TANZANIA: ATTRACTING INVESTMENT IN TOURISM

Transcription

1 TANZANIA: ATTRACTING INVESTMENT IN TOURISM As shown on next page: Case study of Tanzania's successful touism tageting plan, whose main components wee an investment foum suppoted by a follow-up investo outeach pogam. Souce: Multilateal Investment Guaantee Agency (MIGA) Copyight 2005 Multilateal Investment Guaantee Agency. All ights eseved. No pat of this wok may be epoduced in any fom without witten pemission fom the copyight holde. Requests fo pemission to epoduce should be sent to the Diecto, Opeations, the Multilateal Investment Guaantee Agency (MIGA), Wold Bank Goup at [email protected]

2 Attacting Investment in Touism Tanzania's Investo Outeach Pogam Investing in Development Seies Multilateal Investment Guaantee Agency 2005

3 Copyight 2005 The Wold Bank Goup/MIGA 1818 H Steet, NW Washington, DC All ights eseved Manufactued in the United States of Ameica Fist published in Octobe 2005 Available online at Fo moe infomation contact: MIGA Opeations 1818 H Steet, NW Washington, DC t f See also The mateial in this publication is copyighted. Requests fo pemission to epoduce potions of it should be sent to MIGA Opeations at the above mentioned addess. The Multilateal Investment Guaantee Agency (MIGA) of the Wold Bank Goup was established in 1988 to pomote the flow of pivate foeign investment to developing membe counties. MIGA offes political isk insuance coveage to eligible investos fo qualified investments in developing membe counties. MIGA also offes technical assistance pogams to develop and implement effective stategies fo attacting and etaining foeign diect investment. This hands-on technical assistance focuses on thee pimay aeas: dissemination of infomation on investment oppotunities and business opeating conditions in developing membe counties though online sevices; capacity building of the oganizations and institutions involved in the pomotion of foeign investment; and, investment facilitation activities suppoting the effots of developing counties to identify and attact investment.

4 Attacting Investment in Touism Tanzania's Investo Outeach Pogam Investing in Development Seies Multilateal Investment Guaantee Agency 2005

5 The Investing in Development seies of case studies is intended to stimulate discussion and leaning egading investment pomotion agencies. It is not meant to povide complete o compehensive case histoies, but athe to highlight impotant aspects elevant to investment pomotion. The Multilateal Investment Guaantee Agency is not, by means of this publication, endeing accounting, business, financial, investment, legal, tax, site selection, o othe pofessional advice o sevices, and shall not be esponsible fo any loss sustained by any peson, company o oganization that elies on this publication as a substitute fo such pofessional advice o sevices. Befoe making any decision o taking any action that may affect you business, you should consult a qualified pofessional adviso.

6 Table of Contents Content Synopsis... 7 Intoduction... 9 A tadition of hospitality... 9 Backgound... 9 Touism s ole in the economy... 9 Assets and infastuctue The Stategy The Touism Maste Plan Building competitive advantage The Playes Poject sponsos Govenment The Tanzania Investment Cente Pesidential Paastatal Secto Refom Commission The pivate secto Investment Pomotion Activity MIGA in Afica The investment foum The Investo Outeach Pogam Ceating a pocess Pogam pioities Moving fowad The Kilimanjao Kempinski Hotel A new level of sevice Next Steps Questions fo Discussion Annexes Annex 1: Aconyms & Glossay Annex 2: Tanzania Statistical Data Annex 3: Tanzania s Institutional Famewok fo Touism Annex 4: A Shot Histoy of the Kilimanjao Hotel Annex 5: Evaluating The Investo Confeence as a Pomotional Tool Endnotes... 45

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8 Synopsis Touism is one of Tanzania s thee leading expot sectos, along with mining and agicultue. As the demand fo touism sevices has inceased among Wold Bank Goup membe counties, so has the Multilateal Investment Guaantee Agency s (MIGA s) technical assistance focused on attacting foeign diect investment (FDI) in the touism secto. MIGA has seveal investo outeach pogams in Afica and suppots these activities with a eseach pogam that benchmaks competitiveness factos fo FDI in seveal sectos. One of the investo outeach pogams, the MIGA-Swiss Patneship Pogam fo Investments in Sub-Sahaan Afica (MSP) with Tanzania, is financed in patneship with the Swiss govenment and focuses on impoving investment in the touism industy. This pogam is showing esults that can be taced to eplicable investment pomotion activities. The MSP patneed with the Govenment of Tanzania to oganize an investment foum fo touism in 2002, held at the Ausha Intenational Confeence Cente, and continues to povide follow-up suppot though an investo outeach pogam to geneate futhe oppotunities fo investment. The pogam has poduced a numbe of investments and elated activities (pivatizations), including a landmak investment in the Kilimanjao Hotel in This case study highlights aspects of the undelying foundation that Tanzania ceated in tageting touism as a gowth secto, and focuses on key elements of the investo outeach pogam suppoted by the MSP. In paticula, two inteelated elements illustate the specifics of Tanzania s pactical appoach: the investment foum that led to the acquisition and econstuction of the Kilimanjao Hotel, and the oveall investo outeach pocess of which the foum was a pat. This appoach, along with the Govenment of Tanzania s commitment to the development of touism, seved to attact the inteest of seveal new investos and to help solidify the county s eputation as a seious contende fo investment in an intensely competitive secto. investing in development tanzania touism

9 investing in development tanzania touism

10 Intoduction A tadition of hospitality The Kilimanjao Hotel in Da es Salaam, Tanzania opened its doos in 1965 as the Govenment s main hotel fo foeignes visiting the county. It was an imposing building on a pime site in the habo aea, designed to povide appopiate business sevice within the pevailing political climate of the time optimism fo a futue of self-detemination afte independence. It seved the county well fo 20 yeas, but lost its peeminence as the county s leading hotel when Tanzania s fotunes falteed in the late 1980s. The hotel was staved of funding and did not geneate the cash flow to cay out enovations o compete with newe, pivately owned hotels. It deteioated quickly, and in 1996, was foced to close its doos. Reduced to a shadow of its fome gandeu, the Kilimanjao was destined to become an ominous pesence fo nealy 10 yeas, casting a pall ove investment in downtown Da es Salaam and in Tanzania s touism secto as a whole. In a damatic tun of events and a new socioeconomic envionment, the Kilimanjao eopened as a five-sta hotel in August 2005, now owned by the Albwady Goup of Dubai and managed by Kempinski, the intenationally enowned hotel opeato. As an investment poject, the Kilimanjao is notewothy both as a bellwethe in a histoically significant secto in Tanzania, and as a tangible esult of the county s ecent effots in investment pomotion. Touism is a gowth secto in Tanzania that ceates lifelong jobs, including those at manageial levels and fo women. This case study opens with backgound on the touism secto in Tanzania: its ole in the economy, natual esouces and assets, and existing infastuctue in tems of built hotels. Next, the case highlights aspects of Tanzania s stategy and institutional famewok fo developing touism and intoduces the key public and pivate secto playes in the secto. The next section focuses on investment pomotion activity, including the Multilateal Investment Guaantee Agency s (MIGA s) wok with the Swiss Govenment in Tanzania, and specifically, the touism investment foum and investo outeach pogam. Finally, details of the Kilimanjao Hotel econstuction, as a poject and poduct, help illustate how Tanzania met the needs of a paticula type of investo. Ultimately, the high-pofile natue of the Kilimanjao poject would einfoce the county s oveall touism stategy and investment pomotion pogam, and influence seveal subsequent investos. Backgound Touism s ole in the economy In the ecent past, mining and touism have been the fastest gowing sectos in Tanzania with aveage gowth ates of 10% and 5.5% between 1998 and This gowth has coincided with a elatively stong pefomance in non-taded sectos such as constuction, tanspot and communications. Agicultue s pefomance was less notable, with gowth declining fom 5.5 to 4.0% in 2003, due to doughts in most pats of the county. Agicultue, howeve, emains the lagest secto of the economy, contibuting moe than 40% of the goss domestic poduct (GDP), 70% of employment, and a lage shae of foeign exchange eanings. Total employment in the touism secto was almost 200,000 in Fom an opeational point of view, oom occupancy was 53% in 2004 up six points fom 2003; the aveage length of stay was 11 days and the aveage daily expenditue was US$188 fo visitos on package tous and US$119 fo those taveling alone. investing in development tanzania touism

11 Total foeign exchange eanings fom touism wee US$746 million in 2004, moe than fom any othe secto in Tanzania. (See Table 2-3 in Annex 2: Tanzania Statistical Data.) Tanzania had no foeign diect investment (FDI) in 1990, but it ose apidly to US$240 million in 2000 and US$248 million in 2003, as shown in Figue 1. 1 Figue 1 Foeign exchange eanings fom touism (US$ millions) M. of Touism IMF BOP The tend lines eflect data fo touism eceipts fom two diffeent souces. Souces: Ministy of Touism; Intenational Monetay Fund Balance of Payments (BOP) Statistics The ising shae of touism within a national economy is sometimes consideed supising. As gowth sectos, manufactuing o agicultue ae typically undestood, but the ole touism can play as a souce of gowth, divesification and povety alleviation is not always ecognized. Rathe, touism may be peceived as a volatile industy that ceates only menial jobs, and which is dominated by foeignes whose pofits stay oveseas. In Tanzania, this chaacteization is cetainly not tue. Touism has been gowing steadily (with only slight deviation in 2001) fo 10 yeas. As an industy, it ceates life-long jobs, often equiing supeio people skills, including specialized positions at the manageial o supevisoy levels and caees open to women. Tanzanians own many hotels in Tanzania. The foeign-owned fims bing skills in maketing, finance and management with thei investments. Much of touism s evenue does emain in Tanzania, and the county has the potential to supply the industy moe via locally poduced goods. In evey yea since 1995, foeign exchange eceipts 2 fom touism have been the lagest item in Tanzania s expots of goods and sevices (30-45%). Within the domestic economy, the tade, hotels and estauant secto is the second lagest secto afte agicultue, accounting fo 16% of GDP between 1990 and (See Box 1: What s Diffeent About Touism?) While some uncetainties emain, touism is now gaining ecognition as a valid secto fo sustainable development. If managed popely, touism can contibute jobs and wealth, addess social issues and ensue consevation of natual and cultual esouces. Assets and infastuctue Tanzania is stengthening its capacity to host touists by impoving its built envionment and developing its spiit of hospitality. Investment in hotels and lodges has acceleated; thee has been a wave of pivatizations and sales of assets that is now eaping benefits in tems of injection of new funds to impove the standads of hotels in all categoies. Pivate investment in hotels has gown apidly, with the numbe of hotels ising fom 210 in 1995 to 476 in Inteest in touism in Tanzania continues to be high among Middle Easten and South Afican investos. Tanzania is the only county in the wold to have potected moe than 25% of its landmass as consevation aeas, and to have developed a fa-eaching pogam of coastal zone management to potect maine and coastal esouces. The county is endowed with wold-class touism assets (natual, cultual, histoic and acheological) that ae in high demand in intenational touism makets. Among the best known, including its six Wold Heitage Sites, ae: Ngoongoo Consevation Aea, Seengeti National Pak, Lake Manyaa, Selous Game Reseve, Mt. Kilimanjao and its national pak, Stone Town of Zanziba, and the uins of Kilwa Kisiwani and of Songo Mnaa. Tanzania has 12 national paks, 17 game eseves, and 50 game contolled aeas and maine paks. Additional natual esouces include the sandy 10 investing in development tanzania touism

