South Africa is an ideal tourist destination with many FDI opportunities, as Philippa Garson reports.

Despite the negative impact of September 11 on tourism around the world, South Africa has continued to experience growth in the industry.

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In January 2002, there was a 14.5 % growth in tourists from Europe compared with the same period last year. The total number of foreign travellers to South Africa during February increased by 10% compared with last year.

In the eight years since South Africa became a democracy, the tourism sector has continued to grow steadily, expanding at a rate of up to 8% a year. The sector has been identified as one of the country’s five economic growth areas and is expected to grow from its current 4.5% of GDP to 9% by 2014, creating around one million jobs in the country.

According to John Morris of Trade and Investment South Africa (TISA), the national agency in charge of trade and investment promotion, the tourism industry last year generated R34.3bn from foreign arrivals.

South Africa’s major source countries for FDI are the UK, Germany, the Netherlands and the US.

“Investment opportunities in South African tourism are to be found in business ventures such as hotels, resorts, theme parks and game lodges,” says Mr Morris. “Foreign investors in the South African tourism industry include major players such as British Airways, Sheraton, Hilton and Legacy Hotels and Resorts.”

TISA, which has secured R87.1m in tourism FDI since April 2002, has another R6bn in potential tourism FDI lined up. It is also hoping to attract an extra R4bn in domestic investments in tourism.

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Mr Morris says foreign investors are drawn by the country’s high growth rate in foreign visitors. South Africa is now ranked 25th of the world’s most popular destinations by the World Trade Organization, compared with 52nd place in the early 1990s.

The country has much to offer tourists – natural beauty, a good climate, diversity of experience, rich and varied local culture and value for money. “We are emphasising the fact that South Africa has a first-world infrastructure and facilities as well as world-class tourism product and service offerings,” says South African Tourism CEO Cheryl Carolus, a former High Commissioner to the UK.

Customer focused

South African Tourism has begun to adopt a more focused, customer-driven international marketing strategy and is intent on establishing more brand awareness about the country’s offerings. The strategy is starting to pay off, says Ms Carolus, and a growing number of tourism products are receiving international recognition.

Five South African properties were ranked among the top 65 “Best in the World” in the US Condé Nast Traveler 2001 Readers’ Choice Awards; Singita Game Reserve was ranked the world’s best hotel. The hosting of the World Summit on Sustainable Development this August and the 2003 Cricket World Cup in South Africa have also boosted the country’s profile as a prime tourism and conference destination.

Tourism features high on the country’s job creation, economic empowerment and sustainable development agendas and is regarded as a core component of the continent’s renewal plan, the New Partnership for Africa’s Development (Nepad).

Several Spatial Development Initiatives (SDIs) have been earmarked by the Department of Environment and Tourism to attract responsible investment in tourism. These – such as the Lubombo initiative (involving the governments of South Africa, Swaziland and Mozambique), Coast-to-Coast and the Maluti-Drakensberg initiatives – are designed to stimulate foreign and local investment in tourism and other economic ventures that preserve the natural environment and create jobs. “We are developing integrated, networked tourism destinations. It is not about putting hotels on a Monopoly board,” says the Department’s Julian Sturgeon. “We can no longer have non-regulated, ribbon developments along the beach fronts. These are unfriendly to both users and the environment.”

The SDIs are about responsible investment. But they are also “a one-stop shop” for investors, he adds. “We are fast-tracking the investment process so that all the legwork has been done before the destinations are being marketed to them.”

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