Description
The International Institute for Sustainable Development contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change, measurement and indicators, and natural resources management.
International Trade in Services and Sustainable
Development: The Case of Tourism in South Africa
Edited by: Rashad Cassim, Wendy Jackson and Lucille Gavera
TIPS
Contributing authors:
Paul Robertson
University of Cape Town
Jolene Skordis
Centre for Social Science Research, University of Cape Town
April 2004
t k n pa pe r
About the Trade Knowledge Network
http://www.tradeknowledgenetwork.net
The goal of the Trade Knowledge Network (TKN) is to foster long-term capacity to address the complex issues of trade
and sustainable development. TKN is a collaborative initiative of the International Institute for Sustainable Development
and the International Centre for Trade and Sustainable Development; and kindly supported by the Rockefeller
Foundation, The Norwegian Ministry of Foreign Affairs, International Development Research Centre (IDRC), Swiss
Agency for Development and Cooperation (SDC), and the Canadian International Development Agency (CIDA).
Agri-Environment and Rural Development in the Doha Round
Copyright © 2003 International Institute for Sustainable Development
Published by the International Institute for Sustainable Development
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The International Institute for Sustainable
Development (IISD)
http://www.iisd.org
The International Institute for Sustainable Development contributes to sustainable development by advancing policy
recommendations on international trade and investment, economic policy, climate change, measurement and
indicators, and natural resources management. By using Internet communications, we report on international
negotiations and broker knowledge gained through collaborative projects with global partners, resulting in more
rigorous research, capacity building in developing countries and better dialogue between North and South.
IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live
sustainably. IISD receives operating grant support from the Government of Canada, provided through the Canadian
International Development Agency (CIDA) and Environment Canada, and from the Province of Manitoba. The
institute receives project funding from the Government of Canada, the Province of Manitoba, other national
governments, United Nations agencies, foundations and the private sector. IISD is registered as a charitable organization
in Canada and has 501(c)(3) status in the United States.
The International Centre for Trade and
Sustainable Development (ICTSD)
http://www.ictsd.org
The International Centre for Trade and Sustainable Development (ICTSD) was established in Geneva in September
1996 to contribute to a better understanding of development and environment concerns in the context of international
trade.
As an independent non-profit and non-governmental organisation, ICTSD engages a broad range of actors in ongoing
dialogue about trade and sustainable development. With a wide network of governmental, non-governmental and
intergovernmental partners, ICTSD plays a unique systemic role as a provider of original, non-partisan reporting and
facilitation services at the intersection of international trade and sustainable development.
ICTSD facilitates interaction between policy-makers and those outside the system to help trade policy become more
supportive of sustainable development. By helping parties increase capacity and become better informed about each
other, ICTSD builds bridges between groups with seemingly disparate agendas. It seeks to enable these actors to discover
the many places where their interests and priorities coincide, for ultimately sustainable development is their common
objective.
Trade and Industrial Policy *Strategies* (TIPS)
http://www.tips.org.za
TIPS serves as a clearing house by effectively assisting in harnessing all relevant trade and industrial policy research for
the South African government’s Department of Trade and Industry (DTI) policy considerations, which will
strengthen and enhance the capacity for policy analysis in the DTI. TIPS also serves to strengthen the capacity outside
of government to construct research on trade and industrial policy in order to enlarge the pool of researchers.
TIPS is currently engaged in research for the DTI in restructuring of the defence industry, in spatial development
initiatives and in regional integration.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa iii
Table of Contents
General introduction 1
International trade in services and sustainable development: the case of energy
and tourism in South Africa 1
Introduction to services 1
Sustainable development 1
Energy 2
Tourism 3
Methodology 3
Structure 4
Abridged findings 4
Tourism 6
Executive summary 6
Tourism and sustainable development 7
SA tourism – introduction 10
General information 10
Economic characteristics if SA tourism 11
Employment 11
Investment 11
Exports 12
Government spending 12
Taxes 12
SA tourism services regulation 13
Cross-border supply (Mode 1) – focus on financing 13
Consumption abroad (Mode 2) 14
Commercial presence (Mode 3) 15
Presence of natural persons (Mode 4) 16
Case studies – methodology 17
Background on the case study sites 18
The Phinda Game Reserve 18
Greater St Lucia Wetlands Park 19
Amadiba Adventures 19
Tourism and sustainable development: case studies 21
Social development/equity 21
Environmental conservation/protection 29
Economic development 33
Lessons from the case studies 36
Conclusions 38
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa iv
Appendix A: Definition of tourism 40
Appendix B: SA’s tourism suppliers and international tourism consumers 41
Tourism suppliers 41
International tourism consumers 41
Appendix C: Background information on respondents 44
Phinda Reserve 44
The Greater St Lucia Wetlands Park 44
Amadiba Adventures 45
References 47
List of figures
Figure 1: Structure for the management of Amadiba Horse and Hiking Trail 20
Figure 2: Arrivals and departures of foreign visitors and SA residents 1975–2000 42
Figure 3: Shares of overseas visitors, 2000 42
Figure 4: Purpose of visit for foreign visitors to South Africa, 2000 43
List of tables
Table 1: Tourist accommodation measurements for Greater St Lucia Wetlands park region 22
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa v
General introduction
International trade in services and sustainable development: the
case of energy and tourism in South Africa
Introduction to services
As services have become increasingly tradeable on the global market—due in part to
technological developments and regulatory reform—they have consequently become more
important in international trade negotiations. In addition, the recent review of the General
Agreement on Trade in Services (GATS) as part of the World Trade Organization’s (WTO’s)
built-in agenda has also drawn attention to trade in services. Work already undertaken under the
built-in agenda will continue under the Work Programme as set out in Ministerial Declaration of
the WTO Fourth Ministerial Conference held in Doha in November 2001. The Work
Programme specifies that participants shall submit initial requests for specific services
commitments by June 30, 2002 and initial offers by March 31, 2003.
Developing countries have been grappling with liberalization of services sectors. Two specific
challenges have been encountered: domestic reform of the state monopolies; and, how GATS
negotiations are likely to undermine or reinforce domestic reform efforts.
South Africa (SA) is a middle-income economy with one of the highest levels of inequality in the
world—close to 30 per cent unemployment and a high incidence of poverty. The problem is
compounded by the fact that the economy continues to experience low growth. There is an
urgent debate about how best to create long-run growth and reduce inequality and poverty.
Policy-makers and economists increasingly recognize that the services sector could become a
potential lever to growth and a significant creator of more jobs.
The services sector already makes up 65 per cent of the gross domestic product (GDP), 63 per
cent of employment and 74 per cent of capital formation in SA and has been the main source of
growth for the economy in the 1990s. The largest sectors are community/social services (18.6 per
cent), distribution services (14.5 per cent), business services (11.2 per cent), financial services
(6.1 per cent) and transport services (5.3 per cent). The domination of services is more
pronounced in the informal sector where petty trade, domestic work and minibus taxi-driving
are the most common sources of income, although not subject to liberalization as such. Sectors
such as energy and tourism also contribute significantly to the economy. Both these sectors have
large, indirect effects on competitiveness, employment and output.
Sustainable development
The concept of sustainable development was popularized by the International Union for the
Conservation of Nature in its “World Conservation Strategy,” and was refined in 1987 in the
Brundtland Report of the World Commission on Environment and Development:
Sustainable development is development that meets the needs of the present,
without compromising the ability of future generations to meet their own needs.
While definitions and interpretations of the elements of sustainable development have varied, the
concept is generally viewed as consisting of three primary aspects or “pillars”: economic
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 1
(sustainable economic development); social (social development/equity); and environmental
(environmental protection/conservation/preservation). Other essential characteristics of
sustainable development have been identified by a number of organizations and institutions. For
example, the Canadian Commissioner for the Environment and Sustainable Development has
suggested that sustainable development must incorporate quality of life, integrated decision-
making and equity aspects.
1
While work in the area of services liberalization is fairly new to SA, work on the synergies
between services liberalization and sustainable development does not exist. The major reason for
the absence of work in this area relates to the difficulty of assessing the exact nature of the
linkages. Although the GATS will be used as a starting point for this analysis, we are interested
in the de facto liberalization and/or deregulation, irrespective of whether the influences are
external or domestic. Looking at two specific sectors—energy and tourism services—this study
attempts to investigate the nature of trade liberalization and deregulation within a sustainable
development framework. There are several reasons why the energy and tourism sectors were
chosen.
Energy
Energy is central to achieving the interrelated economic, social and environmental aims of
sustainable development, and energy services play a crucial role in providing efficient access to
energy in support of development. Developing countries are faced with a number of challenges
in this regard, such as achieving more reliable and efficient access to energy for domestic
consumption and production, growing their share in the trade of energy goods and services, and
mitigating adverse environmental impacts from energy activities.
The energy sector includes coal, oil, gas, electricity, nuclear and renewable energy sectors. The
main objective of this study is to look at what dominates SA energy supply—coal-based
energy—although we also review other forms of energy generation. However, the main emphasis
of the energy study is on electricity.
Electricity relates to sustainable development in that it provides a critical service element in:
I
running hospitals, schools and businesses;
I
heating, cooling and lighting in homes and workplaces;
I
preserving food commercially and at home;
I
pumping fresh water supplies and sewage;
I
maintaining the flow of road, rail and air traffic;
I
lighting in public places;
I
operating global communications systems;
I
providing access to the Internet and the information society; and
I
supplying power for a wide range of appliances.
2
With electrification still a major objective of South Africa’s electricity utility Eskom, which has
committed to a further 600,000 connections, an examination of the sustainable development
implications of further liberalization and deregulation is merited.
1
Web site of the Commissioner for the Environment and Sustainable Development:
http://www.oag-bvg.gc.ca/domino/cesd_cedd.nsf/html/menu6_e.html accessed 30/01/03.
2
See Joint Statement by the Electricity Industry on Sustainable Development for the World Summit on Sustainable Development:
www.basd-action.net/resources/positionpapers/ 200208_electric.pdf
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 2
The research on the energy sector, which forms part of this study’s investigation into the nature
of trade liberalization and deregulation within a sustainable development framework, has been
published as a separate paper.
Tourism
Tourism is another important services sector that the government has identified as a major contributor
to job creation, economic growth and poverty relief objectives. There are various benefits of tourism
growth. First, tourism is relatively labour intensive and therefore well placed to absorb a large part of
the unskilled workforce. Second, the industry uses relatively few imported inputs and gives rise to
extensive forward and backward linkages in the hotel, food, entertainment and transport industries.
Third, it can be an important source of foreign exchange and contribute to export diversification.
However, certain constraints to tourism growth have been identified, such as: a lack of
transparent investment incentives to attract investors; a scarcity of needed infrastructure in
regions with the strongest natural resource base for tourism; inadequate tourism education; and,
inadequate marketing of SA as a long-haul tourism and business centre.
Although there has been considerable work done on sustainable tourism, there is a paucity of
research and analysis on trade in tourism in southern Africa and in SA specifically, creating an
explicit need for further awareness, knowledge and understanding of the sustainable development
issues of the sector. The studies that have been conducted on tourism have tended to focus on
sustainable tourism and poverty elimination, with only cursory attention given to environmental
aspects or specific social dimensions, such as employment.
An important question facing the SA tourism industry is what impact it will have on both the
environment and the poor of SA as the industry grows and its importance to the overall
economy expands. This has brought to attention a few important issues, such as how new
tourism developments use local suppliers and the distribution of benefits from tourism growth.
Tourism is particularly essential in creating employment in remote, poverty-stricken areas of SA.
Methodology
TIPS’ contribution to the TKN Phase II project is a collaborative effort among a number of
different researchers from various universities and organizations in SA. The tourism study,
contained in this publication, was conducted by Paul Robertson and Jolene Skordis, both from
the University of Cape Town.
For the publication detailing the energy sector research, Anton Eberhard from the University of
Cape Town’s Graduate School of Business was responsible for the section outlining the economic
and regulatory characteristics of the energy industry, as well as the sections on energy services
reform and the social equity aspects of energy provision. O. A. Akinboade from the Department
of Economics at the University of South Africa (Unisa) and E.W. Niedermeier and F. Sibanda
from the Competition Commission undertook the environmental discussion of the energy study.
Significant modifications and additions to the electricity study were made by Rashad Cassim, the
previous Executive Director of TIPS.
3
3
Much of the information contained within these studies is available in separate papers prepared for TIPS. The following papers
can be found on the TIPS Web site (www.tips.org.za): Energy Services, WTO GATS Negotiations and Energy Market Regulation
and Liberalisation in South Africa by Anton Eberhard; The Impact of Electricity Trade on the Environment in South Africa by O.A.
Akinboade et al.; and The Impact of Trade Liberalisation on the South African Tourism Industry by Paul Robertson.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 3
Structure
After this general introduction, the tourism study is presented, with the energy study published
as a separate paper. Both studies start off with a brief description of the linkages between
sustainable development and the sector under discussion. From that context, the economic and
regulatory aspects of each sector are discussed in detail. Tourism regulation is described in light
of the four modes of services supply, whereas energy is discussed in light of current reform
initiatives being undertaken in the industry.
The tourism study investigates the links between sustainable development and tourism services
liberalization using three case studies. The authors selected a property rights approach to
analyzing the incentive structures under various forms of tourism establishment ownership
(private ownership, community ownership and government/public sector ownership) and each
establishment is discussed in term of the three pillars of sustainable development.
The energy study comprises a description of the economic and regulatory characteristics of SA
energy services, as well as various elements of energy services reform. Because electricity
generation and provision have significant linkages with sustainable development issues, there is
heavy emphasis on aspects of energy services. In that connection, there is an extensive discussion
of how the electricity sector can advance sustainable development, i.e., by: supporting industrial
competitiveness and economic growth; promoting energy efficiency, increased used of renewable
energy technologies and reduced emissions; and ensuring widened access to affordable services.
Abridged findings
Tourism
The authors of the tourism study found that the links between trade liberalization, tourism and
sustainable development are difficult to establish because of the range of services included under
the tourism heading and each one’s differing contribution towards poverty alleviation, economic
growth and employment. However, the study pointed to several potential indirect links between
the liberalization of trade in services and sustainable development. These include:
I
significant inflows of foreign investment for new project development, for NGO
support and for community upliftment projects; and
I
a tremendous upsurge of overseas tourism since the beginning of 2002, and projects
that rely on incomes or donations from these sources clearly benefit.
They also note that a commitment to enforcing environmental safeguards as recommended in
the White Papers on Environmental Management and Coastal Management, as well as the
guarantees of the Constitution, need to be addressed more explicitly in future economic
development programs. Moreover, the authors suggest that regulatory bodies can be guided in
their tasks so that they enhance the achievement of sustainable development goals. Open,
consultative processes that include public and private partnerships are desirable, while some
amount of benevolent leadership from experienced practitioners may be necessary to overcome
lack of capacity and entrepreneurship.
Lastly, the authors suggest that to encourage the right kind of development, it falls on regulators
and investors to:
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 4
I
support initiatives that use tourism as a vehicle for delivering skills while protecting
natural assets;
I
discourage such exploitive arrangements that work against the principles of
sustainable development; and
I
develop methods of assessing the impacts tourism investment is likely to have on the
communities involved in its delivery. In this manner, liberalization of tourism
services would be able to ensure the most appropriate skills and resource
development.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 5
Tourism
Executive summary
The main aim of the tourism study is to provide a macro overview of the sector, focusing
specifically on its importance to the economy. The paper provides a broad outline of the
contribution of tourism to growth and the economy, with specific attention to the regulatory
environment in which the sector operates. In addition, three case studies are used to investigate
the various linkages between tourism services and sustainable development.
The discussion of tourism services is complicated by the range of economic sectors involved in
supplying tourism products, and the competing definitions of tourism. For the purposes of this
paper, the World Trade Organization definition of tourism is used, which describes it as “the
activities of persons travelling to and staying in places outside their usual environment for not
more than one consecutive year for leisure, business and other purposes.”
SA tourism is made up of two-thirds domestic and one-third foreign consumers. The focus of
this research is on export tourism—that is, tourism that takes place within SA and is consumed
by foreigners. To this end, data on foreign visitors is presented, followed by information about
SA tourism service suppliers. Most foreign tourists—about two-thirds—come from the African
continent, and most of these are from neighbouring countries. Lesotho alone accounts for more
than one-sixth of all foreign visitors to SA. Of the remaining share from overseas, two-thirds are
from Europe. Most visitors come on holiday—over 80 per cent—while roughly 10 per cent
come for business, and still smaller percentages for work (two per cent) or study (one per cent).
Service suppliers in tourism include transport companies, hotels, car rental companies,
restaurants, advertisers, the travel press, guides and the distribution services designed for each of
these. Institutions that enable the delivery of tourism products, such as government departments
and professional organizations, should also be considered suppliers. Tourism sites are points
around which these services operate, and include national parks, game reserves, historical
monuments and museums, as well as cities, towns and villages.
Until 2001, tourism contributed about three per cent to the GDP of SA, but its indirect and
induced effects were responsible for as much as 7.1 per cent of the economy. This contribution
increased in 2002, with estimates varying as to how much more the economy will benefit if this
trend continues. About 41 per cent of all revenues generated by SA tourism is captured in the
GDP, with the balance retained in the source markets of foreign tourists. The tourism industry
employs about 490,000 people directly, and 1.1 million when indirect employment is included.
Investment in tourism is about 10 per cent of total GDP, and tourism exports are 10 per cent of
all exports. Furthermore, tourism service exports are 50 per cent of all service exports.
Government spending in the industry is low by world standards (0.6 per cent of all government
expenditure compared to a worldwide average of 6.8 per cent), but the returns on this spending
are much higher than the global norm (15:1 compared to 1.7:1). Tourism also generates over
eight per cent of all taxes paid in SA.
Tourism is one of the least regulated industries in SA and worldwide. However exceptions
include unequal treatment in the entry of natural persons, favouring those from wealthier
Western nations over neighbouring countries. Exchange controls, restrictive conditions on the
employment of skilled foreigners and financing limitations dependent on foreign equity shares
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 6
are examples of regulations that harm both domestic and foreign investors. These create an
environment of uncertainty, inhibit the inflow of technology and skilled people, and impose
unnecessary hardship and bureaucratic barriers to investment.
Liberalization in the tourism sector should bring improvements to the economy that outweigh
the hardships of adjustment. While threats of competition, loss of SA ownership and
retrenchments are to be expected to some extent, the efficiency benefits from specialization will
provide a net social gain for the average consumer. Due to the relative ease with which people
can enter travel and tourism professions, these benefits can be realized in the short term as well.
Measuring the impact of liberalization is less obvious. Apart from the differing definitions of
tourism, various methods exist to calculate its contributions to the economy. Tourism Satellite
Accounts attempt to capture the downstream effects from each injection into the industry, but
may end up inflating its actual importance. Multiplier analysis tends to reflect features of the
host economy rather than those of tourism’s contributions. Other simulations may offer more
precise figures, but can be costly and time-consuming to develop accurately.
Since the Doha Round, WTO members have undertaken to make further commitments by
March 2003. With this in mind, the following conclusions can be drawn from the research so
far. Further liberalization of regulations inhibiting commercial presence and the movement of
capital and people will remove uncertainty around investment. Tourism will be affected most by
the progress of liberalization in sectors that enable its service delivery—most notably transport
and utilities. Despite its contribution to GDP and its importance as an employer, the tourism
industry concentrates information-gathering efforts in a demand-side marketing approach
instead of seeking to understand its suppliers better.
SA policy on sustainable development is mixed, and the environment is often omitted from
discussion. Also, employment creation and equity are paramount in this era of highly unequal
employment opportunities. Fortunately, with the success of eco-tourism ventures there is a
growing emphasis on harnessing the environment in tourism.
An examination of the Phinda Reserve and the Greater St. Lucia Wetlands Park in northern
KwaZulu-Natal, as well as Amadiba Adventures in the northern Wild Coast of the Eastern Cape
reveals how different management and ownership structures can deliver benefits to communities.
Representatives of each management area were interviewed to complete baseline research on
economic growth, poverty alleviation, environmental impacts and possible links to trade in
services to formulate recommendations for sustainability in eco-tourism.
Tourism and sustainable development
One sector that has increasingly contributed to the advancement of sustainable development
dialogue and activities is tourism. The interaction between sustainable development as a practical
approach and tourism as an industry is tangible and far-reaching, and the manner in which the
industry impacts on economic and social development and environmental initiatives is
enormous. A very cursory description of these interactions is given below.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 7
In terms of economic development, the potential contribution of tourism is significant. The
World Tourism Organization (OMT) has reported that in 2001, US$463 billion in international
tourism receipts were recorded worldwide.
4
In terms of export earnings on tourism goods and
services, in 1999, international tourism and international fare receipts (receipts related to
passenger transport of residents of other countries) accounted for roughly 8 per cent of the total
worldwide. In terms of long-term trends, the OMT reports that:
The number of international arrivals shows an evolution from a mere 25 million
international arrivals in 1950 to the 699 million of 2000, corresponding to an
average annual growth rate of seven per cent. In the same period, international
tourism receipts, at current prices and excluding international transport costs, had
an average annual growth rate of 11 per cent.
While earnings from tourism vary among countries, all regions monitored by the OMT (Europe,
the Americas, East Asia and the Pacific, South Asia, Africa and the Middle East) indicated growth.
Employment from the tourism industry is estimated at approximately 72,000,000 jobs, while the
tourism economy as a whole is estimated to be about 198,000,000 jobs worldwide.
5
This latter
figure equals about 7.8 per cent of total employment, or about one in every 12.8 jobs.
In terms of the social pillar of sustainable development, the OMT has identified a number of
social benefits that can result from tourism. For example, it suggested that tourism could
contribute to:
I
rural development;
I
agricultural transformation;
I
community enrichment;
I
social empowerment, particularly for women; and
I
preservation of cultural and heritage traditions.
6
At the same time, however, there can also be negative social outcomes from tourism activities, for
example:
I
inflationary pressures pose the danger of significantly worsening the household
distribution of income;
7
I
increased incidence of crime, and spread of drugs and diseases, including
HIV/Aids;
8
I
change or loss of indigenous identity and values (in terms of commodification,
standardization, loss of authenticity and staged authenticity, and adaptation to
tourist demands);
9
4
See the Web site of the World Tourism Organization: http://www.world-tourism.org/projects/ethics/principles.html,
accessed 30/01/03. Subsequent economic statistics were also obtained from this Web site.
5
Employment statistics taken from The Impact of Travel and Tourism on Jobs and the Economy – 2002: Executive Summary.
World Travel and Tourism Council, 2002.
6
The OMT has initiated research and consultation on the interrelationship of tourism and poverty through a project called
“Sustainable Tourism – Eliminating Poverty.” See the Web site for more information.
7
Sustainable Tourism Development in Small Island Developing States. Report of the Secretary-General, Addendum. UN
Commission on Sustainable Development. Fourth session, April 18–May 3, 1996. Document E/CN.17/1996/20/Add.3. See
www.un.org/esa/
8
Ibid.
9
UNEP Production and Consumption Branch. See the UNEP Web site: http://www.uneptie.org/pc/tourism/sust-
tourism/soc-drawbacks.htm
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 8
I
culture clashes (income inequality, irritation due to tourist behaviour and job-level
friction);
10
and
I
ethical issues (child labour, prostitution and sex tourism).
11
The environmental aspects of tourism are obvious, yet complex. The fundamental paradox that
underlies the environmental aspect of tourism is that most forms of tourism depend on either a
built or natural environment, but excessive tourism can degrade that same environment. Impacts
from tourism can be categorized into three types:
I
pressure on natural resources (land, freshwater and marine resources);
I
pollution and waste generation (improper disposal of liquid and solid waste, for
example, from cruise ships); and
I
damage to ecosystems (disruption of habitats, alteration of animal behaviour,
destruction of coastal areas, forests, mangroves, etc.).
12
However, environmental benefits from tourism have also been documented, the most
predominant of which is the conservation and protection of ecologically-sensitive or unique
areas. These areas attract tourists who are interested in botany, bird watching, wildlife, nature
photography, scuba diving, archaeology, etc.
Accordingly, tourism organizations—local, national and international—have been producing a
number of sustainable development guidelines, principles and codes of behaviour for the sector.
At the international level, the OMT has published a number of documents that emphasize the
importance of integrating a sustainable development approach to tourism projects and activities.
For instance, in Article 3 of its Global Code of Ethics for Tourism,
13
the OMT states that:
All the stakeholders in tourism development should safeguard the natural
environment with a view to achieving sound, continuous and sustainable economic
growth geared to satisfying equitably the needs and aspirations of present and future
generations.
This Article encompasses the economic, social and environmental aspects of sustainable
development. In addition, the OMT has drawn up a guide for sustainable tourism development
that also places emphasis on these three elements. The guide stresses that “sustainable tourism
development can fulfil economic, social and aesthetic needs while maintaining cultural integrity
and ecological processes.”
14
Moreover, the guide explicitly states that planning, development and
operation should entail integrated decision-making, “involving different government agencies,
private corporations, citizens groups and individuals.”
15
Both the Global Code of Ethics for
Tourism and the guide for sustainable tourism development also contain clear directives in terms
of equity, fair distribution of benefits and costs, and application of policies to help raise the living
standards of the populations in the regions visited.
10
Ibid.
11
Ibid.
12
Sustainable Tourism, Environmental Protection and Natural Resource Management: Paradise on Earth? Frederico Neto. Paper
submitted to the International Colloquium on Regional Governance and Sustainable Development in Tourism-Driven
Economies. Cancun: Mexico, February 20–22, 2002.
13
See the Web site of the World Tourism Organization for the full Code.
14
Sustainable Tourism Development: Guide for Local Planners. OMT: 1993. See the Web site of the World Tourism
Organization (listed above).
15
Ibid.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 9
South Africa tourism – introduction
General information
The tourism sector of the South African economy has been characterized by rapid growth in the
mid-1990s, followed by more conservative gains recently, and an increasing contribution to
overall employment. The Department of Environmental Affairs and Tourism (DEAT) indicated
in 2002 that South Africa’s tourism sector was the fastest growing export tourism market in the
world.
16
The majority of tourism consumption in SA (67 per cent) is by South Africans. Export tourism
accounts for the remaining 33 per cent. Of the total R92.95bn spent by foreign tourists on their
SA visits, R38.43bn (or 41 per cent) comes into the country, while the rest remains in the source
market, largely due to airfare sales and respective commissions by foreign travel agents.
17
This is
regarded as a normal percentage split in the tourism sector.