12 beaches noth and south of Da es Salaam, the spice islands of Zanziba, and abundant wates fo spot fishing off Pemba and Mafia, all locations ich in the Swahili and Aab cultues that dominated the East Afican coast fom the Aabian Gulf states as fa as Mozambique. Olduvai Goge, in the inteio of the Rift Valley, is Box 1: What s Diffeent about Touism? Touism as a set of sevices is not like manufactuing. Goods and sevice have diffeent attibutes; touism is cosscutting and involves many linked final goods. 1. The two fundamental tansactions fo touism poduction and consumption cannot be sepaated. Poduction and consumption take place simultaneously and in the same place; a touist must go to the place of poduction to consume touism sevices. Contast that with goods: goods ae poduced in one place and almost always tanspoted to anothe and maketed fo sale. In touism, thee is no inventoy of final goods waiting to be sold, o wok in pocess. Sales ae made by consuming fixed assets. It is a cliché in the industy that any oom-nights that ae not sold ae lost foeve. Moeove, once poduced, the supply of ooms is elatively igid ove time and thee is a pemium on getting it ight the fist time. To counteact this igidity and geneate evenues, hotels e-invest fequently in equipment and facilities to emain competitive and potect assets. This joint function of being an investment and poducing a steam of sevices is unique to sevices. Indeed, in touism, owneship of assets and thei management is often sepaated into owning companies and managing/leasing the buildings. Touism sevices also ae not a standadized, homogenous set. Thei quality vaies fom place to place: a fou-sta hotel in Tanzania may be vey diffeent fom a fou-sta hotel in New Yok, o one in Beijing. 2. Touism spans a ange of activities instead of being a single good. Touism is eally an agglomeation of elated but sepaate, cosscutting sevices: tanspot, lodging, food sevice, eceation and attactions. All these sevices ae assembled eithe individually by the tavele o commecially by a netwok of wholesale and etail sevices (tou opeatos, Global Distibution Systems, and tavel agents, etc.) into a touism package. Touism poducts epesent final commodities, and efficiency though competition in touism makets has epecussions thoughout the supply chains (meats, fish, poulty, daiy and vegetables, etc.) and manufactued goods, such as funitue and equipment. These backwad linkages can enhance o educe the economic etuns to touism and exet an influence on makets. Hotels, fo example, equie many inputs. To the extent that these inputs ae poduced locally, they can enhance value added; to the extent that they ae impoted, they geneate leakages of money flowing out of the economy. But thee ae also fowad linkages as poducts and sevices ae added outside hotels. Handicafts and shopping ae good examples. In the moden touism secto, the way in which these oppotunities add value, o diffeentiate the poduct, has an impotant impact on touism s oveall success. Whee that ceativity is lacking o thee ae no intemediaies (tou opeatos) to constuct innovative packages, touism is likely to be a shallow industy. An efficient and competitive touism secto will tanslate into economy-wide impovement in pivate secto investment and gowth via an impoved business climate and impoved maket discipline. investing in development tanzania touism 11

13 the site of discoveies of the taces of ealiest man. Tanzania also offes inteesting cultue and cafts, notably the Maasai cultue and Makonde wood sculptues. The gowth in touism and hospitality sevices in Tanzania is evident at seveal levels. In tems of capacity, Tanzania has 31,000 ooms with 56,200 beds. A numbe of new hotels have been built ecently, including lage intenational chain hotels 3 and many othe medium-sized hotels. The tavel industy, epesented by the tou opeatos and tavel agencies, has been impoving the poducts and sevices offeed in the county. Though the ceative packaging of diffeent expeiences, touists can now choose fom wildlife and beach vacations, niche poducts Map 1 Tanzania s National Paks and Reseves 12 investing in development tanzania touism

14 such as soft adventue, biding and hunting, and egional packages that involve multi-county visits. Tanzania also aims to aise the quality of sevice to a highe standad by focusing on vocational and manageial taining. The Stategy The Touism Maste Plan With financial suppot fom the Euopean Union, Tanzania poduced a Touism Maste Plan in 1996 that seves as a oadmap and stategic famewok fo the secto. The plan was updated in and is widely ciculated in Tanzania, seving as a useful document to guide the secto s gowth. The Touism Maste Plan focuses on: enhancement of the Nothen Cicuit and its extension to the Usumbaa Mountains in the east, with the Pangani Rive and the pot of Tanga; a stong Southen Cicuit building on the fou national paks in that aea; 5 devel- Box 2: Tanzania s Main Natual Resouce Attactions The Nothen Cicuit, and its extension to the Usumbaa Mountains, includes: Ausha, the main hub and also home to the Intenational Confeence Cente, a venue fo many wold-class meetings Ngoongoo Cate, the lagest cate in the wold with limitless wildlife Seengeti Plains, famed fo its mass movement of wildlife Lake Manyaa National Pak, home to the tee-climbing lions Taangie National Paks Mt. Kilimanjao, the highest mountain in Afica The Usumbaa Mountains, to the east of Ausha, poviding a tempeate mountain climate whee the Afican violet oiginates Olduvai Goge Southeast of Seengeti, the site of the discovey of the oldest human emains eve found The Southen Cicuit compises: Selous Game Reseve, uninhabited since the ealy 20th centuy, with its untamed natue and wildlife Ruaha National Pak, a gem in south cental Tanzania Mikumi National Pak, within a day s dive of Da es Salaam Udzungwa National Pak The Westen aeas close to o on the shoes of Lake Victoia include: Gombe Steam, known fo Jane Goodall s wok with chimpanzees Katavi National Pak, less well taveled but with its own cham Mahale Mountains on the shoes of Lake Victoia The Islands have a ich Swahili and Aab cultue and include: Zanziba, with its well peseved capital, Stone Town, and beautiful beaches in the notheast Pemba and Mafia Island with thei maine paks povide excellent diving and fishing Da es Salaam watefont includes: The Kilimanjao Kempinski Hotel as an ancho investment Othe majo eseves: Ugalla Rive, Uwanda, Moyowosi and Kigosi Game Reseves, less well taveled but with excellent potential fo development investing in development tanzania touism 13

15 opment of coastal zones and the off-shoe islands; enhancement of Da es Salaam and its watefont; and ultimately, linking the Nothen and Southen Cicuits via a coido. It also emphasizes the impotance of encouaging niche poducts, such as soft adventue, biding, bette esot facilities and cultual/histoical poducts. The Touism Maste Plan also emphasizes the need fo clustes, aggessive management to stay abeast of tends and the impotance of diffeentiating poducts to add value. A daft touism plan fo Zanziba was also completed in (See also Box 2: Tanzania s Main Natual Resouce Attactions, and Map 1: Tanzania s National Paks and Reseves.) Tanzania s stategy called fo developing new maket segments and added value poducts to complement the county s image as an upscale destination that commands highe ates. Building competitive advantage In light of the fagility of its natual assets, as well as intenal tanspot limitations, the Govenment of Tanzania (GOT) has linked touism development and envionmental consevation to ensue sustainability. Tanzania has eaned a eputation as a highe piced destination much moe so than neighboing Kenya, which appeas to have opted to pusue the mass maket in ecent yeas. Tanzania aims to potect this image, but at the same time to extend its appeal to othe maket segments. Tanzania s stategy is to develop competitive advantage: (a) by adding value; (b) though maket segmentation; and (c) though poduct diffeentiation. This is an ongoing pocess that includes opening up new aeas in the south of the county, and even extending acoss the bode to neighboing Mozambique. Demand fo Tanzania as a destination fo intenational taveles is summaized in Table 1, below. (See also Table 2-1 and Table 2-3 in Annex 2: Tanzania Statistical Data.) In 2004, intenational aivals exceeded those of 2001 (the yea of 9/11). Although the county has not matched its peak yea of 1999, 6 the govenment expects that 2005 will be anothe banne yea. Leisue taveles account fo ove 80% of all aivals by land and ai. National paks hosted ove 500,000 visitos in 2004, anothe indication of the level of touist activity. The 20% of aiving business taveles fequent the business hotels, many in Da es Salaam, along with an unknown numbe of leisue taveles. With ecent gowth in new hotels in Da es Salaam, occupancies and taiffs have been soft; howeve, the mediumtem pospects ae good, especially if the confeence and incentive maket can be developed. A measue of Tanzania s competitiveness based on Wold Tavel and Touism Council (WTTC) 7 data suggests that Tanzania has plenty of oom fo impovement. (See Table 2-2 in Annex 2: Tanzania Statistical Data.) Nonetheless, with sound policies and impoving management, Tanzania seems set to enjoy continued gowth of its touism secto. Table 1: Tends in Intenational Aivals in Tanzania Yea Total Aivals Leisue National Paks , ,282 N/A , , , , , ,266 Souces: Ministy of Touism and Natual Resouces and the National Bueau of Statistics, Tanzania 14 investing in development tanzania touism

