Tourism revenue practices under spotlight

19 October 2018
The tourism sector’s contribution to GDP has again come under spotlight amid concerns that revenue generated through foreign agents was not being repatriated to Namibia.
They speculate that tourism’s contribution to GDP might increase from the current 15 percent if more bookings where done in Namibia.
These financial sector players conjectured that because of the existing practice, where some funds remained abroad for activities carried out in Namibia, the impact of the industry on the Namibian economy was not showing any growth.
Tourism operators, however, defended the practice, saying without foreign agents, most Namibian companies would be forced to open offices in Europe or close down completely causing even a greater drop in tourism’s contribution to the GDP.  Hosting and staffing overseas offices is an extremely expensive venture and is not viable. 
Executive Officer of the Hospitality of Namibia, Gitta Paetzold told the Windhoek Observer that without European agents, local operators would find it difficult to attract tourists from Europe.  
“Each Namibian booking and travel agent would need an office and pay tax in Europe. It will be expensive – it is not practical,” she said, admitting that a portion of the money generated from tourism bookings stays abroad to pay for the travel services provided by overseas agents sending clients to Namibia.
Jofie Lamprecht, who promotes hunting safaris, told the Windhoek Observer that it is the industry standard that a lot of booking agents are used to try to gather in as many paying clients as possible.  In order to market the product, pay for ads, services, fees and other expenses, a portion of the money paid for the trip to Namibia remains abroad to cover those costs.
“The overseas agents market the trip packages, sell the product to potential tourists, receive the funds from the clients who chose to come to Namibia, hold the funds, take their commissions and then they transfer the invoiced amount to the Namibian operator.  As I said, this is common practice,” he said.
Lamprecht argued that with the increase in the number of tourists to Namibia, its contribution to GDP should positively increase.
“The spending power of tourists will be a big factor here. A tourist on a self-drive safari who will be camping, will spend a lot less than a client that stays in lodges and charters private planes. One has to look at the market sectors that are increasing to establish why its contribution to the GDP is not increasing.”
Talking from a hunting point, Lamprecht said to ensure funds are received in Namibia, exported trophies must be cross-checked with what is invoiced and paid for by professional hunters.
According to Lamprecht, Namibia is the leading hunting destination in Africa. However, some airlines have stopped carrying hunting trophies as part of a misguided international campaign to stop all trophy hunting.
“The airlines that have stopped the export of trophies are just narrow minded, uninformed about the benefits of controlled, regulated professional hunting and against the Namibian constitution that enshrines the “sustainable use of Namibia’s natural resources.  However, about 25,000 trophies are still being exported annually.”
Talking about the current state of the tourism industry, Paetzold said although it is high season at the moment, tourist numbers are down by about 10 percent this year compared to last year due to various factors including Namibia becoming more expensive as a tourist destination compared to some of its neighbours.
“Prices in Namibia go up every year,” she said. 
Paetzold said other factors which may humper growth going forward include the recent spate of attacks on tourists and the bad state of some of the roads leading to World Heritage Sites in the Kunene Region. 
Paetzold, however, expressed happiness that the government plans to spend N$95 million to upgrade the Hosea Kutako International Airport.
“This is the first point of entry for tourists arriving by air, we cannot allow it to be closed and downgraded.”
Lamprecht said that the issues surrounding safety and standards at Hosea Kutako airport must be stabilized.  The country (and thus, potential tourism) gets worldwide negative publicity when questions about the viability and safety of the main international airport arise.
“These issues need to be sorted out. It is a negative image that is broadcast to the entire world.”
He said attacks on tourists have a similar effect as the airport situation. “Negative reports on our country damage our reputation as a destination and these attacks need to be stopped.”
Minister of Environment and Tourism, Pohamba Shifeta last month said attacks on tourists will reduce the number of visitors, which will eventually affect the sector’s contribution to the Gross Domestic Product (GDP).
According to the 2017 Bank of Namibia Annual Report, the growth of the tourism sector, which is measured by activity under hotels and restaurants, generally slowed in 2017, as reflected in the lower growth of room and bed nights sold, in spite of rising international arrivals.
The Bank of Namibia said the sector’s growth rate is estimated to have slowed to 3.5 percent in 2017, compared to 5.9 percent in 2016.


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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