Angolas Tourism Infrastructure Development - Research Paper Example

 Angola’s Tourism Infrastructure Development Angola an emerging country needs to invest heavy in tourism infrastructure in order to ensure improved revenue toward the government. There is need to focus on the country’s economic stability with focus being on the indicators of the economic position with inflation being used to determine the cost and standard of living. The availability of investors is a factor in ensuring faster economic growth and improved tourism sector (Raina & Agarwal, 2004). The government role in coordinating funding sources is important to both the economy and the tourism sector (Hanson, 2008). Recommendation made by the research will put into consideration efforts by various sectors. Table of Content 1.1 Introduction 2.1 Methodology 3.1 Result 3.1.1 Macroeconomic indicators 3.1.2 Infrastructure development 3.1.3 Hospitality 3.1.4 Accommodation costs 4.1 Analysis 5.1 Recommendation 6.1 Conclusion Reference 1.1 Introduction There exist a relationship between infrastructure and the tourism development. Measures to gauge the level of economic growth are based on the infrastructure development and standards of living. The tourist inflow would depend on the efforts by any central government to invest in infrastructure. Angola being an emerging economy in Africa needs to invest majorly in the infrastructure in order to realize its full capacity. Stiff competition from the south and East of Africa poses major challenges towards the overall performance of the country as a tourist hub (Hottola, 2009). The research will focus on Models That Will Ensure Angola Succeeds In The Future Development Of Their Tourism Infrastructure. Current economic capacity will ensure the research sets future goals based on the country’s capacity. Various players in the industry will be used to recommend a way forward (The Economist, 2014). 2.1 Methodology In order to suggest models to be used by Angola in improving infrastructure and promoting tourism, the current economic status will be examined. The research will be based on the African Development Bank statistic to gauge the amount allocated by government in both infrastructure and tourism. The sources of funding towards this project will be important in projecting the future capacities. Mazivila (2014) data will be used as Macroeconomic Indicators where status, estimates and future projections. The stability of Angola compared to other SADC members will determine the future strengths and weaknesses while investing in infrastructure and expanding current capacity. Foreign investments will establish Angola’s Income and government’s alternative sources of revenue. Trading Economics (2014) will give an insight of Angola’s foreign direct investments since 2004. This will be a vital element in determining the levels at which the country will invest to attain a certain goal including African Development Bank data (2009). Infrastructure being the major concern in the tourist industry, the research will focus on the time factor. This will include the period used to procure documents that will enhance infrastructure development (The World Bank, 2005). The time taken in this country will compared Angola to other countries with developed tourism infrastructure (World Travel & Tourism Council. 2012). Conclusion based on table 5 will ensure recommendations made are informed. The hotel capacity is an important element in the tourism industry. The research will focus on Angola’s accommodation modes and their capacity since 2006 based on table 6 (Marchand, 2012). Main hotels based on the table will be used to illustrate the current capacity and upgrades recommended based on future goals and objectives towards tourism infrastructure. Service charge per hotel will give an in-depth analysis on expenses incurred by tourist per night. This will be compared to other countries offering the service hence the differences will enable a conclusion and an appropriate action plan (Harrison, 2001). 3.1 Result 3.1.1 Macroeconomic indicators The macroeconomic indicators (table 1) show that in 2012, Angola had a real GDP growth ratio of 5.2 with the real GDP per capita growth ratio being 2.1. The indicators estimate a 0.1 drop in growth in 2013. The data also projects a 2.8 growth ratio in Real GDP and a 2.9 growth ratio in real GDP per capita in 2014. In 2015, aggregate output of Angola is estimated to grow by 1.0. Table 1 also indicate a consumer price index inflation of 10.3 in 2012 a drop by 1.0 in 2013 and 2014 with the projections of 7.8 in 2015. These data also projects a negative 6.9 projections in budget balance GDP percentage in 2015. The current balance percentage GDP is projected to drop as compared to 2012, which had a 9.9 ratio. The data indicates a drop to be visible in 2013 estimates and future projections. 3.1.2 Infrastructure development Angola’s national government has engaged in various investments with the large share of infrastructure development being channeled into the transport infrastructure. The government as of 2011 had allocated 33% to air and Seaports, and railways while allocating only three percent to the tourist industry. Communication infrastructures being allocated 6 % while the health sector being allocated 1 %. The data by SADC indicates a reasonable number projects funded by the community. The numbers of projects funded by SADC are less as compared to South Africa and Botswana who tend to have better tourism infrastructure as compared to Angola. The levels of funding towards tourism infrastructure are sourced from both SADC and government locally sourced revenue. 