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This is a technical document of The World Bank Group and does not represent an official position of the Bank Group or of its Executive Board. The document provides an economic and statistical analysis of the Ugandan tourism sector, based upon a request from the Uganda Ministry of Tourism, Wildlife, and Antiquities (MTWA). The Task Team Leaders are Martin Fodor and Hannah Messerli. Contents Chapter 1 Chapter 3 Introduction— Statistical Analysis Uganda Tourism of the Tourism in Context Expenditure page 1 and Motivation Survey page 20 Chapter 2 Chapter 4 Economic Main Findings Analysis and Policy of Ugandan Conclusions Tourism page 46 Exports in 2012 page 4 Photo: Kirk E. Hamilton ii Photo: Kirk E. Hamilton Acknowledgments This report is the result of a collaboration between the Uganda Ministry of Tourism, Wildlife, and Antiquities (MTWA), the Uganda Bureau of Statistics (UBOS), and the World Bank. The report was written by Kirk Hamilton (World Bank) and Martin Schmidt (consultant, World Bank), with contributions from Alex Asiimwe (MTWA) and Sam Kaisiromwe (UBOS). It analyzes responses to the Tourism Expenditure and Motivation Survey 2012 (TEMS). The survey, designed by MTWA and carried out by UBOS, was conducted to extend the findings of the Uganda Tourism Sector Situational Assessment: Tourism Reawakening (World Bank, June 2012) and to provide a quantitative basis for economic modeling of the impact of tourist expenditures on Uganda’s economy. The report has benefited from the assistance and advice of many colleagues, including Amb. Patrick Mugoya (Permanent Secretary, MTWA), Dr. Chris Mukiza (Director of Macroeconomic Statistics, UBOS), Samuel Echoku (UBOS), Yunus Koire (UBOS), Laban Mbulamuko (Ministry of Finance, Planning and Economic Development), Charles Byaruhanga (Ministry of Finance, Planning and Economic Development), Bradley Weiss (consultant, World Bank), and Stuart Solomon (consultant, World Bank). Particular thanks go to the peer reviewers at the World Bank, Irina Klytchnikova and Craig Meisner. Finally, the generous financial support of the U.K. Department for International Development (DFID) is gratefully acknowledged. Monetary equivalents 2012 average Monetary unit = Uganda Shilling (UGX) 1.00 dollar US = 2686 UGX iii iv Executive Summary The Ministry of Tourism, Wildlife, and Antiquities (MTWA) Key Findings from the instituted a sample survey of tourists exiting Uganda in Economic Analysis 2012—the Tourism Expenditure and Motivation Survey (TEMS). This survey collected data on tourist expenditures, The economic analysis of tourism based on the TEMS duration of stay, tourist activities, sites visited, levels of sat- survey focuses on the impact of tourist expenditures on isfaction, and suggestions for improvements in the sector. the economy. The scope is therefore limited to the impact The purpose of this report is to present the results of the of tourism exports, but these exports are important con- economic analysis of tourist expenditures, and the associ- tributors to the development of the Ugandan economy, ated statistical analysis, to inform government decisions on increasing foreign exchange earnings, and improving the how to increase the contribution that tourism makes to the balance of payments. The analysis uses the 2002 Input- growth of the Ugandan economy. The economic analysis Output table for Uganda to calculate the total impacts of highlights a number of priorities for government reforms tourist expenditures on the generation of GDP. aimed at increasing the impact of tourism on the economy. A key insight from the economic analysis is that $1 of The context for this report is the growing recognition, expenditure by a foreign tourist generates, on average, both outside and within Uganda, of the country’s tour- $2.5 of GDP—the total impact includes the indirect ism potential, including endorsements of the quality of the value added along the supply chain plus the induced nature tourist experience in Uganda by high-profile publi- effects of households spending the wages generated. cations such as Lonely Planet and This figure compares with $2.3 National Geographic Traveler in of GDP generated by $1 of tra- 2012. Tourism has grown five- A key insight from the ditional exports from Uganda. fold over the last decade with economic analysis is that The linkages of the tourism sec- the improvement in security in tor to the Ugandan economy are $1 of expenditure by a foreign the northern part of the country. quite strong. But many challenges remain, in- tourist generates, on cluding the need for government average, $2.5 of GDP The data show that leisure and leadership in developing the sec- cultural tourists spend 30 per- tor, for skills upgrading in the sector, for investment in the cent to 100 percent more than other types of tourists per parks and other protected areas, and for a much stronger visit to Uganda. This substantial difference in spending marketing effort for Ugandan tourism. makes these tourists an attractive target in government efforts to increase the economic contribution of the tour- Compared to neighboring countries, tourism is still a de- ism sector and reinforces the importance of strengthen- veloping sector in Uganda. According to figures from the ing the marketing of Ugandan tourism. World Travel and Tourism Council, the direct impact of tourism expenditures in Uganda amounted to 3.7 percent The TEMS survey estimates that roughly 500,000 foreign of gross domestic product (GDP) in 2012, which can be tourists spent at least one night in Uganda in 2012, and compared to 4.8 percent of GDP in Tanzania, 5.0 percent nearly 75,000 of these were leisure or cultural tourists. in Kenya, and 5.7 percent in Madagascar. The total economic impact of the expenditures made Executive Summary v by these half-million foreign tourists while in Uganda versus $176), and engage more frequently in adventure is large—expenditures totaled UGX (Uganda shillings) activities (33 percent versus 21 percent). African tourists 1.1 trillion and generated UGX 2.7 trillion of GDP. This predominantly come to Uganda for business or meeting expenditure amounted to 38 percent of exports and gen- reasons; most leisure tourists come from Europe (46 erated 5.6 percent of 2012 GDP, including revenues to percent), but a large number of them come from Africa government from indirect taxes of 0.5 percent of GDP. (20 percent) and North America (22 percent). Policy simulations show that attracting 100,000 addition- Most tourists obtain information regarding their trip to al leisure tourists to visit Uganda would add 11 percent Uganda mainly through personal networks; however, to exports and 1.6 percent to GDP. Similarly, if each tour- leisure tourists rely as much on travel agents, guide- ist visiting Uganda stayed one additional night, imports books, and the World Wide Web as they rely on per- would rise by 7 percent and GDP by 1 percent. The latter sonal networks. Only 5 percent of all tourists use the finding is important because the TEMS survey shows Uganda Tourism Board’s website as their main source that over 70 percent of tourists visiting on business, for of information. meetings, or to visit friends and relatives did not visit any natural sites outside of Kampala. Business and meeting tourists rarely stay longer than a week (only 25 percent), but a sizeable proportion of them stay for extended periods of time (up to 6 months). The Statistical Analysis About 75 percent of leisure and cultural tourists do not In 2013 more than 1 million nonresidents visited Uganda, stay longer than 2 weeks (their average length of stay and it is estimated that about half of them of them stay at is 7 days), and 90 percent of them do not stay longer least one night. Most tourists come from Uganda’s neigh- than 1 month. boring countries, Europe, and North America; Kenya (16 percent of all visitors), Rwanda (10 percent), the United In Uganda, virtually all travel (about 98 percent) is by road Kingdom (11 percent), and the United States (15 percent) (bus, car, or motorcycle). Leisure tourists account for are tourists’ most common countries of residence. the vast majority of visits to national parks and stays in nature tourism accommodation (lodges, cottages, camp- On their trip to Uganda, over 40 percent of tourists visit sites, etc.); nevertheless, about 20 percent of business, other African countries, most importantly Kenya (visited meeting, and family tourists undertake at least one trip by 20 percent of all Ugandan tourists), Tanzania (12 per- to Uganda’s nature tourism sites. cent), and Rwanda (10%). About 90 percent of tourists travel in groups of four or fewer. Some 32 percent of The popularity of nature tourism sites generally does not tourists come for business reasons, 11 percent for meet- depend on tourist type; however, destinations closer to ings or conferences, 17 percent for leisure, 20 percent for Kampala are relatively more attractive to business and family, 5 percent for spiritual/religious purposes, and 2 meeting tourists; there is large variation in the popular- percent for cultural tourism; the remaining tourists come ity of nature tourism sites and, apart from Murchison to Uganda for research, nongovernmental organization Falls National Park, the most popular destinations are (NGO) work, or education. in the vicinity of Kampala and the southwest of Uganda. If tourists visit a specific nature tourism site, they stay Among leisure tourists, wildlife safari (39 percent), gorilla on average between 1 and 2 days. viewing (26 percent), adventure tourism (25 percent), and backpacker travel (17 percent) are the most popu- About 6 percent of all tourists and 20 percent of all lei- lar trip activities; it is possible to distinguish a group sure tourists are package tourists; 80 percent of package of young backpacker travelers from other leisure tour- tourists stay less than 15 days in Uganda, their average ists; for example, backpackers stay longer (20 days on total package expenditure is about $1,415 per person (ex- average versus 14 days for the average leisure tourist), cluding airfare), and their average daily package expen- spend less ($1,160 in total versus $1,438; $105 per day diture is about $166. Discretionary spending of package vi Economic and Statistical Analysis of Tourism in Uganda tourists increases their total and daily expenditure by about 20 percent. Low-season (November to June) and high-season (July to October) tourists differ: the main difference is that low-season tourists are less often leisure tourists than high-season tourists (16 percent versus 20 percent). Low-season leisure tourists spend, on average, nearly 50 percent less than high-season leisure tourists (in total $981 versus $1,718, and by day $139 versus $210). And the percentage of package tourists among leisure tourists is much smaller in low season than in high season (14 percent versus 29 percent). Tourists’ overall satisfaction with their trip to Uganda is high. However, local transport in Uganda and insufficient visitor information are the most frequently cited sources Photo: Kirk E. Hamilton of dissatisfaction and suggested areas for improvement. Moreover, about 10 percent of respondents to questions on areas for improvement in Uganda tourism cited the quality of customer service as an issue. Policy Implications Going forward, there are two basic ways to make tour- ism’s contribution to the Ugandan economy grow: at- tracting more tourists and persuading tourists to spend ■■ Removing bottlenecks: Investments in infrastruc- more money while they are visiting Uganda. These goals ture, particularly roads, can decrease the cost and lead to four broad areas where government policy and increase the convenience for tourists to visit the government investment can make a difference: natural areas of Uganda. Reforms of the concession policy for tourism operators, in particular to increase ■■ Marketing Uganda: Stronger branding, use of new transparency and security of tenure, will boost private media, strengthening links with travel agencies in investment in the sector. And filling the skills gap in source markets, and attracting high-profile foreign the sector will increase visitor satisfaction and the ef- operators can all contribute to attracting more tour- fectiveness of word-of-mouth marketing when these ists to visit Uganda. visitors return home. ■■ Increasing supply: Private sector investments in the ■■ Investing in natural assets: The national parks and tourism sector will be needed to meet growing de- other protected areas in Uganda are in the process mand, which will require improvements in the invest- of recovery from the neglect of earlier decades. ment climate in Uganda. In addition, policies and Investments in park infrastructure, machinery and regulations specific to the tourism sector need to equipment, the protection and management of wild- be reviewed and reformed. A growing private sector life, and staff skills are needed to increase the value can in turn contribute to marketing Uganda tourism. of the key natural assets in the sector. Executive Summary vii viii Economic and Statistical Analysis of Tourism in Uganda Chapter 1 Introduction— Given Uganda’s diverse landscape, flora and fauna, and its national parks, the country enjoys large potential for Uganda Tourism the development of nature tourism. It has wildlife safaris, in Context gorilla tracking, adventure tourism, bird watching, and cultural tourism. It has mountains, the source of the Nile and the Great Lakes. Recent accolades from trusted infor- mation sources underscore this potential: Lonely Planet named Uganda its top destination for 2011/2012, and National Geographic Traveler selected the Virungas as one of the “20 Must-See Places for 2012.