Increasing the local economic impact of tourism through supply and value chains

1. Increasing the local economic impact of tourism through supply and value chains Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) annaspenceley@gmail.com Sustainable Tourism Network Southern Africa AGM 6 May 2010, Durban, South Africa

2. Presentation outline • Ways the poor benefit from tourism • Tourism supply chains • Tourism value chains

3. 1. Seven ways the poor benefit from tourism • Employment of the poor in tourism enterprises • Supply of goods and servicesto tourism enterprises by the poor or by enterprises employing the poor • Direct sales of goods and servicesto visitors by the poor (informal economy) • Establishment and running of tourism enterprises by the poor - e.g. micro, small and medium sized enterprises (MSMEs), or community based enterprises (formal economy) • Tax or levy on tourism income or profits with proceeds benefiting the poor • Voluntary giving/support by tourism enterprises and tourists • Investment in infrastructure stimulated by tourism also benefiting the poor in the locality, directly or through support to other sectors WTO, 2004

4. 1. Seven ways the poor benefit from tourism • Employment of the poor in tourism enterprises • Supply of goods and servicesto tourism enterprises by the poor or by enterprises employing the poor • Direct sales of goods and servicesto visitors by the poor (informal economy) • Establishment and running of tourism enterprises by the poor - e.g. micro, small and medium sized enterprises (MSMEs), or community based enterprises (formal economy) • Tax or levy on tourism income or profits with proceeds benefiting the poor • Voluntary giving/support by tourism enterprises and tourists • Investment in infrastructure stimulated by tourism also benefiting the poor in the locality, directly or through support to other sectors Supply and value chains address both of these WTO, 2004

5. 2. Tourism supply chains System of organizations (e.g.people, technology, activities, information and resources) involved in moving a product or service from supplier to customer Andreas Springer-Heinze (2006-2) cited in Mitchell and Phuc, 2007

6. Supply chain interventions Objective of interventions on tourism supply chain is to enhance the positiveimpacts of tourism on poor people by: • removing barriers that prevent poor people entering the industry • enhancing the terms on which they work • improving the knock-on affects that tourism operations have on surrounding communities Ashley, Mitchell and Spenceley, 2009

7. Traditional restaurant supply chain MEAL

8. Traditional restaurant supply chain MEAL • Typical problems for small scale farmers: • Poor linkages with end users: reliance on intermediaries • Private sector not serving ‘traditional’ foods • Transport, storage and processing difficulties • Variable quality and quantity of stock • Lack of information on products private sector want

9. Traditional restaurant supply chain MEAL • Typical problems for small scale farmers: • Poor linkages with end users: reliance on intermediaries • Private sector not serving ‘traditional’ foods • Transport, storage and processing difficulties • Variable quality and quantity of stock • Lack of information on products private sector want

10. Option to adapt the supply chain MEAL If the intermediaries are ‘unfair’

11. Traditional restaurant supply chain MEAL • Typical problems for small scale farmers: • Poor linkages with end users: reliance on intermediaries • Private sector not serving ‘traditional’ foods • Transport, storage and processing difficulties • Variable quality and quantity of stock • Lack of information on products private sector want

12. Option to adapt the supply chain TRADITIONAL MEAL Restaurants serving more traditional meals buy more local, traditional produce

13. Options to adapt the supply chain MEAL • Typical problems for small scale farmers: • Poor linkages with end users: reliance on intermediaries • Private sector not serving ‘traditional’ foods • Transport, storage and processing difficulties • Variable quality and quantity of stock • Lack of information on products private sector want

14. Traditional restaurant supply chain MEAL • Typical problems for small scale farmers: • Poor linkages with end users: reliance on intermediaries • Private sector not serving ‘traditional’ foods • Transport, storage and processing difficulties • Variable quality and quantity of stock • Lack of information on products private sector want

15. Traditional restaurant supply chain MEAL • Typical problems for small scale farmers: • Poor linkages with end users: reliance on intermediaries • Private sector not serving ‘traditional’ foods • Transport, storage and processing difficulties • Variable quality and quantity of stock • Lack of information on products private sector want

16. Example analysis and intervention: Spier leisure, Western Cape • Strategic shift away from philanthropy towards responsibilities as corporate citizen • Survey of existing suppliers in relation to corporate values (e.g. local, previously disadvantaged, environmentally aware) • Investigation of new suppliers • Identification of opportunities for change • Stimulating change among existing suppliers • Development of new suppliers • Monitoring and evaluation Ashley and Haysom, 2008

17. Survey of suppliers • Broad-based black economic employment • Employment equity • Procurement practice • Human resource practice • Basic conditions of employment • Labour law compliance • Corporate social investment • Health and safety • Environmental action • Number of employees • Location Ashley and Haysom, 2008

18. Spier laundry development • New alien vegetation clearing business, brick making business, staff restaurant business Ashley and Haysom, 2008

19. 2. Tourism value chains • Products pass through all activities of the chain in order and at each activity the product gains some value. • The chain of activities gives the products more added value than the sum of added values of all activities. Foreign Investment Advisory Service, 2006

20. 2. Tourism value chains • Products pass through all activities of the chain in order and at each activity the product gains some value. • The chain of activities gives the products more added value than the sum of added values of all activities. Foreign Investment Advisory Service, 2006

21. 4. Value chains • Products pass through all activities of the chain in order and at each activity the product gains some value. • The chain of activities gives the products more added value than the sum of added values of all activities. Increasing the amount and proportion of money that is earned locally Foreign Investment Advisory Service, 2006

22. Foreign Investment Advisory Service, 2006

23. Increasing the amount and proportion of money that is earned locally Foreign Investment Advisory Service, 2006

24. Comparing tourism revenue to the poor in different destinations ITC/ODI, 2009

25. Value chain analysis and development approach Ashley, Mitchell and Spenceley, 2009

26. Types of value chain interventions • Greater volume: Sell more fruit/craft/beds to customers • Upgrade processes: Better coordination and communication within, and between stakeholders (e.g. artisans, farmers) • Upgrade products: better quality service, products related to market demand • Add value: take on new functions and to increase revenues (e.g. processing, delivery) • Reduce barriers to entry: improve access the poor have to markets (e.g. linkages between producers and buyers) • Contracts: for members of associations; between producers and tourism enterprises • Diversify markets: sales locally, nationally and export – and outside the tourism industry Adapted from ITC/ODI, 2009

27. 1. Seven ways the poor benefit from tourism • Employment of the poor in tourism enterprises • Supply of goods and servicesto tourism enterprises by the poor or by enterprises employing the poor • Direct sales of goods and servicesto visitors by the poor (informal economy) • Establishment and running of tourism enterprises by the poor - e.g. micro, small and medium sized enterprises (MSMEs), or community based enterprises (formal economy) • Tax or levy on tourism income or profits with proceeds benefiting the poor • Voluntary giving/support by tourism enterprises and tourists • Investment in infrastructure stimulated by tourism also benefiting the poor in the locality, directly or through support to other sectors WTO, 2004

28. Thank you! Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) annaspenceley@gmail.com www.anna.spenceley.co.uk +27 (0)72 311 5700