16 The Playes Poject sponsos The investo. Albwady Investment, 8 founded in 1976 by United Aab Emiates (UAE) national, M. Ali Saeed Juma Albwady, is the new owne of the Kilimanjao Hotel. With a cuent annual tunove exceeding one billion dihams (moe than US$270 million), Albwady Investment etains individual entepises in the goup with an autonomous management team, one company diecto on the boad and M. Albwady as the chaiman. The 40 o so companies in the goup, many with an ISO acceditation, ae in food distibution and logistics, industial constuction and engineeing, and leisue and lifestyle in Dubai, Euope and Afica. Befoe deciding on the Kilimanjao, Albwady had been looking to invest in a hotel in Zanziba (now unde constuction) and had contacted Chistie s in London, one of the lagest eal estate bokes in touism. In exploing Zanziba, the Selous (the Southen Cicuit) also came to Albwady s attention. Ultimately, one of the poject consultants in Dubai made contact egading the Kilimanjao. The management company. Kempinski Hotels 9 is a well-established, intenationally ecognized hotel management company owned by the Thai oyal family (85%) and Bahain inteests (15%). Founded in Gemany ove a centuy ago, Kempinski has appoximately 40 hotels in 20 counties, located in many of the wold s best-known cities. Some of its hotels ae gand and othes ae moden; a few ae olde hotels with individual cham. In addition to opeating many of the wold s fine city hotels, Kempinski also opeates intenational esots. In Afica, it opeates hotels in Mali and Moocco and has its Afican headquates at a esot in Dubai. Govenment Responsibility fo touism policy in Tanzania lies with the Ministy of Natual Resouces and Touism (MNRT). MNRT s key divisions ae: (a) the Touism Division, esponsible fo secto policy, planning, supevising the Hotel and Touism Taining Institute and the Touist Agency Licensing Authoity (TALA); and (b) the Wildlife Division, esponsible fo wildlife management outside designated national paks and fo issuance of hunting concessions and licenses. Also, the Tanzania National Paks Authoity (TANAPA) leases sites fo photogaphic safai lodges fom time to time, within and suounding national paks. The Depatment of Touism has been vey active in pomoting investment in touism, paticulaly in selling the potfolio of state-owned hotels and lodges, woking with the Pivatization Commission. The Tanzania Touist Boad (TTB), esponsible fo destination maketing, also plays a ole in investment pomotion. (See Annex 3: Tanzania s Institutional Famewok fo Touism.) The Tanzania Investment Cente The Tanzania Investment Cente (TIC) is esponsible fo investment pomotion in Tanzania unde the National Investment Act of 1997, 10 and has made substantial pogess in becoming a one-stop shop fo investos. To access the Incentive Code, investos must obtain a TIC Cetificate of Incentives. 11 The minimum fixed cost of investment fo new, ehabilitation and expansion pojects is US$100,000 fo pojects wholly owned by Tanzanian citizens, and US$300,000 fo all othes. Distinctions ae made between lead sectos (those aleady contibuting to investing in development tanzania touism 15

17 gowth), and pioity sectos (those the Govenment wants to encouage). As a lead secto, touism pojects ae exempted fom impot duties duing constuction and value added tax (VAT) is defeed. In addition, copoate tax is set at 30% and losses may be caied fowad fo five yeas. Up until 2003, TIC had appoved a total of 422 touism pojects, including new and upgaded hotels, tou companies and tavel agents and estauants. (Fo moe detail on TIC, see Annex 3: Tanzania s Institutional Famewok fo Touism.) Pesidential Paastatal Secto Refom Commission The Pesidential Paastatal Secto Refom Commission (PSRC) 12 was ceated in 1972 to implement the county s pivatizations and to: (a) impove the opeational efficiency of public entepises; (b) educe the buden on state finances; (c) expand the ole of the pivate secto in the economy; and (d) encouage wide owneship of poductive assets. As of June 30, 2004, 309 of a total 359 paastatals had been pivatized. Of the 309, Tanzanians own about half, foeignes own 28, and the est ae joint ventues (Tanzanians, foeignes and Govenment). Thee has also been substantial pogess on pivatization of state-owned hotels. Among the fist to be pivatized was the New Afica Hotel fom which the state withdew in thee stages moe than 10 yeas ago. Pivatization of hotels in Tanzania was quite slow until the MNRT patneed with PSRC in the late 1990s. The hythm of hotel pivatizations gatheed speed and now only thee hotels emain in public hands all involved in cout cases. The change of owneship and management of these facilities has impoved the quality of touism sevices and helped incease the contibution of touism to the national economy. The pivate secto Govenment policy ecognizes pivate secto investment as touism s engine of gowth. The Touism Confedeation of Tanzania (TCT), an umbella pivate-secto institution, has 14 industy associations as constituent membes. The Confedeation is the focal point fo dialogue between the Govenment and the pivate secto on touism. (See Annex 3: Tanzania s Institutional Famewok fo Touism.) Investment Pomotion Activity MIGA in Afica MIGA has been involved in investment pomotion in Afica fo some time. Wok on touism oiginally stated unde a MIGA pogam called Pomote Afica (PA), jointly sponsoed with the Govenment of Japan. 13 MIGA then launched a successo pogam co-funded by the Swiss Govenment, the MIGA-Swiss Patneship Pogam fo Investments in Sub-Sahaan Afica (MSP), focused on fou counties Tanzania, Mozambique, Ghana and Senegal. The MSP is a fouyea pogam, designed to focus on building capacity in investment pomotion agencies (IPAs), paticulaly by assisting them to undetake focused, well-pepaed investo outeach pogams. The MSP woked with the IPAs in each of the fou counties to pepae, undetake and follow up on investment outeach pogams. In Tanzania, the MSP built on ealie wok in touism and helped the IPA, the 16 investing in development tanzania touism

18 Tanzania Investment Cente, in coopeation with the Ministy of Natual Resouces and Touism, to pepae a touism investo outeach pogam, launched at a majo investment confeence, with subsequent follow up. The MSP contibuted to the pivatization of the Kilimanjao Hotel, among othe investments, and continues to suppot the investo outeach pogam. The investment foum MIGA, in patneship with the Depatment of Touism, TIC and TCT, decided that an investment foum would be a stong way of launching a pocess to encouage highe flows of FDI into touism and an efficient way of pomoting sustainable gowth in the secto. (See Box 3: Setting Up the Foum.) In geneal, the goup envisaged a foum of some 100 paticipants with a focused, tight pogam and a seies of site visits fo seious investos. The Pesident of Tanzania, his Excellency Benjamin Mkapa, was to lend his suppot to the confeence pogam, both as keynote speake and as an intelocuto with pospective investos. (See also Annex 5: Evaluating the Investo Confeence as a Pomotional Tool.) The initial planning goup envisaged a foum of some 100 paticipants with a focused, tight pogam and a seies of site visits fo seious investos. Coodinating the stakeholdes. Fo the pocess to succeed, it was essential fo the paties putting on the investment foum to wok togethe. To ensue pope coodination, a Steeing Committee and a Technical Committee wee fomed with membes epesenting fou key institutions: MNRT (Depatment of Touism), TIC, TTB and the Touism Council of Tanzania, unde the chaimanship of the Diecto of Touism. The Steeing Committee held monthly meetings with MIGA paticipating fom Washington by videoconfeence. MIGA staff also visited Tanzania on a couple occasions. The fist activity was to detemine how best to seek out investos who might be inteested in Tanzania. Afte discussion with the Steeing Committee, it was Box 3: Setting Up the Foum The investment foum was stuctued aound the following key paametes: The concept developed out of the "Pomote Afica" pogam MIGA, Depatment of Touism, TIC and TCT poposed an investment foum fo 100 paticipants A Steeing Committee and a Technical Committee wee set up: - Diecto of Touism, Chai - MNRT (Depatment of Touism) - TIC, TTB - Touism Council of Tanzania The Steeing Committee met by video confeence and staff tavel Two consulting fims wee hied to taget investos: - One familia with investos in Afica - One familia with investos in Euope and the Middle East The foum s date and content wee detemined: - Foum planned to take place in Ausha on Octobe 2, Pesident Mkapa would attend - Focused, tight pogam - Site visits investing in development tanzania touism 17

19 decided to hie two consulting fims, one familia with investos on the Afican continent (DCDM) and the othe with expeience of Euopean and Middle Easten investos (TRI Intenational). The consultants tageted investos and identified ove 400 candidates, both fims and individuals. At the same time, DCDM was actively involved in the design of the foum. (Afte the foum, DCDM, in coopeation with a Tanzanian fim, DAIMA Associates, povided follow-up suppot fo the touism investo outeach pogam.) The event would take place at Ausha s well-known Intenational Confeence Cente, which had hosted many confeences attacting wold attention. A stakeholde meeting was then oganized to elicit esponses fom paticipants on the issues and oppotunities facing touism. (See Box 4: The Stakeholde Meeting.) This meeting was held in Da es Salaam 14 and attacted 100 paticipants fom all ove the county. They included both pivate secto inteests, such as epesentatives fom pofessional associations and individual entepeneus, and govenment officials fom MNRT as well as fom othe inteested agencies, such as the Ministies of Finance, Lands, and Public Woks, and agencies such as TANAPA (national paks). Among the issues discussed wee: peceived high levels of taxation (including pepayment of taxes in some cases and weak pocedues fo eimbusement of VAT); complicated and costly licensing pocesses and pocedues; and the need fo bette infastuctue and pomotion of the destination. 15 One subject spaked heated debate at the stakeholde meeting. Smalle investos opeatos of lodges, small tou companies and estauants aised the issue of whethe Tanzania eally needs big outside investos athe than the small and medium-sized entepises (SMEs) that typically chaacteize the touism industy. This led to an ageement to povide additional suppot fo SMEs in the fom of capacity-building sessions on how to pepae a business plan and caft a maketing pogam. The discussion also led to development of poposals fo a guaantee fund and a business incubato scheme, both of which wee adopted in a compehensive, Wold Bank-financed pogam to suppot the pivate secto. Box 4: The Stakeholde Meeting The Stakeholde Meeting, held in Da es Salaam, unfolded as follows: 100 paticipants attended fom all ove the county - Pofessional associations and individual entepeneus - Govenment officials fom inteested agencies Seveal issues wee aised - Peceived high levels of taxation - Complicated and costly licensing pocesses - Need fo bette infastuctue and pomotion SMEs questioned whethe Tanzania needed foeign investos - Ageement to povide additional suppot fo SMEs: - Capacity-building on how to pepae a business plan and maketing pogam - Guaantee fund - Business incubato scheme 18 investing in development tanzania touism