� Figures from the UN World Tourism Organization show that Uganda tour- ism has grown strongly since the turn of the century, with numbers of visitors growing fivefold from 2001 to 2010. At the same time, Uganda is still an emergent destination compared to some of its neighbors, as table 1.1 shows. Introduction— Uganda Tourism in Context 1 The Government of Uganda recognizes tourism’s potential. The 2010/11–2014/15 National Development Plan priori- tizes tourism as one of the country’s growth sectors. The recent establishment of a full-fledged Ministry of Tourism, Wildlife and Antiquities (MTWA) is concrete evidence of government interest in the development of the sector. Uganda attracts more than 1 million nonresident visitors each year, and about half of them stay overnight. Fostering the growth of the tourism sector requires meet- ing some key challenges, as the Uganda Tourism Sector Situational Assessment has highlighted.1 These challenges include the need for upgrading skills in the sector, in- creasing investment in the parks and the management of the wildlife resource, diversifying the tourism sector in Uganda, and investing in transport infrastructure. Uganda attracts more than 1 million nonresident visi- tors each year, and about half of them stay overnight. Tourism, by contributing directly or indirectly a substan- tial share to GDP and being one of the largest sources of foreign exchange, already plays a major role in the Ugandan economy. The number of visitors has steadily increased, and in the last 5 years alone, it has nearly doubled. At the same time, relatively little is known about the composition, preferences, and expenditures able 1.1. Tourist Arrivals and Direct Contribution to GDP International tourist Direct contribution arrivals, 2010 to GDP, 2012 Kenya 1,470,000 5.0% Rwanda 619,000 3.1% Tanzania 754,000 4.8% Uganda 946,000 3.7% Sources: Arrivals—UN World Tourism Organization, Tourism Highlights, 2012 Edition; GDP—World Travel and Tourism Council, Travel and Tourism Economic Impact 2013. 2 Economic and Statistical Analysis of Tourism in Uganda of Uganda’s tourists, particularly about leisure tourists, who tend to spend more and stay longer than other types Endnotes of tourists. The Expenditure and Motivation Survey 2012 (TEMS 2012) was designed and carried out to overcome 1. Uganda Tourism Sector Situational Assessment: this lack of information. Tourism Reawakening. The World Bank, June 2012. The economic analysis of tourism in Uganda is the central focus of this report and is featured in chapter 2. It is fol- lowed by the detailed statistical analysis in chapter 3 and by summary policy conclusions in chapter 4. Photo: Kirk E. Hamilton Introduction— Uganda Tourism in Context 3 Chapter 2 Economic Analysis The data from immigration forms at border crossings show that Uganda has experienced strong growth of Ugandan Tourism in numbers of visitors in recent years. But a fuller Exports in 2012 understanding of the contribution of tourism to the Ugandan economy has been hampered by a lack of information about the average tourist’s prime reason for visiting, length of stay, number of sites visited and activities undertaken, level of satisfaction with the visit, and total expenditures made by the tourist while in Uganda. Without this information, it has been difficult for the government of Uganda to prioritize investments and policy reforms in the tourism sector. This chapter analyzes the economic contribution of tourism exports to the Ugandan economy to guide government strategy for the sector. 4 Economic and Statistical Analysis of Tourism in Uganda Economic Analysis of Ugandan Tourism Exports in 2012 5 The data on tourist expenditures from the Tourism (COMESA) countries. The analysis of the TEMS data as- Expenditure and Motivation Survey 2012 (TEMS) pro- sumes that 80 percent of the COMESA visitors departing vides the basis for valuing tourism exports, but it is im- at the major land border crossings were on day trips for portant to note that the overall size of the tourism sector small-scale trading activities in Uganda. Total expendi- is larger than what is captured by the TEMS data. The dif- tures by these day-tripping COMESA visitors are likely to ference includes investments made by tourism operators be minimal. Moreover, attempts to survey them would be as well as investments and operating expenditures made unsatisfactory because of high refusal rates and heavily by government in the administration of the sector and the biased responses—it is reasonable to assume that these operations of public sector tourism assets, such as mu- visitors would wish to avoid any scrutiny by officials of seums and national parks. The United Nations Tourism the government of Uganda. Satellite Accounts (if imple- mented) as well as the publica- The scope of the TEMS and the tions of the World Travel and Tourism exports are economic analysis is therefore Tourism Council can provide a particularly important from conservative, but the data are snapshot of the larger sector. of high quality and are sharply the perspective of economic focused on the highest-spend- policy. They provide scarce Tourism exports are particu- ing foreign tourists, including larly important from the per- foreign exchange earnings the most policy-sensitive tour- spective of economic policy. and contribute positively to ists. The TEMS classifies tour- They provide scarce foreign the balance of payments. ists according to their primary exchange earnings and contrib- reason for visiting Uganda: the ute positively to the balance of payments. They are also categories are (1) leisure,1 (2) business, (3) spiritual, strongly influenced by government policy. Policy reforms (4) meetings and conferences, (5) cultural, (6) visiting can strengthen the promotion of the sector in foreign family and friends, and (7) other. Of these tourists, the markets, and reforms on the supply side can foster the most policy-sensitive are the leisure and cultural tourists growth of the tourism sector and its contribution to na- and, to a lesser extent, tourists attending meetings and tional income. conferences. However, even for the other categories of tourists, increases in the quantity and quality of tourism services would increase the likelihood of their spending Scope of the Analysis an extra a day or more on leisure or cultural activities By design, the TEMS measures data only on nonresidents while in Uganda. who spend at least one night in Uganda. This criterion ensures that data on the tourists who are making the largest expenditures in Uganda are captured—an over- night stay entails expenditures on local transport, accom- Table 2.1: Departures of Foreign Tourists by modation, and food as well as additional expenditures Region of Residence, 2012 on activities and/or shopping. It also ensures that the Africa, COMESA 687,169 most policy-sensitive tourists are surveyed—the tourists Africa, other 108,728 whose numbers and total expenditures can grow as a result of both promotion of Uganda as a tourist destina- Europe, western 92,020 tion and growth in the quantity and quality of the supply Europe, other 7,734 of tourism services in Uganda. North America 60,376 Others and not stated 113,019 As seen in table 2.1, immigration data show that 1,069,000 nonresidents departed Uganda in 2012. Of Total 1,069,046 these nonresidents, nearly 700,000 were residents Source: Uganda Bureau of Statistics (UBOS). of Common Market of Eastern and Southern Africa 6 Economic and Statistical Analysis of Tourism in Uganda Photo: Kirk E. Hamilton Measuring the Economic in turn generate value added and purchase intermediate Impact of Tourists inputs. This full chain of production is modeled using the IO table. The primary data used in measuring the contribution of tourists to the Ugandan economy are the individual tour- Finally, by closing the IO model to household expendi- ist expenditure data, derived from TEMS respondents ture, the induced effects of the purchase of a restaurant who were non–package tourists and therefore were able meal can also be estimated. In this case, the wages, to itemize their expenditures. These expenditures by in- salaries, mixed income, and profits generated in each dividual respondents were then scaled up, according to sector accrue to households who save some portion of the population weights derived from the immigration the income and spend the rest on goods and services, forms, to the total population of visitors who spent at generating yet another stream of intermediate inputs least one night in Uganda in 2012.2 and factor incomes along the chain of production. This additional stream adds up to the total induced effect of Because these expenditures were made by nonresidents consuming a restaurant meal.5 of Uganda, they are formally part of Uganda’s exports rather than domestic final demand. The effect of these Of course, some inputs to production are imported exports on the wider economy is modeled using the 2002 rather than domestically produced, so this effect is also input-output (IO) table for Uganda.3 captured in the IO model through the use of import share coefficients for intermediate inputs as well as expendi- Expenditures by tourists constitute the direct effect that tures by households and government. tourists have on the Ugandan economy, and the direct impact of these expenditures is the amount of value add- Summary Figures on High- ed (wages and salaries, mixed income of unincorporated Spending Foreign Tourists businesses, profits, and indirect taxes) in the sectors that supply the goods and services purchased. Using the IO The TEMS provides a rich source of information on for- model, however, the indirect effects of these expendi- eign tourists departing Uganda. To emphasize a point tures can also be captured—for example, a purchase of made earlier, by focusing on tourists who spent at least a restaurant meal requires the purchase of foodstuffs, one night in Uganda, the survey captures information beverages, and energy to provide the meal, and these about the major contributors to tourist exports.6 Tables purchases create a cascade of value added in the sectors 2.2 and 2.3 and figures 2.1 and 2.2 highlight the summary that produce food, beverages, and energy.4 These sectors data for these tourists. Economic Analysis of Ugandan Tourism Exports in 2012 7 Table 2.2: Key Data on Tourists Who Spent at Least One Night in Uganda, 2012 Number of Average nights Average expenditure Average expenditure per tourists per visit per visit, $ visit, UGX thousand Leisure 68,100 6.8 1,211 3,253 Business 164,500 4.4 871 2,339 Spiritual 30,300 7.4 808 2,170 Meetings 60,700 5.2 929 2,495 Cultural 6,600 6.1 1,179 3,167 Family 121,000 5.7 539 1,448 Other 49,300 6.3 560 1,504 All tourists 500,600 5.5 812 2,181 Note: Expenditures are mean values for tourists staying 15 nights or less and spending $50 per night or more. Source: TEMS. Table 2.3: Distribution of Total Tourist Expenditures per Visit by Tourist Type, $ Leisure Business Spiritual Meetings Cultural Family Other All tourists Retail trade 124 140 92 149 196 101 85 121 Hotels, bars, 591 505 333 580 595 260 277 435 and restaurants Passenger road 133 80 85 81 106 63 67 82 transport Air transport 24 14 8 5 46 2 3 10 Cultural and 295 48 51 50 140 63 60 88 recreational services Other services 44 84 240 65 95 52 67 76 Total 1,211 871 808 929 1,179 539 560 812 Source: TEMS. As seen in figure 2.1, the largest numbers of tourists were policy sensitive—they come to Uganda primarily for on business or visiting family and friends, with leisure business or meetings rather than to enjoy the tourist (nature) tourists coming in third. Cultural tourists were attractions in the country. The lowest-spending tourists the smallest category of visitors. per visit are those visiting friends and family as well as those in the Other category. However, as figure 2.2 emphasizes, the biggest spenders per visit were leisure and cultural tourists. These tourists Table 2.3 presents the distribution of tourist expenditures, are an attractive target for government policy because which has implications for the impacts that tourism ex- they spend 30 to 100 percent more per visit than do tour- ports have on the broader economy. As expected, ex- ist in the other categories. As table 2.2 shows, business penditures are weighted toward the hotel and restaurant tourists and tourists attending meetings spent the least sector, cultural and recreational services (particularly for number of nights per visit, and they are not particularly leisure and cultural tourists), transport, and retail trade. 8 Economic and Statistical Analysis of Tourism in Uganda Percentage Percentage Figure 2.1: Total Tourists by Type, 2012 Figure 2.2: Total Expenditures per Visit by Tourist Type, UGX Thousand, 2012 Cultural Family Spiritual Other Other Spiritual Meetings Business Leisure Meetings Family Cultural Business Leisure 0 50000 100000 150000 200000 0 500 1000 1500 2000 2500 3000 3500 Source: TEMS. Source: TEMS. Percentage Percentage of exports the sectoral impactSuggested of UGX 1 million of leisure Comparing Leisure Tourists Suggested Tourism Improvements Tourism Improvements tourist expenditures. to Average Exports from Uganda Table 2.4 shows the much heavier weighting of hotels Having identified leisure tourists in particular as a tar- and restaurants, land transport, and recreation and en- get for policy reforms based on their total spending, the tertainment in leisure tourist exports compared with other relevant analytical question is to compare leisure the weighting toward primary products (edible oils, tourist exports with the average spectrum of goods and livestock, coffee and tea, beans, and fish) for the av- services that Uganda exports. Table 2.4 shows the sec- erage export. This different weighting affects overall toral impact of exports of UGX 1 million of an average economic impacts (direct, indirect, and induced), as bundle of exports (using the 2002 IO data) compared to shown in table 2.5. Table 2.4: Gross Output by Sector Associated with UGX 1 Million of Exports—Top 10 Sectors7 Average export (2002) UGX Average leisure tourist UGX Hotels and restaurants 221,790 Hotels and restaurants 466,850 Edible oils and fats 164,781 Retail services 114,107 Retail services 159,116 Land passenger transport 106,723 Financial services 94,215 Other activities 91,801 Livestock farming 86,401 Financial services 89,163 Coffee, tea processing 81,475 Social services 63,421 Beans growing 72,802 Recreation and entertainment 58,996 Real estate activities 69,842 Other business services 48,935 Fishing, fish farms 60,827 Real estate activities 46,146 Manufacture of metal products 57,836 Public service activities 40,406 Source: TEMS, author calculations. Economic Analysis of Ugandan Tourism Exports in 2012 9 Table 2.5: Economic Impact of UGX 1 Million of Expenditure: Average Export Compared with Leisure Tourist Export Exports (2002) Leisure tourists Final demand 1,000,000 1,000,000 Value added 2,323,784 2,449,298 Wages and salaries 633,733 679,895 Skilled and highly skilled 385,679 490,425 Semiskilled and unskilled 248,053 189,469 Mixed income (NIUB) 1,067,062 1,071,569 Surplus 372,425 459,753 Indirect taxes 250,565 238,081 Memo: Imports 543,220 528,956 Memo: Multiplier 2.3 2.4 Percentages of value added Wages and salaries 27.3% 27.8% Skilled and highly skilled 16.6% 20.0% Semiskilled and unskilled 10.7% 7.7% Indirect taxes 10.8% 9.7% Memo: Imports 23.4% 21.6% NIUB: net income of unincorporated business. Source: TEMS, author calculations. Owing to the effects of household expenditures induced is good news to the extent that these tend to be good by this hypothetical export of UGX 1 million, the total jobs, but it is less positive in the