Picture by Tai:Murchison falls national park Uganda, East Africa
Gone are the days when the Amalfi coast or the resorts of Maldives were the first thing that came to people’s minds when booking a vacation. East African countries are increasingly making a place in people’s itineraries, showcasing the potential for tourism investment opportunities in the region.
The tourism industry generates $5.81 trillion for the global economy, thanks to $2.91 trillion spent on global leisure travel. East African countries are gradually becoming a big part of this industry.
Uganda is one notable example in this regard, generating $942 million from the tourism sector in 2021. That’s 2.1% of the country’s GDP (gross domestic product) and 11% of the total international tourism in East Africa.
Considering these figures, it’s easy to see that East Africa could be a lucrative region to invest in for foreign investors interested in the tourism sector. Let’s look at this in detail.
Factors Favoring Tourism Industry Development in East Africa
Tourism is one of East Africa’s ”invisible” exports, which is quickly revealing its potential. There are plenty of factors that contribute to this shift. Here are some of them.
Tourist Attractions
East Africa is home to a wide range of tourist attractions, from climate resources and relief features to historical sites and cultural heritage. The region’s diverse landscape — from Kilimanjaro Mountain to Ngorongoro Crater and Serengeti — also makes it a preferred destination for travelers.
Improvement in Infrastructure
Previously, the world had a false notion that Africa was a bare region with little to no infrastructure. However, social media and government-backed advertisements have managed to correct this perception for most people.
East African governments have also made massive investments in transport networks, such as air transport, waterways, and roads, to facilitate the movement of tourists and locals.
Budget-Friendly Travel
According to Forbes, the daily average cost of travel in most major US cities was $354.55 in 2022. On the other hand, every tourist spent an average of $1,744 on their whole vacation in Uganda in 2021. That’s a stark difference.
Why spend so much money on domestic travel when you can see a beautiful East African country for the same price or even less? That’s the mentality many tourists have now adopted.
In recent years, there has been a boom in low-cost carriers in East Africa, making air travel accessible and affordable for travelers from all countries. The lower cost of travel, transport, and accommodation incentivizes people to come to East Africa for leisure.
Simplified Visa Rules
Many East African countries have loosened their visa requirements, facilitating tourism. The East African Tourist Visa is a good example. It’s a joint visa that lets visitors travel to Kenya, Rwanda, and Uganda. As a result, these three countries have become highly attractive to international tourists.
Tourism Investment Opportunities in East Africa
Since East African countries, including Uganda, are members of the Multilateral Investment Guarantee Agency (MIGA) by the World Bank, investors can get political risk insurance guarantees for their foreign investments in these regions. That’s an added incentive for foreign direct investments in East Africa.
While it’s certain that the East African tourism industry will grow significantly in the coming years, investors need to conduct thorough research to determine which tourism sub-sector to invest in. Here are some lucrative investment opportunities in this space.
Hotels and Hospitality
As more tourists arrive in the region, they will need a place to stay. There has already been an increase in the demand for accommodation in African countries. Airbnb reports that destinations across Africa are some of the fastest-growing markets on the platform, with 130k+ Airbnb listings available throughout Africa.
Foreign investors can benefit from this increased demand by investing in hospitality projects such as hotels, guesthouses, vacation rentals, and resorts. Government incentives and the availability of a skilled labor force make these investments possible.
For example, the World Bank calls Uganda an ”untapped opportunity” for foreign direct investments due to the aforementioned reasons.
Foodservice
For most people, eating local food is a big part of the traveling experience. So, there’s a potential for food service businesses to thrive in East Africa. Some examples are restaurants, catering, cafes, and food trucks.
Investors should focus on local cuisines with a twist of creativity. Today’s tourists need something they can capture and post on Instagram. That requires a unique atmosphere and visual appeal besides great-tasting food.
Safari and Adventure Activities
Most people associate African tourism with safari and for the right reasons. Renowned publications like Forbes and TripAdvisor regularly put out suggestions for the best places to safari in East African countries, especially Uganda.
There are several ways to invest in the safari and adventure activities sector. Examples include but are not limited to, investing in game reserves, wildlife conservation projects, zip lines, bungee jumping, and ATV trails. You can also invest in transportation services since safari spots are often far from city centers.
Conclusion
There’s no shortage of tourism investment opportunities in East Africa, as the region is extremely diverse. While you may have a brilliant plan, it’s likely you’ll be lacking in investments. After all, setting up a new hotel or investing in a restaurant requires a lot of capital. At Trans African Investments, we help bring your ideas to life by connecting you with investors. We also help you find certified and reliable financial experts, lawyers, and other professionals you need to streamline the investment process. Get in touch with us to kickstart your East African investment plan.