20 The mateial fom the stakeholde meeting was ultimately included in the secto study poduced by MIGA fo the foum. Entitled Touism in Tanzania: Investment fo Gowth and Divesification, it was both a policy-based document and a souce of infomation on investing in touism in Tanzania. Two thousand copies wee pinted and subsequently distibuted to attendees, donos and othe inteested paties. The secto study late became a efeence fo economic wok elated to the integated tade policy famewok fo Tanzania. 16 Planning the confeence. MNRT took the lead in oganizing the logistics, woking with a local confeence planne, Tanzania Confeence Sevices, Ltd., while MIGA pepaed the documentation, highlighting the oppotunities in the touism industy and coveing maketing costs. (See Box 5: Handling the Investment Foum Logistics.) Admission to the confeence was set at US$100 pe paticipant, consistent with the idea that a confeence of value is woth a fai admission pice. Thus, the bulk of the costs was met by the paticipants. Registations fo the foum wee vey slow at fist. Indeed, thee weeks befoe the foum, thee wee still no paid-up egistants. Howeve, in the last ten days, egistation was bisk and the initial taget of 100 attendees was quickly exceeded, ultimately eaching 280. The investment foum s agenda was aanged so that Pesident Mkapa could meet pesonally with investos, a key benefit noted in advance on the invitation. Duing the planning, one of the consultants pointed out that investos would not attend this sot of confeence unless specific investment poposals wee made available. The feeling was that good investos do not have the appetite fo long meetings; they want to get to the meat ight away. It was decided that the best way to offe specific investment oppotunities was to have business plans o feasibility studies eady to shae with potential patnes and financies. Then these poposals could be discussed on a sound basis. In fact, business poposals wee sought ahead of time but none mateialized, except those fo big pojects that wee aleady on the table. The Wildlife Depatment, esponsible fo concessions fo hunting, actually awaded seveal contacts befoe the foum and thus lost the oppotunity to auction lots unde competitive conditions. 17 MIGA eached out to othe donos 18 who ageed to povide budgetay suppot and esouce pesons to speak at the foum. This eniched the content of the final pogam by poviding a moe compehensive pespective on Tanzania fo investos. Fo instance, the Wold Bank discussed pivate paticipation in infastuctue pojects, paticulaly elated to weaknesses in infastuctue povision in Tanzania. Box 5: Handling the Investment Foum Logistics The logistics fo the investment foum wee handled as follows: MNRT aanged logistics though a local confeence planne MIGA pepaed the documentation, including touism oppotunities, and coveed maketing costs Two lettes of invitation wee sent unde the signatue of the Ministe of MNRT: - The fist one accompanied a flie announcing the Foum - The second went with a bochue and moe detailed infomation on Tanzania - Telephone follow-up calls wee made A foum website was set up investing in development tanzania touism 19

21 The Development Bank of South Afica (DBSA) addessed its Special Development Initiatives tanspot coidos designed to attact multiple investment activities. Intenational Finance Copoation (IFC) explained its expeience with investing in East Afica. The Euopean Union, which had povided an advise to the MNRT, pesented Tanzania s Touism Maste Plan and othe key documents. The confeence date of Octobe 2, 2002, was set as a function of Pesident Mkapa s availability. Two lettes of invitation wee sent unde the signatue of the Ministe of MNRT. The fist lette was attached to a flie announcing the foum, and the second lette was sent with a bochue and moe detailed infomation on Tanzania. Telephone follow-up calls wee made. A foum website was also set up that povided a contact point fo investo queies. It included geneal infomation on Tanzania, backgound studies including the MIGA secto study and the newly evised Touism Maste Plan, the agenda and potential investment sites. Following the foum, the website was updated and e-launched. Evaluating the esults. Two hunded and eighty delegates attended the foum. The lagest goup included epesentatives fom existing tou opeatos, hotels and ailines in Tanzania, as well as Tanzania-based epesentatives of intenational fims. About 30 intenational investos, mostly fom Afica, and a handful fom Euope, UAE and the USA also attended. The intenational investos epesented tou opeatos and hotels, and a few financial institutions. (See Box 6: Admission Fees and Attendance fo moe details.) Seveal speakes enlivened the foum s agenda. The Pesident of the Republic, the Honoable Benjamin Mkapa, opened the day with a ousing speech in which he welcomed both foeign and local investos and pesented his vision fo Tanzania. The Pesident of Zanziba, the Honoable Rais Kaume, deliveed his emaks to close the foum. Thoughout the pogam, numeous officials and the Deputy Secetay Geneal of the Wold Touism Oganization, D. Dawid de Villies, offeed thei pespectives. In a paticulaly inspiational anecdote, the Tanzanian owne of Box 6: Admission Fees and Attendance Key paametes of the foum s admission and attendance ae as follows: Admission was set at US$100 pe paticipant Most costs wee met by the paticipants attendance fees Registations wee vey slow at fist, but bisk in the last ten days Attendance eached 280, including: - Consevation Copoation of Afica, Holiday Inns, Seena Goup, Golden Tulip, Legacy Goup (now Mövenpick), Potea Hotels - 30 intenational investos (Ethiopia, Kenya, Mauitius, South Afica) - A few delegates fom Austia, Cypus, the Nethelands, Potugal, the UAE and the USA MIGA contacted institutions that povided funding and esouce pesons: - Wold Bank - IFC - Development Bank of South Afica - Euopean Union 20 investing in development tanzania touism

22 the Peacock Hotel in Da es Salaam shaed his stoy of stating fom scatch with little education, but a lot of humility and peseveance, to build his business ove the couse of a lifetime. He ecounted how his son went on to ean a univesity education, the fist in his family to do so, and now uns the hotel and paticipates in touism associations. The pocess at the foum was faily unique. Rathe than the moe usual one-onone meetings between pospective investos and patnes, the lettes of invitation had suggested that inteested investos would be invited to meet the Pesident of Tanzania and epesentatives of TIC and MNRT. This poved to be a popula decision and seious investos wee intoduced to the Pesident. Two key meetings elated to the futue of the Kilimanjao Hotel. The govenment had been negotiating with an investo to buy the Kilimanjao, yet potacted discussions had continued long afte the investo s exclusivity peiod and the deal was expected to be confimed at the foum. When the deal could not be confimed, the Pesident advised the investo s agent that Tanzania consideed itself fee to poceed with othe investos. The next potential investo to meet the Pesident was a diecto of Albwady Investments of Dubai. He made a fim offe fo the Kilimanjao and immediately a deal was stuck. The Kilimanjao Hotel was sold fo US$3 million as a sale of assets. Although thee wee many factos leading to new investment announcements, the following pojects can be taced, diectly o indiectly, to the foum. Reflecting an expected total value of ove US$100 million, these pojects include: Puchase and edevelopment of the Kilimanjao Hotel (US$35 million) The fist investment in Kikoni camp in the Southen Cicuit (US$0.5 million) Zamani Hotel, Zanziba (US$36 million) 19 Finalization of sale of Mafia Lodge (an estimated US$0.6 million) IFA Hotels and Resots (a poposed US$50 million investment in Zanziba) Although not a esult of the foum, the Fench ambassado chose the occasion of the investment foum to announce that Fance would finance the constuction of a US$4.6 million Hotel School nea the State House in Da es Salaam. 20 Paallel financing fom the Euopean Union of US$3.1 million 21 has been secued fo cuiculum development and ecuent costs. This was cetainly welcome news; the school will meet a pessing need fo local taining and puts emphasis on Tanzania s quality of sevice in touism. The investment foum also eceived consideable fee publicity though local newspapes and the intenational media. Thee inteviews wee given on BBC.com: one fom Washington in advance of the confeence; the second to the consultant pepaing the confeence; and the thid to Pesident Mkapa, a 25-minute session that was handled expetly and seved to showcase Tanzania as an investment destination. These contacts wee aanged by a goup of specialists in New Yok closely associated with the Afica Tavel Association, whose pesident at the time was the Ministe of Touism fo Tanzania. The Investo Outeach Pogam Ceating a pocess The investment foum set in motion a fluy of activity that seved to futhe stuctue Tanzania s investment pomotion pocess fo touism. In paticula, the investing in development tanzania touism 21

23 foum aised a numbe of issues equiing follow-up, and helped to set pioities fo the investo outeach pogam. To supplement existing capacity in the coodinating institutions, a consotium of two consulting fims was engaged to facilitate the follow-up pocess. 22 Among the pessing issues following the foum, seveal took shape as actionable guidelines fo the pogam: The foum aised a numbe of issues equiing follow-up, and helped to set pioities fo the investo outeach pogam. The new Maste Plan should be implemented. (See Box 7: Locations fo Touism Investment and Touism Poducts and Chaacteistics fo an oveview of the sites fo touism investment and touism activities.) Expessions of inteest fom investos should be followed up. Infomation geneated at the foum should be made available fo a wide eadeship via a special website. Capacity building should include capacity fo pepaing business plans and fo locating facilitation and suppot mechanisms, and fo financing facilities fo pivate investos. MNRT would continue to wok with the pivate secto to find solutions to the outstanding issues and poblems that had sufaced at the investment foum. Mechanisms fo continuous dialogue between the public and pivate sectos would be stengthened. The Govenment should facilitate the stengthening of the TCT. At the opeational level, a Steeing Committee and a Technical Committee wee fomed with membes fom fou key institutions: MNRT, TIC, TTB and TCT. These committees would take esponsibility fo coodinating follow-up pomotion and facilitation of touism investments. Pogam pioities The investo outeach pogam was twice advetised in the local pess and esponses eceived fom local investos wee encouaging, including the investment pofiles descibed below. Seveal key elements helped to shape the pogam s sevices in woking with potential foeign and domestic investos going fowad. Many of these elements can be taced to specific needs identified as a esult of the initial stakeholde meeting that kicked off planning fo the investment foum. These key pogam elements include: Contact database. As noted ealie, two consultant teams identified a list of contacts. This list was subsequently stengthened with the addition of attendees at the confeence and othe new contacts and inquiies. The esulting compehensive list coves close to 200 investos, and is available fom MIGA. While it is pimaily intended as a database fo Tanzania, the list is also useful in othe counties in Afica, especially those in Easten and Southen Afica. Infomation on financing souces. Avenues of finance fo investos in touism ae still peceived as insufficient. Fo instance, while Tanzania claims ove 20 commecial banks, access to cedit so fa has been limited to a few high-value boowes with adequate collateal. (Lending on cash flow is not seen as likely in the nea futue.) Since 2002, howeve, with financial secto efoms, local banks have become moe aggessive and lending ates ae coming down; ates of 7-12% ae becoming moe common, compaed to 12-18% ates a couple of yeas ago. In addition, a few ventue capital, leasing, and cedit guaantee funds ae emeging. IFC ecently opened an office in Tanzania and is involved in leasing and suppot fo SMEs. 22 investing in development tanzania touism