context of the large pool value added (i.e., GDP) generated exceeds the total final of unskilled labor in Uganda. demand. This effect is more pronounced for the leisure tourist export compared to the average export—a mul- The Overall Economic Impact tiplier of 2.4 compared with 2.3. Although the difference of Tourists in 2012 is small, this result shows that leisure tourist exports are closely linked to the rest of the Ugandan economy. In con- Table 2.2 highlighted the average expenditures per visit trast, indirect tax revenues (value added tax [VAT], excise by the different types of tourists. The starting point in tax, and tariffs on imports) are somewhat higher for aver- assessing the overall economic impact of tourists visiting age exports compared to leisure tourists. Uganda is therefore to analyze the economic impacts per tourist visit. This information is presented in table 2.6. The other point to note in table 2.5 is the distribution of wages and salaries between skilled and unskilled labor- The first figure to note in this table is the size of the mul- ers. Leisure tourist exports employ a much larger propor- tiplier for each tourist type. This metric is the amount tion of skilled labor compared to average exports—this of value added (GDP) generated per dollar of final 10 Economic and Statistical Analysis of Tourism in Uganda Table 2.6: Economic Impact of One Average Tourist Visit by Tourist Type, UGX Thousand Leisure Business Spiritual Meetings Cultural Family Other All tourists Final demand 3,253 2,339 2,170 2,495 3,167 1,448 1,504 2,181 Value added 7,966 5,893 5,364 6,334 7,827 3,602 3,744 5,447 Wages and salaries 2,211 1,506 1,438 1,603 2,079 949 985 1,428 Skilled and highly skilled 1,595 1,067 992 1,138 1,485 673 696 1,015 Semiskilled and unskilled 616 439 446 464 594 277 289 414 Mixed income (NIUB) 3,485 2,653 2,424 2,860 3,482 1,608 1,671 2,435 Surplus 1,495 1,190 994 1,293 1,520 705 735 1,072 Indirect taxes 774 544 509 578 746 340 353 511 Memo: Imports 1,720 1,216 1,153 1,291 1,665 758 788 1,140 Memo: Multiplier 2.4 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Percentages of value added Wages and salaries 27.8% 25.6% 26.8% 25.3% 26.6% 26.4% 26.3% 26.2% Skilled and highly skilled 20.0% 18.1% 18.5% 18.0% 19.0% 18.7% 18.6% 18.6% Semiskilled and unskilled 7.7% 7.4% 8.3% 7.3% 7.6% 7.7% 7.7% 7.6% Indirect taxes 9.7% 9.2% 9.5% 9.1% 9.5% 9.5% 9.4% 9.4% Memo: Imports 21.6% 20.6% 21.5% 20.4% 21.3% 21.0% 21.0% 20.9% NIUB: net income of unincorporated business. Source: TEMS, author calculations. Photo: Kirk E. Hamilton Economic Analysis of Ugandan Tourism Exports in 2012 11 expenditure based on direct plus indirect plus induced impacts of expenditures on the economy. For the average of all tourists and the non–leisure tourists, this figure is 2.5, which is higher than the average export multiplier of 2.3 and the leisure tourist multiplier of 2.4. Again, tourist expenditures are strongly linked to the Ugandan economy. For leisure tourists, two other figures stand out. First, the share of wages and salaries in the value added gener- ated is higher (27.8 percent) than the other categories of tourists. The second figure to note is the share of indirect taxes in value added, which again is higher (9.7 percent) than for other categories of tourists. Leisure tourists are therefore strongly linked to formal sector employment and the generation of government revenues. As seen in table 2.7, the overall economic impacts of all tourists, broken down by tourist type, is substantial. First, expenditures by tourists who spent at least one night in Uganda are a large proportion of exports: 38 percent for all tourists and roughly 8.5 percent for lei- sure and cultural tourists. These expenditures in turn are substantial proportions of GDP: 2.2 percent for all tourists and 0.5 percent for leisure and cultural tourists. These expenditures generate value added amounting to 5.6 percent of GDP for all tourists and 1.2 percent for leisure and cultural tourists. The half-million tourists who spent at least one night in Uganda in 2012 therefore made a major contribution to Uganda’s exports and to GDP. Simulating the Impact of Policies That Increase Tourism Fundamentally, there are two ways to increase tourism’s contribution to the Ugandan economy. The first is to attract more tourists to visit. The second is to persuade tourists to spend more while they are visiting Uganda. These goals require different policy interventions. Photo: Kirk E. Hamilton The TEMS shows that roughly 70,000 visitors to Uganda in 2012 were leisure tourists—these are the tourists who spent the most per visit. One obvious policy outcome to examine is the impact of attracting another 100,000 leisure tourists to visit Uganda. Table 2.8 breaks down the figures. 12 Economic and Statistical Analysis of Tourism in Uganda Table 2.7: Total Economic Impact of All Tourists by Tourist Type, UGX Million Leisure Business Spiritual Meetings Cultural Family Other All tourists Total tourists 68,100 164,500 30,300 60,700 6,600 121,000 49,300 500,600 Final demand 221,496 384,821 65,755 151,453 20,899 175,166 74,150 1,091,746 Value added 542,510 969,368 162,542 384,459 51,657 435,860 184,562 2,726,707 Wages and salaries 150,594 247,676 43,567 97,273 13,723 114,888 48,579 715,056 Skilled and highly skilled 108,627 175,472 30,064 69,103 9,800 81,384 34,315 507,878 Semi-skilled and unskilled 41,967 72,204 13,502 28,170 3,923 33,503 14,264 207,178 Mixed income (NIUB) 237,348 436,499 73,440 173,604 22,979 194,515 82,360 1,219,096 Surplus 101,833 195,723 30,117 78,486 10,031 85,260 36,229 536,819 Indirect taxes 52,734 89,470 15,418 35,095 4,924 41,198 17,394 255,737 Memo: Imports 117,162 199,989 34,935 78,333 10,986 91,721 38,837 570,878 Memo: 2012 GDP 49,080,988 Memo: 2012 exports 2,861,546 Final demand, 7.74% 13.45% 2.30% 5.29% 0.73% 6.12% 2.59% 38.15% percentage of exports Percentages of GDP Final demand, 0.45% 0.78% 0.13% 0.31% 0.04% 0.36% 0.15% 2.22% percentage of GDP Value added, percentage 1.11% 1.98% 0.33% 0.78% 0.11% 0.89% 0.38% 5.56% of GDP Wages and salaries, 0.31% 0.50% 0.09% 0.20% 0.03% 0.23% 0.10% 1.46% percentage of GDP Skilled and highly skilled 0.22% 0.36% 0.06% 0.14% 0.02% 0.17% 0.07% 1.03% Semi-skilled and unskilled 0.09% 0.15% 0.03% 0.06% 0.01% 0.07% 0.03% 0.42% Indirect taxes, 0.11% 0.18% 0.03% 0.07% 0.01% 0.08% 0.04% 0.52% percentage of GDP Memo: Imports, 0.24% 0.41% 0.07% 0.16% 0.02% 0.19% 0.08% 1.16% percentage of GDP NIUB: net income of unincorporated business. Source: TEMS, author calculations Economic Analysis of Ugandan Tourism Exports in 2012 13 Table 2.8: Economic Impact of an Additional 100,000 Leisure Tourists, UGX Million Number of leisure tourists 100,000 Final demand 325,251 Value added 796,637 Wages and salaries 221,137 Skilled and highly skilled 159,511 Semiskilled and unskilled 61,625 Mixed income (NIUB) 348,529 Surplus 149,535 Indirect taxes 77,436 happen is if tourists stay longer. As figure 2.3 shows, 75 Memo: Imports 172,044 percent of tourists who visit Uganda for business, meet- ings and conferences, and to visit friends and relatives Memo: 2012 GDP 49,080,988 do not visit any of the natural areas outside of Kampala. Memo: 2012 exports 2,861,546 The impacts of policy reforms that make it easier and Final demand, percentage of exports 11.37% more affordable for tourists to extend their stay in Uganda are shown in table 2.9. The simulation answers Percentages of 2012 GDP the question, What would be the economic impact if every tourist who spent at least one night in Uganda in 2012 de- Final demand, percentage of GDP 0.66% cided to extend their visit by one additional night? Value added, percentage of GDP 1.62% As the table shows, the effect of extending all tourist stays Wages and salaries, percentage of GDP 0.45% by one night is substantial, adding 1 percent to GDP and Skilled and highly skilled 0.32% 7 percent to total exports (1.25 percent of this attributable Percentage Semi-skilled and unskilled 0.13% to leisure and cultural tourists). Wages and salaries in the formal sector would rise by UGX 130 billion, and indirect Indirect taxes, percentage of GDP 0.16% tax revenues would rise by nearly UGX 47 billion. Memo: Imports, percentage of GDP 0.35% Figure 2.3: Percentage of Tourists Who Do Not NIUB: net income of unincorporated business. Visit Natural Sites Outside Kampala Source: TEMS, author calculations Leisure Cultural The effects of this near tripling of leisure tourists would be substantial. Tourist expenditures would increase total Other exports by over 11.4 percent, and GDP would grow by 1.6 Spiritual percent. Wages and salaries for skilled and highly skilled Family workers would rise by UGX 160 billion. Government would Meetings raise an additional UGX 77 billion in indirect taxes. Business 0 10 20 30 40 50 60 70 80 Turning to the question of persuading tourists to spend more while in Uganda, the most profitable way for this to Source: TEMS. Percentage Suggested Tourism Improvements 14 Economic and Statistical Analysis of Tourism in Uganda Table 2.9: Economic Impact If Each Tourist Spent One Extra Night in Uganda, by Tourist Type, UGX Million Leisure Business Spiritual Meetings Cultural Family Other All tourists Average expenditure/day 0.48 0.53 0.29 0.48 0.52 0.25 0.24 0.40 Value of 1 extra day/tourist 32,573 87,459 8,886 29,126 3,426 30,731 11,770 198,499 Final demand 32,573 87,459 8,886 29,126 3,426 30,731 11,770 198,499 Value added 79,781 220,311 21,965 73,934 8,468 76,467 29,296 495,765 Wages and salaries 22,146 56,290 5,887 18,706 2,250 20,156 7,711 130,010 Skilled and highly skilled 15,975 39,880 4,063 13,289 1,607 14,278 5,447 92,341 Semiskilled and unskilled 6,172 16,410 1,825 5,417 643 5,878 2,264 37,669 Mixed income (NIUB) 34,904 99,204 9,924 33,385 3,767 34,125 13,073 221,654 Surplus 14,975 44,482 4,070 15,093 1,644 14,958 5,751 97,603 Indirect taxes 7,755 20,334 2,084 6,749 807 7,228 2,761 46,498 Memo: Imports 17,230 45,452 4,721 15,064 1,801 16,091 6,165 103,796 Memo: 2012 GDP 49,080,988 Memo: 2012 exports 2,861,546 Final demand, 1.14% 3.06% 0.31% 1.02% 0.12% 1.07% 0.41% 6.94% percentage of exports Percentages of 2012 GDP Final demand, 0.07% 0.18% 0.02% 0.06% 0.01% 0.06% 0.02% 0.40% percentage of GDP Value added, 0.16% 0.45% 0.04% 0.15% 0.02% 0.16% 0.06% 1.01% percentage of GDP Wages and salaries, 0.05% 0.11% 0.01% 0.04% 0.00% 0.04% 0.02% 0.26% percentage of GDP Skilled and highly skilled 0.03% 0.08% 0.01% 0.03% 0.00% 0.03% 0.01% 0.19% Semiskilled and unskilled 0.01% 0.03% 0.00% 0.01% 0.00% 0.01% 0.00% 0.08% Indirect taxes, 0.02% 0.04% 0.00% 0.01% 0.00% 0.01% 0.01% 0.09% percentage of GDP Memo: Imports, 0.04% 0.09% 0.01% 0.03% 0.00% 0.03% 0.01% 0.21% percentage of GDP NIUB: net income of unincorporated business. Source: TEMS, author calculation. Economic Analysis of Ugandan Tourism Exports in 2012 15 Poverty Impacts Because this analysis is based on tourist expenditures, it does not permit any direct analysis of the impacts of tourism, particularly of leisure and cultural tourism, on poverty in Uganda. A full analysis of tourism and poverty would require administration of a household survey mea- suring the sources of income and levels of well-being of households living adjacent to national parks compared with similar households who are not living in the vicinity of national parks. The Uganda Tourism Sector Situational Assessment notes that human-wildlife conflict is an issue in areas around the national parks, which has a negative impact on household income and well-being. It also notes that, through a government program, 20 percent of park fees is shared with households in adjacent areas. This share of fees should be positive for household welfare, but the report suggests that fee income is not well targeted to maximize benefits. The literature on household benefits from reforms in natural resource management 8 suggests that the insti- tutional setting in which reforms take place is critical for increasing household welfare. Recent work in Zambia, for example,9 shows that the community share of the fees from trophy hunting in the Game Management Areas around natural parks has been largely captured by local elites, so the impacts on poor households are limited. Whether households living adjacent to national parks benefit from the parks is important for reducing poaching and encroachment, which erode the quality of Uganda’s natural assets and undermine the basis for nature tour- ism. Government may wish to consider ways to reduce human-wildlife conflict, to compensate households for losses from these conflicts, and to reform the institu- tional structures that govern how communities benefit from park fees. Policy Priorities That Follow from the Economic Analysis Policies implemented by the Uganda Ministry of Tourism, Wildlife and Antiquities (MTWA) or by other ministries of the Ugandan government can contribute in four ar- eas to growth in the number of tourists visiting Uganda 16 Economic and Statistical Analysis of Tourism in Uganda and their contribution to GDP. In one way or another, they would feature their Ugandan sites in their own mar- these areas all relate to the two basic ways to grow tour- keting material. Attracting high-profile investors means ism’s contribution to the Ugandan economy: by attract- meeting their standards for secure investments, and the ing more tourists and persuading them to spend more net benefits to the economy may be partially diluted be- money while staying in Uganda. cause after-tax profits are repatriated. But investments by high-profile operators are important in signaling to The following subsections deal with (1) marketing other investors and to potential tourists that Uganda is Uganda, (2) increasing the supply of tourism services, a high-quality tourist destination. (3) removing bottlenecks, and (4) investing in natural assets. In many instances, the questions of increasing de- Branding is also an issue in marketing Uganda. Other mand and increasing supply overlap and are interlinked. destinations have successfully created a brand and an im- age that appeals to potential tourists: think of “Incredible India� or “Malaysia Truly Asia.