18
Through the development of
tourism distribution services and marketing campaigns, SA hopes to claw some of this
percentage back in its favour.
Although there are many similarities between SA tourism services and those in other countries,
the SA tourism sector has also evolved to feature those assets that are uniquely South African.
The best example of this is cultural tourism, which describes the activities of visitors who engage
in the political and cultural history of the country. South Africa’s peaceful transition to
democracy and current process of transformation are widely appreciated throughout the world,
and translates into a very dynamic component of South Africa’s tourism industry, as evidenced
by its repeated mention in provincial tourism strategies.
19
Other forms of leisure and recreation include ecological, adventure, sporting, health and even
educational tourism. Less is known about the percentage of time a foreign visitor is likely to
spend between these classes of tourism activities, although the data permit a broader distinction
to be made between holidays and other purposes of visit.
The South Africa Tourism (SATOUR) slogan, “A World in One Country,” rightly draws
attention to the diversity of SA flora, fauna and landscapes. Around this natural asset an
adventure market has developed, catering to thrill-seekers and nature enthusiasts. The country’s
reputation in several international sports ensures many visitors for SA-hosted events. A choice of
temperate climates in any season is also an attractive feature of the country. On the rise are
multi-purpose visitors who find good value in elective health services and combine their
therapeutic visit with a recreational holiday. Those on work or study permits staying less than a
year would also be considered tourists, as are those who come for business purposes or to attend
a conference.
16
Department of Environmental Affairs and Tourism (DEAT), 2002a.
17
DEAT homepage, http://www.environment.gov.za/parliamentUpdate/QA_Tourism.htm, accessed October 2002.
18
Ibid.
19
See, for example, http://www.capetourism.org/content/greenpaper.doc for the Western Cape province or
http://www.kzn.org.za/kzn/kznta/26.xml for KwaZulu-Natal province.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 10
Economic characteristics of South African tourism
Employment
The generation of employment is one of the strongest recommendations for tourism, and the
Department of Environmental Affairs and Tourism identified the sector as an engine for growth
in its 1996 White Paper. After a doubling of tourist arrivals from 1992 to 1996, it was estimated
that for every eight visitors a new job was created. Currently, it is estimated that there are over
490,000 people employed directly by the travel and tourism industry in SA, representing about
three per cent of total employment. According to the World Travel and Tourism Council
(WTTC), the employment figure rises to over 1,100,000 jobs when one looks at the larger travel
and tourism economy, which would equate to about one in every 14.5 jobs in SA.
There are many labour-intensive features of tourism’s prominent sub-sectors. Typically, the skills
required in this sector are low to medium, and the wages and salaries reflect these requirements.
This means that although there are opportunities for all to participate, the sector suffers from a
lack of status and has trouble attracting people with higher qualifications.
Moreover, tourism does not occupy the place in the SA economy it ought to if one considers the
percentage of GDP attributable to tourism in other economies. The U.S. share, for example, is
10 per cent of GDP while the SA share is about three per cent. If tourism were to grow to this
potential, an estimated two million additional jobs would be created.
20
Since 1999, the DEAT alone has spent over R260m on more than 150 community-based
tourism projects.
21
Although the number of temporary jobs created surpassed 400,000, only
2,300 newly-created, permanent positions exist. The DEAT has also funded additional training
to provide more skilled people into the tourism market, but there has been no follow-up on this
program’s placement success.
There is further a concern over the participation of women in new jobs in the tourism sector.
Although 46 per cent of new jobs in tourism go to women worldwide—far outpacing the
percentage in other industries—the average seems to be somewhat lower in SA.
22
It has been posited
that the high levels of male unemployment are partially responsible for lower female gains.
23
Investment
Capital investment in tourism has been fairly constant since the mid-1990s. This seems odd
when one considers the growth of the industry in the same period. Tourism investment as a
share of GDP has remained constant at just over 10 per cent, which compares well with the
world average of 9.2 per cent.
20
WTTC, 2002. Except where otherwise noted, statistics in this section are from this document.
21
DEAT, 2002
22
Page, 1999.
23
Ibid.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 11
For an analysis of this kind it should ideally be possible to decompose the industry into its sub-
sectors and sources of investment (foreign or local), but as mentioned earlier, data are not easily
refined into these subsets. Furthermore, most of the available data are geared towards developing
marketing strategies for holiday-makers. Although one is able to differentiate between vacationers
and business visitors in the arrivals and departures data, not much more is known about
potential and current investors in SA.
The WTTC forecasts more robust investment figures for the years ahead, with the assumption
that SA will have addressed some of its investor uncertainty and risk issues. Professor David
Kaplan, former chief economist at the Department of Trade and Industry (the dti), has identified
uncertainty as the number one issue plaguing investment in SA.
Exports
The activities and purchases of international visitors are, by definition, measured as exports in
the host economy. Services in tourism are unique among exports because they are consumed in
the same country in which the services are produced. Although exports can refer to the spending
on both merchandise and activities by foreigners, it is only the non-merchandise spending
component that is discussed under the trade in services.
For smaller developing countries in particular, the export share of tourism is the most significant
portion of the industry, and often for the entire economy. In SA, tourism exports represent about
35 per cent of consumption within the industry, and are about 10 per cent of all SA exports.
Tourism exports include a visitor-spending component about 3.5 times larger than the
merchandise component. It is the visitor spending that touches the trade in services issues, since
transport, accommodation, car hire and the like are all service industries. If there were to be a
consequence of trade liberalization, it would be evident in both the share of tourism among
exports and absolute growth in tourism exports.
Government spending
Expenditure by the SA government on tourism services and facilities is considered very small
compared to world averages, and has remained constant at about R130m from 1997 to 2000.
Only recently has it risen to R900m, and this amount still represents just two per cent of
government expenditure. The worldwide average is more than three times this share at 6.8 per
cent. This can be interpreted as a threat to future growth or as a sign of confidence in the
industry. To the extent that government spending is linked to growth, a zero-growth budget for
tourism spending could mean a future bottleneck in the provision of services.
However, SA is unique in that the return experienced from current expenditure is of several
magnitudes larger than most countries. The ratio of tourism’s contribution to the economy
versus government spending is about 15:1, while the world average is about 1.7:1. Interpreting
this is more difficult, but it would appear that SA owes its dividends to other sources than
government spending.
Taxes
Less recent information is available on tax revenues from the tourism industry. In 1998, these
represented R15bn, or about 8.4 per cent of all taxes paid in SA. Of this, R6.6bn is generated
from the wages and salaries of employees in the industry, R5.9bn is the estimated contribution
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 12
from indirect taxes and a further R2.6bn comes from businesses. As tax collection improves, it is
expected that revenues will continue to grow, which also assumes employment and consumption
growth in this sector.
From the above, it can be seen that the travel and tourism sector is managing to defy some of the
negative trends present in other sectors in SA. Employment is growing, and the share of private
investment is on par with that of other nations. Moreover, the consequences of 2001’s terrorist
events were not felt as severely in SA.
South African tourism services regulation
South Africa’s array of tourism-related policies address all three pillars of sustainable
development: economic development; social development/equity; and environmental
protection/conservation. For example, the 1996 White Paper identifies a number of specific
economic, social and environmental objectives.
24
However, with GATS negotiations taking place
in the WTO, the current emphasis is on the trade and economic aspects of tourism.
Presented below is an overview of the regulatory environment of SA as it relates to tourism and
to the trade in services.
25
Tourism in SA is unregulated in the sense that consumption by
foreigners is not subject to controls. A discussion of how trade liberalization affects tourism is
thus not based on any direct controls in this industry, but rather on how other activities that
allow the supply of tourism goods and services in this country are affected by regulation. So in
this respect, the body of regulation that affects tourism is largely the same as that which affects
any other service industry.
Cross-border supply (Mode 1) – focus on financing
Mode 1 covers service flows from the territory of one WTO Member into the territory of
another Member, such as banking.
26
In this sense, foreign firms are not treated differently than
South African firms by lending institutions, except for limits imposed by the percentage of
foreign ownership (described under “commercial presence” below). In its latest requests for the
WTO trade in services negotiations, the EU has requested of SA that this limitation be
suppressed.
27
The SA banking system is known to be efficient and sophisticated, but suffers from
higher real interest rates than those available at equally reputable institutions overseas. Otherwise,
the financial market is not heavily regulated and banks are generally left to set their own criteria
for lending.
There are a number of financing schemes available to consumers of tourism financial services, of
which both foreign and domestic investors should be aware. Previously, the Industrial
Development Corporation (IDC) offered two financing products below prime lending rates for
investors who either developed appropriate tourist facilities in ecologically-protected zones or
improved existing accommodation elsewhere. Now the role of the IDC in tourism has expanded
with the creation of a Strategic Business Unit (SBU) that is focused on broader initiatives.
24
Available online at: http://www.polity.org.za/govdocs/white_papers/tourism.html.
25
DTI, 2001. Except where noted, regulations cited in this section are from this source.
26
See World Trade Organization Web site section on GATS: http://www.wto.org.
27
EU Ad Hoc Committee – Services, 2000.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 13
Using partnerships with the dti, Khula Enterprises and the Development Bank of Southern
Africa (DBSA) to encourage investment in other types of tourist facilities, the SBU has helped to
develop convention centres, cultural villages and health tourism facilities. The IDC also offers a
discounted rate on the funding of operations that will create new employment opportunities.
The criterion here is that the capital cost must not exceed R100,000 for each opportunity
created.
However, the SBU fears that the market may soon be saturated in SA, and so is also turning its
attention to neighbouring countries.
28
The IDC starts funding at R1m, so this precludes
development in the small, medium and micro-sized enterprise (SMME) category.
These schemes are still largely targeted towards the making or refurbishing of upper-end
establishments by investors with sufficient collateral at their disposal. The 1996 White Paper
identified this as a problem area because (a) there may be a surfeit of five-star properties already
and (b) participation in the tourism economy is not enhanced by the continued exclusion of
groups without access to funding.
29
It goes on to quote independent consultancy Kessel
Feinstein as saying the current incentives are “so little as to be meaningless in encouraging any
development.”
Consumption abroad (Mode 2)
Consumption abroad refers to situations where a service customer (for example, a tourist) moves
into another WTO Member’s territory to obtain a service.
30
For the most part, this mode covers
tourism or education abroad. Activities of foreign individuals who remain in SA for less than one
year (including those who enter with work, business or study permits) can be classified under
tourism. Thus the movement of these people into the country is a matter of tourist regulation
and, by extension, affects Mode 2 trade in services. The government fully manages this aspect of
regulation, although members of the tourist industry have a larger stake in seeing greater
liberalization and hence a freer movement of people.
As far as SA regulation is concerned, foreigners are not treated differentially in their consumption
of services, and there are no Mode 2 requests at present.
However, under the present arrangements, not all members of the WTO are granted equal entry
rights, as is the eventual goal. Citizens of the U.S., Canada, Japan, Australia, New Zealand and
most of the Western European nations receive preferential treatment for a variety of reasons:
reciprocal arrangements, low history of visit-length violations and their value to the economy in
terms of spending per capita. Typically, these nationals are issued visitor permits on arrival for
stays up to 90 days according to return/onward flight dates. Upon supplying further proof of a
bona fide intention as a visitor (such as means of financial support) and at the discretion of
immigration officials, these nationals can request a temporary residence permit valid for up to
one year.
28
Dampier, 2002.
29
1996 White Paper.
30
See World Trade Organization Web site section on GATS: http://www.wto.org.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 14
As of November 2000, nationals of neighbouring Southern African Development Community
(SADC) countries do not enjoy the same treatment, and are granted visits not exceeding 30 days on
average. Research conducted by SATOUR shows that nationals of these countries generally come on
much shorter—but more frequent—visits than their overseas counterparts.
31
In fact, SADC citizens
represent the greatest proportion of foreign visitors.
32
Given the frequent nature of their visits, if
their shorter lengths of stay are not the result of the relatively more restrictive visa conditions towards
SADC nationals, then it would do no harm to extend the stipulated period of visit.
Commercial presence (Mode 3)
The establishment of a commercial presence in SA is an area subject to regulation, and more
particularly if the South African company is 75 per cent or more foreign owned. Such companies
are known as “affected companies” and are limited in the amount that they may borrow from SA
sources. Companies that are 100 per cent foreign owned can borrow up to 100 per cent of their
effective capital. The percentage allowed increases as the percentage of South African ownership
increases, according to the formula:
100 per cent of effective capital + (per cent SA interest/per cent foreign interest) x 100 per cent
Thus a situation may arise where the repatriation of funds would not be permitted if the amount
of effective capital would be reduced to a point below what is required to have qualified for SA
financing.
This, however, is somewhat less restrictive than the 10 per cent foreign asset base limitation SA
firms face. Although this was recently improved from five per cent, it does not permit the same
flexibility in investment as is possible for foreign-owned firms. Residents must obtain permission
from the National Treasury through its agents—the exchange authorities—when converting large
sums of rands into foreign denominations. However, there have been no restrictions for non-
residents on exchanging rands since the abolition of the financial rand in 1994. Likewise, there
are scarcely any controls over the repatriation of investment income.
The controls that do exist are maintained to prevent capital flight, although they may ironically
contribute to weak investment through the uncertainty they impose. Controls might cause
potential investors to question the reasons behind the enactment of such restrictions, and
ultimately may serve only to advertise and substantiate perceived risk.
In terms of labour, potential investors should be familiar with some of the legislation, including
the Basic Conditions of Employment Act (1998), the Employment Equity Act (1999), and the
Skills Development Act (1998). SA has made enviable strides in legislating the rights of workers,
which are on par with those of developed nations. Trade unions are also well organized and exert
a lot of upward pressure on nominal wages.
There are two aspects of the labour market of interest to foreign investors. Under the Skills
Development Act, foreign investors are expected to import new technologies to improve productive
capacity. It is unclear how the legislation addresses this issue and whether there is a monitoring
process in place. Secondly, given the relatively high unit cost of labour compared with other
markets in SA, there is much scope for examining the role this plays in investment as well.
33
31 SATOUR, 2002b.
32 Stats SA, 2001.
33 Fedderke, 2001.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 15
Regarding other issues, business registration, land acquisition and land re-zoning are further areas
of regulation that affect commercial presence but which are neither discriminatory toward
foreign investors nor unduly encumbered processes. Tax incentives are offered for industrialists
involved in export, but schemes for attracting overseas investment in tourism are not as well
known. This problem was also identified in the 1996 White Paper, which recommended that
either a new institution devoted to tourism be created or that the existing State institutions be
more aggressive about funding this sector.
Presence of natural persons (Mode 4)
According to the GATS, the presence of natural persons consists of persons of one WTO Member
country entering the territory of another Member to supply a service—such as their labour. Foreigners
planning to work in SA are not officially differentiated by nationality. For a foreign national to enter SA
with the intention of working, certain standards must be met that show the country will benefit from
the person’s skills, and that these same skills are not possessed by a South African who could fill the
desired post. These clauses are expressly designed to protect the domestic labour market but are
arguably more restrictive than necessary. First, they provide for the use of a much stricter standard of
credential analysis than exists in the domestic labour market. Secondly, prospective employers are
required to draw up a plan of skills transfer from the foreigner to a South African citizen who will hold
the post in the long run. This places the onus on the employer to (a) find or have employed an under-
qualified SA candidate at the time of the foreigner’s application and (b) arrange for training that might
better be accomplished through the educational system, professional organizations or other means than
its foreign employees. The assumption is that the qualifications of the foreigner are of the sort that
cannot be obtained in SA, rather than the sort that may simply be scarce in SA for other reasons.
Requirements for those seeking business visas—whether they are representing a foreign business,
visiting a branch office in a temporary capacity or exploring investment opportunities—are less
stringent than for those seeking work visas. Key personnel transfers to SA branches of foreign
firms are also more easily secured, and the movement of these persons need only be justified in a
letter to Home Affairs. Secondments, or employees paid outside of SA for their work inside the
country, require only a visitor visa.
As of 2001, work (and study) permits could be obtained for a three-year period rather than
having to renew the permit yearly. This move reduces the administrative burden on both the
permit-holder and the Department of Home Affairs, but has little impact on the movement of
labour. As part of the WTO negotiations on trade in services, the European Union (EU) has
requested SA to reduce the credentialing criteria for certain professional sectors to one year of
experience and a university degree or equivalent professional diploma.
34
When referring to the tourism industry, the movement of natural persons has consequences for
both SA and foreign businesses. Foreign-held businesses are more easily able to import labour
under secondment and transfer arrangements, so it is possible to imagine that some might
benefit from overseas expertise. However, given the adequate skills base in SA, it is unlikely this
would occur for any but the most senior positions. Still, foreigners in the SA tourism industry
might possess a level of education, global experience and linguistic or cultural affinity with
clientele that a SA employer might find desirable but inaccessible. Finally, and although the
effect would be longer term, the opening of the tourism labour market would help to remove
wage pressure that existed for the most senior positions. If skills for such jobs are scarce within
SA, then welcoming more foreigners could relieve this pressure.
34
EU Ad Hoc Committee - Services, 2000.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 16
Case studies – methodology
To explore possible links between the regulatory environment and sustainable development
through tourism, the authors will present findings from a microeconomic study that illustrates
these processes in selected SA coastal communities. While it would have been desirable to
conduct a more precise macroeconomic analysis of tourism in SA, owing to the diversity of the
industry participants and the indistinct definition of tourism services, it was decided that a case
study approach would be sufficient to highlight the salient features of tourism and sustainable
development—even if not able to do so in a representative manner for all experiences of tourism
in SA.
In this instance, the authors chose to look at the eco-tourism segment of the tourism market.
Eco-tourism is a fast-growing sector of tourism in SA, as evinced by the DEAT’s drafting of an
Integrated Eco-tourism Development Plan for 2003.
35
Land that might have previously been
used for agricultural and forestry products or mining is becoming more profitable as an
attraction in its natural state.
This phenomenon is demonstrated in the focus of two coastal spatial development initiatives
(SDIs) located at either end of KwaZulu-Natal Province. Both the Lubumbo SDI and the Wild
Coast SDI began as infrastructure development plans that later tapped into the wealth of eco-
tourism. When the inherent value of the land as a tourism asset began to be realized, a shift in
focus took place from infrastructure development for general use to that designed for the specific
use of tourism. As a result of this shift, land that was likely to be given over to mining in both
SDI areas may now be set aside for eco-tourism. The Lubumbo SDI incorporates both the
Greater St. Lucia Wetlands Park and Phinda Game Reserve, while the Wild Coast SDI hosts the
community-run Amadiba Adventures coastal hiking and horse trail.
This paper adopted the use of a property rights (that is, Coasian) approach to analyzing the
incentive structures under various forms of ownership. To facilitate this, it was necessary to
control for the environment as far as possible and to vary the form of ownership (or
management structure) to understand the incentive to conserve the natural environment, create
new employment opportunities and actively attract visitors to the site. Once these questions have
been asked, the remaining concern was whether tourist throughput and the associated incomes
were sufficient to sustain these efforts.
There was insufficient data in the public domain to facilitate this form of analysis without field
visits and additional qualitative research. The key stakeholders needed to be interviewed in
person and their feedback assimilated into the framework of the discussion. In short then, using
a careful selection of case studies, these aim to:
1) Examine different forms of ownership including:
I
private ownership;
I
community ownership; and
I
government/public sector ownership.
35
DEAT, 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 17
2) Explain the institutional dynamics of each of these forms of ownership. Particular attention
will be given to the following aspects and the extent to which they might promote (or
discourage) sustainable development and a culture of environmental conservation:
I
principle-agent relations;
I
asymmetry of information; and
I
incentive structures (both positive and negative).
3) The extent to which increasing competition, efficiency and openness might encourage
growth in the tourism received by these destinations.
4) The likely impact that growth might have on poverty and job creation in each of these cases.
In accordance with this methodology, and to further explore the eco-tourism segment, the
following sites were selected as case studies:
I
Phinda Game Reserve – KwaZulu-Natal: private ownership;
I
The Greater St Lucia Wetlands (GSLW) Park – KwaZulu-Natal: government
steward-ship; and
I
Amadiba Adventures – KwaZulu-Natal/Eastern Cape: community ownership).
At each of the three targeted sites, initial consultation with available contacts and other
researchers helped to identify the correct spokespeople within the relevant management
institutions. In many cases, more than one organization, and more than one spokesperson, was
approached to provide a more comprehensive understanding of the management context.
Meetings with the targeted respondents
36
took the form of an in-depth qualitative interview.
Discussions were structured around specific predetermined themes or topics to ensure that the
same ground was covered in all conversations. The report below is structured around the themes
of these interviews, and pertinent information from each case study is presented under each topic
heading for purposes of comparison.
Background on the case study sites
The Phinda Game Reserve
“Phinda is acclaimed as South Africa’s most responsible wildlife tourism project,
with its goals of wilderness restoration and community participation.”
37
Owned and run by Conservation Corporation Africa (CC Africa), Phinda is situated within
17,000 hectares and seven distinct ecosystems in Zululand, northern KwaZulu-Natal. Phinda has
earned a worldwide repute for its diversity and scenic wonder and the Web site for the resort
describes it as the “nucleus linking nearby conservation areas in the creation of the Greater St
Lucia Wetland Park,” and claims that “Phinda has ensured the bio-diversity of this remarkable
region.”
38
36
The terms “spokesperson” and “respondent” are used interchangeably in the subsequent narrative and the reader should be
aware that they carry the same meaning. Details of the meetings and spokespeople can be found in Appendix C.
37
http://www.africantravel.com/cca/phinda2.html accessed 05/12/02
38
http://www.southafrica-travel.net/Parks/e_lucia.htm, accessed 4/12/02
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 18
Greater St. Lucia Wetlands Park
Greater St. Lucia Wetlands Reserve comprises a river mouth approximately 60 km long, which
forms a lagoon parallel to the coast. The lagoon is separated from the sea by a ridge of dunes.
There are countless species of fish and an equally impressive variety of birds. Another attraction
is the chance to see hippos and crocodiles. With about 1,500 specimens, the crocodile
population in the St. Lucia Lake is the biggest of all the animal parks in SA. The park offers
camping sites and holiday facilities of varying degrees of luxury. On weekends, these are usually
filled with visitors from nearby Richard’s Bay and the city of Durban.
Amadiba Adventures
Amadiba Adventures was initiated by PondoCROP (a regional NGO
39
) in conjunction with the
Amadiba Coastal Community Development Association (ACCODA). The Amadiba Horse and
Hiking Trail is a wilderness trail that runs along the northernmost section of the Transkei Wild
Coast in the Eastern Cape, from the Mzamba River to the Mtentu River. Accommodation in
tented lodges, the hire of horses, tour-guiding and catering is supplied by small business
enterprises owned by members of the local community.
PondoCROP, ACCODA and Triple Trust (an NGO focusing on skills development) are working
together on the development of the region’s low-impact eco-tourism trail. PondoCROP holds
responsibility for the development of the new trails, strategy planning and the development of
appropriate business plans. Triple Trust handles the training of involved community members to
ensure appropriate skills development, and the community group manages the operationalization
of the trails.
This initiative has recently benefited from an R80m investment by the EU into the Wild Coast
region over a five-year period, and Amadiba Adventures is one of a number of beneficiaries. The
initiative is going into its third year under its original development grant from the dti. Figure 1,
provided by the Amadiba respondents, explains how the institutional arrangement of Amadiba
Adventures operates.
The trail, use of the land and the funds generated are all the property and responsibility of the
Amadiba Community, which is represented by ACCODA (hence the selection of this site by the
authors as a community-owned initiative). Representatives from PondoCROP, ACCODA and
the booking agency were interviewed, as well as representatives from the community active on
the trail, such as the guides, cooks and camp keepers. The views discussed below reflect a
summation of these interviews.
39
Non-governmental Organization
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 19
Figure 1: Structure for the management of Amadiba Horse and Hiking Trail
The community owns the Horse and Hiking Trail. ACCODA makes decisions
on behalf, and in the interests, of the broader community. PondoCROP provides
ongoing support during hand-over. The business units are self-managed and are
all represented on ACCODA. The Facilitation and Support Unit builds capacity
within the business units, enabling them to become effective interdependent
units of the overall business. Macro-marketing initiatives for the Wild Coast area
(Booking Agency) are closely linked with the Central Administrative process.
Source: Amadiba Horse and Hiking Trail: A Brief Overview
PondoCROP
Community
ACCODA
Booking agency
Facilitation
and support unit
Kwanyana
Campsite Guides and
horse organizers
Mtentu
Campsite
Central
administration
= Profit generating centres
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 20
Tourism and sustainable development: case studies
40
Social development/equity
Phinda
CC Africa
Poverty alleviation
The respondent claims that the dependency ratio in the area is 10 to one, that is, for every single
income earner in a household there are 10 dependants. They, therefore, claim to be supporting
about 2,500 members of the local community (which reportedly constitutes almost 25 per cent
of the local population). The respondent claims that there is a 45 per cent unemployment rate in
the area, which would make Phinda the largest employer, serving nearly half of the employed
population.
Education and health provision
Consideration for sustainable development is integrated into CC Africa’s decision-making at
every step. In an effort to strengthen co-ordination, a classroom will not be built without an
undertaking from the government to provide a teacher for at least five years, while a clinic will
not be built without similar guarantees that it will be staffed and stocked.
Legislative improvements that enable the opening of other game farms
Phinda claims a significant contribution to growth and employment in the northern KwaZulu-
Natal region. Before the park opened up, the land was under cattle farming, with some small
proportion under pineapple farming.
When development of the park began, there was no legislation regulating the retention of “big
five”
41
game on private land, nor was there legislation permitting (or regulating) buffalo on
private land. Phinda claims the credit for getting this legislation formulated and passed.
According to the Phinda representative, the park had substantial support from the people on the
ground but higher up the legislative hierarchy, the agents became more risk-averse and less
willing to assist the project. Despite the reported lack of active support from regional and
national government, the legislation was passed and Phinda was permitted to contain the big five
on its land.
When asked to explain the reason for the risk-averse behaviour by certain government agents, the
respondent gave as example the attempt to introduce cheetah into public (that is, government-
run) game parks. This attempt was unsuccessful for a number of reasons, resulting in a net loss
of some 100 cheetah by the public authorities. The Phinda reserve has also introduced cheetah;
however, its experience has been a net gain of some 100 head of cheetah. The respondent was
asked to suggest a possible explanation for the difference between the negative public park
40
The information presented in this section has been verified wherever possible, and relies chiefly on interviews with those
involved in managerial or representative capacities at each of the case study sites. These interviews should be considered the
source where no other is cited. Details of those interviewed are presented in Appendix C.