24 Box 7: Locations fo Touism Investment and Touism Poducts and Chaacteistics The potential sites fo touism development in Tanzania ae well known and include: National Paks, Game Reseves, and Consevation Aeas: Sites ae available fo photogaphic and hunting safais (in well-sepaated aeas) in and aound Tanzania s national paks and eseves. The Coastline and Off-Shoe Islands: Tanzania has an 804-kilomete coastline, mostly of unpolluted beaches and shoes with good fishing and diving pospects. Mafia Island is now a maine pak devoted to big game fishing and diving. Zanziba and Pemba islands have beaches and histoical settings. The mainland cost also offes many oppotunities. Histoical Sites and Achaeological Teasues: Tanzania has a ich heitage of achaeological, histoical and ock painting sites, a numbe of which have been designated as Wold Heitage Sites (e.g. the Olduvai Goge, Kilwa Kisiwani, Bagamoyo and Zanziba s Stone Town). Mountains: Mount Kilimanjao, Afica s highest mountain and the wold s highest feestanding mountain, and the Usumbaa Mountains, have a teain and climate in stak contast to those of the coastal aeas. Lakes: The thee lage lakes with touist potential include Lake Tanganyika as one of the wold s deepest and longest lakes (772.4 metes deep); Lake Victoia as souce of the lagest eseve of fesh wate and the longest ive in Afica, the Nile; and Lake Nyasa. All thee lakes povide oppotunities fo wate spots. Touism Poducts and Chaacteistics Tanzania s touist poduct is geneally chaacteized by: its abundance, divesity, eliability and visibility (in the case of wildlife); quality and beauty of its envionment and sceney; low touist density at sites and paks; authenticity and the unique Afican expeience and fiendliness of the Tanzanian people; safety; and beaches. A standout-featue in Tanzania s touist poduct is its ability to offe a wide ange and packagable expeiences and activities. Given this potential, Tanzania pomotes the following touism poducts: Soft Adventue and Wildlife Safai Poducts: nealy 25% of Tanzania s land has been set aside as wildlife and botanical sanctuaies, fo consevational, educational, scientific, cultual and eceational puposes; Special Inteest Poducts: these poducts include the coastal and island esouces fo maine-based inteest; mountain climbing, hiking and walking; and possibilities fo those seeking to pusue aspects of cultual inteest; Resot Poducts: attactions exist to help develop esots on the coast and on the islands, in the mountains and by the lakes, which can povide the sevices and facilities fo quality esots; Cultual and Histoical Poducts: with its vaied cultue, Tanzania has the capacity to povide a ewading and satisfying cultual expeience fo a wide ange of touists. Pogams ae undeway to futhe conseve histoical sites and aeas alongside development of intepetative centes and pomotion of cultual activities. A good success stoy is the Cultual Touism Pogam in Ausha, which was developed via a Dutch aid poject. investing in development tanzania touism 23

25 Unde the investo outeach pogam, a seies of memoanda on institutions financing touism pojects was completed and made available fo investos. It includes 35 intenational and fou local financial institutions. Investment pofiles. The investment pofiles have poved vital fo keeping in touch with potential local and foeign investos, and fo encouaging the maximum involvement of business associations, such as TCT. Though this element, potential investos and local developes (pomotes) ae kept infomed of available investment oppotunities and pogams. In addition, investos can lean how to stengthen thei poposals and meet potential patnes. Following the media advetising in mid-2004 that invited local investos to send in poposals, 38 touism investment poject pofiles wee compiled and classified into five categoies as follows: beach touism; city popeties; wildlife esots; tou opeations; and othe. Investments ae in the ange of US$100,000 US$2,000,000 equivalent. Best effots wee made to ensue that the data supplied is accuate, but a full due diligence pocess was beyond the scope of the poject. The consultants eiteated the idea that an ancho poject would add inteest fo investos. At an ealie stage, a land eclamation and eal estate development on the Da es Salaam watefont had been poposed, but was subsequently withdawn as too politically sensitive. The Aga Khan investments on Zanziba (efubishment of Stone Town watefont; expansion of Seena Inn) wee placed on hold until afte the pesidential elections. Business assistance and capacity building. The MSP sponsoed a wokshop fo SMEs and povided technical assistance in developing business plans. MIGA developed poposals that wee adopted fo financing the business incubato and the guaantee fund unde Wold Bank assistance to the pivate secto. 23 The pogam also povided suppot to stengthen touism-elated associations, such as TCT, Tanzania Association of Tou Opeatos (TATO) and the Hotel Keepes Association of Tanzania (HKAT), which stepped fowad to play leadeship oles in patneship with TIC, MNRT and govenment. Howeve, moe discussion was equied and additional sessions wee scheduled to hamme out pogams on, fo example, linkages and localization of puchases. Investo outeach. To pepae fo investo outeach, a full-day stategy session modeated by expeienced intenational consultants was held in Da es Salaam. MIGA was pesent, along with othe stakeholdes. The session helped fomulate a stategy tageted at investment in the context of Tanzania s Touism Maste Plan. Following this session, two outeach missions wee completed: attendance at the Mozambique Touism Investment Foum in Maputo in Octobe 2004; and individual epesentation fo Tanzania at the Aabian Hotel Investment Confeence in Dubai in Apil The Maputo mission povided an oppotunity fo touism investos to inteact with like-minded individuals and companies fom Tanzania. As a esult of the Dubai mission, Tanzania was offeed a speaking slot fo 2006 and will be the featued county fo Aabian investments in sub-sahaan Afica. Moving fowad The cuent phase of Tanzania s investo outeach pogam, in coopeation with the MSP, will soon be completed, although pessing activities await implementation. It is impotant that the emaining sevices unde the investo outeach 24 investing in development tanzania touism

26 pogam be ealized efficiently and effectively in ode to foste continued suppot, and ultimately to help take Tanzania s touism to a highe level. Thee main aeas of planned activities ae due to be implemented: infomation dissemination, new maket outeach and capacity building. Infomation dissemination. This aea of activity includes ciculating the investment pofiles to potential patnes on the list, and updating investos on ecent pogess in tax efom and the touism maket. Timely data of inteest to potential investos is available that needs to be diectly communicated to investos by newslette and though the poject website. New maket outeach. Investment pomotion tips to Saudi Aabia, Qata, Oman, and Kuwait, and possibly Malaysia, ae necessay to help boaden Tanzania s base of investment pospects. The egional focus is based on the fact that significant investment capital is cuently emanating fom the Middle East close to US$300 million in sub-sahaan Afica in the past two to thee yeas. 24 Howeve, this effot does not ecognize that the smalle investments impotant to Tanzania s oveall plan may have little appeal in that maket. SME investment could be bolsteed though enhanced outeach to investos in the noth still open to oppotunities in Tanzania; with the Nothen Cicuit effectively unde a moatoium, cetain investos may be willing to look to the south. Capacity building. Now that capacity building has been absobed unde the Wold Bank-suppoted pivate secto development (PSD) opeation, oppotunity exists to apply appopiate funds to diect investment pomotion effots. The Kilimanjao Kempinski Hotel A new level of sevice The Kilimanjao Kempinski opened in August 2005 as a five-sta hotel, ovelooking the habo on one of the finest watefont sites in Da es Salaam. Its top floo offes an unpaalleled, panoamic view. The hotel will have about 180 ooms and suites and no fewe than seven food and beveage outlets, as well as a pivate beach on the south coast some 15 kilometes away. Restoed to its fome gandeu with yet a new level of quality in sevice, the hotel is expected to attact esidents of the capital, business taveles and touists. (See Box 8: The Kilimanjao Kempinski Hotel Sevices, an indicative list of planned quality aspects.) Afte a quiet opening, the hotel intends to host a fomal gala opening late in the yea. The hotel had its fist function on August 23, 2005, a commitment that dove management to secue the August opening date. (See also Annex 4: A Shot Histoy of the Kilimanjao Hotel.) The Kili eopened unde new owneship as the five-sta Kilimanjao Kempinski Hotel. Duing final wok on the hotel, one emaining issue elated to the electicity gid. Because the new Cental Bank building was being constucted next doo (a positive fo the hotel s business), the existing powe netwok could not handle the inceased demand. TANESCO, the powe company, constucted a new powe line to sevice the neighbohood. In the meantime, both buildings had stand-by geneatos, which helped to solve immediate poblems. investing in development tanzania touism 25

27 The Kilimanjao Kempinski aims to be the leading hotel in Da es Salaam and will levy taiffs slightly above those of othe top hotels, which cuently chage about US$135 pe night, plus VAT. The hotel s management plans to build a lage local meeting and estauant business, and will keep estauant and ba pices modest by intenational standads in Tanzania. Although some investos have found Tanzania a difficult envionment in which to opeate, this has not been tue fo Kempinski. The company is dawing high maks fo its elations with the community. Howeve, Kempinski did epot a poblem of pilfeing at its wok site and had to edouble its effots in this egad. Box 8: The Kilimanjao Kempinski Hotel Sevices Known fondly as the Kili, this elegant hotel is both a testament to Da es Salaam s histoical past and its independent futue. It is a favoed meeting place fo locals, as well as visitos to town. Rooms Facilities Guest ooms 180 Intenet access Pesidential Suite 1 Intenational LCD TV Diplomatic Suite 1 Multilingual voic Executive Suites 13 Tea and coffee Executive Rooms hou oom sevice Deluxe Rooms 132 Laundy/dy cleaning S shoe-shine sevice Each with: Make-up mio and hai dye In-oom safe Miniba Bathobes Hotel Sevices Butle sevice pivate club 24-hou conciege sevice luggage stoage 7 Restauants and bas shops and boutiques Foeign cuency exchange Floist Haidessing salon secuity paking Tavel agent limousine sevice Emegency sevices Ca ental Health and beauty spa tanslation sevices Business cente Pivate beach club 15 km fom hotel 13 meeting ooms accommodating fom 2 to 500 people Souce: Management of Kilimanjao Kempinski Hotel 26 investing in development tanzania touism

