Analysis of the tourism value chain in Uganda

Tourism is an increasingly important contributor to Uganda’s economy. The 1.5 million international arrivals, combined with a growing number of domestic tourists, generated 7.75% of GDP and 6.7% of total national employment in 2018.

The vast majority of international arrivals (80%) come from Africa. In 2018, the regions outside Africa which generated the most arrivals were Europe (8%, which grew for the first time in 5 years), Asia Pacific (6%, which also grew significantly compared with the previous year) and the Americas (5%).

Tourism data for 2018 and 2019 are based on modelling, following the introduction of e-visas and changes to data collection processes. As a result, the most current data on individual source markets are from 2017, when the top 5 source markets were Rwanda (32% of arrivals), Kenya (24%), Tanzania (6%), the USA (4%) and India (3%). In Europe, the largest source market was the UK (2.4%), followed by the Netherlands (0.7%) and Germany (0.6%). Annex A provides actual visitor numbers for 2017.

Leisure visitors are highly valuable and account for 89% of visitor expenditure, yet they only make up 21% of arrivals. By contrast, more than 75% of visitors to Kenya and Tanzania come for leisure. These countries also receive between 3 and 6 times more visitors from Europe than Uganda does.

Uganda’s greatest opportunity is to invest in attracting adventure travellers. This market segment is very valuable and adventure travellers are looking for experiences that Uganda can offer, in particular safari, hiking, birdwatching and community-based cultural tourism.

Adventure tourists travel both independently and in small mid- to high-budget tour groups. Independent adventurers love all things local and their preference to book directly creates opportunities for MSME providers as well as local entrepreneurs who create suitable products, offer high-value flexible itineraries and promote themselves effectively online. To capture the European tour groups, high standards of professionalism and an environmentally sustainable supply chain are required.

Uganda has the potential to position itself as a high-value destination that offers exceptional wildlife, adventure and cultural experiences which match or exceed those of its neighbours. However, it currently lacks the confidence, infrastructure and skills to capitalise on its competitive advantage.

Potential for New Products and Regions

The regions which have the greatest potential to attract tourists from niche markets in Europe, and which could help diversity Uganda’s tourism offer, are the south-east and north-east. Jinja and Mount Elgon are well positioned to provide the starting point for an eastern circuit through the Karamoja region to Kidepo Valley National Park. There is also considerable potential to diversify the product in the Rwenzori region to the west. This area already attracts a reasonable volume of tourists and could support the growth of new businesses.

In all regions, communities must be able to offer cultural experiences that appeal to the growing demand from European adventure travellers to gain a greater understanding of local lifestyles.

Structure and Governance of the Value Chain

Overall, the governance of Uganda’s tourism sector is well structured. For the public sector, the MTWA is leading in terms of policy, strategy and planning. Its key agencies, UWA and UTB, are responsible for managing the natural heritage as well as realising product development and marketing. However, responsibility for skills development is more fragmented. In the private sector, there is a clearly defined structure for communicating with central government through UTA, which represents the industry on behalf of its 9 industry associations.

At the local level, tourism management is in its infancy. The MWTA is represented by district tourism officers and tourism clusters have recently been set up to enable private- as well as public-sector stakeholders to manage regional destinations jointly.

However, the sector needs a clear focus and direction, with a well-prioritised strategy and an action plan that coordinates activities across the sector. The forthcoming NTSDP 2020–2025, due for publication in mid-2020, is the next opportunity to deliver on this need.

The public sector and business support organisations welcome expertise as well as support in a wide range of areas, provided that it is designed to be sustainable beyond the life of the funding programme. A large number of international organisations are actively involved in supporting the tourism sector and provide opportunities for partnerships. Care is needed to ensure that these programmes are complementary and that efforts are not duplicated.

Sustainability of the Value Chain

The long-term sustainability of leisure tourism in Uganda depends on the conservation of its natural resources and cultural heritage, in particular its iconic and endangered wildlife. Conserving this wildlife and its natural habitat largely depends on the commitment of local communities that live in the wildlife reserves adjacent to the national parks in order to support the work of the UWA. To achieve this aim, they need to derive direct economic benefit from tourism.