41
Lion, leopard, buffalo, rhinoceros and elephant.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 21
experience and the positive private park experience as far as the reintroduction of cheetah was
concerned and his answer related directly to factors of institutional arrangement. In the private
environment, accountability for the loss is directly attributable to the person working on the
project and the loss of a cheetah means loss of money. The respondent painted a picture of
government bureaucracy where the person responsible for the loss of the cheetah in the public
sector simply enters it in a journal and is never expected to explain the loss. This, of course, is a
claim that is impossible to verify.
Promotion of the northern KwaZulu-Natal region
The Phinda representative claims that before the development of the Phinda reserve, the
northern KwaZulu-Natal region had no market presence as a top-end facility. Phinda became a
flagship for the Maputaland region and needed to promote the region as a whole before it could
promote the resort itself. The respondent cited a joint DBSA and World Bank report that details
some indicators (see Table 1 below) of tourism growth in the region.
Table 1: Tourist accommodation measurements for Greater St Lucia Wetlands park region
1991 2000
Number of structured beds Less than 4,000 12,000
Number of foreign tourist arrivals to the region 2,000 8,000
The Phinda representative also claims that its promotion of the region—which came at a heavy
financial cost with no assistance from the State—opened the door for the Greater St Lucia
Wetlands Park, although he does not believe that the Park has maximized its potential for
development.
Infrastructure development
The positive externalities being reaped by other reserves such as the GSLW reserve do not end
with benefits from the promotion of the region. Phinda claim to have initiated the development
of infrastructure in the region, which not only made other resorts a viable possibility, but also
contributed to the upliftment of local communities. The most notable of these was initiating the
building of a major SDI road, which took place in 1994 during a period of what the respondent
describes as “pre-election political inertia.” Getting the road project off the ground cost CC
Africa a reported R500,000 in ministerial visits to the region and other forms of facilitation.
Consequences of trade liberalization
In most cases it was difficult for respondents to distinguish any direct impact from trade in
service negotiations on the effectiveness of tourism’s delivery of sustainable development. Phinda
has been successful at reaching out beyond SA for financing and the funding of its projects, so
trade liberalization would probably entail no significant change to such endeavours. If one were
to assume an increase in the number of foreign-owned, private game reserves, it is arguable that
sources of funding for Phinda may decrease as they transform into sources of new ownership and
competition. There is little reason to believe in a fixed number of foreign investors, so this
scenario would appear unlikely. It is more plausible to expect Phinda’s continued support of the
surrounding communities to be consistent with the growing trend of overseas visitors in SA.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 22
The Africa Foundation
Infrastructure provision
Aside from employment and training, the Phinda resort—through the Africa Foundation—takes
visitors into the local community and encourages them to assist in building local facilities. This
initiative has raised some R10m in the last 10 years and this money has been used to build a 24-
hour clinic with 10,000 people on the books and 45 classrooms schooling as many as 3,500
children. This is done in co-operation with the government and no classroom is built without an
assurance that a teacher will be provided to teach in that classroom.
Another way in which Phinda has attempted to bring about poverty relief in the surrounding
community was through the purchase of vegetables from local farmers to meet the resort’s
catering needs. Unfortunately, the lack of infrastructure (irrigation particularly) and low rainfall
in the area prevented the success of this project and fresh produce is now purchased from outside
the area. When asked about the possibility of an irrigation scheme, the respondent pointed out
that tap water needs to be made available to people before it can be made available to plants—a
point which illustrates how much development remains to be done in the region.
The Africa Foundation representative made it very clear that without tourism the Foundation
would not have come into being. In the first five years of its existence (as the Royal Investment
Fund), the Foundation was entirely dependant on funding from CC Africa and hence on money
from tourism. Without the Foundation, it is highly unlikely that the classrooms and clinic would
have been built.
Growth through infrastructure and skills development
The Africa Foundation began as a division of CC Africa known as the Royal Investment Fund.
The Fund was primarily tasked with the responsibility of involving local communities in
community development projects. Difficulties in separating funding applications for CC Africa
in general and the Royal Investment Fund in particular led to the removal of the department
from the CC Africa fold and the formation of the autonomous Africa Foundation, which stills
works closely with CC Africa in the vicinity of Phinda. The locality serviced by the Africa
Foundation includes the areas of Nibela, Mduku, Mnqobokazi and Kwajobe, cumulatively
populated by about 50,000 people.
The Foundation is funded primarily (but not solely) by funds contributed by visitors to the
Phinda resort. A representative of the Foundation will visit tourists at the resort, give them some
background to the communities living on the borders of the resort and, if they are interested,
take tourists on a cultural visit to local schools and clinics. These visitors often end up
contributing money to the development of the areas they visit and this forms a substantial
portion of the Africa Foundation’s funding. By working closely with the communities, the Africa
Foundation has structured a communication process whereby communities bring proposals for
development to the Foundation, that in turn applies to the central office in Johannesburg for
approval of the funding. Once the funds have been granted, the Foundation reverts to the
community and assists in setting up the project (be it a classroom, clinic or other project). The
idea of assisting the community at every step throughout the implementation of the project is to
ensure that skills are developed as part of the process and that the community is able to maintain
its new resource without ongoing help from the Foundation. Community participants are also
required to make some contribution to the building of the project. The relatively impoverished
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 23
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 24
status of these communities prevents them from giving money but they are required to give time
and to assist with bricklaying, cementing or bringing water to the building site. This aims to
inculcate a sense of ownership rather than a sense of entitlement.
The respondent defines the Foundation’s success in terms of the longevity of its projects, and this
longevity is attributed to the close process of consultation and involvement not only with the
community involved but also with other stakeholders. For example, no classroom will be built
without an undertaking from the KwaZulu-Natal government to supply a teacher. No clinic will
be built without a similar undertaking to supply nurses, medicines and a doctor (even if that
doctor is not part of the full-time staff.). No infrastructure will even be considered for funding
without first establishing that the community have the right to occupy the premises and that the
community who will benefit from the project is equitably constituted, that is, that funds are not
channelled to chiefs and their families, as is often the case.
Employment through empowerment
These projects contribute to employment through the development of skills and through the use
of local contractors for building and other services and supplies. These contractors are required
to tender for the work and thus gain some experience with the tendering process, albeit on a
small scale. The community is normally asked to nominate at least four builders in the area to
ensure reasonable pricing and good quality. There are also secondary growth and employment
benefits as more classrooms contribute to a better educational environment for learners.
Similarly, the building of clinics ensures easier access to healthcare and less time spent off work
due to illness.
Greater St Lucia Wetlands Park
The St. Lucia Wetlands Authority
Health and social programs
The St. Lucia Wetlands Authority is able to cite a number of programs to alleviate poverty (and
the effects of poverty), although few of them are managed or initiated by the Authority itself.
These include:
I
a malaria program to reduce the incidence of the disease in the area;
I
crafts, which have assisted about 400 crafters to build skills as well as links with
markets;
I
cultural programs targeting youth;
I
a new partnership with THETA that aims to launch skills development programs in
the area;
I
the use of local labour to build fences in the area; and
I
the use of local labour to build roads.
Of these examples, the use of local labour to build the major SDI road through the region is
perhaps the most significant. According to the respondents, 68 per cent of the services used in
the development of the Hluhluwe-Maputo road in the Lubumbo SDI come from local small,
medium, and micro-sized enterprises (SMMEs).
The SMMEs have gained not only an opportunity to ply their trade but also an opportunity to
develop skills, particularly tendering skills, which have enabled them to tender for other jobs.
At an activity level, the Authority claims to be targeting SMMEs for guiding. They are currently
devising a tender process for concessions that would prescribe equity requirements for all tender
candidates. These criteria would also apply to any applications to develop new accommodation
facilities in the region. This proposal has met with some resistance in the racially volatile area.
According to the respondents, some groups see the Authority as a national body with an African
National Congress (ANC) agenda rather than one with the best interests of the Park at heart.
This resentment has been fuelled by delays in the processing of tenders and entitlement issues.
From an institutional perspective, the respondents did make it clear that private managers are
being sought to take over accommodation facilities and relieve the public sector of the risk of
running these facilities. The public facilities in the Park are currently running at a loss and it is
hoped that private management might restore some financial balance.
Growth and land redistribution
The representatives of the Authority were quick to point out that the development of a tourism
industry in the St. Lucia area was starting off with a low base, and that significant input was
required to allow for potential growth in tourism (and thus in the benefits that tourism could
bring to the region). These respondents believe that the Park is now positioned to “take off.”
The area constituting the Greater St. Lucia Wetlands Park initially consisted of 16 separate
parcels of land. The St. Lucia Wetlands Authority was established with the directive of
consolidating these parcels and instituting a single institutional and regulatory framework for the
area, which has historically been dogged by stalled development. In some cases, it is reported that
developments in the area have been delayed for up to 10 years. Defraying this backlog while still
keeping pace with new applications poses a considerable challenge to the new Authority.
However, it is hoped that the newly streamlined process will meet with success.
The establishment of the Authority also signals a shift in the way in which conservation is
managed in the area. The community is reported to be resentful of past conservation efforts as
they were forcibly removed from land without any remuneration or share in the benefits of the
conservation efforts. These communities were competing with the environment for survival. This
situation is being redressed in a number of ways. To address the historical imbalance,
communities are being invited to submit lands claims for restitution. Four claims have already
been processed and a further six are pending. Under the most recent system of compensation, a
nominal solatium is paid, which acknowledges suffering, and grazing rights are granted.
However, the bulk of the restitution package is tied up for development, which enables the
community to benefit from the future development of the land. In short, successful claimants are
granted title with restricted use.
The representatives of the Authority see their goals as:
I
ensuring tourism development;
I
regulating conservation; and
I
ensuring that the conservation that does happen benefits the people affected.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 25
As a conduit to the realization of these goals, the Authority has a management agreement with
KZN Wildlife, formerly the Natal Parks Board, an organization with a long track record in
conservation in the KwaZulu-Natal region.
Employment with potential for improvement
According to the respondents, approximately 500,000 people live in the area, which was
described during the interview as a “previously cut-off former homeland.” The area was
considerably underdeveloped and the building of the Pongola Dam in the region had adversely
affected the flood plains. Agriculture and tourism were the only industries in the area and
agriculture was not considered by the respondents to have been a success, despite the large tracts
of land still occupied by commercial forests, pineapple farms and sugar cane. Tourism, however,
has created approximately 3,500 direct jobs. Only 350 of these jobs are within the Hluhluwe-
Umfolozi Park and the private game lodges. Concerns about the impact of tourism on
employment are two-fold: (1) the sorts of jobs being created at present are unskilled, menial jobs;
and (2) the majority of the tourist beds in the St. Lucia area are self-catering beds, which create
less employment than other forms of accommodation. The concerns do, however, speak to a
potential for further employment creation in the area as a direct result of tourism.
The St. Lucia Tourism and Publicity Association (SLTPA)
The aim of greater growth potential than is currently being realized was reiterated at a meeting
with the St. Lucia Tourism and Publicity Association. The Association consists of a number of
local business people operating in and around the town of St. Lucia. Many of the respondents
own self-catering holiday accommodation, guesthouses and bed and breakfast establishments.
The respondents agreed that the effect of tourism on growth and employment in the area had
been positive, but far from reaching its potential for the area. They attribute the poorer growth
performance to three key reasons:
I
failure to promote St. Lucia as a tourist destination;
I
the recent ban of 4x4 driving on the beach, which resulted in a decline in the
number of domestic visitors in the area; and
I
failure by the institutional legislative bodies managing the area (KZN Regional,
Nkanyakude and the St. Lucia Wetlands Authority) to co-ordinate their activities.
Co-ordination of management bodies to ensure greater growth and employment
It was the consensus of the group that a lack of property rights between the legislative bodies has
resulted in inertia. Simple problems such as the construction of new ablution facilities on the
beach and then the failure to maintain them were cited as examples of this lack of action.
However, the most serious example given is the perceived failure to promote the area—a
responsibility that the group sees as falling within the ambit of the legislative bodies. The group
went on to claim that no head for the local SDI has yet been appointed formally and that they
are struggling to get any decisions ratified. The SDI has apparently been waiting for four years
for such an appointment, the lack of which was cited as a further example of institutional inertia
in the region.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 26
The ban on 4x4 beach driving – a story with two sides
The 4x4 beach-driving ban from St. Lucia northwards to the Mozambican border was
announced by the DEAT in November 2001. Environmentalists argued that aside from the
nuisance for those wishing to enjoy the beach, off-road vehicles damage dune structures by
killing surrounding vegetation and destroy or severely threaten bird and turtle nesting sites.
However, the SLTPA has since pointed to research that contests the claim of dune damage, and
has suggested alternative measures that would allow off-road vehicles limited access without
threatening nesting sites.
42
The Association has also pointed out more urgent issues that need to
be addressed, such as unsuitable forestry lands that drain the water table, polluting effluent from
the sugar cane fields into the estuary; and prawn trawling methods that damage coral reefs and
breeding grounds of demersal fish.
According to the SLTPA, 90 per cent of the visitors to St. Lucia and surroundings are domestic
and only 10 per cent are international. The ban on beach driving has severely reduced the
domestic visitation to the area (according to the respondents there has been a 71 per cent drop in
business since January 2002). The respondents claim that 10 businesses closed in the six months
before the interview date, and that one of the two local supermarkets will also be closing after
Christmas 2002. This decline obviously has an impact on employment opportunities in the area
and the respondents spoke of the surviving businesses expecting more hours from current staff
rather than up-staffing for the Christmas season. The respondents also claim that domestic
tourists spend more in the town than foreign tourists, as domestic tourists tend to stay in self-
catering accommodation and shop in and around the town for provisions, while foreign tourists
tend to be either day visitors or customers of holiday packages, the profits of which remain
outside the region.
While these impacts are significant, there appears to be another side to the story. Those local
business people who do operate establishments catering to foreign tourists are thriving. The bed
and breakfast establishments and guesthouses are fully booked. If catered accommodation is
more labour-intensive than self-catering accommodation, surely an employment trade-off
presents itself? Will jobs shed in the local supermarkets and self-catering industry not be
absorbed into the catered accommodation industry? Is it not possible for self-catering
establishments to absorb some portion of the excess demand for catered accommodation by
providing catered accommodation options?
The key here is that, while this may be possible, institutional failure has prevented it from
happening in the short- to medium-term at least. The ban was instituted too quickly and,
arguably, with too little consultation for local business people to adapt to the changes in their
operating environment. The result is that self-catering accommodation supplies and the
secondary industries (such as supermarkets) which benefited from self-catering visitors are barely
surviving—and they are taking the matter to court. Their focus now is on overturning the beach
ban rather than reversing their business fortune in more imaginative ways and working with the
beach ban. In short, the result is that the fragile ecology of the St. Lucia beach is once again
threatened because of an apparent institutional failure to implement change appropriately,
promptly and in a consultative fashion.
42
http://www.environment.gov.za/NewsMedia/MedStat/2000jun22_3/Lubombo_22062000.htm
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 27
Thus, while the market is currently aligned to favour domestic visitors, it continues to forego an
opportunity of potential profits from the overseas market. Here, the foreign competition has
been more successful at marketing and selling the destination to overseas visitors. Somewhat
ironically, this is the type of competition that local suppliers fear will erode their current
customer base in other markets, whereas in St. Lucia this segment has largely been ignored in
favour of the domestic visitor. Rather than serving as an example of the dangers of increased
competition from liberalization, St. Lucia may yet provide an interesting case of how foreign
market presence will have encouraged competition from domestic suppliers.
KZN Wildlife
Labour issues
The respondent from KZN Wildlife expressed concern that most businesses in the area use the
local community like farm labourers in low-skill, low-reward jobs. At present, no significant
attempt is being made to train unskilled workers into more responsible positions. While
authorities are trying to address this problem through co-management projects that ensure
capacity building and sustainable program development, this process is not without its problems.
Some co-management institutions are coming into the area through the tribal authorities, a
process that fosters nepotism and benefits only the tribal authorities and their friends and
relatives. This in turn creates resentment among the broader community and threatens the long-
term sustainability of these initiatives.
The respondent believes that entry points into the community should be through the subsistence
structures and that care should be taken to ensure fair processes and representation.
Training and capacity building
KZN Wildlife is also concerned that, for historical reasons, local communities have low levels of
capacity and lack the confidence to show initiative in the development of new projects. The
respondent is further concerned that training and development can be very “stop-start”—her
feeling is that these initiatives should take the shape of ongoing partnerships with communities
that span at least five years or more. Again, co-management projects are seen as the ideal vehicle
to operationalize this proposal. Skills development should be seen as a long- or medium-term
project.
Amadiba Adventures
Employment creation and skills development
Amadiba Adventures has mainly contributed to poverty relief through employment creation,
skills development and empowerment through the ownership of resources. The Amadiba Coastal
Community Development Association is responsible for deciding how the profits from the trail
are disseminated and for the present, the community has elected to reinvest the money into the
business.
Although local schools sorely need the investment and there is no clinic or hospital of any kind
in the area, the community reasons that investing in such infrastructure is futile if the business
cannot afford to maintain its upkeep. With sufficient growth in the business, it hopes not only
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 28
to build classrooms and clinics but also to be able to employ teachers and nurses that it does not
believe the government would be prepared to provide out of public funds.
Two possible weaknesses might pose challenges in the future. In the first instance, there is the
possibility of community envy. One respondent claimed that “people are talking.” When he got
involved in ACCODA he was a thin man, now he is fat and he drives a car (both symbols of
wealth in this community). He does not see this as a problem at the moment but if the
community continues to reinvest all profits back into the business and concern grows that
certain stakeholders are enriching themselves from those profits, the initiative may fall victim to
in-fighting.
The organizing bodies (and the community) are very aware of this problem. A similar initiative
at KwaDapha in the Kosi Bay region failed for this and other reasons. In an attempt to reduce
the level of suspicion as far as possible, the profits from the trails are not held within the
community; instead PondoCROP acts as “banker” for the project. This solution raises its own set
of problems, as one respondent pointed out. Since the system is becoming institutionalized,
PondoCROP will at some stage want to remove itself from the project and leave it to the
community to run. Without the skills to manage the finances, the project might be at risk when
such a time comes.
Environmental conservation/protection
Phinda
CC Africa
Phinda has taken over 15,000 hectares of heavily degraded farmland and restocked it with
wildlife. It is the respondent’s belief that, had Phinda not taken over that land, the farming
practises would have “bumbled along” until the money ran out. Conservationists had long
targeted the land; however, a lack of money to purchase it had prevented any action. Private
investors eventually provided the money, and the vision had the approval of the ANC, the
Inkatha Freedom Party (IFP) and the National Party (NP)—the three strongest political parties
in the country at the time.
Phinda views the communities residing on the borders of the park as the greatest potential threat
to its ecology. The respondent believes that this is a function of education among a people
equipped for a nomadic lifestyle, but who now live a sedentary one. For this reason, the resort
has developed extensive outreach programs (through the Africa Foundation) into communities,
not only to re-educate but also to provide some direct benefit to the communities from the
tourism that Phinda receives.
The Africa Foundation
The respondent from the Africa Foundation expressed a similar view as other respondents when
he indicated that convincing local communities that environmental conservation was in their
best interests was no mean task because of a history of marginalization in the name of
conservation. To illustrate Phinda’s success in this area, however, he gave the example of Nkosi
Kumede, an influential local figure who has put in a claim for the restitution of land adjacent to
Phinda. Nkosi Kumede has publicly announced that if he wins the claim, he wants the land to
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 29
remain under Phinda management because he supports its formula of conservation and eco-
tourism to provide lasting benefits to the surrounding communities.
Greater St Lucia Wetlands Park
The St. Lucia Wetlands Authority
The Authority inherited an area that has a history of the State dabbling in forestry and cattle
farming, as well as over-hunting. Efforts are now being made to re-introduce indigenous species
to the area, approximately 20,000 hectares of commercial forests are reported to have been
removed, and the respondents expect this to increase significantly by 2004. A road running
through the Cape Vidal swamps was also relocated at a cost of about R2m.
The respondents attribute this return to conservation directly to tourism, which has replaced a
proposed mining project as the main industry in the area. However, their work is not yet done.
Plans are underway to develop an integrated management plan for the park in accordance with
Unesco World Heritage Site guidelines. Greater levels of compliance are expected in the future,
with this and other plans, and it is anticipated that the tendering process detailed earlier will
facilitate this. SEED, the dti and the DBSA are working together to provide the skills necessary
to tender candidates. In theory, there will be a significant amount of stakeholder support on the
ground to ensure the success of the newly streamlined process. As far as the granting of tenders is
concerned, the only anticipated bias in the process is likely to be an empowerment one.
However, aside from this, operational experience will be preferred—regardless of whether the
tendering service provider is foreign or domestic.
A multilevel strategy is needed to shift income sources away from natural resources, but the
respondents believe that commercial operations are causing more environmental damage than
the operations of marginalized communities. Historically, this has been the case with large-scale
forestry and sugar cane farming in the region, while the subsistence gathering and farming
activities of the traditional residents have allowed the environment to thrive for generations.
Again, it is believed that the proposed tender process will, to some extent, mitigate the damage
caused by commercial farmers.
This said, the Authority is not waiting for the “trickle-down effect” to benefit marginalized
communities in the area. It believes that job creation is important for environmental
conservation and that job creation and income switching will only be facilitated by tourism. The
greatest perceived threat to these initiatives is the high HIV/Aids prevalence in the area, which is
dissolving the benefits of skills development (and similarly, raising the costs).
The St. Lucia Tourism and Publicity Association
These respondents appeared unanimous in their conviction that tourism not only provides the
incentive to upgrade the local ecology, but also provides the funds to do so. The respondents
claim that they are “always looking for sustainable uses for [their] resources so that ecological
resources can pay for themselves.” They believe that some amount of damage might be
unavoidable but that damage should be repairable if resources are managed correctly.
While these respondents see little harm in the 256,000 hectares of the GSLW Park being farmed
for medicinal plants, they are very concerned about the effects of sugar cane farming in the area.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 30
They believe that sugar cane farming is drawing water out of the Hluhluwe River and that the
lack of fresh water has closed the estuary mouth at St. Lucia. If tourism replaces these farming
practises, such damage might be repaired.
The respondents believe that community development and environmental/ecological
development should be symbiotic processes, particularly in the context of tourism. They claim
that, as unemployment increases, more forests are being burned down. They are further
concerned that, at the moment, unemployment is too high in the area to maintain an ecological
balance and that people are returning to unfriendly subsistence farming practises on land that is
not well-suited to this form of farming.
One group among the respondents stated that some compromises were needed between tourism
promotion and conservation, and again returned to the 4x4 ban as an illustration of one instance
where this compromise should take place.
The respondents claim that opening an 8.5-km stretch of beach to 4x4 driving is important to
their sustainable development. Some of the respondents believe the fisherman (or leisure tourist)
who would capitalize on this change is very aware of the environment and would not cause
unnecessary damage. The group also claimed that domestic tourism fosters foreign tourism, since
domestic visitors initiate infrastructure development that can then be upgraded for foreign
visitors. Other suggestions to ensure sustainable development include the closer co-ordination of
the three legislative bodies in the area and the active promotion of the area’s potential.
KZN Wildlife
The respondent from KZN Wildlife shared the general view that the number of direct jobs
created through tourism in the St. Lucia area was considerable. However, she expressed concern
regarding the size and nature of the secondary employment market. The word concern is used
deliberately as she felt that the failure to factor this secondary market quantitatively into the
expected environmental impacts of tourism might result in unanticipated environmental damage
to both the terrestrial and marine components of the park.
The terrestrial environment
By way of example, the respondent mentioned the informal links between the extraction of
firewood from natural forests and the proliferation of tourists (who buy the wood from roadside
vendors). The Dukuduku community is an example of an indigenous community who reside
within the natural forests and use the wood—for their own needs and possibly for sale to
tourists. Similarly, the production of grass mats and crafts could also be a problem as the raw
materials are being extracted from what is essentially a porous park area.
A very different problem in the terrestrial environment is the need to maintain biodiversity and
still satisfy the tourist need to see many animals in a relatively contained area. These high-density
populations may not be beneficial to the local flora or conducive to the reintroduction of new
species that are indigenous to the area but which no longer inhabit the park for one reason or
another.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 31
The marine environment
In the marine environment, the extractive use is relatively low, with the prawn fisheries arguably
causing the greatest damage to the estuary itself. The problem of off-shore fishing was positively
impacted by the recent ban on 4x4 driving on the beach; however, the extent of that impact has
not yet been quantified. Aside from the environmental impacts, the respondent believed that the
ban had hit small businesses harder than it had local communities and that the interaction
between local business and the indigenous communities is somewhat ad hoc.
Finding creative solutions
It is the view of this respondent that the depletion of environmental resources due to the influx
of tourists can be halted without undue prejudice to either the tourists or the communities
involved. For example, as far as firewood is concerned, local communities could be encouraged
to source their wood from commercial forests.
43
Similarly, the sale of crafts can continue if the
nature of craft manufacture reverts to an emphasis on non-natural raw materials such as wire and
beads. Some efforts are already being made to realize these changes and the Sokhulu Resource
Project near Kosi Bay is teaching local potters to paint pots using enamel paints. Another
example in the Kosi Bay area is a basketware project that is attempting to teach local weavers to
produce premium basketware. The concept at work is that fewer resources can be made to yield
higher returns.
Another alternative to natural resource use would be to move local people into tourism activities
that are—for example—guide-based and do not rely on the depletion of resources but rather on
their sustenance. The respondent feels that communities need to increasingly establish co-
management structures with environmental groups such as KZN Wildlife and the Sokhulu
Resource Project to address the need for alternatives to natural resource use. With correct
management, tourism could be a “major-plus” to the ecological environs of St. Lucia Park.
A supply-side effort is unlikely to succeed without a comparable demand-side effort. Tourists
provide the market for sales and those same tourists need to encourage communities to create
sustainable crafts and related products by supporting those products that do not deplete the
natural environment. This is likely to happen only with extensive consumer education.
Amadiba Adventures
The benefits of tourism in this context are directly tied to the environment and the participants
are aware that, without their beautiful surroundings, they would have no work. The
environmental benefits are clear from this type of low-impact tourism: the major attraction and
selling point of Amadiba Adventures is the pristine state of their land and coastline, so all
activities are designed to complement their natural assets. Their efforts are supported by DEAT’s
CoastCare initiative, which has created further awareness along the Wild Coast of the benefits of
preserving the health and beauty of the coastline with signposting and the employment of 35
additional people.
