Following a survey instituted into Namibia’s tourism sector, research experts Simonis Storm has said that despite the survey showing a contribution of about 4% to nominal GDP, they believe the true contribution to be in the region of 15% to 18% of the Namibian economy.
Of the eight associations in the industry, the research firm received data submissions for the survey only from 63 companies which represent 30.7% of the most economically significant members from industry associations. The industry is said to have 5547 companies.
“Based on the financial data from the 63 members only, we estimate that the local tourism industry has a direct socioeconomic contribution to the Namibian economy and society of N$7.7 billion (3.7% of nominal GDP) from the operations of these 63 companies, and an indirect contribution of N$24.8 billion (12.0% of nominal GDP).
“We estimate that the direct impact represents about half the economic activity of the industry. Sales revenue from these 63 companies alone totalled N$2.6 billion (1.3% of nominal GDP) in 2022,” Simonis Storm said in the survey report.
The 63 companies employed 3,483 workers (49% male and 51% female), with 99% of workers being Namibians and 87% who were hired on a permanent contract. The total wage bill for these workers was N$292.6 million which generated personal income tax of N$54.0 million. From the 3,483 workers at the 63 companies, it is known from the SAM matrix that 41,796 additional jobs are directly and indirectly created or supported. This is about 3.8% of the country’s labour force and 5.7% of all employed Namibians.
“The employment capability of the local tourism sector has proven to be very impactful. This is supported by our survey results and even government statistics would support this notion. The last official unemployment rate provided by the NSA is 33.4% in 2018. We estimate that unemployment is more likely closer to 40% currently, with youth unemployment most likely close to 60%. Given our high unemployment, it naturally makes sense to focus job creation efforts and initiatives in an industry that has great employment absorption capabilities such as the tourism industry. Not only can tourism assist in addressing high unemployment, it can improve overall economic activity if tourism is prioritised and job creation takes place.
“We would advocate for greater importance and recognition to be given to vocational training and work integrated learning so that skills needed by the tourism sector can be met and that a career in tourism can become something young individuals in Namibia aspire to. This would not only need additional funding from central government, but also requires better management of vocational training centres across the country. Furthermore, addressing concerns raised by the private sector will go a long way to improve efficiencies, profits and jobs in the tourism sector,” further stated Simonis Storm.
The 63 companies had an asset stock insured for N$2.7 billion in 2022, which is about 39% of the total assets held by short-term insurance companies according to NAMFISA data. This implies that tourism companies form a significant customer base for the local short-term insurance industry and its profitability. Lastly, the 63 companies spent N$12.9 million on corporate social responsibility initiatives. Regardless of whether these were in-kind donations or actual money given out, this amount would have led to N$41.7 million in additional spending throughout the economy.
The Managing Director of Simonis Storm, Bruce Hansen, says: “Tourism has become the world’s third-largest export industry after fuels and chemicals, and ahead of food and automotive products. From the last few years, there has been a great surge in international tourism, culminating to 7% share of World’s total exports in 2016 according to Future Business Journal, January 2021. Tourism is essential for the success of many economies around the world. There are several benefits of tourism on host destinations. Tourism boosts the revenue of the economy, develops the infrastructure of a country, creates thousands of jobs and establishes a sense of cultural exchange between foreigners and residents.
“Therefore, it becomes increasingly important that we must have accurate data reflecting the state of tourism within Namibia – as it is currently being measured, it is very difficult to get a genuine reflection. The significance of accurate data and statistics are key to making resourceful decisions. It serves as the foundation for informed decision-making, effective policies, and transparent governance. It enables us to navigate complexities, allocate resources wisely and produce evidence-based solutions in efforts to enhance our economy and societies that function within it. As a research house, Simonis Storm is committed to be enablers of accurate and true information drivers that will assist in the decision-making process and this report is an effort in starting to address the current shortcomings.”
The Chairman of FENATA, Martin Webb-Bowen, believes that the absence of comprehensive data on the impact of tourism on the Namibian economy, in terms of both the financial contribution and the social impact on the development of rural communities, is a major part of the reason why authorities do not seem to give sufficient priority to the tourism sector when taking policy decisions on land access and the use of natural resources across the country.
“It is key that we, as Namibians, ensure that tourism is recognized for its role in guaranteeing a future for the country and its people as this is an industry with arguably the largest real potential for sustainability” says Webb-Bowen. For Namibia to safeguard this sustainability, decision-makers will need to make informed decisions on the exploration and development of Namibia’s natural resources and to take full account of all socio-economic aspects of that development. Tourism is one of the main economic pillars of the country, but it is not always recognized for its full impact and potential – partly due to the fragmented way in which it is reflected in national accounts.”