The Vital Role of Tourism in South Africa’s Economic Development

The tourism sector is often overlooked as a key economic driver, yet it holds significant potential for economic growth and job creation in South Africa.

As the seventh administration begins its term, the mission is to elevate tourism’s profile by fostering growth in the sector and demonstrating its positive impact on the economy and local communities. This report outlines the critical contributions of tourism, its economic impact, and the strategic plans designed to ensure the sector reaches its full potential over the next five years.

Tourism and Government Priorities

In line with President Cyril Ramaphosa’s opening address to Parliament, the Government of National Unity (GNU) has identified three main priorities for the next five years:

• Driving inclusive growth and job creation.
• Reducing poverty and tackling the high cost of living.
• Building a capable, ethical, and developmental state.

The Department of Tourism is focused on aligning its plans with these priorities and contributing to their success. A five-year plan is being finalized that aligns with the GNU priorities, the National Development Plan (NDP), the Tourism Sector Master Plan, and the National Tourism Sector Strategy. As stated in the NDP, tourism is one of the fastest-growing sectors, providing a great opportunity to increase employment.

Current Status and Ambitious Targets for Growth

Tourism in South Africa has been growing steadily and offers immense opportunities. The target is to reach 15 million international arrivals by 2030, a significant increase from current levels. A recent two-day departmental “Lekgotla” meeting with South African Tourism served as a starting point to assess the current status and map out a plan to reach this goal.

The Department of Tourism, together with stakeholders in the private sector, aims to implement these action plans to ensure that tourism plays an integral role in advancing inclusive economic growth.

The collaboration with Operation Vulindlela and other key departments, such as Home Affairs, Transport, and Arts and Culture, aims to improve visa regimes, increase direct flights, streamline tour operator licensing processes, and invest in infrastructure showcasing South Africa’s culture and heritage.

Importance of Tourism in South Africa

Tourism is essential for South Africa for several reasons:

• Economic Growth: Tourism contributes significantly to the national GDP, generating revenue that supports other economic activities.
• Employment: The sector creates jobs, both directly and indirectly, providing livelihoods for many South Africans.
• Infrastructure Development: The sector drives the need for improved infrastructure, which benefits other areas of the economy.

South Africa’s diversity, cultural heritage, and natural beauty make it an attractive tourist destination, winning numerous awards in various categories such as cities, airports, hotels, and overall tourism experiences. As the country recovers from the impact of COVID-19, there is a growing urgency to continue the sector’s growth to generate more economic opportunities.

South Africa’s Performance in Global Tourism

The tourism sector globally has seen significant recovery since the pandemic. According to the United Nations World Tourism Organization (UNWTO), international tourism receipts in 2023 reached US$1.5 trillion, almost matching pre-pandemic levels. South Africa fared well compared to the rest of the world, with the African tourism sector showing a growth rate above 2019 levels.

However, international air access to South Africa has not yet reached pre-pandemic levels. The number of available flight seats and direct flights is still below 2019 figures. Direct flight connections are crucial for growing tourist arrivals from different markets. South Africa is working on recovering lost direct flights and filling gaps, such as a direct flight to India, as part of a National Air Access Strategy.

Current Arrivals and Future Projections

In 2023, South Africa welcomed approximately 8.5 million international arrivals, a 48.9% increase from 2022. These arrivals contributed R95 billion (US$5.44M), a 92% increase from previous levels and a new record for the country. By 2030, international arrivals are expected to reach 15.1 million, surpassing pre-pandemic figures.

The regional distribution of international arrivals to South Africa in early 2023 indicates the following shares:

• Africa Land Market: 72%
• Europe: 2%
• The Americas: 3%
• Asia, Australasia, and the Middle East: 9%

International arrivals in South AFrica (Source; Statista)

According to the World Travel and Tourism Council (WTTC), tourism contributed 9.5% of South Africa’s GDP in 2019, declining during the pandemic but recovering to 8.2% in 2023. This is projected to rise to 10.4% by 2030. Comparatively, South Africa’s tourism sector contributes more to GDP than sectors like mining and agriculture.