28 Next Steps A few people have questioned the wisdom of the Kilimanjao deal, including some who wee fustated at thei own ealie effots to close on the popety. Howeve, fo the most pat the poject has been favoably viewed by many people and consideed a catalyst fo impovement in Tanzania s investment climate and gowth in the touism secto, paticulaly among the county s supply of high-quality hospitality sevices. The Kilimanjao poject cetainly focused attention on Da es Salaam. The Royal Palm, a locally owned hotel managed by Legacy of South Afica (and fomely Sheaton) changed hands. It is now owned by the Kingdom Goup of Saudi Aabia and opeated unde the Mövenpick band. The Kingdom Goup also holds the Fou Seasons and Faimont bands, and it is umoed that the Royal Palm will be efubished and pehaps ebanded and upgaded to five-sta status. Thee is also wod that a new confeence facility may be unde consideation. If tue, this sot of development would ceate a new dynamic of both synegy and competition among investos fo Da es Salaam to become a confeence destination in its own ight. At the same time, it is epoted that a numbe of lesse-known hotels outside the city may be having difficulties and ae theatened with challenging maket conditions. With good coopeation among the key playes, shot-un excess capacity can be offset by a poactive appoach to the conventions and incentive tavel business, designed to attact lage goups to the city fo conventions and copoate meetings. Tanzania s touism infastuctue is also impoving to handle highe tavel volumes. As one example, Da es Salaam is enjoying bette ai sevice than it has fo some time. It is seved daily by Emiates fom Dubai; KLM povides daily sevice fom Amstedam, while South Afican Aiways/Ai Tanzania povide daily sevice fom Johannesbug; Bitish Aiways and Swissai each povide sevice thee times weekly fom and to London and Zuich, espectively. As Tanzania moves ahead in its development of the touism secto and its investment pomotion pogam, seveal lessons ae evident in the expeience that ultimately esulted in the Kilimanjao Kempinski Hotel poject and seveal othe investments. Fist, development of touism is a coss-sectoal undetaking that equied a foundation and plan speaheaded by Tanzania s Govenment in conjunction with seveal key agencies and oganizations. It was only afte pogess had been made on seveal concuent fonts in ceating and suppoting a viable stategy fo building the secto and coodinating the playes that an investment such as the Kilimanjao was possible. Second, the touism secto and specific investos wee poactively tageted and cultivated though a highly customized pogam geaed to the needs of both foeign and local investos. The investment foum was caefully ochestated with the Pesident s full paticipation, which helped close the Kilimanjao deal on the spot. Moeove, the foum was not a one-time, isolated activity; its planning and follow-up activities helped put a famewok and pocess in place to suppot a sustainable, scalable investment pomotion pogam that could seve moe investo makets and pospects ove time. Finally, the competitiveness and gowth of the touism secto in Tanzania depends lagely on the quality of its sevices and the efficiency of othe sectos involved, such as agibusiness, fo example. A plan is in place to diffeentiate the Tanzanian investing in development tanzania touism 27

29 touism poduct though quality and added value. While Tanzania s Govenment is not able to povide all the answes o esouces alone, with a keen involvement of pivate secto and foeign capital in patneship, the futue fo touism in Tanzania is vey bight. Questions Fo Discussion 1. What was the ole of govenment in Tanzania s case, and how did the stuctue facilitate development of the touism secto? What challenges existed unde this stuctue? 2. What citical building blocks had Tanzania established in the touism secto that povided a foundation fo touism investment? What pieces wee still missing? 3. How did Tanzania suppot lage and small touism investos? Discuss ways to meld foeign and local investment in touism towad eaching optimal development objectives. 4. How did Tanzania appoach touism investment pomotion? Discuss the stuctue and the stategy in geneal, and how they specifically elated to the positive outcome of the Kilimanjao investment. 5. How was the investment foum an effective tool in attacting high-potential investos? Compae the foum as a pomotional vehicle to othe types of maketing activity, and identify specific aspects of the foum that would have been difficult to accomplish though othe means. 6. How did the investment foum impact the oveall investment pomotion pocess in Tanzania? Cite specific elements of the pocess that esulted fom the expeience of the foum. 7. How would you chaacteize Tanzania s oveall maketing stategy, in tems of maket segments and positioning? What ole did business tavel play in the scheme? 28 investing in development tanzania touism

30 Annexes Annex 1: Annex 2: Annex 3: Annex 4: Annex 5: Aconyms & Glossay Tanzania Statistical Data Tanzania s Institutional Famewok fo Touism A Shot Histoy of the Kilimanjao Hotel Evaluating The Investo Confeence as a Pomotional Tool investing in development tanzania touism 29

31 30 investing in development tanzania touism

32 Annex 1: Aconyms & Glossay Aconyms DBSA DCDM FDI GDP got HKAT IFC IPA MIGA MNRT msp NCAA PA PSD PSRC SME SWRI TAFICO TALA TANAPA TANESCO TAto TAWICO TCt TIC TTB TWICO UAE VAT WTTC Development Bank of South Afica De Chazal Du Mé foeign diect investment goss domestic poduct govenment of Tanzania Hotel Keepes Association of Tanzania Intenational Finance Copoation investment pomotion agency Multilateal Investment Guaantee Agency Ministy of Natual Resouces and Touism miga-swiss Patneship Pogam fo Investments in Sub-Sahaan Afica Ngoongoo Consevation Aea Authoity pomote Afica pivate secto development pesidential Paastatal Secto Refom Commission small and medium-sized entepises Seengeti Wildlife Reseach Institute Tanzania Fisheies Copoation touist Agency Licensing Authoity Tanzania National Paks Authoity Tanzania Electic Supply Company tanzania Association of Tou Opeatos Tanzania Wildlife Company touism Confedeation of Tanzania tanzania Investment Cente tanzania Touist Boad Tanzania Wood Industy Copoation United Aab Emiates value added tax Wold Tavel and Touism Council Glossay Nothen Cicuit Includes Ngoongoo Cate, Seengeti Plains, lake Manyaa and Taangie National Paks and Mt. Kilimanjao Olduvai Goge Southeast of Seengeti Maasai Maa On notheast bode of Tanzania, mostly in Kenya Southen Cicuit Includes the Selous Game Reseve, Ruaha and Mikumi National Paks Westen aeas Gombe Steam, Katavi and Mahale Mountains Islands Zanziba, Pemba, Mafia Island Othe majo eseves Ugalla Rive, Uwanda, Moyowosi and Kigosi Game Reseves investing in development tanzania touism 31

33 Annex 2: Tanzania Statistical Data Table 2-1: Tanzania Touist Aivals, by Continent of Oigin Yea Continent Afica Ameica Euope Asia ,069 32,184 96,861 56, ,909 35, ,051 62, ,599 47, ,229 83, ,345 61, , , ,959 49, ,470 86, ,516 45, ,225 99, ,845 59, ,982 73, ,922 49, ,025 66, ,778 53, ,865 50,302 Souces: Ministy of Touism and Natual Resouces and the National Bueau of Statistics, Tanzania. Table 2-2: Tanzania, WTTC Touism Competitiveness Monito Index Value Ranking Pice Competitiveness Human Touism n/a n/a Infastuctue Envionment Technology Human Resouces Openness Social Index Value Least competitive is 0.0; most competitive is Ranking Most competitive is numbe 1; least competitive is numbe 212. n/a Data is not available. Souce: Wold Tavel and Touism Council Competitiveness Monito, 32 investing in development tanzania touism

34 Table 2-3: Business Tends in Tanzania s Touism Intenational aivals 360, , , , , , , ,807 Intenational hotel aivals 345, , , , , , , ,332 Vacation and eceation 246, , , , , , , ,679 Eanings (US$ millions) Aveage length of stay Aveage daily expenditue (US$) Numbe of hotels a 469 a 476 a Numbe of ooms 7,470 7,500 9,575 10,025 10,325 25,300 a 30,600 30,950 a Numbe of beds 13,248 13,400 17,235 17,303 18,284 45,500 a 55,500 a 56,200 a Total touist bed nights (in '000) 1,479 1,695 2,534 1,888 1,955 2,146 2,153 2,193 Annual oom occupancy (%) Employees in touism 110, , , , , , , ,557 a - Expansion of data collection aea 1 - Package tou 2 - Non-package tou Souces: Ministy of Touism and Natual Resouces and the National Bueau of Statistics, Tanzania investing in development tanzania touism 33

35 Annex 3: Tanzania s Institutional Famewok fo Touism In Tanzania, institutional efom stated in the ealy 1990s, making a majo shift fom govenment-led to pivate secto-led development. The ole of govenment is changing fom diect engagement in commecial activities in the touism secto to policy fomulation, egulation, maketing, investment and sevice pomotion, and facilitation of suppoting infastuctue. Responsibility fo touism policy in Tanzania lies with the Ministy of Natual Resouces and Touism (MNRT) on the Mainland and with the Ministy of Touism in Zanziba. 25 (See Figue 3-1, which shows an oganization chat of the MNRT, along with its pincipal agencies.) Within the MNRT, the Touism Division is esponsible fo secto policy and planning, manpowe taining, classification and licensing of hotels and touism agencies, and supevising the Hotel and Touism Taining Institute (HTTI) and the Tanzania Touist Boad (TTB). (Figue 3-2 shows the oganization of the Touism Division.) The Reseach, Taining and Statistics Section of the Touism Division has a taining unit, but no dedicated taining staff. A woking goup compising membes of the National Bueau of Statistics (NBS) and the Bank of Tanzania (BOT), with the Touism Division, is efoming the county s touism data infomation system. The Touist Agency Licensing Authoity (TALA) and the Hotels Boad ae located within the Licensing and Contol Section of the Touism Division. TALA is esponsible fo licensing and inspecting tavel agencies and tou opeatos, and the Hotels Boad fo hotel classification, licensing and inspection. The Ministy is cuently woking on a new touism law designed to simplify pocedues and egulations fo touism, which is expected to be appoved befoe Decembe Within the MNRT, a numbe of divisions have esponsibilities fo the wildlife and natual and cultual assets that daw touists to Tanzania. The Wildlife Division is esponsible fo all wildlife management ( eseves ) outside designated paks and consevation aeas, and also fo the issuance of hunting concessions and licenses. Management esponsibility is split between the depatment and five paastatals: Tanzania National Paks Authoity (TANAPA) Ngoongoo Consevation Aea Authoity (NCAA) College of Afican Wildlife Management (CAWM), at Mweka Seengeti Wildlife Reseach Institute (SWRI) Tanzania Wildlife Company (TAWICO) Within the MNRT, Foesty and Fisheies each has a division esponsible fo policy and planning. The Fisheies Division is esponsible fo maine paks. The Antiquities section was ecently moved to the MNRT and is esponsible fo management of the county s cultual heitage and patimony, and the national museums. The mandate of the TTB is to pomote and develop all aspects of the touist industy. It is the agency authoized to pomote Tanzania by undetaking maket eseach, geneating and poviding elevant touist infomation and pomoting Tanzania intenationally. Its maketing budget in 2004 was US$600,000. The Tanzania National Paks Authoity (TANAPA) is a management authoity (of tustees) fo the national paks of Tanzania, ceated unde the National Paks Odinance. The tustees ae unde the authoity of the Ministe. The geneal powes, duties and functions of tustees ae to contol, manage, administe and maintain the national paks. Because these national paks ae the pincipal focus of touism activities in 34 investing in development tanzania touism

