PUBLIC PRIVATE PARTNERSHIPS TO BENEFIT THE POOR

1. PUBLIC PRIVATE PARTNERSHIPS TO BENEFIT THE POOR VALUE CHAINS SUPPY CHAINS Dr Trevor Sofield Professor of Tourism University of Tasmania, Australia Consultant: ITC

2. VISITOR GENERATING REGIONS GOVERNMENT SUPPORT SERVICES SECTOR DESTINATION FRONT LINE SECTOR TRANSIT REGION TRANSIT REGION BIO-PHYSICAL ENVIRONMENT COMMUNITY INTRODUCTION As we saw from our exercise on tourism as a system, tourism has a capacity to link into virtually all other sectors of an economy and provide opportunities for including poor people in a very wide range of activities well beyond the ‘normal’ frontline operators and agencies. We often need supply chain and value chain analysis to identify these ‘hidden’ opportunities.

3. VISITOR GENERATING REGIONS GOVERNMENT SUPPORT SERVICES SECTOR DESTINATION FRONT LINE SECTOR TRANSIT REGION TRANSIT REGION BIO-PHYSICAL ENVIRONMENT COMMUNITY INTRODUCTION As we also saw in our examination of tourism as a system, the public sector -government and its agencies - are essential for providing a wide range of inputs into the tourism industry if indeed we are to have a viable industry. And when it comes to striving for poverty alleviation the public sector can only do so much and in terms of a business model for sustainability a partnership between the public sector and the private sector is both essential and fundamental.

4. Poverty and Tourism Tourism’s ‘pro-poor’ potential lies in five main areas (DFID, 1999; Ashley, Roe and Goodwin, 2001): • Tourism is a diverse industry, which increases the scope for wide participation, including the participation of the informal sector. • The customer comes to the product, providing considerable opportunities for linkages (e.g.souvenir selling). • Tourism is highly dependent upon natural capital (e.g. wildlife, scenery and culture). These are assets that some of the poor have, even if they have no financial resources. • Tourism can be more labour intensive than manufacturing, although less labour intensive than agriculture. • Compared to other modern sectors, a higher proportion of tourism benefits go to women (e.g.jobs, petty trade opportunities).

5. Poverty and Tourism Tourism generated income • Many organisations have been seeking ways to enhance the impacts of tourism on poor people in recent years. • Specific impetus was given to this objective with the formulation of “Pro Poor Tourism” in 1999 by a research group from DFID (Department for International Development (1999) Tourism and poverty elimination: untapped potential, DFID). • There is now a large body of research and evidence from the field • on different aspects of Pro Poor Tourism, a key • point of which to note is that it is not a new • kind of tourism but rather an approach to • tourism which aims to distribute benefits specifically to impoverished communities (“sharing the cake”). Share for the poor

6. Poverty and Tourism The UN World Tourism Organization embraced the concept of tourism and poverty alleviation in 2002 and launched its program at the UN World Development Conference in Johannesburg in 2002, which it called STEP - Sustainable Tourism as a tool for Eliminating Poverty (Sofield, De Lacy, Lipman, and Daugherty, 2003. Sustainable Tourism ~ Eliminating Poverty (STEP). An Overview. Brisbane: WTO and CRC for Sustainable Tourism). SNV acts as technical adviser to UNWTO for its STEP Program. http://www.unwto.org/step/

7. Poverty and Tourism • The TPRP is a further advance in ways to tackle poverty alleviation through tourism. • While the initial focus tended to be on micro level community projects, our understanding of the opportunity provided by mainstream tourism to benefit the poor has grown (Mitchell and Ashley, 2008). • Where local supply chains and indigenous enterprise are strong, and out-of-pocket tourism expenditure high, incomes to the poor can equate to as much as 1/4 to 1/3 of destination-level tourist expenditure (Mitchell and Ashley, 2007). • Strong pro-poor impact is not automatic; the ‘trickle-down effect’ may have little impact on the poorest and most vulnerable members of a community.

8. Poverty and Tourism • Positive and deliberate interventions are necessary and they can significantly enhance the impact of tourism on poor people. • Building market access for the poor requires the private sector, practitioners and poor people, together with government, to work together at destination level. • • Achievements in community-based tourism enterprises (CBTE) have often been disappointing. • • In order to achieve poverty impacts at scale, development practitioners need to engage with mainstream tourism and this is a key principle of the approach by ITC/TPRP to tourism development and poverty reduction.

