“despite of growing evidence of the beneficial impacts of tourism in developing countries and good...
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“Despite of growing evidence of the beneficial impacts of
tourism in developing countries and good practices in
some individual firms, critics still question whether the
overall balance of impacts is positive, particular as
regards large holiday complexes and international hotel
chains.”
“As it has been the case of many other industries, tourism companies thus have so far focused most of their corporate responsibility efforts on environmental issues and philanthropic contributions to social programs.Much less attention has been paid to managing their economic multipliers and impacts along local and global value chains.”
“The potential for innovative business practices that deliberately
expand economic opportunities for the disadvantaged has not been
fully realized.”Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007
On CSR: “…shows tourism lagging behind other industries.”
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B4D - THE BEGINNING
SADC Conference on Poverty and Development in Mauritius (2008)
B4D Pathfinder = most appropriate project
Partnership for poverty reduction
B
CG
Jointly with SADC Employer Group
Inclusive Business
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THE DEFINITION
Inclusive business aims to overcome poverty by incorporating low income communitiesinto a company's value chain…
…while maintaining profitability and upholding the principles of Corporate Social Responsibility (CSR).
…sound environmental, health and safety management, fair labour conditions, good governance preservation of human rights.
Inclusiv
e Busines
s
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THE APPROACH
It’s not “another problem”.
It’s about profits of companies!
Financial benefits
How can business practices of tourism companies be adapted to achieve long-term commercial profit and deliver greater benefits to the poor?
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MODEL OF THE B4D PROJECT
Uses knowledge, skills, resources and strengths of the private sector
Charter Barometer Toolkit
Focuses on ‘inclusive business’
Core Business
Including low income communities into a company’s value chain
Profitability
Contains mechanisms for self assessment
People-centred, home grown
Certification
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BENEFITS
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POOR PEOPLE AS…
Workers
DistributorsRetailers
Suppliers
Consumers
SMEs
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BUSINESS MODEL
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Manual Distribution CentersFoto: HarvardKennedySchool & IFC
Second largest beer brand in Africa
Over 10 000 farmers involved
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INCLUSIVE BUSINESS & SUSTAINABLE TOURISM
Inclusive business aims at overcoming poverty.
In general, sustainable tourism focuses on environmental sustainability.
Environment = important component of inclusive business as being the resource base for the poor.
Inclusive business also covers large-scale forms of tourism & mass tourism: it is neither equivalent only to ecotourism, nor to rural tourism, nor to community based tourism etc.
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STRUCTURE OF TOURISM INDUSTRY
Africa’s tourism industry = mainly SMEs lacking financial and human resources
Divers range of actors involved in the tourism industry = no model solution
Government: infrastructure, marketing, licensing and regulation
Aspects of governance, labour, health, climate change, safety
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OBSTACLESGeneral obstacles:
1. (International) Verticalisation
2. Seasonality3. Dependency from
origination markets4. Market trends5. Effects of instability6. Low linkages7. Lack of infrastructure8. Lack of skills
Leakages: Repatriation of profits, import of skills, commodities, technology...
Bookings abroad, big int. hotel chains, airlines: frequency & routes, etc.
Source: Economic Commission for Africa & Economic Policy Research Centre/V. Gerosa, 2003
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POLICIES
At national level, tourism has been scarcely included in poverty reduction policies in Africa
Source: Economic Commission for Africa & Economic Policy Research Centre /V. Gerosa, 2003
Lack of consideration and information about how tourism could contribute to produce outcomes that directly benefit the poor, (focus is on growth of the industry or its contribution to macroeconomic indicators.)
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EXAMPLES OF GIVEN POLICIES
Source: Economic Commission for Africa & Economic Policy Research Centre /V. Gerosa, 2003
South Africa:White Paper, Poverty Relief Programme, TEP, NQ, FTTSA, CPPP, etc.