36 Figue 3-1: Oganization Chat of the Ministy of Natual Resouces and Touism (MNRT) fo the Republic of Tanzania Ministe Pincipal Secetay Planning Unit Intenal Audito Manpowe Development, Finance & Administation Touism Division Wildlife Division Antiquities Foesty Division Fisheies Division TTB TAWICO TWICO TAFICO HTTI TANAPA NCAA SWRI CAWM Figue 3-2: Oganization Chat of MNRT s Touism Division Hotel & Touism Taining Institute (HTTI) Pincipal Touism Division Diecto Tanzania Touist Boad (TTB) Managing Diecto Administation & Accounts Section Touism Development Section Assistant Diecto Reseach, Taining & Statistics Assistant Diecto Licensing & Contol Section Assistant Diecto Schedule Offices Schedule Offices Schedule Offices investing in development tanzania touism 35

37 Tanzania, TANAPA is a majo institution in the touism secto. Its esponsibilities include: Recommending sites suitable fo the eection and opeations, by othe pesons, of hotels o othe buildings, fo the accommodation of visitos, shops o simila undetakings; and, Contolling, opeating, establishing o managing any such undetaking, o ganting concessions o licenses to othe peson to opeate such undetakings in buildings unde the contol of the tustees o on behalf of the tustees. Pivate secto institutions Govenment policy cuently ecognizes pivate-secto investment as touism s engine of gowth. In ecent yeas, thee has been consideable incease in pivate investment in touism. Pivate investment in hotels has gown apidly, with the numbe of hotels ising fom 210 in 1995 to 476 in Touism Confedeation of Tanzania (TCT). TCT was fomed as an umbella pivate secto institution. The main pivate-secto touism associations, discussed below, ae the constituent membes of the TCT, and the Confedeation acts as the focal point fo dialogue between the Govenment and the pivate secto about touism inteests. The TCT has an Executive Secetay who is stengthening the oganization s capacity to epesent industy moe completely. Tanzania Association of Tou Opeatos (TATO). TATO epesents the inteests of tou opeatos in Tanzania. About 90% of the licensed tou opeatos, including many of the lage opeatos, ae membes of the Association. Only applicants with a Class A TALA license can be full-voting membes. All othe opeatos ae welcome to join the Association as associate membes and eceive all the benefits except voting ights. TATO, theefoe, handles intenal aangements fo a lage pecentage of aiving touists. Tanzania Society of Tavel Agents (TASOTA). TASOTA epesents the inteests of tavel agents. Its main concen is the inconvenience caused by non-acceptance of cedit cads and taveles checks in most tansactions that touists initiate in Tanzania. All Afican Tavel and Touism Association (AATTA). AATTA is concened that foeignes dominate the secto, with local investos playing only a mino ole in the industy. The Association cites the following examples: hunting is 95% foeign owned; ai tavel 99%, land 80%, hotels and lodges 80%, and leisue and eceation owned 50/50 by locals and foeignes. The association is concened that thee should be a special mechanism to empowe indigenous investos. Hotel Keepes Association of Tanzania (HKAT). HKAT epesents the inteests of hotelkeepes and is mainly concened with the quality of human esouces and the availability of finance. Human esouce development in the hotel industy is lagging behind the inceasing demand fo touism sevices. As a esult, thee ae citical shotages of tained pesonnel, paticulaly at the manageial and supevisoy levels. As local investos do not have access to investment finance fom financial institutions in the county, most cannot affod to modenize thei hotels to meet intenational standads in the industy. 36 investing in development tanzania touism

38 Tanzania Ai Opeatos Association (TAOA). TAOA epesents the inteests of ai opeatos in Tanzania, whose chief concen is the equiement fo multiple licenses. An ai opeato must have fou diffeent licenses: a business license fom the Ministy of Industies and Tade, an Ai Sevice License & Ai Opeato's Cetificate fom the Tanzania Civil Aviation Authoity, a TALA license fom the MNRT, and a Local Authoities License in the aea of opeation. Tanzania Huntes Association (TAHOA). TAHOA epesents hunting inteests in the policy dialogue with the Govenment. The Association sets standads fo its 20 membes and admits as membes those who obseve TAHOA s code of ethics. Its membes epesent the lage hunting oganizations and, theefoe, a majoity of visiting huntes. The complex egulations fo the hunting concessions ae established by the Depatment of Wildlife. In the case of a membe having legal poblems because of its hunting opeations, TAHOA pays the legal fees, on the gounds that success fo the espective membe benefits all membes by establishing a legal pecedent. Non-govenmental oganizations and community involvement The ole of non-govenmental oganizations (NGOs) is to: (a) paticipate in planning and policymaking as patnes in development, (b) paticipate in community level pojects, and (c) pomote eco-touism pactices. Community-based consevation (CBC) pogams aim at empoweing people to manage and benefit fom wildlife esouces on thei lands. CBC is suppoted by the poject, Patneship Options fo Resouce Use Innovations, which is funded by United States Agency fo Intenational Development (USAID) though the Afican Wildlife Foundation (AWF). Paticipatoy land use planning has been adopted as a way of involving stakeholdes in decision-making in espect to land use. Box 3-1: Tanzania s Majo Legislation Govening Touism Hotels and Touism New Touism Bill unde pepaation Hotels Act, No. 22 of 1963 Touist Boad Act, 1992 Touist Agents Licensing Act, Act No. 2 of 69 Investment Legislation Tanzania Investment Act, No. 26 of 1997 Land and Physical Planning Legislation The Land Act, No. 4 of 1999 The Villages Land Act, No. 5 of 1999 Town and County Planning Odinances Regulations fo Natual, Wildlife and Cultual Assets Wildlife Consevation Act, 1974 National Paks Odinances (vaious) Ngoongoo Consevation Aea Odinance Antiquities Act Maine Paks Act, No. 29 of 1994 Envionment Acts Tanzania is paty to most intenational teaties investing in development tanzania touism 37

39 TANAPA has initiated seveal activities in community involvement, including those in conjunction with the Maine Paks and Reseves Boad, USAID/AWF, the Cultual Touism Pogam and Japan Intenational Coopeation Agency (JICA). Though TANAPA s Community Consevation Sevices pogam, local communities living aound national paks deive benefits as incentives fo consevation though a special fund. The UK Depatment fo Intenational Development (DFID) has funded Tanzania s pogam, Taveling Fai: Developing and Maketing Touism Ventues with Southen Communities. The pogam s objective is to enable coffee-faming communities in two communities in Tanzania with established touist industies to divesify thei income steams by developing sustainable, community-owned touism entepises. Public-pivate secto inteface The Tanzania Business Council, epesenting the public and pivate sectos, suppots a public pivate patneship, along with the Investos Roundtable, a foum of intenational investos meeting unde the pesidency of Pesident Mkapa. The Business Council also conducts sepaate activities fo SMEs and woks with local opeatos. Touism-elated business associations ae expected to aticulate the inteests of the industy and contibute to the fomulation and implementation of policies that poduce and maintain quality poducts in a sustainable way. The Touism Facilitation Committee of the MNRT, involving all paties engaged in touism, will be stengthened and empoweed to play its ole in ensuing quality and hamonious development of the industy within the famewok of this patneship. The Tanzania Investment Cente The Tanzania Investment Cente (TIC) is esponsible fo investment pomotion in Tanzania unde the National Investment Act, 1997 (No. 26 of 1997). TIC has made substantial pogess in becoming a one-stop shop fo investos. While TIC has been dealing with investos up to the point of completion of an application, it has ecently begun to emphasize follow-up, to monito any poblems encounteed duing implementation and opeation. Its functions ae to: (a) suppot measues to enhance the investment climate fo both local and foeign investos; (b) collate, collect, analyze and disseminate infomation on investments; (c) consult with othe public institutions on investment facilitation; and (d) assist investos to obtain pemits, licenses, appovals, consents and othe mattes equied by law. Incentives fo touism ae based on ecognition of pivate popety and its potection against any non-commecial isk. Investos must obtain a TIC Cetificate of Incentives. 26 The minimum fixed cost of investment fo new, ehabilitation and expansion pojects should be at least US$100,000 fo pojects wholly owned by Tanzanian citizens, and US$300,000 fo pojects that ae eithe wholly owned by foeign investos o joint ventues. Distinctions ae made between lead sectos that ae aleady contibuting to gowth, and pioity sectos that the Govenment wishes to encouage, such as manufactuing. Incentives ae modulated as a function of these citeia. Touism is consideed a lead secto, and consequently, hotels, touist tanspotation and elated sectos qualify. Lead sectos ae exempted fom impot duties duing constuction, and VAT is defeed. Copoate tax is set 38 investing in development tanzania touism

40 at 30% and losses may be caied fowad fo five yeas. As is the case in many counties, touism investment pomotion is often caied out sepaately fom othe investment pomotion by a elated touist agency. In fact, TTB and the Depatment of Touism ae both active in pomoting investment in touism in Tanzania. Up until 2003, TIC had appoved a total of 422 touism pojects, including new and upgaded hotels, tou companies and tavel agents and estauants. investing in development tanzania touism 39