9. Mutual benefit for the private sector and the poor Crucially, PPT relies on and must be integrated into, wider tourism systems and the private sector. It is not a stand-alone option. As Ashley et al indicate (2001), when reviewing the results of case studies of PPT financed by the UK’s DFID, successful PPT depends on the poor – i) having access to markets (private sector), ii) on the commercial viability of PPT projects, iii) on a policy framework that provides a secure investment climate (including access to land) (government – public sector), and iv) on effective stakeholder co-operation and strategy implementation: public private sector partnerships (Harrison 2008).

10. Poverty and Tourism • In the context of tourism development for poverty alleviation there is a sometimes an underlying tension between the private sector, the government, NGOs, and communities. • 1. Re government, policies for poverty alleviation in essence are apublic good for which governments hold primary responsibility. • 2. But that is not the primary responsibility of individual companies. • The private sector can only survive where profits are realized. • However the private sector has some responsibilities as, globally, companies are increasing being urged to be ‘good corporate citizens’ and adopt ‘the triple bottom line’, a business approach that achieves a balance between economic, environmental and socio-cultural outcomes. • The TPRP actively seeks partnerships with such private sector businesses.

11. Poverty and Tourism 3. Into this mix of public sector responsibilities and private sector practices are I/NGO’s (International/Non Government Organizations), many of whom exist solely for the purpose of finding and applying ways to alleviate poverty, whose motives are altruistic, and which have a very real role to play. However, experience demonstrates that some of them (particularly those that are located towards the extreme end of conservation ideals) are wary of the private sector and may avoid cooperation.

12. Poverty and Tourism • Yet PPT as advocated by Ashley, Roe, Spenceley, Goodwin, Leclercq and other proponents is not anti-capitalist: “rather, strategies derived from a PPT perspective are formulated to incorporate the poor into capitalist markets by increasing the employment and entrepreneurial opportunities, and more collective benefits, available to them. • In this respect PPT resembles ‘fair trade’, in that it is a form of market intervention” (David Harrison, 2008). • We know that without linkages from communities into the private sector, and support for an entrepreneurial business model instead of a communal approach, sustainability is very difficult to achieve.

13. Poverty and Tourism 4. Impoverished communities, as the weakest segments of a society, will be powerless in most instances and lack the capacity to voice their concerns, needs and desires. Supply and value chain analysis commences the process of bringing them into the action because it recognizes them as key stakeholders and brings them to the table with other agencies and interest groups. It provides a voice for them and seeks to optimize ways in which improvements to their livelihood can be accomplished. Turtle Island, Fiji Photograph by James L. Stanfield http://travel.nationalgeographic.com/travel/countries/south-pacific-photos/

14. Poverty and Tourism • One of the common ‘problems’ with much of the work so far on PPT and Community Based Tourism as the entry point for reducing poverty is that a community is targeted for intervention without undertaking a prior supply chain or value chain analysis. • This lack of planning is putting the cart before the horse, because we may end up with a product in a place that may not interest the traveller and therefore the private sector, and it will not be marketed or accessed. • By contrast, the value chain approach starts with an assessment of the tourism economy, working out where the poor already operate and where their participation can be increased: analysing the supply and value chains identifies opportunities where best to intervene. • This is the strength of the • ITC/TPRP approach. Putting the cart before the horse

15. Poverty and Tourism Another ‘problem’ is that in many cases the real costs of establishing a pro poor community based tourism project militate against replication. Example: LuangNam Tha homestay and ecotourism project, Laos, one of most quoted success stories in pro poor tourism, absorbed more than USD$1.2 million in NZ Aid and NGO inputs over a 5-year period, for an annual turnover of approx $80,000 for 65 families (900-1,100 visitors p.a., average per capita expenditure of USD$60=$66) (Harrison & Schipani, 2007).

16. Poverty and Tourism • Nam Tha homestay and ecotourism project, Laos • Many of its costs are ‘disguised’ and not counted, e.g. grants, time and fees of consultants, volunteers, etc. • The community has had no capital costs to find or repay. Constructions costs of facilities, upgrading of houses, installation of toilets, training costs, etc have not had to be met by the community itself. • So the generated income from its ecotourism venture has effectively lifted the community out of poverty. • But it would not be sustainable as a business if it had to repay the investments in its establishment. It has been founded on grants and is sustainable only because the normal start up business costs have been covered by a range of donors .

