75215 January 2012 – Number 78 AN TOURISM IN MENA: A STRATEGY TO PROMOTE RECOVERY, ECONOMIC DIVERSIFICATION AND JOB CREATION Simon C. Bell, Jana Malinska, Peter McConaghy, and However, due to ongoing economic and political Sara Al Rowais1 uncertainty associated with the recent revolutions in the region, tourism arrivals declined in 2011 by 9% Introduction:2 As countries across the Middle East to 72 million, a decrease of 6.6 million visitors and North Africa (MENA) continue to recover from (United Nations World Tourism Organization - the economic and political volatility associated with UNWTO 2012). Given this volatility, strategic the Arab Spring, how can they leverage their unique reforms are needed to ensure tourists return to the historical, geographic, and cultural assets to region. promote growth through tourism? How can tourism strategies in the region promote public- Recent political developments also provide private partnerships, creating jobs and economic important demand-side opportunities. As many linkages, particularly for the large numbers of countries in the region transition to new unemployed youth in the region? governments, economic reforms can be undertaken to liberalize the sector, breaking down monopolistic Often described as the cradle of civilization, the market structures that prevent new entrants and MENA region boasts rich cultural assets, and is the stifle innovation. Similarly, there are new historical origin of major religions including opportunities to develop a full-suite of tourism Christianity, Judaism, and Islam. This cultural services (ecological, cultural, and religious tourism), heritage, coupled with the region’s rich natural moving away from the “sun, sand, and sea� wonders, has made tourism a critical sector for approach certain countries in the region have economic and social development in the region. adopted. Effective reform in the sector will require Tourism is a vital source of foreign exchange structural and regulatory changes that promote earnings, infrastructure investment, and cross- competition, strategic investment in infrastructure, sectoral linkages. Even more importantly, the sector targeted marketing, and a focus on training to is a key source of job creation that can help MENA address labor-skill mismatches, particularly for countries move from low value manufacturing into women and youth. higher value-added service oriented activities. Tourism’s Strategic Importance to Economic and 1 Simon C. Bell, Sector Manager, Finance and Private Sector Social Development in MENA: Tourism remains a Development, Middle East and North Africa (MENA FPD). Jana vital source of economic growth in the MENA Malinska, Peter McConaghy, and Sara Al Rowais all work in region. In 2011 the sector directly contributed an MENA FPD. estimated $107.3 billion to GDP (4.5% of total). 2 This quick note was informed by a MENA tourism workshop held in Tunis on December 3-4th, 2012, organized by WB MENA Visitor exports contributed $93 billion (8.1% of total FPD jointly with Urban and Environment departments, IFC exports), and $48.9 billion in investments (7.45% of Investment Climate Department, Competitive Industries and total investment) to the region. Tourism is Investment Climate for Industry Practices and the Government of considered a major source of foreign exchange, and Tunisia. The event was sponsored by the MNA Knowledge and Learning Fund. is important for balance-of-trade purposes. In Jordan, for example, tourism is considered the main North Africa4 source of foreign exchange earnings after remittances from overseas Jordanians. Tourism is also an important generator of employment (see figure 1), particularly in higher skilled service- oriented positions (translators, guide operators, curators, etc.). In 2011 the sector directly accounted for over 4.5 million jobs (6.75% of total employment) in the MENA region (World Travel and Tourism Council - WTTC 2012). 10% of the Egyptian population depends on tourism for their living, while in Tunisia tourism contributes to 7% of overall GDP, employing 400,000 people (UNWTO 2010). The sector is also an important source of economic diversification, particularly for the Gulf countries that are heavily reliant on oil revenues. Source: WTTC 2012 Tourism often connects local and rural communities to outside markets, providing avenues for unique Tourism and the Arab Spring: International tourist local products such as art and textiles to find arrivals in the MENA region rose from 34 million in lucrative markets abroad. Developing cultural and 2000 to 79 million in 2010, making the region one of eco-tourism sub-sectors such as trekking, desert the fastest growing tourism destinations worldwide tourism, and home stays can help connect these (UNWTO 2011). The tourism sector suffered products to outside markets. Responsible significant drops in volume due to the Arab Spring development of these sub-sectors