44
The residents ensure the success of small-scale harvesting by re-planting
mangroves to protect breeding sites, while their efforts at restoring and improving the coastal
trail are rewarded with increased revenues from tourism.
43
Some portion of the commercial forests surrounding the park is reported to be comprised of substandard commercial trees.
44
Amadiba Adventures, ACCODA Newsletter No. 2, November 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 32
The Amadiba region also supports the Mtentu Fly-Fishing Programme—a catch-and-release,
estuary fishing business that places an emphasis on environmentally-friendly practices. By
restricting recreational fishing under the auspices of this one organization, these practices will
help restore the kingfish population while again bringing in tourism revenues.
At a more formal level, PondoCROP and Triple Trust are actively educating their guides about
ecological conservation. One guide was sent on a six-month conservation course in
Johannesburg, and it is hoped that this sort of training will have spill-over effects into the schools
and communities.
It is especially difficult to isolate potential effects from the regulatory framework on the Amadiba
region due to the nature of their business. The selling point is the harmony between the
traditional culture and the well-preserved environment, which cannot be supplied or duplicated
elsewhere. So the threat is not in competition, but in the destruction of their natural resource,
which the proposed toll road may hasten.
There is also uncertainty regarding the percentage of SMME involvement in this project, and
how sustainable livelihoods will be encouraged after thousands of temporary construction jobs
disappear. These latter issues are perhaps better addressed in assessing impacts vis-à-vis the
transportation industry. Of course, the remunerative benefits of increased exposure and access
cannot be ignored, but the recently published Environmental Impact Assessment does not
examine the impact of the inevitable peripheral roads.
45
Economic development
Phinda
CC Africa
Foreign direct investment
The purchase of the land for Phinda’s development was entirely privately funded. According to
the respondent, 60 per cent of the initial funds for the project were foreign funds and this
constituted the first international investment into South Africa in 12 years. The remaining 40
per cent of the funding for the project was derived from local private investors and it was
interesting to hear that the make-up of ongoing investment into CC Africa is now 60 per cent
local investment and 40 per cent foreign investment.
Employment and training
The criterion for obtaining employment at the Phinda Lodge is that potential candidates are able
to walk to the interview. This ensures that the resort draws their employees from the local
communities and only once this pool has been exhausted does the resort look elsewhere (usually
for more skilled candidates). For the development phase of the resort, Phinda employed 350
people. The resort now employs 250 people on an on-going basis. Most employees lack skills
when they are first employed and CC Africa has set up a program to provide literacy,
45
SABC 2’s “50/50,” January 26, 2003. EIA available at www.n2wcc.co.za.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 33
numeracy and English lessons. Training is ongoing and the initial hope was that local
community members could be trained up from entry level, low- or no-skill jobs to general
management positions. Unfortunately, this has not been the case and the Phinda management
attribute the failure directly to HIV/Aids. Local recruits do not live long enough to make the
transition to general management level and even at the lower skill levels, the resort has to train
two people for every one position they wish to fill.
Profitability/sustainability of land use
Before the development of Phinda, the area was used primarily for cattle farming, with some
small amount of the land being used for pineapple farming. According to the respondent, in a
marginal rainfall area such as the Phinda reserve, you cannot beat the profitability of wildlife,
which now earns approximately R1,500 per hectare compared to the previous R150 per hectare.
Wildlife is also more sustainable than farming in the long run, according to the respondent.
Export markets
He described an initiative in Hluhluwe-Umfolozi Park that aims to open export markets to local
crafters. He also described the efforts of a group known as Ilala Weavers, a co-operative that
exports local products. These projects were initiated after the development of Phinda, which
raised awareness of the region and its local crafts and thus raised demand. Due to the popularity
of these crafts, the markets continue to grow at home and overseas, but the benefits are more
widely distributed as well. Instead of sourcing these crafts only from these communities,
exporters in Durban are trucking the raw materials directly to their own manufacturing sites.
Although it is difficult to obtain quantitative data, the benefits from such enterprises can be
expected to decrease within a highly competitive market.
Greater St Lucia Wetlands Park
The St. Lucia Wetlands Authority
Lack of facilities for international tourists
Aside from the considerable amount of donor funding that the area receives, the Authority cited
the growth in international tourism to South Africa and the GSLW region. However, despite
these positive developments, the respondents believe that northern KZN is “barely on the map”
and that there are relatively few places for foreign tourists to stay in the area.
The St. Lucia Tourism and Publicity Association
Profit differential between domestic and international tourists
The majority of these respondents currently feel as though they are fighting for their survival as
small business owners. They reiterated their concern that the ban on 4x4 driving effectively
sacrificed domestic tourism in favour of international tourism and that this was affecting the
indigenous community as well as themselves. They are concerned that the ban will exacerbate
poverty in the area as local crafters cannot compete with the quality of crafts in other parts of
Africa that foreign tourists are able to visit. Similarly, local vegetable vendors would be adversely
affected by the drop-off in self-catering visitors to the area. These respondents see the area
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 34
around St. Lucia town as competing directly with Hluhluwe-Umfolozi Park, which is more
successful in offering a six-day product and accommodation for busloads of tourists. They are
concerned that this competition is resulting in cut-throat rates, long delays in the receipt of
payment and, thus, a hostile environment for the growth and survival of SMMEs.
They claim that domestic visitors to the park spend an average of R153 per day while foreign
visitors spend only R43 per day on average, and that the new foreign bias in the promotion of
the area is costing the local communities. Much of this difference is explained by the inability of
St. Lucia service providers to capture profits from package holidays through which overseas
visitors organize their visits.
KZN Wildlife
Attraction of international aid
The co-management and subsistence groups mentioned previously are almost entirely funded by
Norwegian donations. Some 29 co-management institutions benefit as many as 19 communities.
Amadiba Adventures
The contribution to growth and employment
The key contribution of the Amadiba trail to growth and employment in the region is through
the creation of direct employment (tour guides, ferrymen and cooks, for example), as well as
through the creation of less direct forms of employment such as the growing of crops for sale to
the camp-cooks and the raising and training of horses for use on the horse trails. No money
changes hands en route, but a carefully worked out paper trail keeps track of which services are
provided by whom. These slips are then used to claim back money from the central fund for
services rendered. An effort is made to share the employment as equally as possible throughout
the participating community. For example, two sets of horses are used on the trail to allow two
sets of horse owners to benefit from their lease.
Before the inception of the project a little over three years ago, the local hotel and casino (The
Wild Coast Sun) was the main source of formal employment for the region. The local
community subsisted on their crops and the sale of crayfish and seashells to tourists, and in most
cases, young men had to travel to Durban and Johannesburg to find work. Of the guides we
met, two were recent matriculants and one had gone through a series of jobs in Durban and East
London before returning to the region to work as a guide. All expressed satisfaction that their
families were able to stay together and were not divided by the need to travel to cities for work.
All enjoyed their job as a guide and one had been sent on a number of training courses,
including a six-month stint in Johannesburg, learning about ecological conservation.
Investment and aid
The single largest investment in the Amadiba region is the Wild Coast Sun. The principle
behind Amadiba Adventures is to move away from such investments that do not enrich the
communities and that are exploitive of their environment and labour. The type of investment
desired is in skills development and infrastructure support. This role is currently being fulfilled
by the active NGOs in the region; thus aid, rather than investment, supplies these development
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 35
needs. However, the proposed N2 toll road through their region would constitute a major
investment on the part of the government (approximately R4bn).
46
An additional grant of
R80m from the EU will also be primarily used to support this road, although the balance is
administered by regional organizations for the development of local enterprise, from which
Amadiba has received approximately R1 million.
The proposed N2 toll road extension is worthy of a separate study; the following are just some of
the issues facing residents. The proposed upgrade from Port Edward to Port St. Johns is
considered invasive by environmentalists and many community residents due to the increased
traffic, construction spin-offs, and degradation of a recognized biological hotspot and place of
high botanical endemism.
47
There could be benefits in greater market access and employment
that must be balanced against the possible loss of the same on the current N2 route, as well as
the irretrievable loss to the environment surrounding the highway’s corridor.
For eco-tourism, the benefits of the road are limited and controversial. While easier access is
certainly a drawing card for local economies surrounding Amadiba and neighbouring Mkambati
Nature Reserve, with it comes the threat of more destructive practices. For example, some
criticize the road as an excuse for mining companies to gain access to the titanium found in the
coastal dunes.
48
Given the choice between mine employment and eco-tourism, the Amadiba
community already chose to develop their own business and are already receiving revenues equal
to the R300/month, as reportedly promised by one of the mining companies.
Amadiba was also the recent recipient of a small business development award of R620,000 from
the dti’s Community Public Partnership Programme.
49
Both sources of financing are to be used
at the discretion of ACCODA for the benefit of the community, the business, or a combination
of both. Already ACCODA has decided to reinvest Amadiba Adventures’ profits back into the
business, because they feel it is important to maintain the growth of the latter before dissipating
its rewards thinly through the community members at this stage.
Lessons from the case studies
Regardless of the institutional arrangement of a resort, tourism can have a positive effect on the
sustainable development of servicing regions. Similarly, all three forms of institutional
arrangements featured above—government ownership, private ownership and community
ownership—have shown that tourism can create incentives to preserve the natural ecology of an
area. This said, certain factors do appear to differ by institutional arrangement. While it is
conceivable that these differences could be explained by the size, age or capacity of the resource
owner/manager, ultimately they correspond with accepted theoretical assumptions regarding
institutional behaviour.
Firstly, the government-managed St. Lucia Wetlands Authority is required to bring together a
large number of diverse role-players who have conflicting ideas about what is best for the
environment. It is proving difficult to convince all communities that ecological conservation at
the expense of current business practices and (in the short term at least) at the expense of profits
46
Ibid.
47
Ibid.
48
Ibid.
49
Amadiba Adventures, ACCODA Newletter No. 2, November, 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 36
is meritorious. This difficulty may be the result of poor co-ordination between institutions at
present, and a lack of transparent communication in the past that has created an aura of distrust
and antipathy.
There also appears to be some incidence of the shifting of accountability in the GSLW park area;
for example, the parties involved are unsure where the responsibility for marketing the St. Lucia
destination lies—and the St. Lucia Tourism Association is unwilling to bear the primary
responsibility. There are concerns about free-riding in the broader environs of the GSLW park
and these concerns seem justified in the light of input from Phinda representatives who claim to
have invested heavily in the promotion of the region, to the benefit of the St. Lucia Reserve as
well as to themselves. These and other factors appear to have perpetuated a concern that the
GSLW park is not yet reaching its potential as a tourist destination and, as such, is not fully
delivering on the benefits that tourism can bring to the area.
The institutional arrangement of ownership also seems to affect the choice of, and manner in
which, benefits filter down to community residents in the area. There are fewer intermediaries
and fewer facilitating organizations in the privately-run Phinda arrangement and perhaps, as a
result, the surrounding communities have benefited from infrastructural development (quite
apart from the direct employment and sales opportunities) within a relatively short space of time.
This is not to say that these same benefits will not accrue to communities around the other
initiatives, merely that their institutions have not been in place as long as Phinda’s have, and thus
they have not had the opportunity of accomplishing their goals on the same scale.
The Amadiba community initiative appears to be the initiative adhering most closely to the
World Bank principle of ongoing payments for ecological services described earlier. While this is
also the case in the other two case studies, marginalized communities tend to benefit from
ecological services largely through intermediaries such as the Africa Foundation in the case of
Phinda. This may create a sense of removal from ecological resources and less of a vested
interested in the conservation of those resources.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 37
Conclusions
The links in the chain between trade liberalization, tourism and sustainable development are
difficult to establish because of the range of services included under the tourism heading and
each service’s differing contribution towards poverty alleviation, economic growth and
employment. Eco-tourism provides an excellent example of the conflict between resource
exhaustion and benefit, but rarely indicates a causality from the SA regulatory environment.
Therefore, the existence of this link has been questioned in terms of possible impacts on tourism
from trade liberalization. Thus far, the study can point to several potential indirect links between
the liberalization of trade in services and sustainable development.
At a more tangible level, there have been significant inflows of foreign investment for new
project development, for NGO support and for community upliftment projects. Additionally,
overseas tourism has experienced a tremendous upsurge since the beginning of 2002, and
projects that rely on income or donations from these sources clearly benefit. However, it is
difficult to argue that these flows would not take place without a commitment to trade
liberalization on the part of SA. Because of their humanitarian nature, such investments occur
more as a function of fulfilling basic human needs than as motivations to make a profit. Yet
some projects initially owe the attention they receive to tourism, so it is undeniable that
sustainable development projects benefit to some extent from a liberal environment across all
modes of trade in services.
A commitment to enforcing environmental safeguards as recommended in the White Papers on
Environmental Management and Coastal Management, as well as the guarantees of the
Constitution, need to be addressed more explicitly in future economic development programs.
The lack of such commitments destabilizes the momentum of investment in current projects
that rely on the environment in threatened areas, such as the Wild Coast. Currently, the interests
of large-scale mining and infrastructure development in this region clash with the interests of
those who rely on a pristine environment for eco-tourism.
Based on some of the successful experiences described in the case studies, regulatory bodies can
be guided in their tasks so that they enhance the achievement of sustainable development goals.
Open, consultative processes that include public and private partnerships are desirable, while
some indication of benevolent leadership from experienced practitioners may be necessary to
overcome lack of capacity and entrepreneurship.
Finally, in the interests of poverty alleviation, growth and greater employment, some forms of
tourism are preferable to others. Projects like Amadiba Adventures, which encourage leadership
and business development skills while sharing the benefits across numerous community
stakeholders, are much more preferable to even large-scale hotel or recreation investments, which
provide low-paying, menial employment in less-skilled positions. An emphasis needs to be
placed, and more tangible incentives offered, for those whose projects engage communities in
sustainable development. To encourage the right kind of development, it falls on regulators and
investors to:
I
support initiatives that use tourism as a vehicle for delivering skills while protecting
natural assets;
I
discourage exploitive arrangements that work against the principles of sustainable
development; and
I
develop methods of assessing the impacts tourism investment is likely to have on the
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 38
communities involved in its delivery. In this manner, liberalization of tourism
services would be able to ensure the most appropriate skills and resource
development.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 39
Appendix A: Definition of tourism
Tourism describes many different economic activities under one heading. In order to clarify the
scope of discussion, one definition will be advanced. In a traditional sense, one thinks of tourism
as encompassing all the industries that are involved in recreation or leisure away from the place
of normal residence. Yet, this definition is open to exceptions and cannot be applied universally;
for example, is normal place of residence defined by a radius of some length from one’s home, or
does it make more sense to use areas of concentrated economic activity as regions? How long
must someone be away for the activity to fall under tourism? It is easy to imagine the
inconsistencies that might arise from such definitions.
For purposes of comparison, the WTO has adopted the following definition of tourism:
The activities of persons travelling to and staying in places outside their usual
environment for not more than one consecutive year for leisure, business and other
purposes.
50
While easier to apply, the definition includes areas of activity that one may not immediately
associate with tourism. With this definition, all business travel and consumption overseas
becomes a form of tourism. Thus, when calculating the benefits that tourism might accrue to its
host economy, the estimates become inflated over those strictly pertaining to the leisure and
recreation market.
The WTO definition has already become a standard in the discussion of trade in services. For
purposes of accurate data comparison, this definition is used throughout the paper, although the
scope of analysis is somewhat more restricted. Although business activity is included in the
definition, the paper focuses on sectors more traditionally associated with tourism—leisure and
recreation activities, transport, hotel and guide services.
Multiple sectors of an economy are grouped together under the umbrella of the tourism and
travel industry that would otherwise remain unrelated. Transportation, accommodation,
entertainment, and recreation rely on very distinct supply chains because the inputs and skills
required by these sectors are vastly different. It is the common profile of the demand-side of the
market that brings these sectors into the same discussion. So there is an element of
complementarity, as developments within any of the prominent sectors have implications for the
tourism industry as a whole.
A comparison between the Standard International Classification of Tourism Activities (SICTA)
and those defined in the General Agreement on Trade in Services (GATS) highlights the
differences between the common understanding of tourism and the definition used by the WTO
(Appendix A provides a list of SICTA codes as applied to the sectoral coding used by the
GATS).
51
In many cases, the SICTA can be applied to the GATS-defined services sectors, but
often these activities are not included under the tourism sector. Rather, many are within another
industry’s sector (such as transport, travel insurance, car hire) or not classified at all (such as
computer reservation systems). Such differences between definition and application complicate
the discussion of tourism services.
50
WTO homepage, http://www.wto.org
51
For an exhaustive listing of all tourism activities, please refer to Europa’s index at:
http://forum.europa.eu.int/irc/dsis/bmethods/info/data/new/embs/tourism/tour_appendix9.html
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 40
Appendix B: SA’s tourism suppliers and international
tourism consumers
Tourism suppliers
Tourism in SA is composed of the same service industries as anywhere else in the world:
transport, accommodation, restaurants and catering, entertainment, guiding, the travel press, as
well as distribution mechanisms such as travel agencies and internet booking services. The
country’s heritage sites—parks, reserves, museums, and historical monuments—are pivotal points
for suppliers and may contain several of these services. There are also government and private
institutions involved in promoting, regulating and gathering information about tourism. This
sub-section explores the roles of these key players and institutions and identifies features relevant
to the trade in tourism services.
The GATS may have interesting ramifications for the introduction or acquisition of these
services by international investors. Aside from the change in ownership structure, unequal terms
for competition may not bring the intended benefits of liberalization. Equally challenging is the
development of a sustainable and transformed industry reflecting South Africa’s commitment to
a more equitable distribution of incomes and opportunities. Regulation such as affirmative
action, training requirements and, in some sectors, equity partnerships, will place additional
burdens on the foreign investor. It is with these concerns that one should consider the role of
tourism suppliers.
International tourism consumers
Although SA has experienced a tremendous upsurge in foreign arrivals since the new
dispensation, the so-called “democracy dividend” from the mid-1990s is over. South Africa must
now employ sophisticated marketing strategies in order maintain even a modest two per cent
growth rate.
52
At first glance it would appear that these methods are beginning to yield results.
After lacklustre inflows during the 1999–2001 period, foreign arrivals have quite surprisingly
increased, despite the global downward trend. The latest statistics indicate that foreign arrivals are
up 7.2 per cent for the first seven months of the year over the same period in 2001.
53
Overseas
arrivals have increased by 11.3 per cent on average, and the stronger U.K. market has increased
by as much as 19.4 per cent. It is worth keeping in mind that foreign arrivals represent 33 per
cent of the tourist market, while 67 per cent is domestic.
Yearly visitor arrivals and departures are strongly correlated with industry growth. As seen from
Figure 1, foreign arrivals have risen sharply since 1994 and have started to outpace departures,
indicating ever-increasing lengths of visits.
The vast majority of foreign visitors are citizens of neighbouring African nations, and particularly
of Lesotho (about 1.3 million annually). Of the six million visitors each year, over four million
are from the African continent. Beyond the continent, about 67 per cent of overseas visitors
come from European nations, with the U.K. (23 per cent) and Germany (14 per cent)
comprising the brunt of this share (see Figure 2).
52
SATOUR, 2002a.
53
DEAT homepage.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 41
U.S. nationals make up the third largest category of visitors, yet are the largest per capita gross
spenders of any group.
54
The relative shares of these groups have changed slightly in recent years,
with the U.S., Australia, Japan, China, India and other Asian nations increasing their
consumption of SA tourism.
Figure 2: Arrivals and departures of foreign visitors and SA residents 1975–2000
Source: Stats SA, 2001
Figure 3: Shares of overseas visitors, 2000
Source: Stats SA, 2001
54
SATOUR, 2002a
Netherlands
6%
France
6%
Rest of Europe
18%
USA
11%
Other Americas
5%
India
2% UK
23%
Germany
14%
Australasia
5%
Middle East
2%
Japan
2%
Rest of Asia
6%
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
Foreign Arrivals
SA Arrivals
Foreign Departures
SA Departures
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 42
Figure 4: Purpose of visit for foreign visitors to South Africa, 2000
Source: Stats SA, 2001
The purpose-of-visit data are also an important factor in tracking who is coming to South Africa.
As seen in Figure 3, about 10 per cent of those choosing to come do so for business purposes,
whereas 84 per cent state their visit is for leisure.
55
Among the majority coming for holiday
purposes, less is known about what percentage choose to spend their time in eco-tourism,
adventure, sport, and cultural activities or from which countries consumers with particular
preferences usually hail.
A 1997 international tourism survey, in combination with the available statistics and domestic
surveys, has played an important role in SATOUR’s targeted marketing campaigns.
SA hopes to increase its share of overseas high-spenders while defending its stake of the more
budget-conscious groups from neighbouring countries. As a result, SATOUR campaigns are due
to be directed at countries with an already solid base of visitors poised for continued tourism
growth. The U.S., the Netherlands, Australia, Japan and the U.K. are the top five countries for
this campaign, while Germany, France, Italy, India and others have been identified for growth as
well.
55
Stats SA, 2000.
Holiday
84%
Business
10%
Work
2%
Other
3%
Study
1%
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 43
Appendix C: Background information on
respondents
Phinda Reserve
CC Africa
Time of interview: 13h00 – 13h47
Date of interview: November 22, 2002
Respondent: Les Carlisle
The research team had the opportunity to interview the developer of the Phinda nature reserve
by teleconference. Now based in White River, Les Carlisle is a professional Game Catcher who
was commissioned by CC Africa to develop the reserve from scratch. He subsequently took on
the role of General Manager at Phinda where he was based for six years before taking on broader
responsibilities within CC Africa. Les still operates at both a regional and community level and
spends one week of every month at the Phinda reserve
The Africa Foundation
Time of interview: 11h00 – 13h30
Date of interview: November 26, 2002
Respondent: Isaac Tembe
Isaac Tembe is a Field Manager for the Africa Foundation. He has been with the Organization
since 1994 when the Africa Foundation was still known as the Royal Investment Fund (RIF) and
was owned by CC Africa. The Africa Foundation is now a separate legal entity to CC Africa,
with its own fund number and its own board of trustees; however, the two organizations still
work very closely.
The Greater St. Lucia Wetlands Park
The St. Lucia Wetlands Authority
Time of interview: 10h40 – 11h45
Date of interview: November 25, 2002
Respondents: Bronwyn James and Terry Castis
Bronwyn James heads the social orientation unit known as SEED and Terry hold responsibility
for the commercial development of the Park. The Authority is a National Body answerable to the
Minister of Environmental Affairs and Tourism. The Authority is also responsible for running
the Park as a World Heritage Site.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 44
The St. Lucia Tourism and Publicity Association
Time of interview: 14h00 – 15h30
Date of interview: November 26, 2002
Respondents: Con Vermaak, Louw Kloppers, Petrus Viviers, et al.
The St. Lucia Tourism and Publicity Association is a group of small business people operating in
and around the town of St. Lucia. Present at the meeting were: Con Vermaak, the head of the
Association; Louw Kloppers, a local Councillor; Petrus Viviers, a local businessman; and other
self-catering and catered accommodation owners.
KZN Wildlife
Time of interview: 14h00 – 15h30
Date of interview: November 27, 2002
Respondent: Jean Harris
KZN Wildlife was previously known as the Natal Parks Board and shares responsibility with the
St. Lucia Wetlands Authority for the maintenance and development of the GSLW Park.
Amadiba Adventures
Amadiba Coastal Community Development Association (ACCODA)
Time of interview: 11h00 – 12h00
Date of interview: November 28, 2002
Respondents: Velaphi Ndovela and Christopher Ngcwele
ACCODA is the community trust for the Amadiba region and thus makes decisions on how
monies earned from Amadiba Adventures will be allocated, what projects will receive their
support, as well as liaison with government bodies on local infrastructure and community
development issues.
PondoCROP
Time of interview: 09h00 – 10h00
Date of interview: November 28, 2002
Respondent: Rone Visser
Time of interview: 19h00 – 20h00
Date of interview: December 1, 2002
Respondent: Travis Bailey
PondoCROP is a regional NGO, initially involved with development projects surrounding the
rehabilitation of the Wild Coast hiking trail. Their interest is in providing support before the
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 45
eventual transfer of all responsibilities to Amadiba and other coastal communities as the latter
gain momentum in business self-sufficiency.
Community Participants
Date of interviews: November 28, 2002 – December 1, 2002
Respondents: Bernard Mbele
The research team actually went on the trail to see first-hand how the system worked and to
have a chance to interact with the community participating in the trail (trail guides, cooks, camp
keepers, ferrymen, etc.). These meetings were ad hoc and less structured than the other
discussions but were equally valuable to the overall understanding of the project.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 46
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SATOUR, 2002b. “SA Tourism Growth Strategy Segment Profiles,” PowerPoint presentation of
SATOUR marketing strategy, accessed from www.southafrica.net, August 2002.
Singh, N. and R. Strickland, 1994. Sustainability, Poverty and Policy Adjustment: from Legacy to
Vision, Winnipeg: International Institute for Sustainable Development.
Southern African Association for the Conference Industry, “Meeting Statistics,” accessed from
www.saaci.org October, 2002. Date unspecified for material.
Stats SA, 2002. “Hotels: trading statistics,” Statistical Release P6441, Pretoria: Stats SA, August
2002.
Stats SA, 2001. “Tourism 2000: 03-51-02,” Pretoria: Stats SA.
Stenzel, A., 2001. “Tourism in South Africa,” Business English World, accessed from
http://www.business-english-world.de/safrica.htm, October 2002.
Tembe, Isaac of Africa Foundation. Interview and site visit on November 26, 2002.
US Trade Representative’s Office, “Tourism and Hotels,” accessed from
http://www.ustr.gov/sectors/services/tour.pdf, June 2002.
Vermaak, Con, et al., of St. Lucia Tourism and Publicity Association. Interview on November
26, 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 48
World Bank, 2002a. Environmental Economics and Indicators: Payments for Ecological Services,
accessed September 2002 from http://lnweb18.worldbank.org/ESSD/essdext.nsf/
44ByDocName/PaymentsforEcological
World Bank, 2002b. South Africa Data Profile, accessed November 2002 from
http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=ZAF&CCODE….
World Trade Organization, 1998. “Tourism Services: Background Note by the Secretariat,”
accessed from http://www.wto.org/, June, 2002.
World Travel and Tourism Council, 2002. “South Africa: The Impact of Travel and Tourism on
Jobs and the Economy – 2002,” accessed from http//:www.wttc.org/, July 2002.