17. Poverty and Tourism Nam Tha cannot be replicated. There are simply not enough $1million grants for every impoverished community to receive similar benefits. And the private sector will not invest $1.2mil+ for a gross annual turnover of about $80,000 with little or no profit margin above operating costs. Tour group at village welcome feast

18. Poverty and Tourism As Spenceley, Ashley and de Kock (2009, p.17) state: “Today we know that there are many different ways that tourism can engage poor people, boost local economic development, or affect their physical and social environment. It is important to be aware of them all, to see which links can be strengthened in different circumstances.” Both immediate and long-term changes, both financial and non-financial, need to be considered. Ambua Lodge, Southern Highlands, Papua New Guinea

19. Poverty and Tourism They identify three main types of impact to take into account: “1. Poor participants earn income by participating in tourism and related sectors. Thanks to tourism, cash flows into the pockets of poor households. 2. Tourism has many longer-term dynamic impacts to develop local economies and poor people’s livelihoods. This may affect their income, opportunities, or security. 3. Tourism affects the natural environment in which people live, and their social and cultural environment. Whether or not these directly affect their livelihood, they affect their well-being” (Spenceley, Ashley and de Kock, 2009, p.17).

20. Examples of value and supply chain interventions benefitting the private sector and the poor : • Sandals Inclusive Resorts, Caribbean The Sandals Group is a large all-inclusive resort chain with 20+ properties in Jamaica, Bahamas, St. Lucia and Antigua. With 6,000 employees, Sandals is one of the largest employers in the Caribbean. The company is 100% Jamaican owned. More than 90% of its employees are locals, achieved through training programs carried out by each property that are compulsory for staff. Average incomes of staff are up to three times greater than for other resorts in the Caribbean (between USD$700 -$1,150 per month) . Staff savings average between 10%-33% per month. Source: Klaus Lengefeld, GTZ Caribbean, and Robert Stewart, Managing Director, Sandals UK. 2004.

21. Sandals Inclusive Resorts, Caribbean • Sandals’ approach to developing agricultural supply linkages has been quite distinctive. • Sandals’ Farmer Programme in Jamaica began in 1996, with the aim of developing good working relationships between farmers and hotels by improving the quality of produce, developing proper pricing arrangements, and improving communications between farmers and hotels. • Several hundred farmers now contracted to grow fruit and vegetables for Sandals Resorts with secure incomes five times above poverty level • Cooperation with public sector: Sandals funds the position of an agricultural extension officer in Min Agriculture specifically to work on the linkage with its hotels and farmers – the necessary technical expertise exists in the Ministry not in the hotel chain. • Thus the initiative works across supply, demand and marketing and is effective BECAUSE of the PPS partnership with the Ministry of Agriculture Source: Klaus Lengefeld, GTZ Caribbean, and Robert Stewart, Managing Director, Sandals UK. 2004.

22. Sandals Inclusive Resorts, Caribbean • Community Outreach • Each Sandals resort has to accept responsibility for a community outreach project – • Now more than 200 around the Caribbean:- • Each resort has to adopt at least one school and assist with all needs, incl construction and facilities; • Established a region-wide ‘Tourism in Schools’ project. These require a PPS to exist and function. • Support to hospitals, clinics, HIV-Aids hospices, and children’s homes on a continuing basis: this requires a PPS partnership with the Ministry of Health. • . Source: Klaus Lengefeld, GTZ Caribbean, and Robert Stewart, Managing Director, Sandals UK. 2004.

23. Mana Island Resort, Fiji Model ii) Foreign owned (not community-owned) inclusive resort. Established in 1972 with 600 beds Mana Island was the first and the largest inclusive resort in Fiji. Commenced operations in 1972 by leasing Mana Island from the traditional land owners, the 75 extended family households of the Ketenemasi tribe of Malolo.

24. Fiji:Mana Island Resort – role of Government Government provides “Indigenous Lands Title Act” to regulate leasehold (maximum 50 years, renewable); & through the Indigenous Lands Commission it provides legal staff to assist communities in lease negotiations with minimum standards, so guaranteeing set lease fee levels for the community by law. Locals are given employment preference.

25. Fiji:Mana Island Resort after 30 years • Economic effects • Employment:No. of Fijians 2002 - 180/184 (expatriates only 4) • Income generation (wages) – total $8.3 million 1972 - 2002 • Leasehold of community owned land: Lease monies - $2.2 million • Combined effect: One of highest per capita family incomes in Fiji