can bring needed revolutions and ongoing economic and political revenues to local communities while promoting and uncertainty (see figure 2). International tourism protecting their unique social and cultural assets. arrivals declined by 8.4% to the Middle East (reaching 55.4 million) and by 6.5% to North Africa Figure 1: Direct Contribution of Travel and (reaching 17.1 million) in 2011 (UNWTO). Tourism Tourism to Employment in MENA revenues were down about 30% in Egypt and 45% in Tunisia (World Bank GEP 2012; UNWTO 2012). The Middle East3 decline led to significant contractions in employment, exports, and investments. Marketing the region has also become challenging as images of unrest continue to dominate media headlines. Tour operators have been wary to promote the region given this volatility. Nevertheless, the sector is expected to rebound by 3% in 2012 (WTTC 2012). This rebound, however, is anticipated to be highly unequal (for example accommodation reservation rates will grow by 13.2% in Qatar and -20.5% for Syria) and is increasingly uncertain, given ongoing economic and political unrest (WTTC 2012). Tourist arrivals for the first four months of 2012 increased by only 1% (Sambidge 2012). Source: WTTC 2012 3 The World Trade and Tourism Council (WTTC) defines the Middle 4 East as Bahrain, Iran, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, The World Trade and Tourism Council (WTTC) defines North Africa Saudi Arabia, Syria, UAE, and Yemen as Algeria, Egypt, Libya, Morocco, and Tunisia January 2013 · Number 78· 2 Figure 2: Middle East: Foreign Visitor Exports and potential travelers. Focusing on value-added service International Tourist Arrivals can also create robust economic linkages, ensuring tourism revenues are widespread within local communities rather than concentrated among small numbers of private-sector or government entities. Tourism in Iraq: There are over 60,000 historical and religious tourist sites in Iraq, with some dating back to 10,000 years B.C. Tourists travelling for religious purposes constitute 90% of the overall sector. There are 4,000 tourists per weekday to the pilgrimage cities of Najaf and Karbala. This number swells to 10,000 on the weekends. The sector’s potential is not limited, however, to religious sites. Eco-tourism is ripe for development given the country’s diverse physical landscape Source: WTTC 2012 which includes woods, lakes, mountains (in Kurdistan) to vast deserts in the South and West. With regard to cultural tourism, the Addressing Market Bottlenecks and Realigning National Gallery of Iraq, with its 28 galleries, Strategy: Given ongoing economic and political is the largest in the Middle East. Regional uncertainty in the region, attaining sustained growth towns such as Hatra boast archeological sites and recovery in the tourism sector will require a from the Hellenistic period. Regulators in the renewed commitment by authorities to address the country recently placed a 4,000 daily cap on strategic, operational, and regulatory bottlenecks in the number of Iranian tourists allowed to the sector that prevent competition and growth. enter the country because they lack the Development of the sector in the region often lacks infrastructure and regulatory framework to strategic focus, with many countries beset by handle the thousands of tourists who come daily to take in the country’s rich religious outdated regulatory and administrative structures sights. The unofficial figure is well above that impede market entrants, strategies that fail to integrate local communities, and underdeveloped There4,000. is also a need to reach beyond European and infrastructure that prevents lucrative sub-sectors other international target markets to foster domestic from flourishing (for example eco-tourism). and regional tourism. Domestic travel spending generated 45.3% of direct travel and tourism GDP in Re-Aligning Sectoral Strategies: Tourism strategies the Middle East compared to 54.7% for visitor in the MENA region must invest in the full spectrum exports (WTTC 2012)5. In Egypt, despite instability, of ecological, historical, and religious assets the the domestic market is set to expand 7% in 2012 to region has to offer. This implies shifting focus reach 19.3 million visitors ($20.40 billion) somewhat from the “sun, sand, and sea� approach (Euromonitor International 2012). The sector is in many countries in the region towards offering forecast to increase 3% in 2012 (18.4 million visitors) experiences that weave beaches with historical sites, and 10% annually for an estimated 88 million culinary and artistic offerings, and natural wonders visitors to the region by 2020 (WTTC 2012). The vast (parks and reserves). In certain instances this implies majority of regional tourists visit the holy cities of moving from “externally driven� tourism patterns to Mecca and Medina and hail from Egypt, Bahrain, “internally driven� cultural