41 Annex 4: A Shot Histoy of the Kilimanjao Hotel The Kilimanjao Hotel in Da es Salaam, along with the Mount Meu Hotel in Ausha, was constucted fou yeas afte Tanzania s independence in Octobe of The Kilimanjao opened its doos in 1965 as the Govenment s main hotel to accommodate visiting foeignes to the county. It was an imposing building that set out to povide adequate business sevice within the pevailing political envionment of the time. Funding fo the poject was povided by Isael and the United Kingdom. The popety was built by Solelboneh, an Isaeli fim. In the ealy yeas, the hotel was also managed by an Isaeli fim, Mlonot. The Kilimanjao had 200 ooms and a staff of 435 at its peak. In 1972, the Kilimanjao was taken ove by the Tanzania Touist Copoation (TTC) and set up to consolidate state hotels unde one oof. Afte the fist Tanzanian-bon manage was appointed in 1983, it continued to be managed by TTC. The Wold Bank funded a ehabilitation pogam in Fom that time, well-tained and competent Tanzanians managed the hotel. Unfotunately, as Tanzania s fotunes falteed in the late 1980s, no funding was made available by the state and the hotel did not geneate the necessay cash flow to cay out ehabilitation o enovations. In addition, new hotels bought competition as the political climate moved fom one of estained socialism to a libeal, maket-diven economy. Fo example, local investos, using blocked funds, built a new Sheaton Hotel on Ohio Steet that subsequently became the city s pemie lodging establishment, and the up-maket Sea Cliff Hotel opened on the beach as a business and touist opeation. In 1996, staved of funds and in competition with newe hotels, the Kilimanjao was foced to close. The othe hotels at the time wee Bahai Beach, Kunduchi Beach and White Sands, all hotels that wee built along the beach noth of Da es Salaam by Indian entepeneus. (These hotels have ecently completed majo pogams of ehabilitation.) None of this latte goup was a city cente hotel and the Kilimanjao enjoyed a monopoly as a top-class city hotel location. A numbe of othe hotels wee held by the state unde the umbella of the TTC. These hotels included the New Afica Hotel, Da es Salaam s oldest city cente hotel, and the thee TAHI lodges 28 in the Nothen Cicuit, which as ealy as the 1960s was ecognized as an aea of outstanding natual beauty and touist attaction. Management of the TAHI lodges was assued by TTC and subsequently by the Fench goup, Acco. When the Govenment announced that they wee to be sold, the lodges passed though a difficult time until thei sale in 2002 to a Tanzanian petoleum chain, GAPCO. The Govenment of Tanzania intends to sell the emaining hotels in the state potfolio as a matte of policy. The state still has inteests in a numbe of hotels, including the Moshi Hotel, 77 Hotel (Ausha), and the Embassy Hotel (Da es Salaam), but only because these popeties have been had to sell o ae encumbeed with litigation. The Kilimanjao was the one impotant hotel emaining in the state potfolio. It was to be sold on a sole souce contact, wheeas all the othe publicly owned hotels wee sold unde competition. Seveal attempts to sell the Kili, as it was affectionately called, had failed fo one eason o anothe. Some of the potential offes wee sponsoed by industialists, othes by well-known hotel goups (fo instance, BESIX, InteContinental, Sheaton and Seena, among othes) and some by influential pesons seeking a pestige investment. By the time it was sold, seveal poposals fo as high as US$6 million had been ejected and the value of 40 investing in development tanzania touism

42 the Kilimanjao had dopped to about US$3 million. Thee was uncetainty as to whethe the old hotel could be efubished o whethe it would have to be azed and ebuilt fom the gound up. Unde eithe scenaio, it was clea that substantial investment was equied to etun the Kilimanjao eithe to its oiginal state o to a much highe standad. The Kilimanjao Hotel was sold fo US$3 million as a sale of assets to Albwady Investments of Dubai, following a deal stuck at the investo foum in Ausha in Octobe investing in development tanzania touism 41

43 Annex 5: Evaluating the Investo Confeence as a Pomotional Tool An investo confeence is a vey time-consuming and expensive fom of investment pomotion, but often is a pefeed method among IPAs. The pocess of maketing a confeence (boad dissemination of infomation, and advetising the event) can be used to focus attention on the fact that investment pomotion activity is being undetaken. Ultimately, pepaation and follow-up of the confeence will distinguish a budensome waste of esouces fom an effective confeence that eflects the objectives and pocess of a sustainable investment pomotion pogam. IPAs that do not have the time and esouces to expend as Tanzania did in this case often choose an altenate oute: they focus on ensuing that thei own outstanding confeence paticipation and follow-up ae oganized by othes. Taget the ight audience. Geneally vey few actual potential investos attend such confeences. Most attendees compise vaious goups, which daw diffeent value fom the event: Investment facilitatos lawyes, bankes, accountants a vey impotant audience (commonly called multiplies in the investment pomotion wold); Govenment bueaucats, politicians and ministes, to whom the impotance of investment pomotion in govenment thinking is einfoced; Membes of the pess, who find a focus fo thei epoting; Lage local investos, who need to demonstate thei suppot fo govenment pivate secto pomotion policy, and often lean useful infomation on policy shifts and context and investment oppotunity aeas, and can consolidate thei access to govenment actos; Cuent intenational investos, who often use the oppotunity to impot thei Regional Diecto o Diecto of Intenational Opeations to swiftly develop, o update, thei feel of pospects in the county, and meet key political and administative leades; A few (usually less than one pecent of attendees) actual pospective foeign investos, who use the oppotunity to quickly meet the key playes (public and pivate) and to scan the investment oppotunity and envionment. Set specific confeence objectives. At its best, an investment confeence povides the oppotunity fo investment pomotion intemediaies, govenment and business epesentatives to: Hone and update thei investment message Identify and esolve contadictions Test peceived aeas of national competitiveness Update thei maketing mateials and efesh mailing lists Spead the net to catch hoveing pospects Reinfoce the confidence of cuent investos Motivate administatos and politicians and suppot the public-pivate secto dialogue Update both local and foeign investo pospects on oppotunities offeed in the economy Spead the wod on the location s commitment to investment thoughout the society Povide a host of new pospects fo subsequent follow up. 42 investing in development tanzania touism

44 Undestand the pitfalls. In the wost case, a confeence is oganized on vey shot notice (less than six months), the county s investment pomotion intemediaies devote consideable effot to the planning, and outine business (including investment facilitation) is set aside. Little stategic pepaation is undetaken, and the multi-day confeence compises a succession of political and bueaucatic leades deliveing lectues (most unning ove time) to an audience of administatos and a few local oganized business paticipants and local investos, who use the oppotunity to einfoce thei political access. Afte the confeence, exhausted investment pomotion staff etun to deal with outine business, and little, if any follow-up to the event is conducted. investing in development tanzania touism 43

45 44 investing in development tanzania touism

46 Endnotes 1 It is inteesting to note that UNCTAD entitles its Wold Investment Repot, 2004, The Shift towads Sevices. See: 2 Eanings fo touism ae fom the IMF, Balance of Payments (BOP) Statistics; expots of goods and sevices data ae taken fom the balance of payments data fom the Economic Suvey 2004, Govenment of Tanzania. 3 These hotels include: the Holiday Inn Hotel with 152 ooms, Golden Tulip Hotel with 100 ooms, the Mövenpick Royal Palm Hotel with 250 ooms, Coutyad Hotel with 55 ooms, Beachcombe Hotel with 48 ooms, Blue Bay Beach Hotel (Zanziba). 4 United Republic of Tanzania, Ministy of Natual Resouces and Touism, Touism Maste Plan: Stategies and Actions, Final Summay Update, Apil Selous, Mikumi, Udzungwa and Ruaha was the peak yea with some 627,325, but this may be a statistical eo. 7 Wold Tavel and Touism Council, London, an intenational association of chief executives in the tavel and touism industy, which has emeged as the industy s advocate in wold foa. 8 Adapted fom the website, and an inteview with company officials. 9 Adapted fom 10 No. 26 of Detailed infomation about Tanzanian investment incentives can be found on MIGA s website, o TIC s website at 12 Pivatisation in Tanzania, Octobe 2004, pepaed by the PSRC, United Republic of Tanzania. 13 This pogam funded a eview of touism in Tanzania and FDI exchange tips with Asia. See Evaluation of the Pomote Afica Pogam, an independent study conducted by MIGA fo the Govenment of Japan, Policy and Human Resouces Development Fund, June At the Sea Cliff Hotel. 15 It is inteesting to note that in the budget speech of 2005, the Ministe of Finance emoved the pepayment condition, stuck down a numbe of nuisance taxes and intoduced efoms to the Tanzania Revenue Authoity. At the same time, the MNRT is intoducing a new Touism Law, whose pincipal goal is to simplify licensing by intoducing a single license application pocess, although thee ae still multiple licenses. investing in development tanzania touism 45

47 16 Tanzania, Diagnostic Tade Integation Study, May 2005, Wold Bank, Washington D.C. 17 A closed bidding pocess can contibute to an envionment in which the same insides bid on all investment pojects, foeclosing access to investment oppotunities by new entants. 18 The Wold Bank, IFC, Development Bank of South Afica and the Euopean Union paticipated. 19 By Albwady Investment, the same goup investing in the Kilimanjao Hotel. 20 The school will be located behind the Holiday Inn. 21 e2.5 million; based on convesion ate of 1EUR = USD. 22 The two consulting fims wee DAIMA Associates and DCDM. 23 It was beyond the mandate of MIGA to diectly finance the business incubato and the guaantee fund. 24 Fo example: Kilinanjao, Zamani and Mali Kempinskis, sale of Royal Palm, Da es Salaam (now Mövenpick); sale of Kampala Sheaton; in Mozambique, Rani investments (Pemba Beach and Indigo Bay hotels), sale of Polana Hotel to Seena (Aga Khan) and its efubishment. 25 The Ministy of Tade, Maketing, Industy and Touism is esponsible fo touism policy and its implementation in Zanziba. Thee ae thee agencies esponsible fo touism in Zanziba: The Zanziba Touism Commission, ceated unde the Touism Pomotion Act of 1996; the Zanziba Investment Pomotion Agency (ZIPA) ceated unde the 1986 Investment Act; and the Commission fo Land and Envionment. 26 Detailed infomation about Tanzanian investment incentives can be found on MIGA s website, o TIC s website, 27 Wold Bank Poject Completion Repot June 29, The total poject cost was US$20 million, of which the cedit was US$14 million. The poject coveed ehabilitation of seven hotels and five lodges owned by TTC, equipping of a hotel taining facility, technical assistance and vehicles and equipment to enable TANAPA and Ngoongoo Consevation Authoity in its anti-poaching effots. 28 The TAHI lodges ae: Loba Lodge (Manyaa), Seeneo Lodge (Seengeti) and the Ngoongoo Lodge (Ngoongoo). 46 investing in development tanzania touism

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