World Travel and Tourism Council, 1998. “South Africa’s Travel and Tourism: Economic Driver
for the 21st Century,” London, WTTC.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 49
doc_586227870.pdf
The International Institute for Sustainable Development contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change, measurement and indicators, and natural resources management.
International Trade in Services and Sustainable
Development: The Case of Tourism in South Africa
Edited by: Rashad Cassim, Wendy Jackson and Lucille Gavera
TIPS
Contributing authors:
Paul Robertson
University of Cape Town
Jolene Skordis
Centre for Social Science Research, University of Cape Town
April 2004
t k n pa pe r
About the Trade Knowledge Network
http://www.tradeknowledgenetwork.net
The goal of the Trade Knowledge Network (TKN) is to foster long-term capacity to address the complex issues of trade
and sustainable development. TKN is a collaborative initiative of the International Institute for Sustainable Development
and the International Centre for Trade and Sustainable Development; and kindly supported by the Rockefeller
Foundation, The Norwegian Ministry of Foreign Affairs, International Development Research Centre (IDRC), Swiss
Agency for Development and Cooperation (SDC), and the Canadian International Development Agency (CIDA).
Agri-Environment and Rural Development in the Doha Round
Copyright © 2003 International Institute for Sustainable Development
Published by the International Institute for Sustainable Development
All rights reserved
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Tel: (204) 958-7700
Fax: (204) 958-7710
E-mail: [email protected]
Web site: http://www.iisd.org
The International Institute for Sustainable
Development (IISD)
http://www.iisd.org
The International Institute for Sustainable Development contributes to sustainable development by advancing policy
recommendations on international trade and investment, economic policy, climate change, measurement and
indicators, and natural resources management. By using Internet communications, we report on international
negotiations and broker knowledge gained through collaborative projects with global partners, resulting in more
rigorous research, capacity building in developing countries and better dialogue between North and South.
IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live
sustainably. IISD receives operating grant support from the Government of Canada, provided through the Canadian
International Development Agency (CIDA) and Environment Canada, and from the Province of Manitoba. The
institute receives project funding from the Government of Canada, the Province of Manitoba, other national
governments, United Nations agencies, foundations and the private sector. IISD is registered as a charitable organization
in Canada and has 501(c)(3) status in the United States.
The International Centre for Trade and
Sustainable Development (ICTSD)
http://www.ictsd.org
The International Centre for Trade and Sustainable Development (ICTSD) was established in Geneva in September
1996 to contribute to a better understanding of development and environment concerns in the context of international
trade.
As an independent non-profit and non-governmental organisation, ICTSD engages a broad range of actors in ongoing
dialogue about trade and sustainable development. With a wide network of governmental, non-governmental and
intergovernmental partners, ICTSD plays a unique systemic role as a provider of original, non-partisan reporting and
facilitation services at the intersection of international trade and sustainable development.
ICTSD facilitates interaction between policy-makers and those outside the system to help trade policy become more
supportive of sustainable development. By helping parties increase capacity and become better informed about each
other, ICTSD builds bridges between groups with seemingly disparate agendas. It seeks to enable these actors to discover
the many places where their interests and priorities coincide, for ultimately sustainable development is their common
objective.
Trade and Industrial Policy *Strategies* (TIPS)
http://www.tips.org.za
TIPS serves as a clearing house by effectively assisting in harnessing all relevant trade and industrial policy research for
the South African government’s Department of Trade and Industry (DTI) policy considerations, which will
strengthen and enhance the capacity for policy analysis in the DTI. TIPS also serves to strengthen the capacity outside
of government to construct research on trade and industrial policy in order to enlarge the pool of researchers.
TIPS is currently engaged in research for the DTI in restructuring of the defence industry, in spatial development
initiatives and in regional integration.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa iii
Table of Contents
General introduction 1
International trade in services and sustainable development: the case of energy
and tourism in South Africa 1
Introduction to services 1
Sustainable development 1
Energy 2
Tourism 3
Methodology 3
Structure 4
Abridged findings 4
Tourism 6
Executive summary 6
Tourism and sustainable development 7
SA tourism – introduction 10
General information 10
Economic characteristics if SA tourism 11
Employment 11
Investment 11
Exports 12
Government spending 12
Taxes 12
SA tourism services regulation 13
Cross-border supply (Mode 1) – focus on financing 13
Consumption abroad (Mode 2) 14
Commercial presence (Mode 3) 15
Presence of natural persons (Mode 4) 16
Case studies – methodology 17
Background on the case study sites 18
The Phinda Game Reserve 18
Greater St Lucia Wetlands Park 19
Amadiba Adventures 19
Tourism and sustainable development: case studies 21
Social development/equity 21
Environmental conservation/protection 29
Economic development 33
Lessons from the case studies 36
Conclusions 38
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa iv
Appendix A: Definition of tourism 40
Appendix B: SA’s tourism suppliers and international tourism consumers 41
Tourism suppliers 41
International tourism consumers 41
Appendix C: Background information on respondents 44
Phinda Reserve 44
The Greater St Lucia Wetlands Park 44
Amadiba Adventures 45
References 47
List of figures
Figure 1: Structure for the management of Amadiba Horse and Hiking Trail 20
Figure 2: Arrivals and departures of foreign visitors and SA residents 1975–2000 42
Figure 3: Shares of overseas visitors, 2000 42
Figure 4: Purpose of visit for foreign visitors to South Africa, 2000 43
List of tables
Table 1: Tourist accommodation measurements for Greater St Lucia Wetlands park region 22
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa v
General introduction
International trade in services and sustainable development: the
case of energy and tourism in South Africa
Introduction to services
As services have become increasingly tradeable on the global market—due in part to
technological developments and regulatory reform—they have consequently become more
important in international trade negotiations. In addition, the recent review of the General
Agreement on Trade in Services (GATS) as part of the World Trade Organization’s (WTO’s)
built-in agenda has also drawn attention to trade in services. Work already undertaken under the
built-in agenda will continue under the Work Programme as set out in Ministerial Declaration of
the WTO Fourth Ministerial Conference held in Doha in November 2001. The Work
Programme specifies that participants shall submit initial requests for specific services
commitments by June 30, 2002 and initial offers by March 31, 2003.
Developing countries have been grappling with liberalization of services sectors. Two specific
challenges have been encountered: domestic reform of the state monopolies; and, how GATS
negotiations are likely to undermine or reinforce domestic reform efforts.
South Africa (SA) is a middle-income economy with one of the highest levels of inequality in the
world—close to 30 per cent unemployment and a high incidence of poverty. The problem is
compounded by the fact that the economy continues to experience low growth. There is an
urgent debate about how best to create long-run growth and reduce inequality and poverty.
Policy-makers and economists increasingly recognize that the services sector could become a
potential lever to growth and a significant creator of more jobs.
The services sector already makes up 65 per cent of the gross domestic product (GDP), 63 per
cent of employment and 74 per cent of capital formation in SA and has been the main source of
growth for the economy in the 1990s. The largest sectors are community/social services (18.6 per
cent), distribution services (14.5 per cent), business services (11.2 per cent), financial services
(6.1 per cent) and transport services (5.3 per cent). The domination of services is more
pronounced in the informal sector where petty trade, domestic work and minibus taxi-driving
are the most common sources of income, although not subject to liberalization as such. Sectors
such as energy and tourism also contribute significantly to the economy. Both these sectors have
large, indirect effects on competitiveness, employment and output.
Sustainable development
The concept of sustainable development was popularized by the International Union for the
Conservation of Nature in its “World Conservation Strategy,” and was refined in 1987 in the
Brundtland Report of the World Commission on Environment and Development:
Sustainable development is development that meets the needs of the present,
without compromising the ability of future generations to meet their own needs.
While definitions and interpretations of the elements of sustainable development have varied, the
concept is generally viewed as consisting of three primary aspects or “pillars”: economic
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 1
(sustainable economic development); social (social development/equity); and environmental
(environmental protection/conservation/preservation). Other essential characteristics of
sustainable development have been identified by a number of organizations and institutions. For
example, the Canadian Commissioner for the Environment and Sustainable Development has
suggested that sustainable development must incorporate quality of life, integrated decision-
making and equity aspects.
1
While work in the area of services liberalization is fairly new to SA, work on the synergies
between services liberalization and sustainable development does not exist. The major reason for
the absence of work in this area relates to the difficulty of assessing the exact nature of the
linkages. Although the GATS will be used as a starting point for this analysis, we are interested
in the de facto liberalization and/or deregulation, irrespective of whether the influences are
external or domestic. Looking at two specific sectors—energy and tourism services—this study
attempts to investigate the nature of trade liberalization and deregulation within a sustainable
development framework. There are several reasons why the energy and tourism sectors were
chosen.
Energy
Energy is central to achieving the interrelated economic, social and environmental aims of
sustainable development, and energy services play a crucial role in providing efficient access to
energy in support of development. Developing countries are faced with a number of challenges
in this regard, such as achieving more reliable and efficient access to energy for domestic
consumption and production, growing their share in the trade of energy goods and services, and
mitigating adverse environmental impacts from energy activities.
The energy sector includes coal, oil, gas, electricity, nuclear and renewable energy sectors. The
main objective of this study is to look at what dominates SA energy supply—coal-based
energy—although we also review other forms of energy generation. However, the main emphasis
of the energy study is on electricity.
Electricity relates to sustainable development in that it provides a critical service element in:
I
running hospitals, schools and businesses;
I
heating, cooling and lighting in homes and workplaces;
I
preserving food commercially and at home;
I
pumping fresh water supplies and sewage;
I
maintaining the flow of road, rail and air traffic;
I
lighting in public places;
I
operating global communications systems;
I
providing access to the Internet and the information society; and
I
supplying power for a wide range of appliances.
2
With electrification still a major objective of South Africa’s electricity utility Eskom, which has
committed to a further 600,000 connections, an examination of the sustainable development
implications of further liberalization and deregulation is merited.
1
Web site of the Commissioner for the Environment and Sustainable Development:
http://www.oag-bvg.gc.ca/domino/cesd_cedd.nsf/html/menu6_e.html accessed 30/01/03.
2
See Joint Statement by the Electricity Industry on Sustainable Development for the World Summit on Sustainable Development:
www.basd-action.net/resources/positionpapers/ 200208_electric.pdf
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 2
The research on the energy sector, which forms part of this study’s investigation into the nature
of trade liberalization and deregulation within a sustainable development framework, has been
published as a separate paper.
Tourism
Tourism is another important services sector that the government has identified as a major contributor
to job creation, economic growth and poverty relief objectives. There are various benefits of tourism
growth. First, tourism is relatively labour intensive and therefore well placed to absorb a large part of
the unskilled workforce. Second, the industry uses relatively few imported inputs and gives rise to
extensive forward and backward linkages in the hotel, food, entertainment and transport industries.
Third, it can be an important source of foreign exchange and contribute to export diversification.
However, certain constraints to tourism growth have been identified, such as: a lack of
transparent investment incentives to attract investors; a scarcity of needed infrastructure in
regions with the strongest natural resource base for tourism; inadequate tourism education; and,
inadequate marketing of SA as a long-haul tourism and business centre.
Although there has been considerable work done on sustainable tourism, there is a paucity of
research and analysis on trade in tourism in southern Africa and in SA specifically, creating an
explicit need for further awareness, knowledge and understanding of the sustainable development
issues of the sector. The studies that have been conducted on tourism have tended to focus on
sustainable tourism and poverty elimination, with only cursory attention given to environmental
aspects or specific social dimensions, such as employment.
An important question facing the SA tourism industry is what impact it will have on both the
environment and the poor of SA as the industry grows and its importance to the overall
economy expands. This has brought to attention a few important issues, such as how new
tourism developments use local suppliers and the distribution of benefits from tourism growth.
Tourism is particularly essential in creating employment in remote, poverty-stricken areas of SA.
Methodology
TIPS’ contribution to the TKN Phase II project is a collaborative effort among a number of
different researchers from various universities and organizations in SA. The tourism study,
contained in this publication, was conducted by Paul Robertson and Jolene Skordis, both from
the University of Cape Town.
For the publication detailing the energy sector research, Anton Eberhard from the University of
Cape Town’s Graduate School of Business was responsible for the section outlining the economic
and regulatory characteristics of the energy industry, as well as the sections on energy services
reform and the social equity aspects of energy provision. O. A. Akinboade from the Department
of Economics at the University of South Africa (Unisa) and E.W. Niedermeier and F. Sibanda
from the Competition Commission undertook the environmental discussion of the energy study.
Significant modifications and additions to the electricity study were made by Rashad Cassim, the
previous Executive Director of TIPS.
3
3
Much of the information contained within these studies is available in separate papers prepared for TIPS. The following papers
can be found on the TIPS Web site (www.tips.org.za): Energy Services, WTO GATS Negotiations and Energy Market Regulation
and Liberalisation in South Africa by Anton Eberhard; The Impact of Electricity Trade on the Environment in South Africa by O.A.
Akinboade et al.; and The Impact of Trade Liberalisation on the South African Tourism Industry by Paul Robertson.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 3
Structure
After this general introduction, the tourism study is presented, with the energy study published
as a separate paper. Both studies start off with a brief description of the linkages between
sustainable development and the sector under discussion. From that context, the economic and
regulatory aspects of each sector are discussed in detail. Tourism regulation is described in light
of the four modes of services supply, whereas energy is discussed in light of current reform
initiatives being undertaken in the industry.
The tourism study investigates the links between sustainable development and tourism services
liberalization using three case studies. The authors selected a property rights approach to
analyzing the incentive structures under various forms of tourism establishment ownership
(private ownership, community ownership and government/public sector ownership) and each
establishment is discussed in term of the three pillars of sustainable development.
The energy study comprises a description of the economic and regulatory characteristics of SA
energy services, as well as various elements of energy services reform. Because electricity
generation and provision have significant linkages with sustainable development issues, there is
heavy emphasis on aspects of energy services. In that connection, there is an extensive discussion
of how the electricity sector can advance sustainable development, i.e., by: supporting industrial
competitiveness and economic growth; promoting energy efficiency, increased used of renewable
energy technologies and reduced emissions; and ensuring widened access to affordable services.
Abridged findings
Tourism
The authors of the tourism study found that the links between trade liberalization, tourism and
sustainable development are difficult to establish because of the range of services included under
the tourism heading and each one’s differing contribution towards poverty alleviation, economic
growth and employment. However, the study pointed to several potential indirect links between
the liberalization of trade in services and sustainable development. These include:
I
significant inflows of foreign investment for new project development, for NGO
support and for community upliftment projects; and
I
a tremendous upsurge of overseas tourism since the beginning of 2002, and projects
that rely on incomes or donations from these sources clearly benefit.
They also note that a commitment to enforcing environmental safeguards as recommended in
the White Papers on Environmental Management and Coastal Management, as well as the
guarantees of the Constitution, need to be addressed more explicitly in future economic
development programs. Moreover, the authors suggest that regulatory bodies can be guided in
their tasks so that they enhance the achievement of sustainable development goals. Open,
consultative processes that include public and private partnerships are desirable, while some
amount of benevolent leadership from experienced practitioners may be necessary to overcome
lack of capacity and entrepreneurship.
Lastly, the authors suggest that to encourage the right kind of development, it falls on regulators
and investors to:
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 4
I
support initiatives that use tourism as a vehicle for delivering skills while protecting
natural assets;
I
discourage such exploitive arrangements that work against the principles of
sustainable development; and
I
develop methods of assessing the impacts tourism investment is likely to have on the
communities involved in its delivery. In this manner, liberalization of tourism
services would be able to ensure the most appropriate skills and resource
development.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 5
Tourism
Executive summary
The main aim of the tourism study is to provide a macro overview of the sector, focusing
specifically on its importance to the economy. The paper provides a broad outline of the
contribution of tourism to growth and the economy, with specific attention to the regulatory
environment in which the sector operates. In addition, three case studies are used to investigate
the various linkages between tourism services and sustainable development.
The discussion of tourism services is complicated by the range of economic sectors involved in
supplying tourism products, and the competing definitions of tourism. For the purposes of this
paper, the World Trade Organization definition of tourism is used, which describes it as “the
activities of persons travelling to and staying in places outside their usual environment for not
more than one consecutive year for leisure, business and other purposes.”
SA tourism is made up of two-thirds domestic and one-third foreign consumers. The focus of
this research is on export tourism—that is, tourism that takes place within SA and is consumed
by foreigners. To this end, data on foreign visitors is presented, followed by information about
SA tourism service suppliers. Most foreign tourists—about two-thirds—come from the African
continent, and most of these are from neighbouring countries. Lesotho alone accounts for more
than one-sixth of all foreign visitors to SA. Of the remaining share from overseas, two-thirds are
from Europe. Most visitors come on holiday—over 80 per cent—while roughly 10 per cent
come for business, and still smaller percentages for work (two per cent) or study (one per cent).
Service suppliers in tourism include transport companies, hotels, car rental companies,
restaurants, advertisers, the travel press, guides and the distribution services designed for each of
these. Institutions that enable the delivery of tourism products, such as government departments
and professional organizations, should also be considered suppliers. Tourism sites are points
around which these services operate, and include national parks, game reserves, historical
monuments and museums, as well as cities, towns and villages.
Until 2001, tourism contributed about three per cent to the GDP of SA, but its indirect and
induced effects were responsible for as much as 7.1 per cent of the economy. This contribution
increased in 2002, with estimates varying as to how much more the economy will benefit if this
trend continues. About 41 per cent of all revenues generated by SA tourism is captured in the
GDP, with the balance retained in the source markets of foreign tourists. The tourism industry
employs about 490,000 people directly, and 1.1 million when indirect employment is included.
Investment in tourism is about 10 per cent of total GDP, and tourism exports are 10 per cent of
all exports. Furthermore, tourism service exports are 50 per cent of all service exports.
Government spending in the industry is low by world standards (0.6 per cent of all government
expenditure compared to a worldwide average of 6.8 per cent), but the returns on this spending
are much higher than the global norm (15:1 compared to 1.7:1). Tourism also generates over
eight per cent of all taxes paid in SA.
Tourism is one of the least regulated industries in SA and worldwide. However exceptions
include unequal treatment in the entry of natural persons, favouring those from wealthier
Western nations over neighbouring countries. Exchange controls, restrictive conditions on the
employment of skilled foreigners and financing limitations dependent on foreign equity shares
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 6
are examples of regulations that harm both domestic and foreign investors. These create an
environment of uncertainty, inhibit the inflow of technology and skilled people, and impose
unnecessary hardship and bureaucratic barriers to investment.
Liberalization in the tourism sector should bring improvements to the economy that outweigh
the hardships of adjustment. While threats of competition, loss of SA ownership and
retrenchments are to be expected to some extent, the efficiency benefits from specialization will
provide a net social gain for the average consumer. Due to the relative ease with which people
can enter travel and tourism professions, these benefits can be realized in the short term as well.
Measuring the impact of liberalization is less obvious. Apart from the differing definitions of
tourism, various methods exist to calculate its contributions to the economy. Tourism Satellite
Accounts attempt to capture the downstream effects from each injection into the industry, but
may end up inflating its actual importance. Multiplier analysis tends to reflect features of the
host economy rather than those of tourism’s contributions. Other simulations may offer more
precise figures, but can be costly and time-consuming to develop accurately.
Since the Doha Round, WTO members have undertaken to make further commitments by
March 2003. With this in mind, the following conclusions can be drawn from the research so
far. Further liberalization of regulations inhibiting commercial presence and the movement of
capital and people will remove uncertainty around investment. Tourism will be affected most by
the progress of liberalization in sectors that enable its service delivery—most notably transport
and utilities. Despite its contribution to GDP and its importance as an employer, the tourism
industry concentrates information-gathering efforts in a demand-side marketing approach
instead of seeking to understand its suppliers better.
SA policy on sustainable development is mixed, and the environment is often omitted from
discussion. Also, employment creation and equity are paramount in this era of highly unequal
employment opportunities. Fortunately, with the success of eco-tourism ventures there is a
growing emphasis on harnessing the environment in tourism.
An examination of the Phinda Reserve and the Greater St. Lucia Wetlands Park in northern
KwaZulu-Natal, as well as Amadiba Adventures in the northern Wild Coast of the Eastern Cape
reveals how different management and ownership structures can deliver benefits to communities.
Representatives of each management area were interviewed to complete baseline research on
economic growth, poverty alleviation, environmental impacts and possible links to trade in
services to formulate recommendations for sustainability in eco-tourism.
Tourism and sustainable development
One sector that has increasingly contributed to the advancement of sustainable development
dialogue and activities is tourism. The interaction between sustainable development as a practical
approach and tourism as an industry is tangible and far-reaching, and the manner in which the
industry impacts on economic and social development and environmental initiatives is
enormous. A very cursory description of these interactions is given below.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 7
In terms of economic development, the potential contribution of tourism is significant. The
World Tourism Organization (OMT) has reported that in 2001, US$463 billion in international
tourism receipts were recorded worldwide.
4
In terms of export earnings on tourism goods and
services, in 1999, international tourism and international fare receipts (receipts related to
passenger transport of residents of other countries) accounted for roughly 8 per cent of the total
worldwide. In terms of long-term trends, the OMT reports that:
The number of international arrivals shows an evolution from a mere 25 million
international arrivals in 1950 to the 699 million of 2000, corresponding to an
average annual growth rate of seven per cent. In the same period, international
tourism receipts, at current prices and excluding international transport costs, had
an average annual growth rate of 11 per cent.
While earnings from tourism vary among countries, all regions monitored by the OMT (Europe,
the Americas, East Asia and the Pacific, South Asia, Africa and the Middle East) indicated growth.
Employment from the tourism industry is estimated at approximately 72,000,000 jobs, while the
tourism economy as a whole is estimated to be about 198,000,000 jobs worldwide.
5
This latter
figure equals about 7.8 per cent of total employment, or about one in every 12.8 jobs.
In terms of the social pillar of sustainable development, the OMT has identified a number of
social benefits that can result from tourism. For example, it suggested that tourism could
contribute to:
I
rural development;
I
agricultural transformation;
I
community enrichment;
I
social empowerment, particularly for women; and
I
preservation of cultural and heritage traditions.
6
At the same time, however, there can also be negative social outcomes from tourism activities, for
example:
I
inflationary pressures pose the danger of significantly worsening the household
distribution of income;
7
I
increased incidence of crime, and spread of drugs and diseases, including
HIV/Aids;
8
I
change or loss of indigenous identity and values (in terms of commodification,
standardization, loss of authenticity and staged authenticity, and adaptation to
tourist demands);
9
4
See the Web site of the World Tourism Organization: http://www.world-tourism.org/projects/ethics/principles.html,
accessed 30/01/03. Subsequent economic statistics were also obtained from this Web site.
5
Employment statistics taken from The Impact of Travel and Tourism on Jobs and the Economy – 2002: Executive Summary.
World Travel and Tourism Council, 2002.
6
The OMT has initiated research and consultation on the interrelationship of tourism and poverty through a project called
“Sustainable Tourism – Eliminating Poverty.” See the Web site for more information.
7
Sustainable Tourism Development in Small Island Developing States. Report of the Secretary-General, Addendum. UN
Commission on Sustainable Development. Fourth session, April 18–May 3, 1996. Document E/CN.17/1996/20/Add.3. See
www.un.org/esa/
8
Ibid.
9
UNEP Production and Consumption Branch. See the UNEP Web site: http://www.uneptie.org/pc/tourism/sust-
tourism/soc-drawbacks.htm
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 8
I
culture clashes (income inequality, irritation due to tourist behaviour and job-level
friction);
10
and
I
ethical issues (child labour, prostitution and sex tourism).
11
The environmental aspects of tourism are obvious, yet complex. The fundamental paradox that
underlies the environmental aspect of tourism is that most forms of tourism depend on either a
built or natural environment, but excessive tourism can degrade that same environment. Impacts
from tourism can be categorized into three types:
I
pressure on natural resources (land, freshwater and marine resources);
I
pollution and waste generation (improper disposal of liquid and solid waste, for
example, from cruise ships); and
I
damage to ecosystems (disruption of habitats, alteration of animal behaviour,
destruction of coastal areas, forests, mangroves, etc.).
12
However, environmental benefits from tourism have also been documented, the most
predominant of which is the conservation and protection of ecologically-sensitive or unique
areas. These areas attract tourists who are interested in botany, bird watching, wildlife, nature
photography, scuba diving, archaeology, etc.
Accordingly, tourism organizations—local, national and international—have been producing a
number of sustainable development guidelines, principles and codes of behaviour for the sector.
At the international level, the OMT has published a number of documents that emphasize the
importance of integrating a sustainable development approach to tourism projects and activities.
For instance, in Article 3 of its Global Code of Ethics for Tourism,
13
the OMT states that:
All the stakeholders in tourism development should safeguard the natural
environment with a view to achieving sound, continuous and sustainable economic
growth geared to satisfying equitably the needs and aspirations of present and future
generations.
This Article encompasses the economic, social and environmental aspects of sustainable
development. In addition, the OMT has drawn up a guide for sustainable tourism development
that also places emphasis on these three elements. The guide stresses that “sustainable tourism
development can fulfil economic, social and aesthetic needs while maintaining cultural integrity
and ecological processes.”
14
Moreover, the guide explicitly states that planning, development and
operation should entail integrated decision-making, “involving different government agencies,
private corporations, citizens groups and individuals.”
15
Both the Global Code of Ethics for
Tourism and the guide for sustainable tourism development also contain clear directives in terms
of equity, fair distribution of benefits and costs, and application of policies to help raise the living
standards of the populations in the regions visited.
10
Ibid.
11
Ibid.
12
Sustainable Tourism, Environmental Protection and Natural Resource Management: Paradise on Earth? Frederico Neto. Paper
submitted to the International Colloquium on Regional Governance and Sustainable Development in Tourism-Driven
Economies. Cancun: Mexico, February 20–22, 2002.
13
See the Web site of the World Tourism Organization for the full Code.
14
Sustainable Tourism Development: Guide for Local Planners. OMT: 1993. See the Web site of the World Tourism
Organization (listed above).
15
Ibid.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 9
South Africa tourism – introduction
General information
The tourism sector of the South African economy has been characterized by rapid growth in the
mid-1990s, followed by more conservative gains recently, and an increasing contribution to
overall employment. The Department of Environmental Affairs and Tourism (DEAT) indicated
in 2002 that South Africa’s tourism sector was the fastest growing export tourism market in the
world.