tourism that focuses on Kuwait, Qatar, and the UAE. Supporting regional strengthening local standards. Providing value- added services that accurately meet demand will 5 Visitor exports: spending within the country by international help attract higher value and repeat visitors. tourists for both business and leisure trips, including spending on Strategic government investments in marketing and transport; Domestic Travel & Tourism spending: spending branding internationally can help ensure this within a country by that country’s residents for both business and leisure trips. product offering is effectively communicated to January 2013 · Number 78· 3 tourists can increase arrival volumes needed for in tourism-related customer service, with language sustained growth while minimizing volatility during skills, and sufficient professionalism. The World periods of economic and political uncertainty. Bank Education for Employment (E4E) program estimates that in Jordan there is a 3,000-15,000 labor Although varying widely across the region, shortage of housekeepers, waiters, and receptionists. infrastructure deficiencies continue to hamper Moreover, socio-cultural factors may make it tourism growth. Transport infrastructure, difficult for women to work in the sector. In much of maintenance of tourist sites, health and hygiene MENA there is a preference for women to stay at levels, and security still weigh on the development home, and in some communities there is a cultural of the sector. The region could benefit from wariness around working in tourism. Strategic improved public management of tourist sites, which investments are needed in tourism-related hold great potential but are often poorly preserved vocational training, work-readiness programs and under-managed. Public budgets in the region (internships), and language schools for women and rarely allow adequate resources for up-keep and youth to take advantage of these employment management of tourist sites. Targeted government opportunities. Skills upgrading is particularly investment can yield handsome dividends since important in rural areas, where literacy and formal many tourist sites are self-sustaining once education are low. Also, labor policies must be established – for example desert tourism. reviewed to ensure that the hiring of recent graduates is incentivized rather than stymied. Conclusion: MENA’s tourism sector offers a set of Eco-Tourism: Jordan’s Royal Society for the winning propositions, including sustainable job Conservation of Nature (RSCN) is an creation, community empowerment, service- independent voluntary organization devoted to oriented linkages, and economic diversification. the conservation of Jordan’s natural resources. Established in 1966 under the patronage of Her Given the significant drop in tourism associated Majesty Queen Noor with the late King Hussein, with ongoing political uncertainty and economic RSCN is responsible for protecting wildlife and stagnation, policymakers in the region must wild places and is one of the few voluntary prioritize effective investment to address key organizations in the Middle East with such a industry bottlenecks. The revolutions in the region public service mandate. The organization’s also offer a new opportunity to address market principal activities take the place of traditional inefficiencies and develop alternative forms of tourism ministries in other countries, and tourism such as ecological, cultural, and social include establishing protect areas to safeguard tourism. Effective reform in the sector will require the best wildlife and scenic areas, enforcing government laws to protect wildlife, and raising structural and regulatory changes to promote awareness of environmental issues through competition, strategic investment in infrastructure educational programs. The organization has had and marketing, and a renewed focus on training to a number of important achievements including address labor-skill mismatches. establishing six protected areas within Jordan covering over 1200 square kilometers. Contact MNA K&L: Laura Tuck, Director, Strategy and Operations. MENA Region, The World Bank Regional Quick Notes Team: Cross-Cutting Issues: Promoting Women and Omer Karasapan, and Roby Fields Youth Employment and Addressing the Skills Tel #: (202) 473 8177 Gap: Given the variety of jobs tourism creates cross skills levels - from facilities maintenance to curators, The MNA Quick Notes are intended to summarize architects, and city managers - and the sector’s lessons learned from MNA and other Bank Knowledge ability to promote economic development in rural and Learning activities. The Notes do not necessarily communities, the sector is well placed to employ reflect the views of the World Bank, its board or its youth and women. However, in many MENA member countries. countries, there are acute shortages of labor trained January 2013 · Number 78· 4