3.1.3 Hospitality Foreign Direct Investment in the hospitality industry in Angola seems to be on the rise since January 2010. The highest FDI being registered in 2008 while the lowest being in 2004. The indicator shows the second highest FDI to be in 2012. Trading Economics tend to show an increment in FDI from 2010 a trend that will ensure future projections are higher than 2012 FDI. The investors tend to use more time in acquiring documents and other investment materials. An investor will spend 180 days in requesting a license to build a hotel and other accommodation facilities. The records indicate longer processing periods in relevant offices and authority. The increased foreign direct investments tend to be derailed by the longer processing periods of vital documents. 3.1.4 Accommodation costs Accommodation in Angola has increased since 2006 (table 6) with 2010 recording the highest number of hotels and guesthouses. The cost of accommodation in these hotels tends to differ depending on the hotel’s rating. The most expensive accommodation according to Marchand (2012) is recorded at Talatona hotel at $875 with the cheapest accommodation costing 385 dollars at the continental hotel. The price of these hotels seams to be pushed by the limited accommodation capacity in Angola as compared to the available demand. The accommodation sector seams to boast from variety of facilities but limited number of infrastructure. There are where only 136 hotels in Angola as of 2010(Marchand). 4.1 Analysis The country’s capacity to expand tourism infrastructure is based on its economic stability. The 2015 projections indicate that the country is anticipating an increase in GDP with a lower inflation rate based on the consumer-pricing index. The current balance indicators indicate the ability of the government to utilize its existing budget with less being refunded to the national treasury. This means that the government is anticipating on an increase in aggregate output hence the capacity to increase the levels at which the Angolan government plans and executes its development agendas. There tend to be a relationship between the aggregate economic output and inflation; 2.5 GDP growths is effective in ensuring low inflation rates (The guardian, 2012). The ratio is what Angola is projecting in 2015. The effect will ensure the government collects more revenue and at the same time attract more investors into the tourism sector (Dwyer & Forsyth, 2007). Using the Rational expectation theory, the government needs to use the current economic capability and use them to predict the future (Tucker, 2008). The future should not be used as a means of forgetting the current economic positions. The investments based on the country’s capacity, should be in line with the collected revenue and the anticipated inflation rates (Ariyasajjkorn ,2007). The country’s budget allocation would determine the nature at which the tourism industry grows. The percentage allocated to tourism is lower compared to transport infrastructure. The percentage allocation of the two sectors would tend to improve the sector, as transport is a vital tool in enhancing any economic activity. Angola being an emerging economy needs to get funding from various sources including African Development Bank. The government allocation to tourism will change once the countries revenue increase (Todaro, 2012). The number of project by SADC indicates the nature at which the region is willing to invest in tourism infrastructure in the country. The figure tends to be lower than 46 projects funded by SADC are available in South Africa while Angola is allocated less projects. This shows that the country’s government currently plays a bigger role in ensuring growth in the tourism infrastructure. The government has an important role to play in ensuring foreign investors are motivated in investing in the country’s tourism infrastructure. Angola being an emerging state in Africa tends to attract more investors seeking market for their products (World Bank, 2007). The Trading Economics (2014) shows a decline in foreign direct investment in 2009 from 2008. The condition may be attributed to the current country’s policies (Christie et al. 2014). The total amount of days needed to register a hotel is 349. The period seems to be longer and hence make the process tedious and complicated. The amount of documentation needed before an individual acquires a business premise seams to shy off potential investors. The 2012 statistic shows an improvement. The trend is enhanced by the limited business opportunity investment in the country rather than government policies towards the sector. Demand created by the sector itself is essential in ensuring further investments despite the tedious government registration (Carbaugh, 2005). 5.1 Recommendation The government needs to shorten the period one uses to register a company. The current period is longer hence limiting number of potential investors. The current administration should also limit the number of documentations one requires before investing into the tourism sector. A single permit should be proposed to cater for investors demand and hence shortening the period used to register a business. The government should also be committed in ensuring foreign and local investors are given incentives. This will ensure more investors into the sector while at the same time improving the amount of revenue to be collected in the sector. The government needs to control its revenue to avoid inflation. The GDP growth ratio should be increased to 2.5 per years and hence evading inflation. Increase in cost of living makes the government spend more in lowering this cost and less on development projects. Working on the millennium development goals, the country could be able to stabilize its economy. The amount of resources available would enable foreign investors attracted to the country. The government should ensure economic stability before applying for funds from other sources including the African development Bank and SADC. The government should avoid conflict of interest by coordinating projects funded by SADC. The number of projects should be equal to those by those allocated to South Africa. The government should deploy