� Marketing Uganda The TEMS asked departing tourists to write their sug- gestions for ways to improve the tourist experience in Increasing Supply Uganda. Among the top five suggestions, 15 percent of Assuming a successful marketing strategy that attracts tourists mentioned Web publicity and visitor information more tourists to visit Uganda, a concomitant need exists as weak points. for expansion of the supply of tourism services. To the extent that tour operators are also active in marketing Although the Uganda Tourism Board (UTB) can use tra- Uganda, an expansion of tourism services can create a ditional channels, such as posters, brochures, and trade virtuous circle of increasing supply and demand. shows, to market the country, and can build relationships with travel agencies in source markets, better use of social Although MTWA has some important levers for increas- media can augment these channels. Expert advice on how ing investments in the sector (see the next section, to build a “new media� marketing strategy could be valu- “Removing Bottlenecks�), many of the reforms needed able. At the same time, private sector actors in the tourism hinge on the overall investment climate in Uganda. Doing sector have a strong interest in promoting Ugandan tour- Business 201310 shows that Uganda is in many ways typical ism, which implies that increasing the supply of tourism of other African economies. There is a particular weak- services is also a key part of marketing Uganda. ness with regard to starting a business (which requires 15 procedures, 33 days, and fees on the order of 77 percent Particular marketing benefits may be associated with of per capita income)11 and with protecting investors and high-profile foreign nature tourist operators, because trading across borders. Economic Analysis of Ugandan Tourism Exports in 2012 17 It is important to note that investment incentives for the Investing in Natural Assets tourism sector are typically not the best instrument for expanding supply, whether through tax breaks or explicit or As just noted, Uganda has unique natural assets that can implicit subsidies. One reason for this is that Uganda has yield economic benefits. And tourists responding to the unique assets—African landscapes and African wildlife— TEMS rate the main national parks fairly highly, with 65 which can attract investors without subsidies or tax expen- percent giving a score of excellent or very good. ditures. The other reason is that investment incentives are very poor substitutes for reforming the overall business As an emergent nature tourist destination, however, it is climate: the incentives are costly and of limited scope, clear that Uganda has investment needs in its national whereas improving the business climate yields permanent parks and game reserves. These include investments in increases in growth rates and the scope is economy-wide. park infrastructure, machinery and equipment needed for operations, better protection of wildlife assets, and Government also needs to review whether tourism sec- increasing staff skills. tor–specific policies and regulations are inhibiting invest- ment in the sector—and to institute reforms as needed. Conclusions from the Economic Analysis Removing Bottlenecks A few clear analytical messages result from the economic Another of the top five suggestions from TEMS for im- analysis of tourist expenditures: proving the tourist experience is the question of trans- port, both quantity and quality, as was noted by 35 ■■ Leisure and cultural tourists are an attractive target percent of respondents to the question on the survey. for government policy—they spend 30 to 100 percent Investments in roads and consequent private sector in- more per visit than other tourists. vestments in supply can increase the affordability and convenience of getting to and traveling between nature ■■ Spending by leisure tourists stimulates more GDP tourism sites. This is essential for the growth of the over- per dollar spent than the average traditional export all sector, and can facilitate tourists ‘adding on’ an ad- in Uganda. dition day to their trips. However, roads are expensive, and benefits beyond the tourism sector (e.g., access to ■■ The overall impact of tourist expenditures in 2012 markets for farmers) likely will need to be identified to was large, contributing to 38 percent of exports and justify public investments. 5.6 percent of GDP, including indirect taxes amount- ing to 0.5 percent of GDP. Another bottleneck is the current policy on concessions in national parks. Reforms will be needed to increase ■■ Attracting 100,000 additional leisure tourists to transparency for potential investors, creating a level play- visit Uganda would add 11 percent to exports and ing field and providing sufficient security of tenure to at- 1.6 percent to GDP. tract private investors. The other side of this coin, howev- er, is ensuring high performance by concession holders. ■■ Persuading each tourist to spend one more night in Uganda would add 7 percent to exports and 1.0 Finally, capacity building on the skills required for customer percent to GDP. service in the tourism sector is another important aspect of removing bottlenecks. Ten percent of TEMS respon- Based on this analysis, there is an argument for govern- dents identified the quality of customer service in Uganda ment action to help the sector grow by using more ef- as an issue that detracts from the tourist experience—and fective methods of marketing of Uganda, increasing the this factor reduces word-of-mouth marketing by tourists supply of tourist services, removing bottlenecks that limit who have visited Uganda. More generally, staff skills are the sector, and investing in natural assets. an important ingredient in making the sector grow. 18 Economic and Statistical Analysis of Tourism in Uganda Endnotes 1. Note that, as defined in the TEMS questionnaire, leisure tourists are primarily nature tourists. 2. See Analysis of Uganda’s Tourism Expenditure and Motivation Survey (TEMS) 2012 (World Bank 2013) for details. 3. This is the most recent IO table at the time of writing. A more recent table would be preferable for the analysis, but patterns of goods and services and primary factors used in individual IO sectors tend to be fairly stable over time. The IO model analysis is therefore valid but could be improved with more recent IO data when they become available. 4. his is similar to, but more comprehensive than, the familiar value chain analysis used in many studies of the tourism sector. 5. It should be noted that the IO model assumes that households always consume the same array of goods and services in fixed proportion, with no substitution between different goods and services and no changes in the propensity to consume out of income. This is a strong assumption and requires some caution when interpreting the results of the model. 6. Unless otherwise specified, references to “tourists� in this text is limited to foreign tourists who spent at least one night in Uganda. 7. Table 2.4 reports the direct and indirect impacts on sectoral gross output, excluding the induced impacts of households spending wages and other income. 8. See World Bank, 2008, Poverty and Environment: Understanding linkages at the household level. The World Bank: Washington DC. 9. Bandyopadhyay, S., and G. Tembo, 2009. Household welfare and natural resource management around national parks in Zambia. World Bank, Policy Research Working Paper WPS4932. 10. Doing Business 2013. The World Bank: Washington DC. 11. As one Ugandan interlocutor for this report noted, “You really have to love Uganda to start a business here.� Economic Analysis of Ugandan Tourism Exports in 2012 19 Chapter 3 Statistical Analysis of the The Expenditure and Motivation Survey 2012 (TEMS) was conducted in two waves under the Tourism Expenditure and supervision of the Uganda Bureau of Statistics Motivation Survey (UBOS) and the Ministry of Tourism, Wildlife, and Antiquities (MTWA). The first wave covered low-season tourists, while the second wave focused on high-season tourists. Interviewers recorded responses regarding socioeconomic characteristics, purpose of visit, information sources, accommodation choices, means of transport, duration of stay, visits to tourist sites, and expenditures. This chapter highlights the main findings from the questionnaire. 20 Economic and Statistical Analysis of Tourism in Uganda Statistical Analysis of the Tourism Expenditure and Motivation Survey 21 Methodology and Survey Design Tourists were interviewed shortly before leaving Uganda through the Entebbe International Airport or one of the Interviewers asked non-Ugandan, nonresident visitors three land border crossings. The four different interview who stayed at least one night in Uganda a series of basic locations and the two seasonal waves naturally stratify questions concerning their provenance, socioeconomic the target population into eight location- and season- characteristics, purpose of visit, duration of stay, and specific strata (two seasonal strata for each of the four sources of information about Uganda. Interviewers fur- geographical strata). To obtain a representative picture of ther asked for tourists’ accommodation and transporta- the eight strata, the interviewers tried to avoid selection tion choices, level and distribution of expenditures, visits bias by sampling randomly within each stratum. to specific tourism sites, and perceptions of quality. The 3,908 questionnaires underwent consistency checks, The tourist survey comprised 3,908 interviews and the typo checks, and checks for violations of random sam- corresponding questionnaires. The sample size was large pling. Whenever typos or inconsistent observations enough to yield sufficiently precise estimates at the group were detected, an effort was made to correct them. If a and most subgroup levels. The plausible correction was impos- survey’s target population, re- sible, inconsistent observations ferred to as tourists, consisted Interviewers asked were discarded and typos were of all non-Ugandan, nonresident visitors who stayed at left unchanged. Observations visitors of Uganda who spent at least one night in Uganda were also discarded whenever least one night in the country, they seemed to have been the questions concerning their and departed through one of result of nonrandom sampling Uganda’s four largest migration provenance, socioeconomic (e.g., when the same interviewer posts. The interviews were con- characteristics, purpose and on the same day conducted in- ducted at three land border cross- duration of stay, and sources terviews with two tourists who ings (Katuna, Busia, Malaba) and of information about Uganda. reported rare but identical so- Entebbe International Airport. cioeconomic characteristics The airport and the land border crossings account for more and apparently traveled together). At the end of the than 80 percent of all departures from Uganda.1 cleaning procedure, 3,583 interviews remained: 1,572 low- season interviews and 2,011 high-season interviews. By Interviewers collected tourists’ responses in two waves: location, 2,488, interviews were conducted in Entebbe, a low-season wave with 1,680 respondents in April and 456 in Katuna, 339 in Busia, and 300 in Malaba. It is as- May and a high-season wave with 2,228 respondents in sumed that the removal of inconsistent or nonrandom October. For the purpose of the survey, low season is the observations does not impact the random distribution period that runs from November to June, and high season on the strata level. is the period that runs from July to October. Each wave is assumed to be representative of the specific season. Once data cleaning was completed, the sample’s actual strata sizes became known. The combination of random Interviewers approached tourists at each of the four inter- sampling on the strata level and knowledge of the tar- view locations, and tourists were generally quite willing get population’s strata sizes then allowed weighting of to participate in the survey. The overall response rate was sample observations so that target population averages 72 percent, and the interview location-specific response and distributions could be estimated. To accomplish this rates were respectively 73 percent (Entebbe), 77 percent task, each stratum was assigned a weight corresponding (Katuna), 62 percent (Busia), and 65 percent (Malaba). to the proportion between stratum population size and Interviewers conducted 2,651 interviews in Entebbe, 515 stratum sample size. in Katuna, 362 in Busia, and 316 in Malaba. Interviewers excluded tourists who were Ugandan residents or who Unfortunately, the exact sizes of the target population had not stayed overnight in Uganda. strata are not exactly known. The official statistics2 record 22 Economic and Statistical Analysis of Tourism in Uganda nonresident departures of tourists independent of their Based on 2012 migration statistics,3 it seems that length of stay. Consequently, tourists who do not stay European and North American tourists have been overs- overnight in Uganda are included in the official numbers. ampled (e.g., in May in Entebbe, they made up 34.8 per- However, nonresident departures at land border cross- cent and 25.3 percent of visitors but account for only 21.5 ings include a large number of visitors who do not stay percent and 15.6 percent in the corresponding migration overnight and are not part of the target population. To departure statistics), whereas African tourists have been impute the missing numbers, it is assumed that about 80 undersampled (e.g., in May in Entebbe, they made up percent of the Common Market of Eastern and Southern 33.6 percent of visitors and account for 39.5 percent in the Africa (COMESA) citizens’ land border crossings derive migration statistics). However, the migration statistics from visitors who do not stay overnight. The whole pro- classify a large number of departing visitors as “Others cess of calculating sample weights is outlined in annex & Not Stated� (23.4 percent of all Entebbe departures in 3A, while annex 3B outlines the estimation of the total May), while Asian, Latin American, and Australian tour- tourist population. ists account for only 6.3 percent of the sample. If the majority of visitors in this category did not state their Random sampling on the stratum level is crucial to nationality, it is plausible that a large number of African, obtain valid estimates of the target population charac- European, and North American visitors remained unclas- teristics. Successful random sampling on the stratum sified. In principle, this effect can account for all dis- level implies that sample characteristics at the stratum crepancies between sample and immigration statistics. level are close to strata characteristics at the target population level. Consequently, neither the Entebbe subsample nor the even harder to interpret subsamples from the land border Nonresident departures from Entebbe are unlikely to con- crossings allows a definite assessment of the quality of tain many visitors who do not stay overnight. Therefore, random sampling. Therefore, and because attempts to direct comparison of Entebbe’s monthly nonresident de- correct for the potential discrepancies through reweight- parture numbers with selected sample characteristics of ing did not substantially change the statistical findings, the