16
The majority of tourism consumption in SA (67 per cent) is by South Africans. Export tourism
accounts for the remaining 33 per cent. Of the total R92.95bn spent by foreign tourists on their
SA visits, R38.43bn (or 41 per cent) comes into the country, while the rest remains in the source
market, largely due to airfare sales and respective commissions by foreign travel agents.
17
This is
regarded as a normal percentage split in the tourism sector.
18
Through the development of
tourism distribution services and marketing campaigns, SA hopes to claw some of this
percentage back in its favour.
Although there are many similarities between SA tourism services and those in other countries,
the SA tourism sector has also evolved to feature those assets that are uniquely South African.
The best example of this is cultural tourism, which describes the activities of visitors who engage
in the political and cultural history of the country. South Africa’s peaceful transition to
democracy and current process of transformation are widely appreciated throughout the world,
and translates into a very dynamic component of South Africa’s tourism industry, as evidenced
by its repeated mention in provincial tourism strategies.
19
Other forms of leisure and recreation include ecological, adventure, sporting, health and even
educational tourism. Less is known about the percentage of time a foreign visitor is likely to
spend between these classes of tourism activities, although the data permit a broader distinction
to be made between holidays and other purposes of visit.
The South Africa Tourism (SATOUR) slogan, “A World in One Country,” rightly draws
attention to the diversity of SA flora, fauna and landscapes. Around this natural asset an
adventure market has developed, catering to thrill-seekers and nature enthusiasts. The country’s
reputation in several international sports ensures many visitors for SA-hosted events. A choice of
temperate climates in any season is also an attractive feature of the country. On the rise are
multi-purpose visitors who find good value in elective health services and combine their
therapeutic visit with a recreational holiday. Those on work or study permits staying less than a
year would also be considered tourists, as are those who come for business purposes or to attend
a conference.
16
Department of Environmental Affairs and Tourism (DEAT), 2002a.
17
DEAT homepage, http://www.environment.gov.za/parliamentUpdate/QA_Tourism.htm, accessed October 2002.
18
Ibid.
19
See, for example, http://www.capetourism.org/content/greenpaper.doc for the Western Cape province or
http://www.kzn.org.za/kzn/kznta/26.xml for KwaZulu-Natal province.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 10
Economic characteristics of South African tourism
Employment
The generation of employment is one of the strongest recommendations for tourism, and the
Department of Environmental Affairs and Tourism identified the sector as an engine for growth
in its 1996 White Paper. After a doubling of tourist arrivals from 1992 to 1996, it was estimated
that for every eight visitors a new job was created. Currently, it is estimated that there are over
490,000 people employed directly by the travel and tourism industry in SA, representing about
three per cent of total employment. According to the World Travel and Tourism Council
(WTTC), the employment figure rises to over 1,100,000 jobs when one looks at the larger travel
and tourism economy, which would equate to about one in every 14.5 jobs in SA.
There are many labour-intensive features of tourism’s prominent sub-sectors. Typically, the skills
required in this sector are low to medium, and the wages and salaries reflect these requirements.
This means that although there are opportunities for all to participate, the sector suffers from a
lack of status and has trouble attracting people with higher qualifications.
Moreover, tourism does not occupy the place in the SA economy it ought to if one considers the
percentage of GDP attributable to tourism in other economies. The U.S. share, for example, is
10 per cent of GDP while the SA share is about three per cent. If tourism were to grow to this
potential, an estimated two million additional jobs would be created.
20
Since 1999, the DEAT alone has spent over R260m on more than 150 community-based
tourism projects.
21
Although the number of temporary jobs created surpassed 400,000, only
2,300 newly-created, permanent positions exist. The DEAT has also funded additional training
to provide more skilled people into the tourism market, but there has been no follow-up on this
program’s placement success.
There is further a concern over the participation of women in new jobs in the tourism sector.
Although 46 per cent of new jobs in tourism go to women worldwide—far outpacing the
percentage in other industries—the average seems to be somewhat lower in SA.
22
It has been posited
that the high levels of male unemployment are partially responsible for lower female gains.
23
Investment
Capital investment in tourism has been fairly constant since the mid-1990s. This seems odd
when one considers the growth of the industry in the same period. Tourism investment as a
share of GDP has remained constant at just over 10 per cent, which compares well with the
world average of 9.2 per cent.
20
WTTC, 2002. Except where otherwise noted, statistics in this section are from this document.
21
DEAT, 2002
22
Page, 1999.
23
Ibid.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 11
For an analysis of this kind it should ideally be possible to decompose the industry into its sub-
sectors and sources of investment (foreign or local), but as mentioned earlier, data are not easily
refined into these subsets. Furthermore, most of the available data are geared towards developing
marketing strategies for holiday-makers. Although one is able to differentiate between vacationers
and business visitors in the arrivals and departures data, not much more is known about
potential and current investors in SA.
The WTTC forecasts more robust investment figures for the years ahead, with the assumption
that SA will have addressed some of its investor uncertainty and risk issues. Professor David
Kaplan, former chief economist at the Department of Trade and Industry (the dti), has identified
uncertainty as the number one issue plaguing investment in SA.
Exports
The activities and purchases of international visitors are, by definition, measured as exports in
the host economy. Services in tourism are unique among exports because they are consumed in
the same country in which the services are produced. Although exports can refer to the spending
on both merchandise and activities by foreigners, it is only the non-merchandise spending
component that is discussed under the trade in services.
For smaller developing countries in particular, the export share of tourism is the most significant
portion of the industry, and often for the entire economy. In SA, tourism exports represent about
35 per cent of consumption within the industry, and are about 10 per cent of all SA exports.
Tourism exports include a visitor-spending component about 3.5 times larger than the
merchandise component. It is the visitor spending that touches the trade in services issues, since
transport, accommodation, car hire and the like are all service industries. If there were to be a
consequence of trade liberalization, it would be evident in both the share of tourism among
exports and absolute growth in tourism exports.
Government spending
Expenditure by the SA government on tourism services and facilities is considered very small
compared to world averages, and has remained constant at about R130m from 1997 to 2000.
Only recently has it risen to R900m, and this amount still represents just two per cent of
government expenditure. The worldwide average is more than three times this share at 6.8 per
cent. This can be interpreted as a threat to future growth or as a sign of confidence in the
industry. To the extent that government spending is linked to growth, a zero-growth budget for
tourism spending could mean a future bottleneck in the provision of services.
However, SA is unique in that the return experienced from current expenditure is of several
magnitudes larger than most countries. The ratio of tourism’s contribution to the economy
versus government spending is about 15:1, while the world average is about 1.7:1. Interpreting
this is more difficult, but it would appear that SA owes its dividends to other sources than
government spending.
Taxes
Less recent information is available on tax revenues from the tourism industry. In 1998, these
represented R15bn, or about 8.4 per cent of all taxes paid in SA. Of this, R6.6bn is generated
from the wages and salaries of employees in the industry, R5.9bn is the estimated contribution
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 12
from indirect taxes and a further R2.6bn comes from businesses. As tax collection improves, it is
expected that revenues will continue to grow, which also assumes employment and consumption
growth in this sector.
From the above, it can be seen that the travel and tourism sector is managing to defy some of the
negative trends present in other sectors in SA. Employment is growing, and the share of private
investment is on par with that of other nations. Moreover, the consequences of 2001’s terrorist
events were not felt as severely in SA.
South African tourism services regulation
South Africa’s array of tourism-related policies address all three pillars of sustainable
development: economic development; social development/equity; and environmental
protection/conservation. For example, the 1996 White Paper identifies a number of specific
economic, social and environmental objectives.
24
However, with GATS negotiations taking place
in the WTO, the current emphasis is on the trade and economic aspects of tourism.
Presented below is an overview of the regulatory environment of SA as it relates to tourism and
to the trade in services.
25
Tourism in SA is unregulated in the sense that consumption by
foreigners is not subject to controls. A discussion of how trade liberalization affects tourism is
thus not based on any direct controls in this industry, but rather on how other activities that
allow the supply of tourism goods and services in this country are affected by regulation. So in
this respect, the body of regulation that affects tourism is largely the same as that which affects
any other service industry.
Cross-border supply (Mode 1) – focus on financing
Mode 1 covers service flows from the territory of one WTO Member into the territory of
another Member, such as banking.
26
In this sense, foreign firms are not treated differently than
South African firms by lending institutions, except for limits imposed by the percentage of
foreign ownership (described under “commercial presence” below). In its latest requests for the
WTO trade in services negotiations, the EU has requested of SA that this limitation be
suppressed.
27
The SA banking system is known to be efficient and sophisticated, but suffers from
higher real interest rates than those available at equally reputable institutions overseas. Otherwise,
the financial market is not heavily regulated and banks are generally left to set their own criteria
for lending.
There are a number of financing schemes available to consumers of tourism financial services, of
which both foreign and domestic investors should be aware. Previously, the Industrial
Development Corporation (IDC) offered two financing products below prime lending rates for
investors who either developed appropriate tourist facilities in ecologically-protected zones or
improved existing accommodation elsewhere. Now the role of the IDC in tourism has expanded
with the creation of a Strategic Business Unit (SBU) that is focused on broader initiatives.
24
Available online at: http://www.polity.org.za/govdocs/white_papers/tourism.html.
25
DTI, 2001. Except where noted, regulations cited in this section are from this source.
26
See World Trade Organization Web site section on GATS: http://www.wto.org.
27
EU Ad Hoc Committee – Services, 2000.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 13
Using partnerships with the dti, Khula Enterprises and the Development Bank of Southern
Africa (DBSA) to encourage investment in other types of tourist facilities, the SBU has helped to
develop convention centres, cultural villages and health tourism facilities. The IDC also offers a
discounted rate on the funding of operations that will create new employment opportunities.
The criterion here is that the capital cost must not exceed R100,000 for each opportunity
created.
However, the SBU fears that the market may soon be saturated in SA, and so is also turning its
attention to neighbouring countries.
28
The IDC starts funding at R1m, so this precludes
development in the small, medium and micro-sized enterprise (SMME) category.
These schemes are still largely targeted towards the making or refurbishing of upper-end
establishments by investors with sufficient collateral at their disposal. The 1996 White Paper
identified this as a problem area because (a) there may be a surfeit of five-star properties already
and (b) participation in the tourism economy is not enhanced by the continued exclusion of
groups without access to funding.
29
It goes on to quote independent consultancy Kessel
Feinstein as saying the current incentives are “so little as to be meaningless in encouraging any
development.”
Consumption abroad (Mode 2)
Consumption abroad refers to situations where a service customer (for example, a tourist) moves
into another WTO Member’s territory to obtain a service.
30
For the most part, this mode covers
tourism or education abroad. Activities of foreign individuals who remain in SA for less than one
year (including those who enter with work, business or study permits) can be classified under
tourism. Thus the movement of these people into the country is a matter of tourist regulation
and, by extension, affects Mode 2 trade in services. The government fully manages this aspect of
regulation, although members of the tourist industry have a larger stake in seeing greater
liberalization and hence a freer movement of people.
As far as SA regulation is concerned, foreigners are not treated differentially in their consumption
of services, and there are no Mode 2 requests at present.
However, under the present arrangements, not all members of the WTO are granted equal entry
rights, as is the eventual goal. Citizens of the U.S., Canada, Japan, Australia, New Zealand and
most of the Western European nations receive preferential treatment for a variety of reasons:
reciprocal arrangements, low history of visit-length violations and their value to the economy in
terms of spending per capita. Typically, these nationals are issued visitor permits on arrival for
stays up to 90 days according to return/onward flight dates. Upon supplying further proof of a
bona fide intention as a visitor (such as means of financial support) and at the discretion of
immigration officials, these nationals can request a temporary residence permit valid for up to
one year.
28
Dampier, 2002.
29
1996 White Paper.
30
See World Trade Organization Web site section on GATS: http://www.wto.org.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 14
As of November 2000, nationals of neighbouring Southern African Development Community
(SADC) countries do not enjoy the same treatment, and are granted visits not exceeding 30 days on
average. Research conducted by SATOUR shows that nationals of these countries generally come on
much shorter—but more frequent—visits than their overseas counterparts.
31
In fact, SADC citizens
represent the greatest proportion of foreign visitors.
32
Given the frequent nature of their visits, if
their shorter lengths of stay are not the result of the relatively more restrictive visa conditions towards
SADC nationals, then it would do no harm to extend the stipulated period of visit.
Commercial presence (Mode 3)
The establishment of a commercial presence in SA is an area subject to regulation, and more
particularly if the South African company is 75 per cent or more foreign owned. Such companies
are known as “affected companies” and are limited in the amount that they may borrow from SA
sources. Companies that are 100 per cent foreign owned can borrow up to 100 per cent of their
effective capital. The percentage allowed increases as the percentage of South African ownership
increases, according to the formula:
100 per cent of effective capital + (per cent SA interest/per cent foreign interest) x 100 per cent
Thus a situation may arise where the repatriation of funds would not be permitted if the amount
of effective capital would be reduced to a point below what is required to have qualified for SA
financing.
This, however, is somewhat less restrictive than the 10 per cent foreign asset base limitation SA
firms face. Although this was recently improved from five per cent, it does not permit the same
flexibility in investment as is possible for foreign-owned firms. Residents must obtain permission
from the National Treasury through its agents—the exchange authorities—when converting large
sums of rands into foreign denominations. However, there have been no restrictions for non-
residents on exchanging rands since the abolition of the financial rand in 1994. Likewise, there
are scarcely any controls over the repatriation of investment income.
The controls that do exist are maintained to prevent capital flight, although they may ironically
contribute to weak investment through the uncertainty they impose. Controls might cause
potential investors to question the reasons behind the enactment of such restrictions, and
ultimately may serve only to advertise and substantiate perceived risk.
In terms of labour, potential investors should be familiar with some of the legislation, including
the Basic Conditions of Employment Act (1998), the Employment Equity Act (1999), and the
Skills Development Act (1998). SA has made enviable strides in legislating the rights of workers,
which are on par with those of developed nations. Trade unions are also well organized and exert
a lot of upward pressure on nominal wages.
There are two aspects of the labour market of interest to foreign investors. Under the Skills
Development Act, foreign investors are expected to import new technologies to improve productive
capacity. It is unclear how the legislation addresses this issue and whether there is a monitoring
process in place. Secondly, given the relatively high unit cost of labour compared with other
markets in SA, there is much scope for examining the role this plays in investment as well.
33
31 SATOUR, 2002b.
32 Stats SA, 2001.
33 Fedderke, 2001.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 15
Regarding other issues, business registration, land acquisition and land re-zoning are further areas
of regulation that affect commercial presence but which are neither discriminatory toward
foreign investors nor unduly encumbered processes. Tax incentives are offered for industrialists
involved in export, but schemes for attracting overseas investment in tourism are not as well
known. This problem was also identified in the 1996 White Paper, which recommended that
either a new institution devoted to tourism be created or that the existing State institutions be
more aggressive about funding this sector.
Presence of natural persons (Mode 4)
According to the GATS, the presence of natural persons consists of persons of one WTO Member
country entering the territory of another Member to supply a service—such as their labour. Foreigners
planning to work in SA are not officially differentiated by nationality. For a foreign national to enter SA
with the intention of working, certain standards must be met that show the country will benefit from
the person’s skills, and that these same skills are not possessed by a South African who could fill the
desired post. These clauses are expressly designed to protect the domestic labour market but are
arguably more restrictive than necessary. First, they provide for the use of a much stricter standard of
credential analysis than exists in the domestic labour market. Secondly, prospective employers are
required to draw up a plan of skills transfer from the foreigner to a South African citizen who will hold
the post in the long run. This places the onus on the employer to (a) find or have employed an under-
qualified SA candidate at the time of the foreigner’s application and (b) arrange for training that might
better be accomplished through the educational system, professional organizations or other means than
its foreign employees. The assumption is that the qualifications of the foreigner are of the sort that
cannot be obtained in SA, rather than the sort that may simply be scarce in SA for other reasons.
Requirements for those seeking business visas—whether they are representing a foreign business,
visiting a branch office in a temporary capacity or exploring investment opportunities—are less
stringent than for those seeking work visas. Key personnel transfers to SA branches of foreign
firms are also more easily secured, and the movement of these persons need only be justified in a
letter to Home Affairs. Secondments, or employees paid outside of SA for their work inside the
country, require only a visitor visa.
As of 2001, work (and study) permits could be obtained for a three-year period rather than
having to renew the permit yearly. This move reduces the administrative burden on both the
permit-holder and the Department of Home Affairs, but has little impact on the movement of
labour. As part of the WTO negotiations on trade in services, the European Union (EU) has
requested SA to reduce the credentialing criteria for certain professional sectors to one year of
experience and a university degree or equivalent professional diploma.
34
When referring to the tourism industry, the movement of natural persons has consequences for
both SA and foreign businesses. Foreign-held businesses are more easily able to import labour
under secondment and transfer arrangements, so it is possible to imagine that some might
benefit from overseas expertise. However, given the adequate skills base in SA, it is unlikely this
would occur for any but the most senior positions. Still, foreigners in the SA tourism industry
might possess a level of education, global experience and linguistic or cultural affinity with
clientele that a SA employer might find desirable but inaccessible. Finally, and although the
effect would be longer term, the opening of the tourism labour market would help to remove
wage pressure that existed for the most senior positions. If skills for such jobs are scarce within
SA, then welcoming more foreigners could relieve this pressure.
34
EU Ad Hoc Committee - Services, 2000.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 16
Case studies – methodology
To explore possible links between the regulatory environment and sustainable development
through tourism, the authors will present findings from a microeconomic study that illustrates
these processes in selected SA coastal communities. While it would have been desirable to
conduct a more precise macroeconomic analysis of tourism in SA, owing to the diversity of the
industry participants and the indistinct definition of tourism services, it was decided that a case
study approach would be sufficient to highlight the salient features of tourism and sustainable
development—even if not able to do so in a representative manner for all experiences of tourism
in SA.
In this instance, the authors chose to look at the eco-tourism segment of the tourism market.
Eco-tourism is a fast-growing sector of tourism in SA, as evinced by the DEAT’s drafting of an
Integrated Eco-tourism Development Plan for 2003.
35
Land that might have previously been
used for agricultural and forestry products or mining is becoming more profitable as an
attraction in its natural state.
This phenomenon is demonstrated in the focus of two coastal spatial development initiatives
(SDIs) located at either end of KwaZulu-Natal Province. Both the Lubumbo SDI and the Wild
Coast SDI began as infrastructure development plans that later tapped into the wealth of eco-
tourism. When the inherent value of the land as a tourism asset began to be realized, a shift in
focus took place from infrastructure development for general use to that designed for the specific
use of tourism. As a result of this shift, land that was likely to be given over to mining in both
SDI areas may now be set aside for eco-tourism. The Lubumbo SDI incorporates both the
Greater St. Lucia Wetlands Park and Phinda Game Reserve, while the Wild Coast SDI hosts the
community-run Amadiba Adventures coastal hiking and horse trail.
This paper adopted the use of a property rights (that is, Coasian) approach to analyzing the
incentive structures under various forms of ownership. To facilitate this, it was necessary to
control for the environment as far as possible and to vary the form of ownership (or
management structure) to understand the incentive to conserve the natural environment, create
new employment opportunities and actively attract visitors to the site. Once these questions have
been asked, the remaining concern was whether tourist throughput and the associated incomes
were sufficient to sustain these efforts.
There was insufficient data in the public domain to facilitate this form of analysis without field
visits and additional qualitative research. The key stakeholders needed to be interviewed in
person and their feedback assimilated into the framework of the discussion. In short then, using
a careful selection of case studies, these aim to:
1) Examine different forms of ownership including:
I
private ownership;
I
community ownership; and
I
government/public sector ownership.
35
DEAT, 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 17
2) Explain the institutional dynamics of each of these forms of ownership. Particular attention
will be given to the following aspects and the extent to which they might promote (or
discourage) sustainable development and a culture of environmental conservation:
I
principle-agent relations;
I
asymmetry of information; and
I
incentive structures (both positive and negative).
3) The extent to which increasing competition, efficiency and openness might encourage
growth in the tourism received by these destinations.
4) The likely impact that growth might have on poverty and job creation in each of these cases.
In accordance with this methodology, and to further explore the eco-tourism segment, the
following sites were selected as case studies:
I
Phinda Game Reserve – KwaZulu-Natal: private ownership;
I
The Greater St Lucia Wetlands (GSLW) Park – KwaZulu-Natal: government
steward-ship; and
I
Amadiba Adventures – KwaZulu-Natal/Eastern Cape: community ownership).
At each of the three targeted sites, initial consultation with available contacts and other
researchers helped to identify the correct spokespeople within the relevant management
institutions. In many cases, more than one organization, and more than one spokesperson, was
approached to provide a more comprehensive understanding of the management context.
Meetings with the targeted respondents
36
took the form of an in-depth qualitative interview.
Discussions were structured around specific predetermined themes or topics to ensure that the
same ground was covered in all conversations. The report below is structured around the themes
of these interviews, and pertinent information from each case study is presented under each topic
heading for purposes of comparison.
Background on the case study sites
The Phinda Game Reserve
“Phinda is acclaimed as South Africa’s most responsible wildlife tourism project,
with its goals of wilderness restoration and community participation.”
37
Owned and run by Conservation Corporation Africa (CC Africa), Phinda is situated within
17,000 hectares and seven distinct ecosystems in Zululand, northern KwaZulu-Natal. Phinda has
earned a worldwide repute for its diversity and scenic wonder and the Web site for the resort
describes it as the “nucleus linking nearby conservation areas in the creation of the Greater St
Lucia Wetland Park,” and claims that “Phinda has ensured the bio-diversity of this remarkable
region.”
38
36
The terms “spokesperson” and “respondent” are used interchangeably in the subsequent narrative and the reader should be
aware that they carry the same meaning. Details of the meetings and spokespeople can be found in Appendix C.
37
http://www.africantravel.com/cca/phinda2.html accessed 05/12/02
38
http://www.southafrica-travel.net/Parks/e_lucia.htm, accessed 4/12/02
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 18
Greater St. Lucia Wetlands Park
Greater St. Lucia Wetlands Reserve comprises a river mouth approximately 60 km long, which
forms a lagoon parallel to the coast. The lagoon is separated from the sea by a ridge of dunes.
There are countless species of fish and an equally impressive variety of birds. Another attraction
is the chance to see hippos and crocodiles. With about 1,500 specimens, the crocodile
population in the St. Lucia Lake is the biggest of all the animal parks in SA. The park offers
camping sites and holiday facilities of varying degrees of luxury. On weekends, these are usually
filled with visitors from nearby Richard’s Bay and the city of Durban.
Amadiba Adventures
Amadiba Adventures was initiated by PondoCROP (a regional NGO
39
) in conjunction with the
Amadiba Coastal Community Development Association (ACCODA). The Amadiba Horse and
Hiking Trail is a wilderness trail that runs along the northernmost section of the Transkei Wild
Coast in the Eastern Cape, from the Mzamba River to the Mtentu River. Accommodation in
tented lodges, the hire of horses, tour-guiding and catering is supplied by small business
enterprises owned by members of the local community.
PondoCROP, ACCODA and Triple Trust (an NGO focusing on skills development) are working
together on the development of the region’s low-impact eco-tourism trail. PondoCROP holds
responsibility for the development of the new trails, strategy planning and the development of
appropriate business plans. Triple Trust handles the training of involved community members to
ensure appropriate skills development, and the community group manages the operationalization
of the trails.
This initiative has recently benefited from an R80m investment by the EU into the Wild Coast
region over a five-year period, and Amadiba Adventures is one of a number of beneficiaries. The
initiative is going into its third year under its original development grant from the dti. Figure 1,
provided by the Amadiba respondents, explains how the institutional arrangement of Amadiba
Adventures operates.
The trail, use of the land and the funds generated are all the property and responsibility of the
Amadiba Community, which is represented by ACCODA (hence the selection of this site by the
authors as a community-owned initiative). Representatives from PondoCROP, ACCODA and
the booking agency were interviewed, as well as representatives from the community active on
the trail, such as the guides, cooks and camp keepers. The views discussed below reflect a
summation of these interviews.
39
Non-governmental Organization
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 19
Figure 1: Structure for the management of Amadiba Horse and Hiking Trail
The community owns the Horse and Hiking Trail. ACCODA makes decisions
on behalf, and in the interests, of the broader community. PondoCROP provides
ongoing support during hand-over. The business units are self-managed and are
all represented on ACCODA. The Facilitation and Support Unit builds capacity
within the business units, enabling them to become effective interdependent
units of the overall business. Macro-marketing initiatives for the Wild Coast area
(Booking Agency) are closely linked with the Central Administrative process.
Source: Amadiba Horse and Hiking Trail: A Brief Overview
PondoCROP
Community
ACCODA
Booking agency
Facilitation
and support unit
Kwanyana
Campsite Guides and
horse organizers
Mtentu
Campsite
Central
administration
= Profit generating centres
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 20
Tourism and sustainable development: case studies
40
Social development/equity
Phinda
CC Africa
Poverty alleviation
The respondent claims that the dependency ratio in the area is 10 to one, that is, for every single
income earner in a household there are 10 dependants. They, therefore, claim to be supporting
about 2,500 members of the local community (which reportedly constitutes almost 25 per cent
of the local population). The respondent claims that there is a 45 per cent unemployment rate in
the area, which would make Phinda the largest employer, serving nearly half of the employed
population.
Education and health provision
Consideration for sustainable development is integrated into CC Africa’s decision-making at
every step. In an effort to strengthen co-ordination, a classroom will not be built without an
undertaking from the government to provide a teacher for at least five years, while a clinic will
not be built without similar guarantees that it will be staffed and stocked.
Legislative improvements that enable the opening of other game farms
Phinda claims a significant contribution to growth and employment in the northern KwaZulu-
Natal region. Before the park opened up, the land was under cattle farming, with some small
proportion under pineapple farming.
When development of the park began, there was no legislation regulating the retention of “big
five”
41
game on private land, nor was there legislation permitting (or regulating) buffalo on
private land. Phinda claims the credit for getting this legislation formulated and passed.
According to the Phinda representative, the park had substantial support from the people on the
ground but higher up the legislative hierarchy, the agents became more risk-averse and less
willing to assist the project. Despite the reported lack of active support from regional and
national government, the legislation was passed and Phinda was permitted to contain the big five
on its land.