Opportunities in the Value Chain for SME Providers

The key opportunities for MSMEs that will strengthen Uganda’s tourism value chain are:

i)             Uganda’s potential to create a strong regional competitive position as a high-value destination that offers exceptional wildlife, adventure and cultural experiences which match or exceed those of Kenya, Rwanda or Tanzania;

ii)            International leisure market trends (before the COVID-19 pandemic) that match Uganda’s product offer, in particular:

• Africa’s middle class is growing and travelling more;
• Leisure tourism from emerging markets is growing, particularly from India, Russia and China;
• Millennials from these emerging markets are increasingly looking for adventure experiences;
• There is a growing demand for niche and special-interest holidays in unspoilt destinations;
• Adventure tourism is becoming mainstream, is high value and is growing at 20% p.a.;
• The largest outbound markets for adventure tourism are also Uganda’s target markets of the USA and Europe (the UK, Germany, the Netherlands, France, Italy and Spain);
• The most popular adventure activities for Africa fit well with Uganda’s strengths: safari, ecotourism, hiking, birdwatching and cultural tourism;
• Adventure tourists want to have immersive local experiences, to use small companies that provide bespoke itineraries and to see that their tourist money is supporting local communities;
• There is a growth of online booking by independent travellers using local companies;
• There is a growing awareness of sustainability and conservation;

iii)           Uganda’s potential to develop and market a diverse range of products that meet the interests of the high-value leisure market as well as the broader range of niche market segments;

iv)           Uganda’s potential to diversify products and differentiate suppliers by utilising the whole country’s diverse wealth of natural resources as well as its iconic wildlife;

v)            Uganda’s potential to improve product knowledge and promotion of existing products as well as lesser-known regions by UTB, international marketing representation companies and Kampala tour operators;

vi)           Uganda’s potential to capitalise on unutilised accommodation capacity while matching quality and geographic distribution to the demand;

vii)          Uganda’s potential to maximise marketing investment by developing a strong brand narrative and a digital strategy for content marketing;

viii)         Uganda’s potential to improve the professionalism of DMCs, tour operators, accommodation providers, guides, community tourism, women and craft productions through market intelligence as well as skills development in conjunction with the well-organised support network for tourism association businesses and the large number of NGOs active in Uganda.

Obstacles for SME Providers in the Value Chain

Uganda’s homogenous product of primates and savannah safaris does not tap into the changing demand. To capitalise on these opportunities, the obstacles that MSME tour operators need to overcome include:

i)             Access and infrastructure

• Limited air access;
• Insufficient mobile (3G) network;
• Limited road access and national park trails;
• Loss of iconic natural attractions due to large-scale infrastructure projects.

ii)           Product development and diversification

• Lack of tailored market intelligence, digital marketing skills and access to markets;
• Undeveloped potential for community-based tourism to support conservation;
• Lack of affordable funding and dependence on foreign investment.

iii)          Human resources development

• Inadequate skills training;
• Lack of digital expertise among SMEs and UTB;
• Challenge of meeting customer expectations;
• Lack of a nationally accredited qualification for tour guides.

v)            Marketing and promotion

• Lack of destination branding and marketing strategy;
• Lack of a crisis management strategy;
• Absence of advance planning and budget sign-off for international trade fairs;
• Lack of large-scale MICE convention centre and MICE promotion.

vi)          Tourism management and regulation

• Limited sector coordination;
• Inadequate data collection;
• Uncoordinated planning and regional development;
• Very limited sustainability accreditation;
• Insufficient enforcement of regulations.

Possible Interventions and Activities to Support a More Competitive Value Chain

The Tables in Section 10 list the interventions that would help Uganda’s tourism sector become more competitive. Potential local and external delivery partners are proposed for activities that could be part of the CBI programme. The activities that are also included in the Embassy of the Kingdom of the Netherlands’s Tourism Development Roadmap are highlighted.

Many of the issues raised in the VCA are fundamental to the long-term competitiveness and growth of Uganda’s tourism sector. The need for them to be addressed is even more urgent due to the impact of the COVID-19 crisis, as support for the sector must be focused on:

• Market-driven planning and product development;
• National branding and marketing strategy;
• Skills training to meet customer expectations and safety concerns;
• Sustainability training and accreditation.