Value chain linkages Manuel Mutimucuio

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This presentation by Manuel Mutimucuio was delivered at the 'Concessioning tourism opportunities in conservation areas and maximising rural development' workshop, held in Maputo between 19-22 March 2012 (Day 2, Session 5, Financing tourism concessions)

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Value chain linkages Manuel Mutimucuio

  1. 1. Presentation Outline 1. Opening Remarks Maximising Local Linkages 2. What is a Value Chain? 3. The Value Chain in Tourism The Tourism Value Chain in 4. Why Apply a Pro-Poor TVC Concessions 5. Arguments for Developing Tourism for Poverty Alleviation 6. Realizing the Pro-Poor Impact of Tourism through VCA Manuel Mutimucuio Economic Development Advisor 7. Opportunities to Develop TVC in Concessions 8. Challenges in Developing VC in Concessions March 20th, 2012 Title 2Opening Remarks What is a Value Chain? The value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use (Kaplinsky and Morris, 2001) Inputs Consumer Producer Wholesaler Retailer Supplier Market Title 3 Title 4 The Value Chain in Tourism? Why apply pro-poor TVCFor tourism, the value chain is a combination of services • Good way of organising a chaotic reality (tourism is a(tour organization, accommodation, catering,entertainment, transport), in which commodities play an composite sector);important role (e.g. agricultural products, craft etc.), manyof which can occur simultaneously within the tourist • Means something to real people in tourist sector;destination (Ashley et al, 2009). Key: Non-Tourism Sectors • Gives us the tools to engage with real tourist destinations; • Useful institutional model (governance & power relations); Tourists Direct Service Providers • Enables comparisons with different products; and • Useful economic model for development practitioners (to Support illustrate opportunities to make pro-poor interventions). Institutions Title 5 Title 6
  2. 2. Arguments for Developing Tourism for Poverty Alleviation Realizing the pro-poor impact of tourism through VCA1. The market comes to the producers; • Map the big picture – enterprises and other actors in the2. It has the potential to create considerable inter-sectoral tourism sector, links between them, demand and supply data, linkages; and the pertinent context.3. It is labour intensive; • Tourism demand4. It takes place in marginal areas; • Arrivals and source markets5. It employs a high level of females; • Length of stay • Expenditure6. It has limited barriers of entry; and • Tourism supply7. The sector is already growing at a high rate in many LEDCs • Number and type of enterprises in various nodes• BUT make no mistake – Tourism is NOT inherently pro-poor. • Turnover and profitability The different actors need to work together to make tourism • Occupancy in hotels realize its pro-poor potential. • Constraints Title 7 Title 8 Example of Revenue Distribution in a VCCont. TOTAL TOURISM EXPENDITURES Total Pro-Poor Income 100% 13,29%• The enabling environment US $ 21.482.949,60 US $ 2.856.436,30 • Governance: institutions and policies • Support services (BDS, credit, extension...) Accommodation 53, 59% 16, 49 % PPI or US $ 4,42 per day per person US $ 11.512.695,60 • Support organisations (NGOs, donors...)• Track revenue flows and pro-poor income 18, 37 % PPI or US $ 4,52 F& B, Restaurants per day per person • Estimate how expenditure flows through the chain and how much 9, 46% US $ 2.033.000,00 accrues to low income 83,30 % PPI or US $ 3,11 • Consider their returns and factors that enable or inhibit earnings. Shopping per day per person 1, 38% • Look at staff wages and tips US $ 293.126,00 • Micro business (e.g. boat man, guide) Local Transport 15, 62 % PPI or US $ 2,67 • Vendor, producer, processor (fruit seller, artisan) 2, 72% per day per person US $ 583.688,00 • Community business or partnership: collective income received 3, 50 % PPI or US $ 6,88 Excursion & Activities per day per person 32,85 % US $ 7.057.440,00 Title 9Opportunities to develop a TVC in Concessions VCD in Tourism Led by The Private Sector• First assure markets, then increase production. Local Sourcing• Focus on private sector as the engine for growth.• Support HRD to reduce barriers to entry for the poor. Private Sector (Engine of Growth) Product Local Development Employment Title 11 Title 12
  3. 3. Continued… Continued…• Procurement – source as much as possible from local economy. • Product development should look at opportunities for local linkages • Do a value chain analysis before starting operations. Sometimes, • Remember that after accommodation/food tourists spend their businesses assume there is no local production of a certain product budget on activities in the destination. because they have no clue of what is happening in the destination. • Be resourceful at planning which activities, because there are forms of involving local participation thus increasing the visitors • Look at your value chain – remember there are supporting experience (potential for returning customers) institutions – what can they do for your local potential suppliers • Tour guiding offered by local people (invest in some people for (provide capital, extension work, business skills, etc. ) that) • Village walks that its itinerary includes places with some sort of • Sometimes external (local) suppliers give you the possibility of local economic activity – opportunities for local people to sell increasing production without increasing costs at the same rate. directly to tourists. Take advantage of that (e.g. out growing schemes) • Etc. Title 13 Title 14Continued… Challenges in developing TVC in concessions• Employ local people • Most economic activities in Protected Areas are detrimental to conservation (e.g. in some cases even farming is prohibited) • It may seem obvious, but the reality shows that only real menial jobs remain with local people. Jobs of certain responsibility are • There is not much economic activity supported by tourism offered to locals that are not very local. (almost no tourism industry to map) • Apart from investment in training, tourism operators have to look for people with the right attitude (knowledge and experience they • Risk of increasing too much supply and not secure demand to make it viable – e.g. train many hospital workers and then not can acquire with that job opportunity). have that many operational lodges; support the communities to grow more vegetables and not get tourists to buy or alternatives markets. Title 15 Title 16 Title 17

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