When asked to explain the reason for the risk-averse behaviour by certain government agents, the
respondent gave as example the attempt to introduce cheetah into public (that is, government-
run) game parks. This attempt was unsuccessful for a number of reasons, resulting in a net loss
of some 100 cheetah by the public authorities. The Phinda reserve has also introduced cheetah;
however, its experience has been a net gain of some 100 head of cheetah. The respondent was
asked to suggest a possible explanation for the difference between the negative public park
40
The information presented in this section has been verified wherever possible, and relies chiefly on interviews with those
involved in managerial or representative capacities at each of the case study sites. These interviews should be considered the
source where no other is cited. Details of those interviewed are presented in Appendix C.
41
Lion, leopard, buffalo, rhinoceros and elephant.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 21
experience and the positive private park experience as far as the reintroduction of cheetah was
concerned and his answer related directly to factors of institutional arrangement. In the private
environment, accountability for the loss is directly attributable to the person working on the
project and the loss of a cheetah means loss of money. The respondent painted a picture of
government bureaucracy where the person responsible for the loss of the cheetah in the public
sector simply enters it in a journal and is never expected to explain the loss. This, of course, is a
claim that is impossible to verify.
Promotion of the northern KwaZulu-Natal region
The Phinda representative claims that before the development of the Phinda reserve, the
northern KwaZulu-Natal region had no market presence as a top-end facility. Phinda became a
flagship for the Maputaland region and needed to promote the region as a whole before it could
promote the resort itself. The respondent cited a joint DBSA and World Bank report that details
some indicators (see Table 1 below) of tourism growth in the region.
Table 1: Tourist accommodation measurements for Greater St Lucia Wetlands park region
1991 2000
Number of structured beds Less than 4,000 12,000
Number of foreign tourist arrivals to the region 2,000 8,000
The Phinda representative also claims that its promotion of the region—which came at a heavy
financial cost with no assistance from the State—opened the door for the Greater St Lucia
Wetlands Park, although he does not believe that the Park has maximized its potential for
development.
Infrastructure development
The positive externalities being reaped by other reserves such as the GSLW reserve do not end
with benefits from the promotion of the region. Phinda claim to have initiated the development
of infrastructure in the region, which not only made other resorts a viable possibility, but also
contributed to the upliftment of local communities. The most notable of these was initiating the
building of a major SDI road, which took place in 1994 during a period of what the respondent
describes as “pre-election political inertia.” Getting the road project off the ground cost CC
Africa a reported R500,000 in ministerial visits to the region and other forms of facilitation.
Consequences of trade liberalization
In most cases it was difficult for respondents to distinguish any direct impact from trade in
service negotiations on the effectiveness of tourism’s delivery of sustainable development. Phinda
has been successful at reaching out beyond SA for financing and the funding of its projects, so
trade liberalization would probably entail no significant change to such endeavours. If one were
to assume an increase in the number of foreign-owned, private game reserves, it is arguable that
sources of funding for Phinda may decrease as they transform into sources of new ownership and
competition. There is little reason to believe in a fixed number of foreign investors, so this
scenario would appear unlikely. It is more plausible to expect Phinda’s continued support of the
surrounding communities to be consistent with the growing trend of overseas visitors in SA.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 22
The Africa Foundation
Infrastructure provision
Aside from employment and training, the Phinda resort—through the Africa Foundation—takes
visitors into the local community and encourages them to assist in building local facilities. This
initiative has raised some R10m in the last 10 years and this money has been used to build a 24-
hour clinic with 10,000 people on the books and 45 classrooms schooling as many as 3,500
children. This is done in co-operation with the government and no classroom is built without an
assurance that a teacher will be provided to teach in that classroom.
Another way in which Phinda has attempted to bring about poverty relief in the surrounding
community was through the purchase of vegetables from local farmers to meet the resort’s
catering needs. Unfortunately, the lack of infrastructure (irrigation particularly) and low rainfall
in the area prevented the success of this project and fresh produce is now purchased from outside
the area. When asked about the possibility of an irrigation scheme, the respondent pointed out
that tap water needs to be made available to people before it can be made available to plants—a
point which illustrates how much development remains to be done in the region.
The Africa Foundation representative made it very clear that without tourism the Foundation
would not have come into being. In the first five years of its existence (as the Royal Investment
Fund), the Foundation was entirely dependant on funding from CC Africa and hence on money
from tourism. Without the Foundation, it is highly unlikely that the classrooms and clinic would
have been built.
Growth through infrastructure and skills development
The Africa Foundation began as a division of CC Africa known as the Royal Investment Fund.
The Fund was primarily tasked with the responsibility of involving local communities in
community development projects. Difficulties in separating funding applications for CC Africa
in general and the Royal Investment Fund in particular led to the removal of the department
from the CC Africa fold and the formation of the autonomous Africa Foundation, which stills
works closely with CC Africa in the vicinity of Phinda. The locality serviced by the Africa
Foundation includes the areas of Nibela, Mduku, Mnqobokazi and Kwajobe, cumulatively
populated by about 50,000 people.
The Foundation is funded primarily (but not solely) by funds contributed by visitors to the
Phinda resort. A representative of the Foundation will visit tourists at the resort, give them some
background to the communities living on the borders of the resort and, if they are interested,
take tourists on a cultural visit to local schools and clinics. These visitors often end up
contributing money to the development of the areas they visit and this forms a substantial
portion of the Africa Foundation’s funding. By working closely with the communities, the Africa
Foundation has structured a communication process whereby communities bring proposals for
development to the Foundation, that in turn applies to the central office in Johannesburg for
approval of the funding. Once the funds have been granted, the Foundation reverts to the
community and assists in setting up the project (be it a classroom, clinic or other project). The
idea of assisting the community at every step throughout the implementation of the project is to
ensure that skills are developed as part of the process and that the community is able to maintain
its new resource without ongoing help from the Foundation. Community participants are also
required to make some contribution to the building of the project. The relatively impoverished
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 23
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 24
status of these communities prevents them from giving money but they are required to give time
and to assist with bricklaying, cementing or bringing water to the building site. This aims to
inculcate a sense of ownership rather than a sense of entitlement.
The respondent defines the Foundation’s success in terms of the longevity of its projects, and this
longevity is attributed to the close process of consultation and involvement not only with the
community involved but also with other stakeholders. For example, no classroom will be built
without an undertaking from the KwaZulu-Natal government to supply a teacher. No clinic will
be built without a similar undertaking to supply nurses, medicines and a doctor (even if that
doctor is not part of the full-time staff.). No infrastructure will even be considered for funding
without first establishing that the community have the right to occupy the premises and that the
community who will benefit from the project is equitably constituted, that is, that funds are not
channelled to chiefs and their families, as is often the case.
Employment through empowerment
These projects contribute to employment through the development of skills and through the use
of local contractors for building and other services and supplies. These contractors are required
to tender for the work and thus gain some experience with the tendering process, albeit on a
small scale. The community is normally asked to nominate at least four builders in the area to
ensure reasonable pricing and good quality. There are also secondary growth and employment
benefits as more classrooms contribute to a better educational environment for learners.
Similarly, the building of clinics ensures easier access to healthcare and less time spent off work
due to illness.
Greater St Lucia Wetlands Park
The St. Lucia Wetlands Authority
Health and social programs
The St. Lucia Wetlands Authority is able to cite a number of programs to alleviate poverty (and
the effects of poverty), although few of them are managed or initiated by the Authority itself.
These include:
I
a malaria program to reduce the incidence of the disease in the area;
I
crafts, which have assisted about 400 crafters to build skills as well as links with
markets;
I
cultural programs targeting youth;
I
a new partnership with THETA that aims to launch skills development programs in
the area;
I
the use of local labour to build fences in the area; and
I
the use of local labour to build roads.
Of these examples, the use of local labour to build the major SDI road through the region is
perhaps the most significant. According to the respondents, 68 per cent of the services used in
the development of the Hluhluwe-Maputo road in the Lubumbo SDI come from local small,
medium, and micro-sized enterprises (SMMEs).
The SMMEs have gained not only an opportunity to ply their trade but also an opportunity to
develop skills, particularly tendering skills, which have enabled them to tender for other jobs.
At an activity level, the Authority claims to be targeting SMMEs for guiding. They are currently
devising a tender process for concessions that would prescribe equity requirements for all tender
candidates. These criteria would also apply to any applications to develop new accommodation
facilities in the region. This proposal has met with some resistance in the racially volatile area.
According to the respondents, some groups see the Authority as a national body with an African
National Congress (ANC) agenda rather than one with the best interests of the Park at heart.
This resentment has been fuelled by delays in the processing of tenders and entitlement issues.
From an institutional perspective, the respondents did make it clear that private managers are
being sought to take over accommodation facilities and relieve the public sector of the risk of
running these facilities. The public facilities in the Park are currently running at a loss and it is
hoped that private management might restore some financial balance.
Growth and land redistribution
The representatives of the Authority were quick to point out that the development of a tourism
industry in the St. Lucia area was starting off with a low base, and that significant input was
required to allow for potential growth in tourism (and thus in the benefits that tourism could
bring to the region). These respondents believe that the Park is now positioned to “take off.”
The area constituting the Greater St. Lucia Wetlands Park initially consisted of 16 separate
parcels of land. The St. Lucia Wetlands Authority was established with the directive of
consolidating these parcels and instituting a single institutional and regulatory framework for the
area, which has historically been dogged by stalled development. In some cases, it is reported that
developments in the area have been delayed for up to 10 years. Defraying this backlog while still
keeping pace with new applications poses a considerable challenge to the new Authority.
However, it is hoped that the newly streamlined process will meet with success.
The establishment of the Authority also signals a shift in the way in which conservation is
managed in the area. The community is reported to be resentful of past conservation efforts as
they were forcibly removed from land without any remuneration or share in the benefits of the
conservation efforts. These communities were competing with the environment for survival. This
situation is being redressed in a number of ways. To address the historical imbalance,
communities are being invited to submit lands claims for restitution. Four claims have already
been processed and a further six are pending. Under the most recent system of compensation, a
nominal solatium is paid, which acknowledges suffering, and grazing rights are granted.
However, the bulk of the restitution package is tied up for development, which enables the
community to benefit from the future development of the land. In short, successful claimants are
granted title with restricted use.
The representatives of the Authority see their goals as:
I
ensuring tourism development;
I
regulating conservation; and
I
ensuring that the conservation that does happen benefits the people affected.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 25
As a conduit to the realization of these goals, the Authority has a management agreement with
KZN Wildlife, formerly the Natal Parks Board, an organization with a long track record in
conservation in the KwaZulu-Natal region.
Employment with potential for improvement
According to the respondents, approximately 500,000 people live in the area, which was
described during the interview as a “previously cut-off former homeland.” The area was
considerably underdeveloped and the building of the Pongola Dam in the region had adversely
affected the flood plains. Agriculture and tourism were the only industries in the area and
agriculture was not considered by the respondents to have been a success, despite the large tracts
of land still occupied by commercial forests, pineapple farms and sugar cane. Tourism, however,
has created approximately 3,500 direct jobs. Only 350 of these jobs are within the Hluhluwe-
Umfolozi Park and the private game lodges. Concerns about the impact of tourism on
employment are two-fold: (1) the sorts of jobs being created at present are unskilled, menial jobs;
and (2) the majority of the tourist beds in the St. Lucia area are self-catering beds, which create
less employment than other forms of accommodation. The concerns do, however, speak to a
potential for further employment creation in the area as a direct result of tourism.
The St. Lucia Tourism and Publicity Association (SLTPA)
The aim of greater growth potential than is currently being realized was reiterated at a meeting
with the St. Lucia Tourism and Publicity Association. The Association consists of a number of
local business people operating in and around the town of St. Lucia. Many of the respondents
own self-catering holiday accommodation, guesthouses and bed and breakfast establishments.
The respondents agreed that the effect of tourism on growth and employment in the area had
been positive, but far from reaching its potential for the area. They attribute the poorer growth
performance to three key reasons:
I
failure to promote St. Lucia as a tourist destination;
I
the recent ban of 4x4 driving on the beach, which resulted in a decline in the
number of domestic visitors in the area; and
I
failure by the institutional legislative bodies managing the area (KZN Regional,
Nkanyakude and the St. Lucia Wetlands Authority) to co-ordinate their activities.
Co-ordination of management bodies to ensure greater growth and employment
It was the consensus of the group that a lack of property rights between the legislative bodies has
resulted in inertia. Simple problems such as the construction of new ablution facilities on the
beach and then the failure to maintain them were cited as examples of this lack of action.
However, the most serious example given is the perceived failure to promote the area—a
responsibility that the group sees as falling within the ambit of the legislative bodies. The group
went on to claim that no head for the local SDI has yet been appointed formally and that they
are struggling to get any decisions ratified. The SDI has apparently been waiting for four years
for such an appointment, the lack of which was cited as a further example of institutional inertia
in the region.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 26
The ban on 4x4 beach driving – a story with two sides
The 4x4 beach-driving ban from St. Lucia northwards to the Mozambican border was
announced by the DEAT in November 2001. Environmentalists argued that aside from the
nuisance for those wishing to enjoy the beach, off-road vehicles damage dune structures by
killing surrounding vegetation and destroy or severely threaten bird and turtle nesting sites.
However, the SLTPA has since pointed to research that contests the claim of dune damage, and
has suggested alternative measures that would allow off-road vehicles limited access without
threatening nesting sites.
42
The Association has also pointed out more urgent issues that need to
be addressed, such as unsuitable forestry lands that drain the water table, polluting effluent from
the sugar cane fields into the estuary; and prawn trawling methods that damage coral reefs and
breeding grounds of demersal fish.
According to the SLTPA, 90 per cent of the visitors to St. Lucia and surroundings are domestic
and only 10 per cent are international. The ban on beach driving has severely reduced the
domestic visitation to the area (according to the respondents there has been a 71 per cent drop in
business since January 2002). The respondents claim that 10 businesses closed in the six months
before the interview date, and that one of the two local supermarkets will also be closing after
Christmas 2002. This decline obviously has an impact on employment opportunities in the area
and the respondents spoke of the surviving businesses expecting more hours from current staff
rather than up-staffing for the Christmas season. The respondents also claim that domestic
tourists spend more in the town than foreign tourists, as domestic tourists tend to stay in self-
catering accommodation and shop in and around the town for provisions, while foreign tourists
tend to be either day visitors or customers of holiday packages, the profits of which remain
outside the region.
While these impacts are significant, there appears to be another side to the story. Those local
business people who do operate establishments catering to foreign tourists are thriving. The bed
and breakfast establishments and guesthouses are fully booked. If catered accommodation is
more labour-intensive than self-catering accommodation, surely an employment trade-off
presents itself? Will jobs shed in the local supermarkets and self-catering industry not be
absorbed into the catered accommodation industry? Is it not possible for self-catering
establishments to absorb some portion of the excess demand for catered accommodation by
providing catered accommodation options?
The key here is that, while this may be possible, institutional failure has prevented it from
happening in the short- to medium-term at least. The ban was instituted too quickly and,
arguably, with too little consultation for local business people to adapt to the changes in their
operating environment. The result is that self-catering accommodation supplies and the
secondary industries (such as supermarkets) which benefited from self-catering visitors are barely
surviving—and they are taking the matter to court. Their focus now is on overturning the beach
ban rather than reversing their business fortune in more imaginative ways and working with the
beach ban. In short, the result is that the fragile ecology of the St. Lucia beach is once again
threatened because of an apparent institutional failure to implement change appropriately,
promptly and in a consultative fashion.
42
http://www.environment.gov.za/NewsMedia/MedStat/2000jun22_3/Lubombo_22062000.htm
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 27
Thus, while the market is currently aligned to favour domestic visitors, it continues to forego an
opportunity of potential profits from the overseas market. Here, the foreign competition has
been more successful at marketing and selling the destination to overseas visitors. Somewhat
ironically, this is the type of competition that local suppliers fear will erode their current
customer base in other markets, whereas in St. Lucia this segment has largely been ignored in
favour of the domestic visitor. Rather than serving as an example of the dangers of increased
competition from liberalization, St. Lucia may yet provide an interesting case of how foreign
market presence will have encouraged competition from domestic suppliers.
KZN Wildlife
Labour issues
The respondent from KZN Wildlife expressed concern that most businesses in the area use the
local community like farm labourers in low-skill, low-reward jobs. At present, no significant
attempt is being made to train unskilled workers into more responsible positions. While
authorities are trying to address this problem through co-management projects that ensure
capacity building and sustainable program development, this process is not without its problems.
Some co-management institutions are coming into the area through the tribal authorities, a
process that fosters nepotism and benefits only the tribal authorities and their friends and
relatives. This in turn creates resentment among the broader community and threatens the long-
term sustainability of these initiatives.
The respondent believes that entry points into the community should be through the subsistence
structures and that care should be taken to ensure fair processes and representation.
Training and capacity building
KZN Wildlife is also concerned that, for historical reasons, local communities have low levels of
capacity and lack the confidence to show initiative in the development of new projects. The
respondent is further concerned that training and development can be very “stop-start”—her
feeling is that these initiatives should take the shape of ongoing partnerships with communities
that span at least five years or more. Again, co-management projects are seen as the ideal vehicle
to operationalize this proposal. Skills development should be seen as a long- or medium-term
project.
Amadiba Adventures
Employment creation and skills development
Amadiba Adventures has mainly contributed to poverty relief through employment creation,
skills development and empowerment through the ownership of resources. The Amadiba Coastal
Community Development Association is responsible for deciding how the profits from the trail
are disseminated and for the present, the community has elected to reinvest the money into the
business.
Although local schools sorely need the investment and there is no clinic or hospital of any kind
in the area, the community reasons that investing in such infrastructure is futile if the business
cannot afford to maintain its upkeep. With sufficient growth in the business, it hopes not only
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 28
to build classrooms and clinics but also to be able to employ teachers and nurses that it does not
believe the government would be prepared to provide out of public funds.
Two possible weaknesses might pose challenges in the future. In the first instance, there is the
possibility of community envy. One respondent claimed that “people are talking.” When he got
involved in ACCODA he was a thin man, now he is fat and he drives a car (both symbols of
wealth in this community). He does not see this as a problem at the moment but if the
community continues to reinvest all profits back into the business and concern grows that
certain stakeholders are enriching themselves from those profits, the initiative may fall victim to
in-fighting.
The organizing bodies (and the community) are very aware of this problem. A similar initiative
at KwaDapha in the Kosi Bay region failed for this and other reasons. In an attempt to reduce
the level of suspicion as far as possible, the profits from the trails are not held within the
community; instead PondoCROP acts as “banker” for the project. This solution raises its own set
of problems, as one respondent pointed out. Since the system is becoming institutionalized,
PondoCROP will at some stage want to remove itself from the project and leave it to the
community to run. Without the skills to manage the finances, the project might be at risk when
such a time comes.
Environmental conservation/protection
Phinda
CC Africa
Phinda has taken over 15,000 hectares of heavily degraded farmland and restocked it with
wildlife. It is the respondent’s belief that, had Phinda not taken over that land, the farming
practises would have “bumbled along” until the money ran out. Conservationists had long
targeted the land; however, a lack of money to purchase it had prevented any action. Private
investors eventually provided the money, and the vision had the approval of the ANC, the
Inkatha Freedom Party (IFP) and the National Party (NP)—the three strongest political parties
in the country at the time.
Phinda views the communities residing on the borders of the park as the greatest potential threat
to its ecology. The respondent believes that this is a function of education among a people
equipped for a nomadic lifestyle, but who now live a sedentary one. For this reason, the resort
has developed extensive outreach programs (through the Africa Foundation) into communities,
not only to re-educate but also to provide some direct benefit to the communities from the
tourism that Phinda receives.
The Africa Foundation
The respondent from the Africa Foundation expressed a similar view as other respondents when
he indicated that convincing local communities that environmental conservation was in their
best interests was no mean task because of a history of marginalization in the name of
conservation. To illustrate Phinda’s success in this area, however, he gave the example of Nkosi
Kumede, an influential local figure who has put in a claim for the restitution of land adjacent to
Phinda. Nkosi Kumede has publicly announced that if he wins the claim, he wants the land to
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 29
remain under Phinda management because he supports its formula of conservation and eco-
tourism to provide lasting benefits to the surrounding communities.
Greater St Lucia Wetlands Park
The St. Lucia Wetlands Authority
The Authority inherited an area that has a history of the State dabbling in forestry and cattle
farming, as well as over-hunting. Efforts are now being made to re-introduce indigenous species
to the area, approximately 20,000 hectares of commercial forests are reported to have been
removed, and the respondents expect this to increase significantly by 2004. A road running
through the Cape Vidal swamps was also relocated at a cost of about R2m.
The respondents attribute this return to conservation directly to tourism, which has replaced a
proposed mining project as the main industry in the area. However, their work is not yet done.
Plans are underway to develop an integrated management plan for the park in accordance with
Unesco World Heritage Site guidelines. Greater levels of compliance are expected in the future,
with this and other plans, and it is anticipated that the tendering process detailed earlier will
facilitate this. SEED, the dti and the DBSA are working together to provide the skills necessary
to tender candidates. In theory, there will be a significant amount of stakeholder support on the
ground to ensure the success of the newly streamlined process. As far as the granting of tenders is
concerned, the only anticipated bias in the process is likely to be an empowerment one.
However, aside from this, operational experience will be preferred—regardless of whether the
tendering service provider is foreign or domestic.
A multilevel strategy is needed to shift income sources away from natural resources, but the
respondents believe that commercial operations are causing more environmental damage than
the operations of marginalized communities. Historically, this has been the case with large-scale
forestry and sugar cane farming in the region, while the subsistence gathering and farming
activities of the traditional residents have allowed the environment to thrive for generations.
Again, it is believed that the proposed tender process will, to some extent, mitigate the damage
caused by commercial farmers.
This said, the Authority is not waiting for the “trickle-down effect” to benefit marginalized
communities in the area. It believes that job creation is important for environmental
conservation and that job creation and income switching will only be facilitated by tourism. The
greatest perceived threat to these initiatives is the high HIV/Aids prevalence in the area, which is
dissolving the benefits of skills development (and similarly, raising the costs).
The St. Lucia Tourism and Publicity Association
These respondents appeared unanimous in their conviction that tourism not only provides the
incentive to upgrade the local ecology, but also provides the funds to do so. The respondents
claim that they are “always looking for sustainable uses for [their] resources so that ecological
resources can pay for themselves.” They believe that some amount of damage might be
unavoidable but that damage should be repairable if resources are managed correctly.
While these respondents see little harm in the 256,000 hectares of the GSLW Park being farmed
for medicinal plants, they are very concerned about the effects of sugar cane farming in the area.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 30
They believe that sugar cane farming is drawing water out of the Hluhluwe River and that the
lack of fresh water has closed the estuary mouth at St. Lucia. If tourism replaces these farming
practises, such damage might be repaired.
The respondents believe that community development and environmental/ecological
development should be symbiotic processes, particularly in the context of tourism. They claim
that, as unemployment increases, more forests are being burned down. They are further
concerned that, at the moment, unemployment is too high in the area to maintain an ecological
balance and that people are returning to unfriendly subsistence farming practises on land that is
not well-suited to this form of farming.
One group among the respondents stated that some compromises were needed between tourism
promotion and conservation, and again returned to the 4x4 ban as an illustration of one instance
where this compromise should take place.
The respondents claim that opening an 8.5-km stretch of beach to 4x4 driving is important to
their sustainable development. Some of the respondents believe the fisherman (or leisure tourist)
who would capitalize on this change is very aware of the environment and would not cause
unnecessary damage. The group also claimed that domestic tourism fosters foreign tourism, since
domestic visitors initiate infrastructure development that can then be upgraded for foreign
visitors. Other suggestions to ensure sustainable development include the closer co-ordination of
the three legislative bodies in the area and the active promotion of the area’s potential.
KZN Wildlife
The respondent from KZN Wildlife shared the general view that the number of direct jobs
created through tourism in the St. Lucia area was considerable. However, she expressed concern
regarding the size and nature of the secondary employment market. The word concern is used
deliberately as she felt that the failure to factor this secondary market quantitatively into the
expected environmental impacts of tourism might result in unanticipated environmental damage
to both the terrestrial and marine components of the park.
The terrestrial environment
By way of example, the respondent mentioned the informal links between the extraction of
firewood from natural forests and the proliferation of tourists (who buy the wood from roadside
vendors). The Dukuduku community is an example of an indigenous community who reside
within the natural forests and use the wood—for their own needs and possibly for sale to
tourists. Similarly, the production of grass mats and crafts could also be a problem as the raw
materials are being extracted from what is essentially a porous park area.
A very different problem in the terrestrial environment is the need to maintain biodiversity and
still satisfy the tourist need to see many animals in a relatively contained area. These high-density
populations may not be beneficial to the local flora or conducive to the reintroduction of new
species that are indigenous to the area but which no longer inhabit the park for one reason or
another.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 31
The marine environment
In the marine environment, the extractive use is relatively low, with the prawn fisheries arguably
causing the greatest damage to the estuary itself. The problem of off-shore fishing was positively
impacted by the recent ban on 4x4 driving on the beach; however, the extent of that impact has
not yet been quantified. Aside from the environmental impacts, the respondent believed that the
ban had hit small businesses harder than it had local communities and that the interaction
between local business and the indigenous communities is somewhat ad hoc.
Finding creative solutions
It is the view of this respondent that the depletion of environmental resources due to the influx
of tourists can be halted without undue prejudice to either the tourists or the communities
involved. For example, as far as firewood is concerned, local communities could be encouraged
to source their wood from commercial forests.
43
Similarly, the sale of crafts can continue if the
nature of craft manufacture reverts to an emphasis on non-natural raw materials such as wire and
beads. Some efforts are already being made to realize these changes and the Sokhulu Resource
Project near Kosi Bay is teaching local potters to paint pots using enamel paints. Another
example in the Kosi Bay area is a basketware project that is attempting to teach local weavers to
produce premium basketware. The concept at work is that fewer resources can be made to yield
higher returns.
Another alternative to natural resource use would be to move local people into tourism activities
that are—for example—guide-based and do not rely on the depletion of resources but rather on
their sustenance. The respondent feels that communities need to increasingly establish co-
management structures with environmental groups such as KZN Wildlife and the Sokhulu
Resource Project to address the need for alternatives to natural resource use. With correct
management, tourism could be a “major-plus” to the ecological environs of St. Lucia Park.
A supply-side effort is unlikely to succeed without a comparable demand-side effort. Tourists
provide the market for sales and those same tourists need to encourage communities to create
sustainable crafts and related products by supporting those products that do not deplete the
natural environment. This is likely to happen only with extensive consumer education.