monetary policies and non-monetary policies in stabilizing the economy to march other SADC member countries. These efforts will ensure foreign investors and other financial sources invest in the sector without fear of collapsing economy. The government needs to encourage more investors into the hotel industry. The high demand created by the industry should lay basis of the attraction from foreign investors. The future projections on GDP and overall revenue should be based on the country’s supply and available capacity. The government should focus in lowering the cost of hospitality by reducing the amount of taxes imposed to the tourism industry. The move will ensure increased revenue due to tourism export, which will further improve the available infrastructure. The government should also encourage local investors to the sector and hence increase GDP as the result. The yearly allocation to tourism should be increased from 3 % to 10 %. This will ensure enough resources are available towards infrastructure development. Revenue collected from the sector should be able to be rechanneled into other economic activities. 6.1 Conclusion The Angola tourism infrastructure development depends majorly on three determinants. The first player towards tourism development is the government. The current economic status can be improved through government initiatives. The efforts will then increase foreign investment that is the second determinant towards the development (Moran et al, 2005). The government needs to create a suitable environment in which investors will be motivated into the tourism sector (Carbaugh, 2005). Angola being an emerging country various sources should be developed and models design in ensuring a successful future development in tourism infrastructure. The environment surrounding Angola remains suitable for future development with efforts to ensure strategies remain successful being mandated to the government (Sade, 200) it is evident that an emerging country such as Angola has the capacity to emerge as tourist hub with efforts from both the government and external investors. The economic indicators show a higher potential for the nation to improve the tourism infrastructure and attract tourists. All players in the sector have the responsibility to ensure set goals are achieved within a specified period. Reference African Development Bank. (2009). African Economic Outlook 2009 Overview: Overview. Washington, DC: OECD Publishing. African Development Bank. (2011,January 1). Country Strategy Paper & 2010 Country Portfolio Performance Review. Consulté le 10 16, 2014, sur African Development Bank. Retrived from http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/ORSB%20Angola%20CSP%202011%20-%202015%20En%20Rev%20Version%2BMemox.pdf Ariyasajjkorn, D. (2007). Trade, Foreign Direct Investment, Technological Change, and Structural Change in Labor Usage. Salt Lake City: ProQuest. Carbaugh, R. (2005). Contemporary Economics: An Applications Approach. London:Thomson/South-Western. Christie,I., Fernandes, E., Masserli., H. & twining-wards, L.(2014).Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihood. Washington, DC: World Bank Publications. Dwyer, L. & Forsyth, P. (2007). International Handbook on the economics of tourism. Montpellier: Edward Elgar Publishing. Hanson, R. (2008, July 21). Angola’s political and Economic Development. Retrieved from http://www.cfr.org/world/angolas-political-economic-development/p16820 Harrison, D. (2001). Tourism and the Less Developed World: Issues and Case Studies. London: CABI. Hottola, P. (2009).Tourism Strategies and Local Responses in Southern Africa. Windhoek: CABI Marchand , A. (2012). Private Sector Country Profile. London: African Development Bank. Mazivila, D. (2014, August 25). Angola. Consulté le 10 16, 2014, sur African Economic Outlook. Retrived from http://www.africaneconomicoutlook.org/en/countries/southern-africa/angola/ Moran, T., Graham, E.M., & Blomstrom, M. (2005).Does foreign Investment Promote Development. Boston, MA: Peterson Institute. Raina , A. & Agarwal, S.(2004). The Essence of Tourism Development: Dynamics, Philosophy, and Strategies. New Delhi: Sarup &Sons. SADC. (2012, August 08). SADC Regional Infrastructure. Consulté le 10 16, 2014, sur Development Master Plan (RIDMP): Retrived from http://www.ridmp-gis.org/sadecdocs/SADC%20RIDMP%20Projects%20Database%20(August%202012%20v%203.3).pdf Sader, F. (200).Attracting Foreign Investment into Infrastructure: why it is so difficult. Washington, Dc: The World Bank. The Economist(2014 October, 18) . Breaking the Rules. Retrieved from http://www.economist.com/blogs/freeexchange/2014/10/monetary-policy-0 The guardian. (2012 May, 28). Youth Unemployment takes shine off Africa’s Economic Growth. Retrieved from http://www.theguardian.com/global-development/2012/may/28/africaneconomic-outlook-2012-youth-unemployment The World Bank. (2005). Private solutions for infrastructure in Angola. Washington, DC: The World Bank publisher. Todaro, P. (2012). Economic Development. New York: Longman Trading Economics. (2014, January 1). Angola Foreign Direct Investment . Consulté le 10 16, 2014, sur Trading Economics. Retrived from http://www.tradingeconomics.com/angola/foreign-direct-investment Tucker, I. (2008). Macroeconomics for Today. London: Cengage Learning. World Bank. (2007). Angola: Oil, Broad-based Growth, and equity. Washington, DC: World Bank Publications. World Travel & Tourism Council. (2012). The Economic Impact of Travel and Tourism: Angola. London: W.T.T.C. Appendix Table 1: Macroeconomic Indicators (Mazivila, 2014) Table 2: Public Investment Program (African Development Bank, 2011) Table 3: Tourism Projects (SADC, 2012) Table 4: Angola Foreign Direct Investment (Trading Economics, 2014) Table 5: Dealing with Construction Permits (Marchand , 2012) Table 6: (Marchand , 2012) (Marchand , 2012) Table 6 (two graphs) (Marchand , 2012) Main Hotels (Marchand , 2012) Read More