low- or high-season waves should give an indication it is subsequently assumed—at least, as a first approxi- of the quality of random sampling. Unfortunately, the mation—that the random sampling assumption holds interpretation of the numbers is not clear. for strata levels. Statistical Analysis of the Tourism Expenditure and Motivation Survey 23 Origin of Tourists Tourists come to Uganda from all over the world. Figure Figure 3.1: Tourists’ Countries of Residence 3.1 shows how tourists’ countries of residence are distrib- (Percentage of Total Tourist Population) uted around the globe. The four countries visitors claim as their residence most frequently are Kenya, the United States, the United Kingdom, and Rwanda. Combined they account for more than 50 percent of all visitors. These four countries represent the three main continents where visitors to Uganda come from. Figure 3.2 shows that most tourists have their country of residence in Africa (45 percent), Europe (29 percent), or North America (18 percent). Tourists also reside in Asia (4 percent), Australia (3 percent), and South America (<1 percent). A large number of Asian tourists (40 percent) arrive from only three countries: India, Pakistan, and Bangladesh. A closer look at the distribution of tourists’ countries of origin in figure 3.3 reveals that a large portion of African Percentage of tourists residing in country tourists come from Uganda’s neighboring countries (17 per- 0% 16% cent from Kenya, 10 percent from Rwanda, 4 percent from Tanzania, 3 percent from South Sudan) and South Africa (4 Figure 3.2: Tourists’ Continents of Residence percent). On the other hand, many European tourists live in the northern part of Europe—the United Kingdom (11 per- Percent Asia cent), Netherlands (4 percent), and Germany (4 percent). Africa Region of residence Tourist Arrival Europe and Departure North America Figure 3.4 shows the distribution of airlines tourists use. South America Air Kenya, Uganda Airways, South African Airways, and Australia Precision Air are the most frequently used African airlines 0 10 20 30 40 50 and carry about 34 percent of the tourists. KLM Royal Dutch Airlines, British Airways, and Brussels Airlines are Percentage the largest non-African airlines. Together they carry about Source: Authors, based on TEMS data. 35 percent of Ugandan tourists. United Nations–operated flights transport about 4 percent of Ugandan tourists. The surveyed tourists left Uganda through the airport in Entebbe or through one of the three land border cross- During their trip, 40 percent of tourists visit other—main- ings. Extrapolating to the target population, about 71 ly neighboring—African countries. About 17 percent of percent of tourists depart from Entebbe airport, and tourists visit more than one other African country. Figure 29 percent depart from the land borders in Katuna (10 3.5 maps the percentage of tourists who visit a specific percent), Busia (12 percent), and Malaba (7 percent). 4 African country. The most commonly visited countries Figure 3.6 shows that African tourists in the target are Kenya (20 percent of all tourists), Tanzania (12 per- population depart by air about as often as they depart cent), Rwanda (10 percent), the Democratic Republic of by land, whereas all other tourists depart mainly by air. Congo (5 percent), South Sudan (4 percent), and South Consequently, the vast majority of tourists who leave Africa (4 percent). Uganda by land are African residents. 24 Economic and Statistical Analysis of Tourism in Uganda Figure 3.3: Tourists’ Countries of Residence in Africa and Europe (Percentage of Total Tourist Population) Percentage of tourists residing in country Percentage of tourists residing in country 0% 16% 0% 16% Figure 3.4: Airlines Tourists during Their Trip Figure 3.5: Tourists’ Visits to Other African (Percentage of Tourists Who Travel by Air) Countries as Part of Uganda Trip (Percentage of Total Tourist Population) 540 Percent Aero Link Air Canada Air France Which airline did you use? Air Kenya Air Rwanda British Airways Brussels Airlines Canadian Regional Jet Delta Airlines Eagle Air Egypt Air Emirates Gulf Air KLM Royal Dutch Airlines Mission Aviation Fellowship Precision Air Qatar Airways South African Airways Turkish Airways Uganda Airways United Nations Percentage visiting 0% 20% 0 5 10 15 20 Percentage Source: Authors, based on TEMS data. Statistical Analysis of the Tourism Expenditure and Motivation Survey 25 Age and Gender of Tourists to 65 (24 percent) year olds are the second-largest and Interviewers asked tourists to which of five possible age third-largest groups. Minors and people over age 65 are categories they belong. Estimates of the target popula- comparatively rare in the target population. tion’s overall age distribution in figure 3.7 suggest that the majority of tourists are between 31 and 45 years (40 Closer inspection of the underlying data reveals that the percent), and that 18 to 30 year olds (31 percent) and 46 overall age distribution is a superposition of two differ- ent kinds of age profiles. Africans who travel to Uganda are dominated by individuals in their 30s and early 40s, Figure 3.6: Uganda Departures by Air and Land whereas Europeans and North Americans who travel to (Percentage of Total Tourist Population) Uganda are fairly equally distributed across age groups Air Road and have a sizeable number of individuals above working age. Focusing on leisure tourists, the survey finds that Asia 31 to 45 year olds still dominate the African tourists, and 18 to 30 year olds now clearly dominate tourists from all Africa other regions. A focus on business tourists shows that, Europe within all regions except North America, the 31 to 45 year olds outnumber all other age groups. North Am The estimated gender distribution of the target popula- South Am tion is biased toward males. Figure 3.8 shows that about Australia 66 percent of the total tourist population consists of males, and females make up only 34 percent. Closer scru- 0 5 10 15 20 25 30 0 5 10 15 20 25 tiny of the data reveals that the bias persists to varying degrees across tourist types, regions, and age groups. Source: Authors, based on TEMS data. 26 Economic and Statistical Analysis of Tourism in Uganda Figure 3.7: Age Composition of Tourists Figure 3.8: Gender Composition of Tourists Percent proportions Under 18 Male 18–30 Age group Sex 31–45 46–65 Female Above 65 0 5 10 15 20 25 30 35 40 0 10 20 30 40 50 60 70 80 Percentage Percentage Source: Authors, based on TEMS data. Source: Authors, based on TEMS data. Only cultural tourists, Australian tourists, and tourists in Figure 3.9: Size Distribution of Tourist Groups their 20s show a balanced gender distribution. 1 Percent 2 The relative discrepancy between male and female 3 tourists is partly due to regional differences. More than 4 three-quarters of African and Asian tourists are male (a 5 Number of people in party ratio of more than 3:1), whereas males and females are 6 more equally distributed across Australian, European, 7 and North American tourists (a ratio of less than 3:2). 8 9 Size of Tourist Groups 10 11 Tourists sometimes travel in groups consisting of fam- 12 ily members, company colleagues, or friends who have 13 booked the same package tour. Figure 3.9 illustrates that 14 overnight tourists to Uganda travel most of the time alone 15 or in small groups. The large majority of tourists travel 0 10 20 30 40 50 60 alone (62 percent), and 20 percent travel as couples. Percentage Groups of three account for 5 percent, and groups of four account for 3 percent of all tourists. Virtually all tourists Source: Authors, based on TEMS data. (99 percent) travel in groups smaller than 15 people. Tourist’s Main Purpose Closer study of the survey data shows that the size distri- of Visit butions differ across tourist types and across the regions where tourists come from. Leisure, spiritual, and cultural The reasons tourists travel to Uganda are diverse. tourists are nearly as likely to travel in couples as they Interviewers asked tourists for the main purpose of their are to travel alone. All other tourist types are far more trip and classified tourists according to one of seven main likely to travel alone. Asian and African tourists are more categories: leisure, recreation, and holidays; business and likely to declare they travel alone (around 75 percent of professional; spiritual and religious; meetings and confer- Asian and African tourists do) than are European, North ences; cultural tourism; family and relatives; and a residual American, and Australian tourists. The latter are more category called “other.� Three of the seven categories (lei- likely to travel in groups, and only around 55 percent of sure, meetings, other) contain subcategories, and tour- them travel alone. ists could pick one or more to further describe the main Statistical Analysis of the Tourism Expenditure and Motivation Survey 27 Figure 3.10: Distribution of Tourists’ Main Purpose of Visit (Percentage of Total Tourist Population) Leisure, recreation, Percent and holidays Main purpose of visit Business and professional Spiritual and religious Meetings and conferences Cultural tourism Family and relatives Other 0 5 10 15 20 25 30 35 Percentage Source: Authors, based on TEMS data. photography, sport hunting, self-drive tours, backpacker experiences, adventure activities, bird watching, and overlander tours. Leisure tourists can choose more than one of the nine subcategories, and about 25 percent ac- tually do. Figure 3.11 illustrates the findings. Wildlife sa- fari and gorilla viewing are most popular among leisure tourists (37 percent and 27 percent of leisure tourists pursue these activities), followed by adventure activities and backpacking (25 percent and 17 percent respective- ly). Sport hunting in Uganda is an exotic activity among leisure tourists, but the remaining categories of nature tourism are fairly common (about 10 percent each). Statistical techniques allow leisure tourists to be grouped on the basis of the leisure activities they pursue.5 The survey groups tourists into two clusters: the first cluster consists of leisure tourists who are backpacking, and the purpose of their trip. Figure 3.10 displays the estimated second cluster consists of all other leisure tourists. The population distribution of tourists’ main purpose of visit. differences between the two clusters are real and sizeable. More than 75 percent of backpackers are less than 30 years The majority of tourists travel for business purposes (31 old, but less than 40 percent of the other leisure tourists percent). Family (20 percent) and leisure (18 percent) are under 30. Backpackers are much less likely to engage are tourists’ second- and third-most frequent purpose in gorilla viewing (12 percent versus 30 percent of other for travel. Twelve percent of tourists come (often as vol- leisure tourists) and wildlife safaris (24 percent versus 40 unteers) for research, nongovernmental organization percent). They are more likely to participate in adventure (NGO) work, or education, and they fit into the residual activities (35 percent versus 23 percent). Moreover, they category. Meetings and conferences attract about 11 stay longer than other leisure tourists (23 days on aver- percent of tourists, spiritual reasons motivate about 5 age versus 14 days) and spend less in total ($1,017 versus percent, and the fairly recent phenomenon of cultural $1,369) and per day ($72 versus $171). tourism draws about 2 percent. Even though meeting and conference tourists could The survey lists nine activities for which leisure tourists belong to multiple subcategories (business conference, come to Uganda: gorilla viewing, wildlife safaris, wildlife NGO conference, faith-based conference, international 28 Economic and Statistical Analysis of Tourism in Uganda Figure 3.11: Distribution of Leisure and Meeting Tourists Purposes of Visit (Percentage of Relevant Tourist Category) Gorilla viewing Wildlife safari Business conference Wildlife photography/ filming Sport hunting Faith based conference Self-drive tour Backpacking NGO conferences Adventure activities (hiking, rafting) Bird watching International conference Overlander 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 40 Percentage Percentage Source: Authors, based on TEMS data. conference), there are virtually no overlaps between the Inspection of the survey data reveals that different age subcategories. Tourists who attend business conferences groups feature different tourist types. The younger the are most common (33 percent of all meeting tourists). age, the higher the number of leisure tourists and tourists NGO conferences (22 percent of meeting tourists), in- categorized as other (minors aside). With the exception ternational conferences (20 percent), and faith-based of Africa, the relationship holds across regions. African conferences (14 percent) all play an important role. leisure tourists are mainly in their 30s and early 40s, and not in their 20s. Business and meeting tourists are con- The different border points see different kinds of tourists. centrated on the age group between 30 and 45 years. The About one-third of tourists who depart from Entebbe relationship holds for all regions except North America have visited Uganda for business reasons. The airport is the most important point for the other tourist catego- ries, too. Nevertheless, land border crossings receive a sizeable proportion of leisure, business, family, and residual tourists. Studying the regional distribution of tourist types shows that business, meeting, and family tourists are the pre- dominant type of tourists among African and Asian tour- ists. African business tourists in particular account for half of all business tourists who come to Uganda (more than two-thirds of business tourists come from only three countries: Kenya [41 percent], Rwanda [17 percent], and South Africa [15 percent]). European and North American tourists belong to the business, meeting, and family cat- egories as well; in addition, they contain a large number of leisure tourists. About half of leisure tourists come from Europe, and Africans and North Americans account for most of the remaining part. About three-quarters of all spiritual tourists originate from the United States (51 percent), the United Kingdom (14 percent), and Kenya (10 percent). Australia nearly exclusively sends leisure tourists to Uganda. Statistical Analysis of the Tourism Expenditure and Motivation Survey 29 where business tourists belong to the oldest preretire- The underlying data show that the main source of infor- ment age group. mation varies with the type of tourist. Leisure tourists draw as much on the Web, guidebooks, and travel agen- cies as they rely on personal contacts. The relationship Information Sources becomes more pronounced when tourists visit a large about Uganda number of nature tourism sites. All other tourist types Tourists who consider a visit to Uganda inform them- rely mainly on friends and partly on information from the selves before they make decisions about the trip in Web. Business and meeting tourists complement their general and about accommodation, restaurants, sites information from personal contacts with local media, to visit, and entertainment in particular. The interview- print media, guidebooks, and travel agencies. Business ers asked tourists about their main information source. tourists apparently are the only ones who use trade fairs Personal contacts with friends and relatives are tourists’ to some extent. most important information source. Figure 3.12 shows that about 52 percent of tourists rely mainly on these The underlying data further show that some regional contacts when they make travel-related decisions. They differences exist. African tourists differ in that they rely far less often on third-party sources like the Web (14 use personal contacts far more than do tourists from percent of tourists), the media, or guidebooks and travel other regions. At the same time, they use the Web less agencies. Among tourists who use mainly the Web to frequently and local media like newspapers, radio, or inform themselves, the website of the Uganda Tourism television more frequently as their main source of infor- Board (UTB) is very popular and functions as the main mation. The main sources of information do not differ information source for about 32 percent of them—that much across other regions. Australia stands out in that is, about 5 percent of all tourists use the UTB website as travel agents serve as the main source of information to their main source of information. 