Tourism’s contribution to employment is also substantial. In 2023, tourism supported 1.46 million jobs, with this number projected to grow to 2.23 million by 2030. Tourism, therefore, plays a critical role in providing livelihoods and alleviating poverty across the country.

Tourism contribution to South Africa’s GDP (Source: WTTC)

Current and future arrival projections (Source: Oxford Economic Projections)

Domestic Tourism and Air Travel

Domestic tourism also showed promising results in 2023, with 38 million domestic trips contributing R121 billion (US$6.93M). The domestic market’s spending exceeded that of international arrivals, underscoring its economic significance.

Although domestic air travel seat capacity has been increasing, it still falls short of 2019 levels. Efforts to further promote domestic tourism include campaigns like the annual “Sho’t Left Campaign,” which encourages locals to explore their country and offers discounted travel deals. This campaign helps support local tourism businesses and spread the economic benefits across the country.

Challenges and Strategic Initiatives

To enhance tourism performance, several initiatives are being implemented:

• Safety Measures: The Department of Tourism invested R174 million (US$9.97M) to deploy more than 2,300 tourism monitors across key sites to enhance visitor safety. Partnerships with law enforcement and private sector investments in safety measures are ongoing to ensure the safety of all tourists.
• Visa Facilitation: To facilitate easier access, South Africa has visa waivers for 132 countries and an e-visa application system for 34 others. However, improvements are needed, particularly in key markets like China and India.
• Tour Operator Licensing: The waiting time for tour operator licenses has been a challenge. The Department of Tourism, in collaboration with the Department of Transport, has worked on improving this process, including through the signing of the National Land Transport Amendment Bill.
• Marketing Strategy: To strengthen South Africa’s position as a prime tourist destination, a unified marketing campaign is being rolled out. Collaboration between public and private sectors aims to reduce fragmentation and create a consistent image of South Africa as a desirable destination.

Business Tourism and the Meetings, Incentives, Conferences, and Events (MICE) Sector

South Africa is known for its appeal as a business travel destination, hosting many meetings, conferences, and events annually. In 2023, South Africa improved its ranking as a business event destination, hosting 98 international and regional association meetings that contributed R2 billion (US$114.71M) to the economy.

The country’s MICE industry was valued at R122 billion (US$6.99M) in 2023, a 69% increase from the previous year. Through the National Convention Bureau, numerous bids have been submitted to host international business events in South Africa, ensuring continued growth in this sector.

Infrastructure Investment

To stimulate demand, the Department of Tourism is investing in infrastructure development at tourism establishments. Maintenance projects were funded across various provinces, and funds have been allocated for infrastructure improvements in Gauteng, KwaZulu-Natal, the Northern Cape, and the North West.

Infrastructure improvements ensure that existing establishments remain attractive to tourists and contribute to the overall tourism experience.

Conclusion

Tourism remains a key sector in South Africa, providing significant contributions to economic growth, employment, and infrastructure development. The recovery from the COVID-19 pandemic has been promising, but there is potential for further growth in both international and domestic markets.

The sector’s success depends on the strategic investments in marketing, policy adjustments, infrastructure development, and collaboration with stakeholders across the tourism value chain. This includes addressing challenges related to visas, improving air access, increasing visitor safety, and creating a unified approach to marketing South Africa as a destination.

For South Africa to achieve its target of 15 million international arrivals by 2030, all stakeholders—public and private—must work together with urgency and commitment. Inclusive economic growth, job creation, and poverty reduction are at the forefront of government priorities, and tourism’s potential makes it a critical contributor to achieving these goals.

The path forward is clear: enhanced collaboration, innovative approaches, and leveraging technology will be the key drivers in realizing the full potential of South Africa’s tourism sector. As a diverse, culturally rich, and naturally beautiful country, South Africa must continue to share its unique stories with the world and ensure that more people are inspired to experience its wonders.

Tourism is not just an industry but a source of pride, opportunity, and unity for South Africa. Together, through collective efforts, the tourism sector can continue to flourish and help drive the nation forward into a prosperous future.

This feature appeared in the October-December edition of HORECA Middle East and Africa magazine. You can access the full digital magazine HERE