade policies and regional integration in Africa. http://www.africaneconomicoutlook.org/en/outlook: AfDB. African Minerals. (2010). Definitive agreements signed with China Railway Materials Commercial Corporation to develop Tonkolili Iron Ore Project. http://www.african-minerals.com/media/press-releases/definitive-agreements-signed-china-railway-materials-commercial-corporation. BBC. (2015). Africa creates TFTA - Cape to Cairo free-trade zone. http://www.bbc.com/news/world-africa-33076917. David Pilling & Emily Feng. (2017). Kenya’s $4bn railway gains traction from Chinese policy ambitions. https://www.ft.com/content/d0fd50ee-1549-11e7-80f4-13e067d5072c: Financial Times. Economic Community Of West Africa States. (n.d.). Transport. http://ecoslate.github.io/transport/index.htm. Joel Ng And Densua Mumford. (2017). The TFTA and intra-regional trade in Africa. https://www.howwemadeitinafrica.com/tfta-intra-regional-trade-africa/: How we made it in Africa. Morlin-Yron, S. (2017). All aboard! The Chinese-funded railways linking East Africa. http://edition.cnn.com/2016/11/21/africa/chinese-funded-railways-in-africa/: CNN. Ott, S. (2014). End of the line for 'Lunatic Express?' Kenya begins multi-billion dollar railway. http://edition.cnn.com/2014/01/06/business/end-of-the-line-kenya-railway/: CNN. Phan, S. (2012 ). Cecil Rhodes: The Man Who Expanded an Empire. Teacher Created Materials. Reuters. (2015). Africa bank chief wants to work with China-led AIIB. http://uk.reuters.com/article/uk-asia-aiib-africa-idUKKBN0N520T20150414. Talbot, F. A. (2015 ). The Railway Conquest of the World. Amberley Publishing Limited. Xinhua Agnecy. (2008). China Exim Bank to finance railway project in Mauritania. http://www.chinadaily.com.cn/bizchina/2008-01/23/content_6417458.htm. Zamfir, I. (2016). Africa's Economic Growth: Taking off or slowing down? European Parliamentary Research Service.
Background and perspectives Morocco offers multiple types of destinations for tourists. First, it has almost 3000km of coastline which makes it a top destination for seaside activities; second, it is rich of history and offers cultural activities with entire cities being classified as world heritage sites by UNESCO; also, mountains and desert offer unique experience for people who come for discovery and adventure. Economically, tourism represents a key segment in the Moroccan economy; in fact, it represents the third leading sector after agriculture and industry. In 2013, the sector contributed by USD17.2bn to the Moroccan economy representing 18.7% of the total GDP and investments reached USD3.2bn representing 11.2% of total investments. The World Travel & Tourism Council (WTTC) expects the sector to grow by 5.6% per year from 2014 to 2024 and investments to increase by 5.4% per year (on average) for the coming 10 years1. In a country where total unemployment is reaching the two digits, tourism represents a good opportunity for young unemployed (20%). In 2013, the sector directly supported 814,000 direct and 1,798,000 indirect jobs and total employment is expected to grow by 2.4% (on average) per year during 2014-2024 period1. Stable country Despite the terrorist attack that hit Casablanca in 2003, and Jamaa El Fnaa’ -the most touristic space- in 2011, Morocco has always been considered stable compared to countries of the region. Recently, tourism has enjoyed particular growth following the uprisings that took place in competing economies such as Egypt and Tunisia. Thus, after years of flat growth, Morocco reported a 7.2 percent increase in arrivals since 2012. The enforcement and creation of a special security apparatus have played a significant role in preventing other terrorist threats. In fact, the World Bank ranks Morocco first in North Africa and above average in the MENA region on ‘political stability and absence of terrorism’ indicator. Infrastructure and foreign investments Along with stability, Morocco offers modern infrastructure. For years, the country has been investing significantly on structural projects. Today, the country is linked by 1800km of highway, has 15 international airports, offers advanced telecom services (129% mobile penetration) and hosts one of the biggest ports on the Mediterranean and Africa region; such big projects have attracted foreign investors into Morocco. In 2014, tourism represented 14.7% of total Foreign Direct Investments (FDIs) counting for MAD4.8bn in which more than 