27 percent of Australian tourists. Variation of the main 30 Economic and Statistical Analysis of Tourism in Uganda Figure 3.12: Distribution of Main and Web Information Sources (Percentage of Total Tourist Population) Travel agent, tour operator Newspaper, magazines, brochures Travel guidebooks Web www.visituganda.com Web Radio, TV Friends, relatives Airline (magazine) Web other website Trade fair Other specify 0 10 20 30 40 50 60 70 80 0 10 20 30 40 50 60 Percentage Percentage Source: Authors, based on TEMS data. sources of information is minor across age groups and Figure 3.13: Distribution of Number of Nights largely reflects regional differences in age profiles. Spent in Uganda (Percentage of Subpopulation Who Stays 1 Month or Less) Number of Nights Spent 12 Percent 10 Tourists’ duration of stay is very diverse. The duration of stay can range from an overnight stay to a yearlong Percentage 8 one. Tourists spend an average of 17 nights in Uganda. 6 Because of tourists who stay for very long periods of time (e.g., long backpacker trips, lengthy work-related 4 assignments, religious missions, extended family visits, 2 or monthlong scientific volunteering), the average gives 0 a misleading picture of the typical duration of stay. Half 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 of all tourists do not stay longer than 6 days, 80 percent Number of nights spent in Uganda do stay not longer than 15 days, and about 90 percent Source: Authors, based on TEMS data. do not stay longer than 1 month. For the subpopulation of tourists who do not stay longer than 15 days, figure longer than a month occur more frequently (about 14 3.13 shows the distribution of number of nights spent. percent). Family tourists’ duration of stays last longer Numb The distribution has a mode at 3 nights and a long tail; than those of business tourists and shorter than those it peaks at weeklong and monthlong stays. of leisure tourists. Other tourists’ duration of stay can be spent very long (27 percent of other tourists stay longer than a "1 Further inspection of the survey data reveals that the month). Table 3.1 shows the average and median duration "2 duration of stay varies strongly with the main purpose of stay for all tourists and the average duration of stay of "3 of visit. Business and meeting tourists rarely stay lon- tourists who stay not more than 15 days. "4 ger than a week (only about 25 percent do). Those who stay longer usually spend multiple weeks or months in Closer inspection of the survey data reveals that the re- "5 Uganda. Leisure, spiritual, and cultural tourists, on the gion-specific distributions of duration of stay are partly a "6 other hand, are most likely to stay longer than 1 week reflection of the region-specific mix of tourist types (e.g., "7 (more than 50 percent do). Leisure and cultural tourists African tourists are dominated by business tourists) and "8 who stay longer than 1 month are very rare (less than partly the result of geographic distance, country-specific "9 8 percent), whereas stays of spiritual tourists that last holiday regulations, and other factors. The former effect "10 "11 "12 "13 "14 "15 Statistical Analysis of the Tourism Expenditure and Motivation Survey 31 "16 "17 "18 can be eliminated if the same tourist type is compared Table 3.1: Averages and Median of Number across different regions. of Nights Spent by Tourist Type (in Days) Furthermore, the age-specific distributions of number of Main purpose Average Median 15 Days nights spent are largely determined by the region-specific of visit (average) age compositions. For example, tourists in their 30s and Leisure 15 8 7 early 40s are mainly African and Asian business tourists, Business 14 4 5 and consequently, the distribution of duration of stay Spiritual 24 9 7 shows the pattern of African and Asian business tour- ists. Tourists in their 20s and retirees have the longest Meetings 10 5 5 stays (26 days and 19 days respectively; those numbers Cultural 9 7 7 compare with 12 days for 31–45 years olds and 14 days Family 15 7 6 for 45–65 year olds). Other 35 14 6 Accommodation Before or during their trip to Uganda, tourists must de- Figure 3.14: Percentage of Tourists Staying in cide where they want to spend their nights. If they do not Different Accommodation Options stay in private homes, they can choose between urban International hotel Percent or nonurban settings and expensive or inexpensive ac- Local hotel commodation types. Figure 3.14 demonstrates that most Accomodation type Motel, inn, guesthouse tourists stay in local hotels, inexpensive motels/inns/ Safari lodge, luxury guesthouses, and private homes. Nonurban accommo- tented camp Cottages and bandas dation options, such as lodges, cottages, and campsites, Campsite and the expensive international hotels are less common Private home accommodation choices. Hostel Other The average number of nights tourists stay in a specific 0 10 20 30 40 50 accommodation option is a good measure for the typical Percentage duration of stay in a given accommodation type (disre- Source: Authors, based on TEMS data. garding tourists who never stay in the specific accommo- dation type). Figure 3.15 shows the resulting conditional Figure 3.15: Typical Number of Nights Spent averages. It suggests that tourists first choose between in Different Accommodation Options urban hotel stays and nonurban nature tourism accom- (Averages Conditional on Stay) modation, and less expensive the option, the longer the stay tends to be. Private home stays are longest, followed International hotel Average by hotel stays (hostel, motel, local, international) and Local hotel Accomodation type nature tourism accommodation (campsite, cottage, sa- Motel, inn, guesthouse fari lodge). Other accommodation mainly includes rare Safari lodge, luxury tented camp dormitory stays or long-term apartment rentals. Cottages and bandas Campsite Studying the survey data further reveals that the average Private home number of nights spent in each accommodation type dif- Hostel fers among tourist types. Business and meeting tourists Other are the most frequent users of international and local 0 5 10 15 20 25 30 hotels. Leisure and cultural tourists are the near exclu- Average number of nights sive users of nature tourism accommodation (lodges, Source: Authors, based on TEMS data. 32 Economic and Statistical Analysis of Tourism in Uganda cottages, campsites) and the inexpensive hostels. Figure 3.16: Tourists’ Means of Transport in Uganda (Percentage of Total Tourist Population) The survey data further show that the average duration of stay at accommodation type varies with region of origin. Taxi (matatu) Percent The variation is partly the consequence of region-specific Taxi (special hire) Main means of transport mixes of tourist types and partly a reflection of other fac- Bus between destinations tors. Asian and African tourists stay most of the time in Tour vehicles Private car rental hotels and private homes. Australians, Europeans, and Own private vehicles North Americans stay considerably longer than Asians, Bodaboda and Africans spend, on average, more time across all Bicycle Boat accommodation types. Chartered flight Others Age variation in the accommodation-specific average 0 5 10 15 20 25 length of stay is partly related to tourist type and tourist Percentage region. Moreover, disposable income, time availability, Source: Authors, based on TEMS data. and other factors influence the age distributions. compositions of tourist types. For example, tour vehicles Finally, the average length of stay in relatively expen- are common among tourists from regions with a large sive accommodation options, such as international and number of leisure tourists (Australia, Europe, North local hotels, lodges, and cottages, increases with age. America). Differences across age groups are limited as Simultaneously, the average length of stay in inexpen- well. With increasing age and usually higher income, tour- sive options such as motels, campsites, and hostels de- ists apparently choose the more expensive and conve- creases with age. Average length of stay in private homes nient special-hire taxis and private rental cars over the is significantly longer for 18 to 30 year olds and retirees, inexpensive but inconvenient matatus. possibly reflecting their greater availability of time. Visits to Tourism Sites Means of Transport The survey gathered information regarding tourists’ visits Tourists need means of transportation to move between to Kampala, four of Kampala’s tourist attractions (the locations in Uganda. The available options include cars, Uganda museums, the Kasubi tombs, the Namugongo buses, motorbikes (bodabodas, or “bicycle taxis�), bikes, martyrs, and a city center tour), and 26 of Uganda’s most boats, and flights. Figure 3.16 shows that bikes, boats, popular nature tourism sites. For each of the 31 tourist and flights play virtually no role for tourists who travel attractions, interviewers recorded whether tourists had within the borders of Uganda. About 56 percent of tour- visited them and, if so, how many nights they had spent ists use cars—which can be privately owned, rented, or at the attractions. The map in Figure 3.17 displays all the hired together with a driver—as their main means of major tourist attractions except the four Kampala-specific transportation. About 33 percent of tourists rely mainly ones. The sizes of the circles are directly proportional to on minibuses (matatu), buses, or tour buses. Bodabodas the fractions of the tourist population who actually visit serve 9 percent of tourists as the main means of trans- the attractions. Kampala is the biggest tourist attraction portation (very likely within cities). and draws about 54 percent of the tourists. Jinja is the second-most popular tourist site (24 percent of all tour- Further scrutiny of the data set reveals that differences ists), offering the source of the Nile and adventure tour- across tourist types are fairly limited. Business and meet- ism. The two best-known national parks, Murchison Falls ing tourists make relatively more use of special-hire taxis National Park (11 percent) and Queen Elizabeth National than do all other tourist types. Unsurprisingly, leisure Park (11 percent), and the Ssese Islands on Lake Victoria and cultural tourists almost exclusively use tour vehicles. (10 percent) are also very popular. Differences across regions largely reflect the different Statistical Analysis of the Tourism Expenditure and Motivation Survey 33 The underlying data show that leisure tourists account tourists departing from Malaba focus on the southwestern for most visits to tourist attractions outside Kampala’s national parks and neglect Kampala and its surroundings. surroundings. About 85 percent of leisure tourists do Finally, Katuna departures focus mainly on the southwest- visit one of these tourist sites, and the majority of lei- ern national parks close to the migration post. sure tourists visit more than one. Other tourist types are much less likely to visit these attractions, but even 25 The underlying data shows that nature tourists’ choices percent of business and meeting tourists undertake the of tourist sites show some differences based on their re- visit (and so do more than 50 percent of the remaining gional origin. African nature tourists visit predominantly tourist types). The popularity of the tourist attractions Murchison Falls National Park and sites in or close to is generally independent of tourist type. The more fre- Kampala. Europeans and North American nature tour- quently a tourist type visits a tourist attraction, the more ists visit nearly all tourist sites in sizeable numbers. frequently tourists from another category will visit it.6 Australian nature tourists, finally, focus their visits away Nonleisure tourists seem to have similar preferences and from Kampala and its immediate surroundings. simply visit the tourist attractions less often. However, Further inspection shows that age differences between Figure 3.17: Popularity of Uganda’s Tourist nature tourists’ choices of tourist sites are minor. One Attractions (Percentage of Total Population Visiting) difference is that younger nature tourists visit Jinja more often than do older tourists, whereas the opposite holds for visits to the Southwestern national parks. Not surpris- ingly, nature tourists who stay longer have more time to visit tourist sites. As expected, a relationship exists between a longer duration of stay and a higher fraction of tourists visiting the tourist attractions. The absence of international airports other than Entebbe and the advantage of geographic proximity suggest that nature tourists’ choices of sites could be influenced by the neighboring countries they visit as part of their trip to Uganda. Figure 3.20 provides some evidence for the relevance of geographic proximity. For tourists who visit Percentage visiting Uganda and one other