The tourism industry serves as a potent instrument for eliminating poverty, ending unemployment and providing channels in which streams of different cultures could meet and mingle to create a new ethic-scope on which a fare, humane and enlightened order could be built for the entire human race (Zaei & Zaei, 2013:15).
Tourism has a pivotal role in the economic and social development of South Africa. According to Breytenbach (2017:6), the industry is the largest generator of employment and its services range from travel, accommodation, transportation, the handicraft industry and to preservation of the eco-system.
Tourism not only creates jobs in the tertiary sector, it also encourages growth in the primary and secondary sectors of the industry (Geography Field Work, 2017). In addition, Zaei and Zaei (2013:16) states that one of the important economic features of the tourism industry is the multiplier effect.
According to Economics Online (2017), the term multiplier effect refers to the resulting effect of a service or amenity creating further wealth or positive effects in an area. The flow of money generated by tourist spending multiplies as it passes through various segments of the economy (Quora, 2017). A tourist makes an initial expenditure into the economy, which is received as income by local tour operators, shopkeepers, hotels and taxi drivers (Zaei & Zaei, 2013:16).
The hotel for example, money spent in a hotel helps to create jobs directly in the hotel, but it also creates jobs indirectly in other industries that further contributes to the economy (Geography Field Work, 2017). The hotel has to buy food from local farmers, the farmer receives money from the hotel and uses the money to purchase clothes and entertainment (Geography Field Work, 2017).
The demand for local products increases as tourists often buy souvenirs, which increases secondary employment. The multiplier effect continues until the money eventually ‘leaks’ from the economy through imports – the purchase of goods from other countries (Geography Field Work, 2017).
In relation to the multiplier effect, it is evident that tourism plays an important role in the economic status of South Africa. This is supported by Tourism Excellence (2017), that tourism increases employment opportunities, attracting foreign exchange and the capacity to grow South Africa’s Gross Domestic Product (GDP).
According to Traveller 24 (2016), during the year 2013, the number of people employed in the tourism industry amounted to 4,5% of all people employed in South Africa (Traveller 24, 2016). Furthermore Traveller 24 (2016) adds that in the year 2005, 475 664 individuals were directly employed in the tourism sector. The number of individuals employed since the year 2005 until 2014 raised by 680 817 (Traveller 24, 2016).
In the Western Cape, South Africa one in ten employees earns a living in the tourism industry and tourism contributes more than R25 billion to the provincial economy (South African Government, 2016). One cannot dispute the fact that half of the Western Cape population benefits directly or indirectly from the tourism sector.
Research conducted by Business Day (2017) has shown that the tourism industry contributed a total of R492.2 billion which amounted to 9.3% of South Africa’s GDP in the year 2016. In addition, the industry provided 1 533 000 jobs in South Africa for the year 2016 (Business Day, 2017). This is evident that tourism has the potential to encourage the direct development of entrepreneurial opportunities in all its subsectors. Therefore the tourism industry is one of the most easily accessible industries for entrepreneurs.
In addition, Brand South Africa (2016) states that the South African tourism industry is well established, with an exciting sector of emerging entrepreneurs. The country is strong on adventure, sport, nature and wildlife, and is a pioneer and global leader in responsible tourism (Brand South Africa, 2016).
The Traveller 24 (2016) has reported, the V&A Waterfront, located in Cape Town competed last year in the Destination category, which recognises excellence in sustainable destination stewardship. According to the Traveller 24 (2016), the attraction was nominated as the only South African destination finalist in the prestigious 2016 global Tourism for Tomorrow Award.
In addition, Fin24 (2017) adds that the V&A Waterfront generates huge economic benefit to South Africa. The attraction supports local businesses and attracts over 24 million visitors each year, making it South Africa’s most popular tourist attraction. Furthermore Fin24 (2017) states that the V&A Waterfront has contributed about R198 billion to South Africa’s economy over the past 10 years. The Waterfront (2017) has reported, since 2008 the attraction has invested around R100 million in environmentally-friendly practices, and has helped 206 homeless people off the streets to reconnect with their families.
The lack of cohesion and alignment in the country’s planning and policy implementation has resulted in the unintended consequence of creating barriers to the growth of the tourism sector (Business Day, 2017).
To illustrate this point, one only needs to refer to the immigration regulations that were changed in 2014. Johan Fourie (2015) explains that South Africa imposed new visa regulations that requires tourists to appear in person during the visa application process in order to obtain a biometric visa and that all children should have a birth certificate with full details of both parents (Mail Guardian, 2017).
According to Traveller 24 (2016), the new immigration regulations negatively affected the tourism sector which resulted in South Africa experiencing its biggest loss from African tourists where a decline of 7.3% was recorded for the year 2015, in comparison to the 9% growth recorded during the year 2014 (Traveller 24, 2016).
In addition, SA News (2017) states that the minister of South African Tourism announced that the government is removing the barriers deterring the growth of tourism by addressing immigration regulations and licencing for tourism operations that have an impact on tourism.
Tourism is not only one of the biggest contributors to the county’s GDP but has been dubbed globally as one of the fast growing industries (IBN, 2017). Therefore in conclusion tourism is the backbone of the South African economy. In addition, SA News (2017) has reported, the minister of South African Tourism believes the number of tourist internatiol tourists will grow by 50% in the next five years. The South African government and tourism industry is working together to improve market access through joint marketing agreements funded by the private sector and government (SA News, 2017).
Brand South Africa. 2016. Western Cape Province, South Africa.
Breytenbach, A. 2017. The economic impact of tourism: The power of travel. Cape Town: Cape Peninsula University of Technology.
Business Day. 2017. Tourism has the ability to pull the economy and society out of the mire. https://www.businesslive.co.za/bd/opinion/2017-07-28-tourism-has-the-ability-to- pull-the-economy-and-society-out-of-the-mire/ [27 August 2017].
Economics Online. 2017. The multiplier effect. http://www.economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html [26 August 2017].
Fin24. 2017. V&A Waterfront contributed R198bn to SA.
Geography Work Field. 2017. Tourism Multiplier Effect.
http://geographyfieldwork.com/TouristMultiplier.htm [26 August 2017].
IBN. 2017. New immigration laws affecting tourism sector in South Africa.
Johan Fourie. 2015. Who are most hurt by South Africa’s new visa regulations.
https://johanfourie.wordpress.com/tag/south-african-tourism/ [27 August 2017].
Mail Guardian. 2017. New visa laws are economic sabotage.
Quora. 2017. What is the multiplier effect in tourism, and what are some examples. https://www.quora.com/What-is-the-multiplier-effect-in-tourism-and-what-are-some- examples [27 August 2017].
SA News. 2017. Tourism important driver of economic growth.
Tourism Excellence. 2017. The wider benefits of tourism. http://www.tourismexcellence.com.au/growing-destinations/benefits-of-tourism/the- wider-benefits-of-tourism.html [26 August 2017].
Traveller 24. 2016. South Africa tourism growth over the last decade. http://www.traveller24.com/Explore/BusinessTravel/overview-sa-tourism-growth-over- the-last-decade-20160330 [26 August 2017].
Waterfront. 2017. The V&A Waterfront – South Africa’s success story. http://www.waterfront.co.za/news/Commercial%20News/the-va-waterfront-south- africas-success-story [27 August 2017].
Zaei, M.E. & Zaei, M.E. 2013. European Journal of Tourism Hospitality and Research.
The impacts of tourism industry on host community, 1(2):12-21, September.
By Marco Bosch, 2017 BTech Tourism & Hospitality student, CPUT.