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Economic cost of renewed conflict in Mozambique: Tourism value chains

Mozambique has succeeded in attracting a significant tourism investment in recent years resulting in an increased and relatively diversified tourism offer in comparison to the scope of the national industry prior to 2004. Tourism demand in the country is largely based on its biodiversity, unique cultural heritage and the relative under-commercialization of it natural assets. Due to its proximity to South Africa, Mozambique currently captures a significant portion of its international leisure market share as an add-on destination for visitors to South Africa. However, the country is increasingly being seen as a stand-alone destination for world travellers with a preference for environmentally-responsible tourism. Tourism supply in Mozambique is centered on two key market segments, namely (i) business, and (ii) sun, sea and sand (SSS) leisure. Despite a call for foreign and national investment in Mozambique’s tourism sector, realization of such investment throughout the country has been hampered by several key constraints including: excessive bureaucracy, persistent corruption, difficulties in securing land tenure for development, land usage conflicts, lack of infrastructural and administrative support and restricted access to financing.

From late 2013 through 2014, a series of attacks took place initially in Sofala province, and subsequently along Mozambique’s north-south highway, the EN1 between Sofala and Inhamane provinces as well as in Nampula and Inhambane provinces. The resulting widespread press reporting in the region and internationally, has focused on potential destabilization of Mozambique’s economic development with a particular impact on the tourism sector. Cancellation of bed nights by tourists is one component of the said impact. It should be noted that tourism generates revenue throughout a complex value chain which includes suppliers of food and services to hotels through transport, artisan crafts and retail sectors.

SPEED in partnership with ACIS and CTA commissioned a study to assess the impact of the renewed conflict into the tourism value chain, and highlight the long and short term effects on the economy. The resulting discussion document serves to show the economic effects of the conflict on one of the country’s priority development sectors and contribute to debate around the issue and to incentives for restoring peace.

Preliminary findings indicate that while the renewed conflict is one factor affecting the tourism performance, it was not seen by any to be the primary cause of the current state of the tourism industry. Given the extent and magnitude of the identified constraints affecting tourism and the resulting downturn in performance reported prior to the conflict, there are clearly more systemic issues affecting the industry that require attention and intervention. However, as an element of the overall operating conditions, continued conflict is a significant threat to the industry’s recovery and growth.

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