50% of investments originated from France, UAE, Saudi Arabia, USA and Kuwait. For instance, the French company “Accor Group” injected more than MAD3.5 billion investment on hotels from 2002 to 2012 and has expected to invest another MAD1.2 billion during 2012-2015 period. On regulation side, the country offers incentives for investors like total tax exemptions for the first five years of touristic projects. Open Sky Morocco has seen significant growth in its air traffic links since it signed the open skies agreement with the EU in 2006. The deal has resulted in a substantial influx of low cost flights to the country, which subsequently boosted the tourism sector. In 2013, Europe’s largest low cost company Ryanair added new aircraft in Moroccan airports and plans to grow its operations to 60 routes and eight airports delivering up to 2.5 million passengers a year to the country. Jetairfly, Easyjet among other low cost companies have also expanded their Moroccan network since 20137. Strategic plans The Moroccan government has implemented two strategic plans “Vision 2010 and 2020” to boost the sector in the last decade. Vision 2020 plans to double the size of the sector to reach 20 million visitors and make from Morocco one of the top destinations worldwide. The focus is to increase the total capacity of the sector by 200,000 beds, target tourists from new and emerging markets, and create 470,000 new jobs in the sector by 20209. Moreover, the Ministry of Tourism launched in 2001 another ambitious plan called Plan Azur. This later aimed to create six seaside resorts with a total capacity of 100,000 beds; yet, after thirteen years of Plan Azur, only three seaside resorts were inaugurated with a capacity of 5,000 beds. Sensitive sector Despite all the efforts made by the Moroccan government through big investments and promotion of the sector worldwide to make from tourism a main source of revenue, the delay of several projects could be explained by the terrorist threats in the region and the financial crisis in the Eurozone. Therefore, the future of tourism remains very sensitive to external factors especially that the recent events in neighboring countries keeps tourists skeptical from visiting the North Africa region. Kheireddine Boulghoudan, Analyst at Infomineo https://www.wttc.org/-/media/files/reports/economic%20impact%20research/country%20reports/morocco2014.pdf https://www.quandl.com/collections/morocco/morocco-unemployment https://www.foxnews.com/world/2014/03/18/morocco-tourism-industry-sees-2013-boost-with-10-million-visitors/ https://info.worldbank.org/governance/wgi/index.aspx#reports https://www.invest.gov.ma/?Id=6&lang=fr https://www.lexpress.fr/actualite/monde/afrique/maroc-l-empire-accor_1106838.html https://centreforaviation.com/analysis/ryanair-opens-two-new-bases-in-morocco-6-months-after-charges-dispute-and-ram-looks-for-a-partner-95684 https://www.tourisme.gov.ma/fr/vision-2020/vision-2020-en-bref https://www.medias24.com/ECONOMIE/ECONOMIE/15141-Le-Plan-Azur-dans-l-attente-d-une-reconfiguration.html
One of the main drivers of the aviation industry is the economic growth and development. There is a proved correlation between the amount of air travel and Gross Domestic Product (GDP) around the world that can be observed in the two graphs bellow (MIT). Now taking the example of China as a starting point to highlight this correlation and according to a research done by the University of Nottingham in 2007 in China, for “every 10% increase in a Chinese regional GDP, the volume of air passengers will increase by 8.4% and that of air cargo by 14.8%, holding other conditions unchanged” (Nottingham Study). (more…)
In my previous article published in March, I gave you a general overview of luxury real estate market in Western Africa with a focus on Nigeria and Ghana. Today let us talk about some major projects initiated in Senegal and Côte d’Ivoire. Senegal: A new wind is blowing for the luxurious real estate market With the era of new infrastructures initiated during the last 10 years, the Senegalese luxurious real estate market is also rising. The capital, Dakar gathers the most important luxurious real estate projects. The town is well-known as one of the West African cities where the real estate is very expensive. Over the recent years, huge projects in terms of real estate are flourishing. The most famous among them, Waterfront is developed by Teyliom Group. (more…)