neighboring country, it shows the 0–10% 10–20% 20–30% 30–40% 40–50% >50% popularity of Uganda’s tourist sites and compares them to tourists who visit Uganda exclusively. Tourists who travel to Uganda and Kenya, in comparison with tourists business and meeting tourists have a bias toward sites who travel only to Uganda, are more likely to visit tourist in the vicinity of Kampala. Figure 3.18 shows the relation sites in the eastern part of Uganda and less likely to visit between tourist attractions and tourist type. tourist sites in the southwestern part of Uganda. The opposite holds for tourists who travel to Uganda and The geographic location of departure migration posts can Rwanda. Tourists who travel to Uganda and Tanzania influence tourists’ selection of the tourist attractions they show no relative geographic bias. want to visit, as shown in figure 3.19. Closer study reveals some relationship between departure points and visits Figure 3.21 illustrates that, once nature tourists have de- to tourist attractions. Nature tourists who depart from cided to visit a specific tourist site, they stay an average Entebbe have no clear geographic preferences. Nature of one to two nights. Only Kampala, with an average tourists departing from Busia are less likely to visit the duration of stay of six nights, stands out. southwestern national parks but are more likely to visit the national parks at Murchison Falls and Sipi Falls. Nature Consequently, the geographic map in figure 3.22, which 34 Economic and Statistical Analysis of Tourism in Uganda Figure 3.18: Popularity of Tourist Attractions by Tourist Type (Percentage Visiting of Total Population) Leisure Business Spiritual Meeting Cultural Family Other Percentage visiting 0–10% 10–20% 20–30% 30–40% 40–50% >50% depicts the unconditional average number of nights tour- buy their package inside Uganda after their arrival; nearly ists stay at selected sites, is nearly a mirror image of the all the rest (74 percent) buy it outside of Uganda before geographic map in figure 3.17, which shows the popularity the beginning of their trip. A tiny minority (1 percent) of tourist sites. buys packages outside and inside Uganda. The fact that the vast majority of package tourists buy their packages outside Uganda opens the possibility of revenue leakag- Package Tours es—that is, the possibility that revenue accrues to other Figure 3.23 shows that about 7 percent of all tourists are countries as a consequence of tour arrangements made package tourists. About 25 percent of package tourists outside the country. In principle, the Ugandan tourism Statistical Analysis of the Tourism Expenditure and Motivation Survey 35 Figure 3.19: Nature Tourists’ Visits to Tourist Attractions by Departure Migration Post (Percentage of Nature Tourists) Busia Malaba Entebbe Katuna Percentage visiting 0–10% 10–20% 20–30% 30–40% 40–50% >50% Figure 3.20: Nature Tourists’ Visits to Tourist Attractions by Trips to Neighboring Countries (Percentage of Nature Tourists) Uganda only Uganda & Kenya only Uganda & Tanzania only Uganda & Rwanda only Percentage visiting 0–10% 10–20% 20–30% 30–40% 40–50% >50% 36 Economic and Statistical Analysis of Tourism in Uganda Figure 3.21: Nature Tourists’ Typical Number of Nights Spent at Different Tourist Sites their expenditure responses, but state only additional expenditures. Moreover, about 50 percent of package tourists visit other countries and make it impossible to extract Uganda-specific expenditures. To obtain a fairly reliable expenditure estimate, only total per-person pack- age cost and no other expenditures enter the estimation calculations. Package tourists who visit other countries are excluded from the calculations. The resulting total expenditures are likely underestimates because tourists’ discretionary spending should be added to the total ex- penditure. Rough estimates suggest that discretionary spending amounts to 20 percent of total package cost. 0–1 1–2 2–3 3–4 4–5 >5 Figure 3.24 shows the resulting distribution of total pack- Average nights age cost. The mean package cost is estimated as $1,398. The mean rises to $1,678 if discretionary spending is Figure 3.22: Nature Tourists’ Average Number of added at 20 percent of the package cost. Nights Spent at Different Tourist Sites Total expenditure and knowledge of the number of nights spent make it easy to estimate package tourists’ per-day expenditure. Figure 3.25 shows the resulting distribution. The mean of the distribution is $165, or $199 if discretion- ary spending is included. Because only 45 respondents out of 289 package tourists declared their total expen- diture and stayed only in Uganda, the estimated expen- diture means are not precise. Moreover, 25 percent of respondents declared their daily package expenditure at, implausibly, under $50, thereby calling into question the reliability of package tourists’ expenditure distribution. Average nights 0–0.1 0.1–0.2 0.2–0.3 0.3–0.4 0.4–0.5 >0.5 Expenditures of sector could generate immediate revenue by arranging Independent Travelers package tours that are sold outside Uganda. The most measurable economic consequence of tour- Further scrutinizing the underlying data reveals that leisure ists’ visits to Uganda are the tourists’ expenditures. The tourists make up the majority of package tourists (58 per- survey asked interviewees, package tourists and indepen- cent), so about 21 percent of all leisure tourists travel with dent travelers alike, to estimate their total expenditure a package arrangement. Business, meeting, and other tour- and their expenditure in selected, predefined categories ists each add about 10 percent to the pool of package tour- (the most important ones being accommodation, food ists. Moreover, Australian, European, and North American and beverages, local transport, and shopping). nature tourists are the ones most likely to book a package tour (54 percent, 20 percent, and 31 percent respectively). The previous section used interviewees’ answers to esti- Nature tourists in their late 40s and older are more likely mate package tourists’ total expenditure. Here the focus than younger nature tourists to book a package tour. is on independent travelers who purchase accommoda- tion, food and beverages, local transport, tourist ser- Estimating package tourists’ total and per-day Uganda vices, and other items separately. Independent travelers’ expenditure is not straightforward because package expenditure is the best measure of tourists’ economic tourists often do not explicitly include package cost into impact because independent travelers avoid fees charged Statistical Analysis of the Tourism Expenditure and Motivation Survey 37 by foreign travel agencies and can credibly break down their expenditures into categories. Figure 3.26 shows independent travelers’ distribution of total per-person expenditure. The distribution is nonnormal (there is no well-defined typical expenditure), nonsymmetric and has a long tail. Peaks at rounded expenditure numbers are pronounced (at $1,000, $1,500, $2,000, etc.). The target population’s mean total expenditure of independent travel- ers is estimated as $1,036, and the median total expenditure as $500. The numbers are probably underestimates be- cause they are based on survey respondents’ often implau- sibly low expenditure numbers (because many respondents will have low expenditures, it is difficult to decide which specific respondents have implausibly low expenditures). Dollar expenditure figures are also subject to change be- cause respondents gave their expenditures in different currencies (mainly US$, 60 percent; UGX, 20 percent; and euro, 10 percent) and currency exchange rates are volatile (exchange rate movements of about 10 percent in 2012). Figure 3.23: Distribution of Package Tourists (Percentage of Total Tourist Population) and Distribution of Outside versus Inside Packages (Percentage of Package Tourists) Percent Independent Did you travel independently? Package 0 20 40 60 80 100 Percentage Percent Inside Uganda Outside Uganda 0 10 20 30 40 50 60 70 80 90 100 Percentage Source: Authors, based on TEMS data. 38 Economic and Statistical Analysis of Tourism in Uganda Figure 3.24: Distribution of Package Tourists Figure 3.25: Distribution of Package Tourists’ (Uganda Only) Total Expenditure (US$) (Uganda Only) Expenditure per Day (US$) 20 12 Percent Percent 10 15 Percentage Percentage 8 10 6 4 5 2 0 0 2000 4000 6000 8000 200 400 600 800 Package expenditure per person (in US$) Package expenditure per person per day (in US$) Source: Authors, based on TEMS data. Source: Authors, based on TEMS data. Expenditures differ across tourist types (see table 3.2). Figure 3.26: Distribution of Independent Total expenditure is highest for spiritual and other tour- Travelers’ Total Expenditure (US$) ists, and it is lowest for family tourists. The high expen- ditures for spiritual and other tourists result from long 15 Percent stays. If expenditures are limited to tourists who stay a 12 month or less, the expenditure order changes and leisure Percentage tourists emerge as the highest expenditure type, while 9 family and other tourists form the lowest expenditure types. Spiritual tourists in total still spend more than 6 business, meeting, and cultural tourists except when 3 duration of stay is limited. The concentration of low ex- penditures is highest for family tourists. 0 1000 2000 3000 4000 5000 Total expenditure per person (in US$) Further inspection of the survey data shows that regional differences are also apparent. The mean expenditures of Source: Authors, based on TEMS data. Australian ($1,591) and North American ($1,568) tourists are higher than of Asian ($1,436) and European ($1,342) Table 3.2: Independent Travelers’ Total Expenditure tourists. African tourists, on average, spend less than all by Tourist Type (US$) other tourists ($616). The findings do not change much the duration of stay is limited to 1 month or less. Due Tourist type Average Median 31 Days to the relatively small number of respondents from Asia (average) and Latin America, the expenditure estimates for these regions are unreliable. Leisure $1,209 $800 $1,088 Business 1,057 500 816 Furthermore, older—usually more affluent—age groups Spiritual 1,394 700 924 generally show a higher total expenditure than younger ones. The mean expenditures are $657 for minors, $1,018 Meeting 893 523 828 for individuals between 18 and 30 years, $962 (age 30–45 Cultural 819 500 808 years), $1,126 (45–65 years), and $1,810 for individuals Family 804 363 618 over 65. The relatively large total expenditure for 18 to 35 year olds is a consequence of longer stays, whereas Other 1,256 600 675 the relatively low total expenditure for 35 to 45 years olds is a result of the age-group-specific predominance of Statistical Analysis of the Tourism Expenditure and Motivation Survey 39 low-spending African tourists. The means for business and meeting tourists are par- ticularly high, partly because daily expenditure decreases Finally, total expenditure increases with duration of stay. with duration of stay (compare) and they stay typically Independent travelers’ mean expenditure for 1-week stays only a few days. Moreover, business and meeting tourists is $574; for 2-week stays, $1,164; for 3-week stays, $1,296; most likely spend most of the time in Kampala where the for 4-week stays, $1,721; and for all stays longer than prices are higher than in other areas. Analogously, the 4 weeks, $2,735. Closer examination of daily averages mean daily expenditures of spiritual, family, and other shows that, in a linear approximation, an independent tourists are particularly low. tourist pays, on average, about $50 more for each ex- tension day. The linear approximation conceals a non- Moreover, regional variation in daily expenditure is less linear increase in total expenditure—total expenditure pronounced than variation by tourist type. In addition, increases more slowly as the duration of stay increases. the different regional compositions of tourist type and age groups make the apparent differences hard to inter- Total expenditure is an important measure of economic pret. In a simple comparison, Asian tourists have the activity. For policy purposes, possibly more interesting is highest mean daily expenditure at $172, and European daily expenditure. One means of promoting the tourism tourists have the lowest mean daily expenditure at $126. sector is to encourage tourists to spend more per day or to stay longer. Daily expenditure, obtained by dividing total Age variation in daily expenditure shows roughly the expenditure by the duration of stay, is a way to disentangle same pattern as age variation in total expenditure. the factors. Figure 3.27 shows the distribution of indepen- Overall, the older the age group, the higher the daily dent travelers’ daily per-person expenditure. More than expenditure ($106 for minors, $91 for 18–30 year olds, 95 percent of tourists spend less than $500 per day. The $141 for 30–45 year olds, $165 for 45–65 year olds, and distribution is nonnormal and has a long tail. There are $140 for retirees). The 18 to 30 year olds and the retir- pronounced peaks at $50, $100, $150, $200, $250, $300, ees, on average, stay longer than the other age groups. and $400. Some individuals apparently calculate their total Because daily expenditure decreases with the duration expenditure by multiplying a rounded daily expenditure of stay, their mean daily expenditure is lower than would with the number of nights they spend in Uganda. be expected on the basis of their age alone. The underlying data show that mean daily expenditure Finally, daily expenditure varies with the number of nights varies strongly with tourist type. Roughly said, leisure, spent in Uganda. Generally, daily expenditure decreases cultural, business, and meeting tourists spend about $50 as the duration of stay increases. Some possible reasons more per day than spiritual, family, and other tourists. are lower costs for accommodation due to better rates, the possibility to avoid eating out in restaurants, use Figure 3.27: Distribution of Independent of slower and less expensive transportation, or engage- Travelers’ Daily Expenditure (in US$) ment in low-cost activities. The mean daily expenditure 10 of tourists who stay 1 week or less is $166, and it drops Percent to $108 at 2 weeks, $73 at 3 weeks, $69 at 4 weeks, and 8 $41 at 5 weeks and longer. Percentage 6 Tourists who stay a few weeks in Uganda are usually 4 different from tourists who stay only a few days, and part of the decrease in daily expenditure is the result of 2 different tourist mixes. Nevertheless, it is fairly clear that daily expenditure will decrease with duration of stay and 0 100 200 300 400 500 will approach a (nonuniversal) long-term