In addition, Zambia, Malawi, Lesotho, Tanzania give relevance to tourism in their PRSPs
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TOURISM OVERCOMING POVERTY
Labor-intensive, esp. in low labour cost countries
Less vulnerable than traditional sectors
Non-cyclical and resiliency
Catalytic effect on other economies
Creates better & more gender concerned jobs
Lower barriers to entry (e.g. tariff barriers)
Built on natural & cultural assets and consumed onsite
Source: Economic Commission for Africa & Economic Policy Research Centre/V. Gerosa, 2003
Great potentialities
Outsourcing of services (e.g. food, transport, handy-crafts)
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THE STARTING POINT
Best case: Direct earnings of unskilled/semi-skilled workers = 25% of the tourist spending at destination level
Indirect earnings (supply chain) adds an extra 60-70% on top of the direct effects of tourism.
Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007
Dynamic effects of tourism have to be taken into account
Livehood strategies of local households
Business climate for SME development
Patterns of growth of local/national economy
Infrastructure
Natural resource base
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THE BUSINESS CASE
Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007
Business benefits center around:
1) mitigating risks (security, reputation, policy, regulatory risks)
2) building opportunityEnhancing customer satisfaction
Improving staff morale & service quality
Offering a more diverse range of unique productsImproving community attitudes and interactions with guests
Building the brand and improving marketing capacityDecreasing operating costs (sourcing locally)
Increasing access to finance (e.g. IFC)
Collaborating more effectively with governments
FTTSA
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REQUIREMENTS
High knowledge and understanding of local employment practices
Willingness to e.g. link hotels and local SMEs
Collaborate with other markets (formal and informal)
•Policy•Innovation•Patience•Resources
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Examples
Mt. Plaisir Estate Hotel, Trinidad
Siwa Oasis and Example of Traditional Siwan Architecture
Source:UNDP
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OPTIONS
•Training/mentoring (staff, locals, SMEs)•New employees•Procurement•(New) products•(New) services•Marketing•Transport•Quality insurance•Packaging•Microfinance systems/incentives•Community revenue/profit sharing schemes•Industry-wide training centers (talent pool)•Building up institutional capacities•Think tanks on joint development•etc.
(TEP)
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B4D BAROMETER
BUSINESS FOR DEVELOPMENT VALUE CHAINPRO-POORSUPPLY CHAIN Inbound
logistics OperationsOutbound
logisticsMarketing
& sales Services
Suppliers
Manufacturers
Distributors
Retailers
Customers
Roadmap journey
3 421 3 421 3 421 3 421 3 421
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©B4D Southern Africa Trust
BUSINESS FOR DEVELOPMENT VALUE CHAINPRO-POORSUPPLY CHAIN Inbound
logistics OperationsOutbound
logisticsMarketing
& sales Services
Suppliers
Manufacturers
Distributors
Retailers
Customers
Roadmap journey
3 421 3 421 3 421 3 421 3 421
3 421 3 421 3 421 3 421 3 421
3 421 3 421 3 421 3 421 3 421
3 421 3 421 3 421 3 421 3 421
3 421 3 421 3 421 3 421 3 421
©B4D Southern Africa Trust
Procurement InfrastructureHR ITInbound logistics Operations Outbound logistics
Marketing& sales
Services
VALUE CHAIN CORE BUSINESS FUNCTIONS SUPPORT FUNCTIONS IN A BUSINESS
Supply
Production
Distribution
Retail
Customers
Roadmap
© B4D Southern Africa Trust
ToolkitCharter
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ROAD MAP
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ODI (Overseas Development Institute), IIED (International Institute for Environment and Development)
ICRT (International Center for Responsible Tourism).
SNV
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“Tourism’s current role in expanding economic
opportunity in developing countries presents a
paradox. Resolving this paradox offers tourism
companies the potential to play a leadership role
within the industry and the business community
as a whole.”
Source: Harvard University-John F. Kennedy School of Government & ODI & IBLF/Ashley et al, 2007