Amadiba Adventures
The benefits of tourism in this context are directly tied to the environment and the participants
are aware that, without their beautiful surroundings, they would have no work. The
environmental benefits are clear from this type of low-impact tourism: the major attraction and
selling point of Amadiba Adventures is the pristine state of their land and coastline, so all
activities are designed to complement their natural assets. Their efforts are supported by DEAT’s
CoastCare initiative, which has created further awareness along the Wild Coast of the benefits of
preserving the health and beauty of the coastline with signposting and the employment of 35
additional people.
44
The residents ensure the success of small-scale harvesting by re-planting
mangroves to protect breeding sites, while their efforts at restoring and improving the coastal
trail are rewarded with increased revenues from tourism.
43
Some portion of the commercial forests surrounding the park is reported to be comprised of substandard commercial trees.
44
Amadiba Adventures, ACCODA Newsletter No. 2, November 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 32
The Amadiba region also supports the Mtentu Fly-Fishing Programme—a catch-and-release,
estuary fishing business that places an emphasis on environmentally-friendly practices. By
restricting recreational fishing under the auspices of this one organization, these practices will
help restore the kingfish population while again bringing in tourism revenues.
At a more formal level, PondoCROP and Triple Trust are actively educating their guides about
ecological conservation. One guide was sent on a six-month conservation course in
Johannesburg, and it is hoped that this sort of training will have spill-over effects into the schools
and communities.
It is especially difficult to isolate potential effects from the regulatory framework on the Amadiba
region due to the nature of their business. The selling point is the harmony between the
traditional culture and the well-preserved environment, which cannot be supplied or duplicated
elsewhere. So the threat is not in competition, but in the destruction of their natural resource,
which the proposed toll road may hasten.
There is also uncertainty regarding the percentage of SMME involvement in this project, and
how sustainable livelihoods will be encouraged after thousands of temporary construction jobs
disappear. These latter issues are perhaps better addressed in assessing impacts vis-à-vis the
transportation industry. Of course, the remunerative benefits of increased exposure and access
cannot be ignored, but the recently published Environmental Impact Assessment does not
examine the impact of the inevitable peripheral roads.
45
Economic development
Phinda
CC Africa
Foreign direct investment
The purchase of the land for Phinda’s development was entirely privately funded. According to
the respondent, 60 per cent of the initial funds for the project were foreign funds and this
constituted the first international investment into South Africa in 12 years. The remaining 40
per cent of the funding for the project was derived from local private investors and it was
interesting to hear that the make-up of ongoing investment into CC Africa is now 60 per cent
local investment and 40 per cent foreign investment.
Employment and training
The criterion for obtaining employment at the Phinda Lodge is that potential candidates are able
to walk to the interview. This ensures that the resort draws their employees from the local
communities and only once this pool has been exhausted does the resort look elsewhere (usually
for more skilled candidates). For the development phase of the resort, Phinda employed 350
people. The resort now employs 250 people on an on-going basis. Most employees lack skills
when they are first employed and CC Africa has set up a program to provide literacy,
45
SABC 2’s “50/50,” January 26, 2003. EIA available at www.n2wcc.co.za.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 33
numeracy and English lessons. Training is ongoing and the initial hope was that local
community members could be trained up from entry level, low- or no-skill jobs to general
management positions. Unfortunately, this has not been the case and the Phinda management
attribute the failure directly to HIV/Aids. Local recruits do not live long enough to make the
transition to general management level and even at the lower skill levels, the resort has to train
two people for every one position they wish to fill.
Profitability/sustainability of land use
Before the development of Phinda, the area was used primarily for cattle farming, with some
small amount of the land being used for pineapple farming. According to the respondent, in a
marginal rainfall area such as the Phinda reserve, you cannot beat the profitability of wildlife,
which now earns approximately R1,500 per hectare compared to the previous R150 per hectare.
Wildlife is also more sustainable than farming in the long run, according to the respondent.
Export markets
He described an initiative in Hluhluwe-Umfolozi Park that aims to open export markets to local
crafters. He also described the efforts of a group known as Ilala Weavers, a co-operative that
exports local products. These projects were initiated after the development of Phinda, which
raised awareness of the region and its local crafts and thus raised demand. Due to the popularity
of these crafts, the markets continue to grow at home and overseas, but the benefits are more
widely distributed as well. Instead of sourcing these crafts only from these communities,
exporters in Durban are trucking the raw materials directly to their own manufacturing sites.
Although it is difficult to obtain quantitative data, the benefits from such enterprises can be
expected to decrease within a highly competitive market.
Greater St Lucia Wetlands Park
The St. Lucia Wetlands Authority
Lack of facilities for international tourists
Aside from the considerable amount of donor funding that the area receives, the Authority cited
the growth in international tourism to South Africa and the GSLW region. However, despite
these positive developments, the respondents believe that northern KZN is “barely on the map”
and that there are relatively few places for foreign tourists to stay in the area.
The St. Lucia Tourism and Publicity Association
Profit differential between domestic and international tourists
The majority of these respondents currently feel as though they are fighting for their survival as
small business owners. They reiterated their concern that the ban on 4x4 driving effectively
sacrificed domestic tourism in favour of international tourism and that this was affecting the
indigenous community as well as themselves. They are concerned that the ban will exacerbate
poverty in the area as local crafters cannot compete with the quality of crafts in other parts of
Africa that foreign tourists are able to visit. Similarly, local vegetable vendors would be adversely
affected by the drop-off in self-catering visitors to the area. These respondents see the area
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 34
around St. Lucia town as competing directly with Hluhluwe-Umfolozi Park, which is more
successful in offering a six-day product and accommodation for busloads of tourists. They are
concerned that this competition is resulting in cut-throat rates, long delays in the receipt of
payment and, thus, a hostile environment for the growth and survival of SMMEs.
They claim that domestic visitors to the park spend an average of R153 per day while foreign
visitors spend only R43 per day on average, and that the new foreign bias in the promotion of
the area is costing the local communities. Much of this difference is explained by the inability of
St. Lucia service providers to capture profits from package holidays through which overseas
visitors organize their visits.
KZN Wildlife
Attraction of international aid
The co-management and subsistence groups mentioned previously are almost entirely funded by
Norwegian donations. Some 29 co-management institutions benefit as many as 19 communities.
Amadiba Adventures
The contribution to growth and employment
The key contribution of the Amadiba trail to growth and employment in the region is through
the creation of direct employment (tour guides, ferrymen and cooks, for example), as well as
through the creation of less direct forms of employment such as the growing of crops for sale to
the camp-cooks and the raising and training of horses for use on the horse trails. No money
changes hands en route, but a carefully worked out paper trail keeps track of which services are
provided by whom. These slips are then used to claim back money from the central fund for
services rendered. An effort is made to share the employment as equally as possible throughout
the participating community. For example, two sets of horses are used on the trail to allow two
sets of horse owners to benefit from their lease.
Before the inception of the project a little over three years ago, the local hotel and casino (The
Wild Coast Sun) was the main source of formal employment for the region. The local
community subsisted on their crops and the sale of crayfish and seashells to tourists, and in most
cases, young men had to travel to Durban and Johannesburg to find work. Of the guides we
met, two were recent matriculants and one had gone through a series of jobs in Durban and East
London before returning to the region to work as a guide. All expressed satisfaction that their
families were able to stay together and were not divided by the need to travel to cities for work.
All enjoyed their job as a guide and one had been sent on a number of training courses,
including a six-month stint in Johannesburg, learning about ecological conservation.
Investment and aid
The single largest investment in the Amadiba region is the Wild Coast Sun. The principle
behind Amadiba Adventures is to move away from such investments that do not enrich the
communities and that are exploitive of their environment and labour. The type of investment
desired is in skills development and infrastructure support. This role is currently being fulfilled
by the active NGOs in the region; thus aid, rather than investment, supplies these development
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 35
needs. However, the proposed N2 toll road through their region would constitute a major
investment on the part of the government (approximately R4bn).
46
An additional grant of
R80m from the EU will also be primarily used to support this road, although the balance is
administered by regional organizations for the development of local enterprise, from which
Amadiba has received approximately R1 million.
The proposed N2 toll road extension is worthy of a separate study; the following are just some of
the issues facing residents. The proposed upgrade from Port Edward to Port St. Johns is
considered invasive by environmentalists and many community residents due to the increased
traffic, construction spin-offs, and degradation of a recognized biological hotspot and place of
high botanical endemism.
47
There could be benefits in greater market access and employment
that must be balanced against the possible loss of the same on the current N2 route, as well as
the irretrievable loss to the environment surrounding the highway’s corridor.
For eco-tourism, the benefits of the road are limited and controversial. While easier access is
certainly a drawing card for local economies surrounding Amadiba and neighbouring Mkambati
Nature Reserve, with it comes the threat of more destructive practices. For example, some
criticize the road as an excuse for mining companies to gain access to the titanium found in the
coastal dunes.
48
Given the choice between mine employment and eco-tourism, the Amadiba
community already chose to develop their own business and are already receiving revenues equal
to the R300/month, as reportedly promised by one of the mining companies.
Amadiba was also the recent recipient of a small business development award of R620,000 from
the dti’s Community Public Partnership Programme.
49
Both sources of financing are to be used
at the discretion of ACCODA for the benefit of the community, the business, or a combination
of both. Already ACCODA has decided to reinvest Amadiba Adventures’ profits back into the
business, because they feel it is important to maintain the growth of the latter before dissipating
its rewards thinly through the community members at this stage.
Lessons from the case studies
Regardless of the institutional arrangement of a resort, tourism can have a positive effect on the
sustainable development of servicing regions. Similarly, all three forms of institutional
arrangements featured above—government ownership, private ownership and community
ownership—have shown that tourism can create incentives to preserve the natural ecology of an
area. This said, certain factors do appear to differ by institutional arrangement. While it is
conceivable that these differences could be explained by the size, age or capacity of the resource
owner/manager, ultimately they correspond with accepted theoretical assumptions regarding
institutional behaviour.
Firstly, the government-managed St. Lucia Wetlands Authority is required to bring together a
large number of diverse role-players who have conflicting ideas about what is best for the
environment. It is proving difficult to convince all communities that ecological conservation at
the expense of current business practices and (in the short term at least) at the expense of profits
46
Ibid.
47
Ibid.
48
Ibid.
49
Amadiba Adventures, ACCODA Newletter No. 2, November, 2002.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 36
is meritorious. This difficulty may be the result of poor co-ordination between institutions at
present, and a lack of transparent communication in the past that has created an aura of distrust
and antipathy.
There also appears to be some incidence of the shifting of accountability in the GSLW park area;
for example, the parties involved are unsure where the responsibility for marketing the St. Lucia
destination lies—and the St. Lucia Tourism Association is unwilling to bear the primary
responsibility. There are concerns about free-riding in the broader environs of the GSLW park
and these concerns seem justified in the light of input from Phinda representatives who claim to
have invested heavily in the promotion of the region, to the benefit of the St. Lucia Reserve as
well as to themselves. These and other factors appear to have perpetuated a concern that the
GSLW park is not yet reaching its potential as a tourist destination and, as such, is not fully
delivering on the benefits that tourism can bring to the area.
The institutional arrangement of ownership also seems to affect the choice of, and manner in
which, benefits filter down to community residents in the area. There are fewer intermediaries
and fewer facilitating organizations in the privately-run Phinda arrangement and perhaps, as a
result, the surrounding communities have benefited from infrastructural development (quite
apart from the direct employment and sales opportunities) within a relatively short space of time.
This is not to say that these same benefits will not accrue to communities around the other
initiatives, merely that their institutions have not been in place as long as Phinda’s have, and thus
they have not had the opportunity of accomplishing their goals on the same scale.
The Amadiba community initiative appears to be the initiative adhering most closely to the
World Bank principle of ongoing payments for ecological services described earlier. While this is
also the case in the other two case studies, marginalized communities tend to benefit from
ecological services largely through intermediaries such as the Africa Foundation in the case of
Phinda. This may create a sense of removal from ecological resources and less of a vested
interested in the conservation of those resources.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 37
Conclusions
The links in the chain between trade liberalization, tourism and sustainable development are
difficult to establish because of the range of services included under the tourism heading and
each service’s differing contribution towards poverty alleviation, economic growth and
employment. Eco-tourism provides an excellent example of the conflict between resource
exhaustion and benefit, but rarely indicates a causality from the SA regulatory environment.
Therefore, the existence of this link has been questioned in terms of possible impacts on tourism
from trade liberalization. Thus far, the study can point to several potential indirect links between
the liberalization of trade in services and sustainable development.
At a more tangible level, there have been significant inflows of foreign investment for new
project development, for NGO support and for community upliftment projects. Additionally,
overseas tourism has experienced a tremendous upsurge since the beginning of 2002, and
projects that rely on income or donations from these sources clearly benefit. However, it is
difficult to argue that these flows would not take place without a commitment to trade
liberalization on the part of SA. Because of their humanitarian nature, such investments occur
more as a function of fulfilling basic human needs than as motivations to make a profit. Yet
some projects initially owe the attention they receive to tourism, so it is undeniable that
sustainable development projects benefit to some extent from a liberal environment across all
modes of trade in services.
A commitment to enforcing environmental safeguards as recommended in the White Papers on
Environmental Management and Coastal Management, as well as the guarantees of the
Constitution, need to be addressed more explicitly in future economic development programs.
The lack of such commitments destabilizes the momentum of investment in current projects
that rely on the environment in threatened areas, such as the Wild Coast. Currently, the interests
of large-scale mining and infrastructure development in this region clash with the interests of
those who rely on a pristine environment for eco-tourism.
Based on some of the successful experiences described in the case studies, regulatory bodies can
be guided in their tasks so that they enhance the achievement of sustainable development goals.
Open, consultative processes that include public and private partnerships are desirable, while
some indication of benevolent leadership from experienced practitioners may be necessary to
overcome lack of capacity and entrepreneurship.
Finally, in the interests of poverty alleviation, growth and greater employment, some forms of
tourism are preferable to others. Projects like Amadiba Adventures, which encourage leadership
and business development skills while sharing the benefits across numerous community
stakeholders, are much more preferable to even large-scale hotel or recreation investments, which
provide low-paying, menial employment in less-skilled positions. An emphasis needs to be
placed, and more tangible incentives offered, for those whose projects engage communities in
sustainable development. To encourage the right kind of development, it falls on regulators and
investors to:
I
support initiatives that use tourism as a vehicle for delivering skills while protecting
natural assets;
I
discourage exploitive arrangements that work against the principles of sustainable
development; and
I
develop methods of assessing the impacts tourism investment is likely to have on the
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 38
communities involved in its delivery. In this manner, liberalization of tourism
services would be able to ensure the most appropriate skills and resource
development.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 39
Appendix A: Definition of tourism
Tourism describes many different economic activities under one heading. In order to clarify the
scope of discussion, one definition will be advanced. In a traditional sense, one thinks of tourism
as encompassing all the industries that are involved in recreation or leisure away from the place
of normal residence. Yet, this definition is open to exceptions and cannot be applied universally;
for example, is normal place of residence defined by a radius of some length from one’s home, or
does it make more sense to use areas of concentrated economic activity as regions? How long
must someone be away for the activity to fall under tourism? It is easy to imagine the
inconsistencies that might arise from such definitions.
For purposes of comparison, the WTO has adopted the following definition of tourism:
The activities of persons travelling to and staying in places outside their usual
environment for not more than one consecutive year for leisure, business and other
purposes.
50
While easier to apply, the definition includes areas of activity that one may not immediately
associate with tourism. With this definition, all business travel and consumption overseas
becomes a form of tourism. Thus, when calculating the benefits that tourism might accrue to its
host economy, the estimates become inflated over those strictly pertaining to the leisure and
recreation market.
The WTO definition has already become a standard in the discussion of trade in services. For
purposes of accurate data comparison, this definition is used throughout the paper, although the
scope of analysis is somewhat more restricted. Although business activity is included in the
definition, the paper focuses on sectors more traditionally associated with tourism—leisure and
recreation activities, transport, hotel and guide services.
Multiple sectors of an economy are grouped together under the umbrella of the tourism and
travel industry that would otherwise remain unrelated. Transportation, accommodation,
entertainment, and recreation rely on very distinct supply chains because the inputs and skills
required by these sectors are vastly different. It is the common profile of the demand-side of the
market that brings these sectors into the same discussion. So there is an element of
complementarity, as developments within any of the prominent sectors have implications for the
tourism industry as a whole.
A comparison between the Standard International Classification of Tourism Activities (SICTA)
and those defined in the General Agreement on Trade in Services (GATS) highlights the
differences between the common understanding of tourism and the definition used by the WTO
(Appendix A provides a list of SICTA codes as applied to the sectoral coding used by the
GATS).
51
In many cases, the SICTA can be applied to the GATS-defined services sectors, but
often these activities are not included under the tourism sector. Rather, many are within another
industry’s sector (such as transport, travel insurance, car hire) or not classified at all (such as
computer reservation systems). Such differences between definition and application complicate
the discussion of tourism services.
50
WTO homepage, http://www.wto.org
51
For an exhaustive listing of all tourism activities, please refer to Europa’s index at:
http://forum.europa.eu.int/irc/dsis/bmethods/info/data/new/embs/tourism/tour_appendix9.html
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 40
Appendix B: SA’s tourism suppliers and international
tourism consumers
Tourism suppliers
Tourism in SA is composed of the same service industries as anywhere else in the world:
transport, accommodation, restaurants and catering, entertainment, guiding, the travel press, as
well as distribution mechanisms such as travel agencies and internet booking services. The
country’s heritage sites—parks, reserves, museums, and historical monuments—are pivotal points
for suppliers and may contain several of these services. There are also government and private
institutions involved in promoting, regulating and gathering information about tourism. This
sub-section explores the roles of these key players and institutions and identifies features relevant
to the trade in tourism services.
The GATS may have interesting ramifications for the introduction or acquisition of these
services by international investors. Aside from the change in ownership structure, unequal terms
for competition may not bring the intended benefits of liberalization. Equally challenging is the
development of a sustainable and transformed industry reflecting South Africa’s commitment to
a more equitable distribution of incomes and opportunities. Regulation such as affirmative
action, training requirements and, in some sectors, equity partnerships, will place additional
burdens on the foreign investor. It is with these concerns that one should consider the role of
tourism suppliers.
International tourism consumers
Although SA has experienced a tremendous upsurge in foreign arrivals since the new
dispensation, the so-called “democracy dividend” from the mid-1990s is over. South Africa must
now employ sophisticated marketing strategies in order maintain even a modest two per cent
growth rate.
52
At first glance it would appear that these methods are beginning to yield results.
After lacklustre inflows during the 1999–2001 period, foreign arrivals have quite surprisingly
increased, despite the global downward trend. The latest statistics indicate that foreign arrivals are
up 7.2 per cent for the first seven months of the year over the same period in 2001.
53
Overseas
arrivals have increased by 11.3 per cent on average, and the stronger U.K. market has increased
by as much as 19.4 per cent. It is worth keeping in mind that foreign arrivals represent 33 per
cent of the tourist market, while 67 per cent is domestic.
Yearly visitor arrivals and departures are strongly correlated with industry growth. As seen from
Figure 1, foreign arrivals have risen sharply since 1994 and have started to outpace departures,
indicating ever-increasing lengths of visits.
The vast majority of foreign visitors are citizens of neighbouring African nations, and particularly
of Lesotho (about 1.3 million annually). Of the six million visitors each year, over four million
are from the African continent. Beyond the continent, about 67 per cent of overseas visitors
come from European nations, with the U.K. (23 per cent) and Germany (14 per cent)
comprising the brunt of this share (see Figure 2).
52
SATOUR, 2002a.
53
DEAT homepage.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 41
U.S. nationals make up the third largest category of visitors, yet are the largest per capita gross
spenders of any group.
54
The relative shares of these groups have changed slightly in recent years,
with the U.S., Australia, Japan, China, India and other Asian nations increasing their
consumption of SA tourism.
Figure 2: Arrivals and departures of foreign visitors and SA residents 1975–2000
Source: Stats SA, 2001
Figure 3: Shares of overseas visitors, 2000
Source: Stats SA, 2001
54
SATOUR, 2002a
Netherlands
6%
France
6%
Rest of Europe
18%
USA
11%
Other Americas
5%
India
2% UK
23%
Germany
14%
Australasia
5%
Middle East
2%
Japan
2%
Rest of Asia
6%
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
Foreign Arrivals
SA Arrivals
Foreign Departures
SA Departures
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 42
Figure 4: Purpose of visit for foreign visitors to South Africa, 2000
Source: Stats SA, 2001
The purpose-of-visit data are also an important factor in tracking who is coming to South Africa.
As seen in Figure 3, about 10 per cent of those choosing to come do so for business purposes,
whereas 84 per cent state their visit is for leisure.
55
Among the majority coming for holiday
purposes, less is known about what percentage choose to spend their time in eco-tourism,
adventure, sport, and cultural activities or from which countries consumers with particular
preferences usually hail.
A 1997 international tourism survey, in combination with the available statistics and domestic
surveys, has played an important role in SATOUR’s targeted marketing campaigns.
SA hopes to increase its share of overseas high-spenders while defending its stake of the more
budget-conscious groups from neighbouring countries. As a result, SATOUR campaigns are due
to be directed at countries with an already solid base of visitors poised for continued tourism
growth. The U.S., the Netherlands, Australia, Japan and the U.K. are the top five countries for
this campaign, while Germany, France, Italy, India and others have been identified for growth as
well.
55
Stats SA, 2000.
Holiday
84%
Business
10%
Work
2%
Other
3%
Study
1%
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 43
Appendix C: Background information on
respondents
Phinda Reserve
CC Africa
Time of interview: 13h00 – 13h47
Date of interview: November 22, 2002
Respondent: Les Carlisle
The research team had the opportunity to interview the developer of the Phinda nature reserve
by teleconference. Now based in White River, Les Carlisle is a professional Game Catcher who
was commissioned by CC Africa to develop the reserve from scratch. He subsequently took on
the role of General Manager at Phinda where he was based for six years before taking on broader
responsibilities within CC Africa. Les still operates at both a regional and community level and
spends one week of every month at the Phinda reserve
The Africa Foundation
Time of interview: 11h00 – 13h30
Date of interview: November 26, 2002
Respondent: Isaac Tembe
Isaac Tembe is a Field Manager for the Africa Foundation. He has been with the Organization
since 1994 when the Africa Foundation was still known as the Royal Investment Fund (RIF) and
was owned by CC Africa. The Africa Foundation is now a separate legal entity to CC Africa,
with its own fund number and its own board of trustees; however, the two organizations still
work very closely.
The Greater St. Lucia Wetlands Park
The St. Lucia Wetlands Authority
Time of interview: 10h40 – 11h45
Date of interview: November 25, 2002
Respondents: Bronwyn James and Terry Castis
Bronwyn James heads the social orientation unit known as SEED and Terry hold responsibility
for the commercial development of the Park. The Authority is a National Body answerable to the
Minister of Environmental Affairs and Tourism. The Authority is also responsible for running
the Park as a World Heritage Site.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 44
The St. Lucia Tourism and Publicity Association
Time of interview: 14h00 – 15h30
Date of interview: November 26, 2002
Respondents: Con Vermaak, Louw Kloppers, Petrus Viviers, et al.
The St. Lucia Tourism and Publicity Association is a group of small business people operating in
and around the town of St. Lucia. Present at the meeting were: Con Vermaak, the head of the
Association; Louw Kloppers, a local Councillor; Petrus Viviers, a local businessman; and other
self-catering and catered accommodation owners.
KZN Wildlife
Time of interview: 14h00 – 15h30
Date of interview: November 27, 2002
Respondent: Jean Harris
KZN Wildlife was previously known as the Natal Parks Board and shares responsibility with the
St. Lucia Wetlands Authority for the maintenance and development of the GSLW Park.
Amadiba Adventures
Amadiba Coastal Community Development Association (ACCODA)
Time of interview: 11h00 – 12h00
Date of interview: November 28, 2002
Respondents: Velaphi Ndovela and Christopher Ngcwele
ACCODA is the community trust for the Amadiba region and thus makes decisions on how
monies earned from Amadiba Adventures will be allocated, what projects will receive their
support, as well as liaison with government bodies on local infrastructure and community
development issues.
PondoCROP
Time of interview: 09h00 – 10h00
Date of interview: November 28, 2002
Respondent: Rone Visser
Time of interview: 19h00 – 20h00
Date of interview: December 1, 2002
Respondent: Travis Bailey
PondoCROP is a regional NGO, initially involved with development projects surrounding the
rehabilitation of the Wild Coast hiking trail. Their interest is in providing support before the
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 45
eventual transfer of all responsibilities to Amadiba and other coastal communities as the latter
gain momentum in business self-sufficiency.
Community Participants
Date of interviews: November 28, 2002 – December 1, 2002
Respondents: Bernard Mbele
The research team actually went on the trail to see first-hand how the system worked and to
have a chance to interact with the community participating in the trail (trail guides, cooks, camp
keepers, ferrymen, etc.). These meetings were ad hoc and less structured than the other
discussions but were equally valuable to the overall understanding of the project.
tkn - International Trade in Services and Sustainable Development: The Case of Tourism in South Africa 46
References
Addison, G., 2001. “Growing Pains,” Siyaya!, Cape Town: Idasa, Vol. 7.
Amadiba Adventures, 2002. Amadiba Horse and Hiking Trail: An Overview.
Carlisle, Les of CC Africa. Interview (telephone) on November 21, 2002.
Castis, Terry and Bronwyn James of St. Lucia Tourism Authority. Interview on November 25,
2002.
Dampier, J., 2002. “IDC spreads its wings,” The Journal of Southern African Tourism,
Johannesburg: African Destination Publishing (Pty) Ltd. 2:1.
Deegan, J. and D. Dineen, 1991. “Employment Effects of Irish Tourism Projects: A
Microeconomic Approach,” photostat in UCT Tourism Studies Programme.
DEAT (Department of Environmental Affairs and Tourism), 2002a. “SA continues to defy
trend: Foreign tourist arrivals up 7.2%,” press release of Oct 17, 2002, accessed from
http://www.environment.gov.za/, October, 2002.
DEAT (Department of Environmental Affairs and Tourism), 2002b. “Annual Report,
2001–2002.”
Department of Environmental Affairs and Tourism, 1999. “Institutional Guidelines for Public
Sector Tourism Development and Promotion in South Africa,” Pretoria: DEAT.
Department of Environmental Affairs and Tourism, 1996. “The Development and Promotion of
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