level. A linear Expenditure per day per person (in US$) approximation would predict that tourists who stay a day longer than average will spend about $5 less per day. Source: Authors, based on TEMS data. 40 Economic and Statistical Analysis of Tourism in Uganda However, a better approximation is nonlinear and shows satisfaction regarding various aspects of their trip and a decreasing daily expenditure trend. suggest improvements. Figure 3.29 displays tourists’ sat- isfaction with different trip categories. Hospitality and When asked by the interviewers, a large majority of in- home stays were much appreciated by most tourists. dependent travelers (more than 90 percent) were willing Local transport and visitor information drew the great- to break down their total expenditure into expenditure est criticism. subcategories such as accommodation, food and bever- ages, other shopping, local transport, and others. The Tourists’ satisfaction with the quality of specific high response rate allows the inference of representative Ugandan national parks is reflected in figure 3.30. The estimates for the target population, as shown in figure most popular national parks (Murchison Falls, Queen 3.28. The accommodation ($374) and food and bever- Elizabeth, and Bwindi Impenetrable Forest) all receive ages ($252) subcategories account for nearly two-thirds very high tourist satisfaction ratings. Semliki National of mean total expenditure ($1,036). Local transport ($114) Park and Mount Elgon National Park are the only ones and other shopping ($116) are two other subcategories in the list that receive a sizeable number of low ratings. with sizeable expenditure. The satisfaction ratings regarding Uganda’s national re- serves (Ajai, East Madi, Kabwoya, Katonga, Matheniko- The finding holds across tourist types. Unsurprisingly, Bokora, and Pian-upe) are unreliable because only a leisure tourists have the highest average expenditure in handful of survey respondents had visited them. categories that are related to nature tourism (park entry fees, tracking fees, adventure activities) or guided tours Tourists’ overall high satisfaction with their Ugandan trip (sightseeing tours, guide services). Family tourists spend experience translates into an openness toward a return least on accommodation and beverages. Spiritual tour- to Uganda and a high likelihood of their recommending ists’ large expenditure in the residual expenditure sub- a trip to Uganda to their friends (see figure 3.31). The category (“Other�) is mainly due to donations. underlying data show that the high likelihoods of return and recommendation hold across tourist types. Leisure Percentage and cultural tourists are the most unlikely to return but Tourists’ Satisfaction the most likely to recommend the experience. Family and with Trip business tourists are the most likely to return to Uganda. At the end of the survey, tourists could voice their Figure 3.28: Independent Travelers’ Mean Total Survey respondents had the option to suggest ways to Expenditure by Specific Subcategories (in US$) improve tourism in Uganda, and about 15 percent did. Their responses can be grouped into categories and are Accomodation shown in figure 3.32. Transport and Web publicity were Average Food & beverages Park entry fees cited most frequently as areas of improvement. This Tracking fees result is consistent with the relatively low satisfaction Sightseeing tours Adventure activities ratings regarding local transport and visitor information, Domestic air transport Crafts & souvenirs shown in figure 3.29. Other shopping Entertainment Guide services Local transport Other 0 50 100 150 200 250 300 350 400 Total expenditure by category (independent tour) Source: Authors, based on TEMS data. Statistical Analysis of the Tourism Expenditure and Motivation Survey 41 Percentage Figure 3.29: Tourist Satisfaction with Specific Figure 3.31: Tourists’ Likelihood of Return Trip Aspects to Uganda and Recommendation of Their Percentage Experience to Friends Standard Services Percent Very likely Likelihood of return to Uganda Hotels Safari lodges Likely Percentage Restaurants Uncertain Entertainment Local transport Unlikely Tours, excursions Very unlikely Duty free shopping 0 10 20 30 40 50 60 70 80 Visitor information Percentage People & hospitality Recommendation of Uganda to friends Percent 0 20 40 60 80 100 Definite Percentage Excellent Very good Good Adequate Poor Perhaps Source: Authors, based on TEMS data. Not sure No Figure 3.30: Tourist Satisfaction with National 0 10 20 30 40 50 60 70 80 Parks and National Reserves Percentage Percentage Percentage Lake Mburo NP Source: Authors, based on TEMS data. Queen Elizaberth NP Mgahinga Gorilla NP Rwenzori Mountain NP Figure 3.32: Suggested Areas for Improvement of Bwindi Impenetrable Forest NP Ugandan Tourism Semliki NP Percent Customer service Kibale NP Transport Murchison Falls Hotels & restaurants Kidepo Valley NP Web publicity Mt. Elgon NP Hygiene 0 20 40 60 80 100 Security Percentage International languages Excellent Very good Good Adequate Poor 0 5 10 15 20 25 30 35 40 Source: Authors, based on TEMS data. Percentage Suggested Tourism Improvements Source: Authors, based on TEMS data. 42 Economic and Statistical Analysis of Tourism in Uganda Endnotes 1. Uganda Bureau of Statistics (forthcoming), 2013 Statistical Abstract. 2. For example, Uganda Bureau of Statistics (forthcoming), 2013 Statistical Abstract. 3. For example, Uganda Bureau of Statistics (forthcoming), 2013 Statistical Abstract. 4. Uganda Bureau of Statistics (2012), 2012 Statistical Abstract. 5. The statistical technique used here is called k-means clustering, whereby the number of clusters k is set to 2 and the clustering is based on the nine leisure subcategories. 6. Correlations between the tourist-type-specific fractions are usually around 0.9 and always greater than 0.7. 7. Uganda Bureau of Statistics (forthcoming), 2013 Statistical Abstract. 8. The vast majority of nonresident, non-Ugandan visitors who stay at least one night exited Uganda at Entebbe or the land border crossings sampled by the TEMS. Photo: Kirk E. Hamilton Statistical Analysis of the Tourism Expenditure and Motivation Survey 43 Annex 3A: Population Weights In stratified random samples, sample averages and sam- ple distributions over respondents’ answers generally do not correspond to averages and distributions of the target population. To infer the population averages and popula- tion distributions, it is necessary to weigh respondents’ answers appropriately. The weights for stratified random samples are easily calculated once the strata sizes Ni of the target population are known. The strata-specific weights then are the proportion between population strata Ni and sample strata ni (i.e., Ni/ni). The Tourism Expenditure and Motivation Survey has eight sample strata: n1, n2, n3, n4 , n5, n6, n7, and n8 (see table 3A.1). Table 3A.1: Sample Strata Sizes Low High Entebbe n1 = 978 n2 = 1,510 Malaba n3 = 119 n4 = 181 Busia n5 = 188 n6 = 151 Katuna n7 = 287 n8 = 169 Unfortunately, the corresponding population strata are not known. Official statistics record all nonresident de- partures, and not only departures of residents who stay at least 1 night in Uganda. This is particularly problematic at the three land border crossings where the majority of arrivals and departures are due to day-trippers who return to their home countries before night sets. Therefore, the strata sizes of the target population need to be inferred from official 2012 migration data,7 which include depar- tures of day-trippers (see table 3A.2). Table 3A.2: Target Population Strata Sizes High Low Entebbe 122,231 233,392 Malaba 42,114 76,710 Busia 58,423 129,131 Katuna 73,008 144,703 44 Economic and Statistical Analysis of Tourism in Uganda Annex 3B: Absolute Population Numbers To analyze the TEMS 2012, it was assumed that 80 per- The population weights of Annex 5A and the underlying as- cent of departures from land border crossings result from sumptions implicitly contain information regarding the ab- day-trippers engaged in trade. This assumption changes solute numbers of Ugandan tourists, tourist types, and any the target population strata sizes (see table 3A.3). With conceivable subgroup. Tabulated here are absolute numbers these assumptions, the calculation of weights is straight- for tourist types (table 3B.1) and activities of leisure tourists forward (table 3A.4). (table 3B.2). The numbers refer to the target population of nonresident, non-Ugandan visitors who stay at least one night and depart from one of four border crossings (Entebbe, Table 3A.3: Target Population Strata Sizes Katuna, Busia, Malaba). It should be kept in mind that the Adjusted for Day-Trippers target population leaves out tourists who depart from border High Low crossings other than those covered by the survey.8 Entebbe N1 = 122,231 N1 = 233,392 Table 3B.1: Absolute Number of Tourists by Malaba N3 = 12,179 N4 = 21,265 Tourist Type Busia N5 = 18,625 N5 = 40,796 Tourist type Number of tourists Katuna N7 = 17,791 N6 = 34,359 Leisure 89,000 Business 157,000 Table 3A.4: Population Weights Used in Spiritual 27,000 the Analysis Meetings 57,000 High Low Cultural 8,000 Entebbe 81 239 Family 102,000 Malaba 67 179 Other 61,000 Busia 123 217 Total 501,000 Katuna 105 120 Table 3B.2: Absolute Number of Leisure Tourists by Activity (Leisure Tourists Can Pursue More Than One Activity) Leisure tourist activity Number of tourists Gorilla viewing 24,000 Wildlife safari 33,000 Wildlife photography/filming 10,000 Sport hunting 1,000 Self-drive tour 8,000 Backpacking 15,000 Adventure activities (hiking, rafting) 22,000 Bird watching 7,000 Overlander 9,000 Statistical Analysis of the Tourism Expenditure and Motivation Survey 45 Chapter 4 Main Findings and As the preceding chapters show, the Tourism Expenditure and Motivation Survey 2012 (TEMS) paints a rich picture Policy Conclusions of the tourists who visited Uganda in 2012, the sites they visited, and the activities they undertook. Crucially, it also provides a wealth of policy-relevant information, including the expenditures made by these tourists, their satisfaction with tourist sites and the quality of services and accommodation, and their suggestions for how to improve the tourist experience in Uganda. Tourists’ overall satisfaction with their trip to Uganda is high. However, local transport in Uganda and insuf- ficient visitor information are the most frequently cited sources of dissatisfaction and suggested areas for im- provement. The need for a stronger Web presence for Ugandan tourism was also noted by tourists. In addition, about 10 percent of respondents to questions on areas for improvement in Uganda tourism cited the quality of customer service as an issue. 46 Economic and Statistical Analysis of Tourism in Uganda Photo: Kirk E. Hamilton Main Findings and Policy Conclusions 47 The economic analysis of chapter 2 focuses on tourism In terms of policy priorities, there are two basic ways to exports—the expenditures made by foreign tourists while make tourism’s contribution to the Ugandan economy they were in Uganda. These expenditures provide scarce grow: by attracting more tourists and by persuading foreign exchange for Uganda and contribute positively to tourists to spend more money while they are visiting the balance of payments. The analysis shows that tourist Uganda. To meet this increased demand, however, in- expenditures are strongly linked to the Ugandan economy. creases on the supply side are required. This analysis When direct, indirect, and induced effects are counted, each leads to four broad areas where government policy and dollar spent by a foreign tourist generates US$2.50 of GDP. government investment can increase tourism’s contribu- tion to the economy: ■■ Marketing Uganda —Stronger branding, use of new Policy simulations show media, strengthening links with travel agencies in source markets, and attracting high-profile foreign that attracting 100,000 operators can contribute to attracting more tourists additional leisure tourists to visit Uganda. to visit Uganda would add 11 percent to exports and ■■ Increasing supply —Private sector investments in 1.6 percent to GDP. the tourism sector are needed to meet growing demand, which will require improvements in the investment climate in Uganda. In addition, poli- The TEMS estimates that roughly 500,000 foreign tour- cies and regulations specific to the tourism sec- ists spent at least one night in Uganda in 2012, and tor need to be reviewed and reformed. A growing nearly 75,000 of them were leisure or cultural tourists. private sector can in turn contribute to marketing As shown in chapter 2, the total economic impact of the Uganda tourism. expenditures made by these half-million foreign tourists while in Uganda is large: expenditures totaled UGX 1.1 ■■ Removing bottlenecks —Investments in infrastruc- trillion and generated UGX 2.7 trillion of gross domestic ture, particularly roads, can decrease the cost and product (GDP). This expenditure amounted to 38 per- increase the convenience for tourists visiting the cent of exports and generated 5.6 percent of 2012 GDP, natural areas of Uganda. Reforms of the concession including revenues to government from indirect taxes of policy for tourism operators, in particular to increase 0.5 percent of GDP. transparency and security of tenure, will boost private investment in the sector. And filling the skills gap in Expenditure data from the TEMS show that leisure and the sector will increase visitor satisfaction and the ef- cultural tourists spend 30 to 100 percent more per visit fectiveness of word-of-mouth marketing when these than other categories of tourists. Policy simulations show visitors return home. that attracting 100,000 additional leisure tourists to visit Uganda would add 11 percent to exports and 1.6 percent ■■ Investing in natural assets —The national parks and to GDP. Similarly, if each tourist visiting Uganda stayed other protected areas in Uganda are in the process one additional night, imports would rise by 7 percent and of recovery from the neglect of earlier decades. GDP by 1 percent. The latter finding is important because Investments in park infrastructure, machinery and the TEMS shows that over 70 percent of tourists visiting equipment, the protection and management of wild- on business, for meetings, or to visit friends and relatives life, and staff skills are needed to increase the value did not visit any natural sites outside of Kampala. of the key natural assets in the sector. 48 Economic and Statistical Analysis of Tourism in Uganda 1818 H Street, NW 22 Whitehall Washington, DC 20433 London Telephone: 202-473-1000 SW1A 2EG Internet: www.worldbank.org Email: enquiry@dfid.gov.uk Telephone 020 7023 0000