Government policies and private investment in tourism in Rwanda
University of Tourism Technology and Business Studies (UTB)
The success of tourism industry relies more on the government policies that influence private investment to take a lead in that particularly in Rwanda. Despite the intended support by the government policies, some challenges were identified to hamper private investment in the tourism sector. Among them include increase in price of private land; costly privately conducted EIA; shortage of funds and human resource capacity gap at local government levels; uncertain synergy among private sector and local communities in joint tourism ventures. There is need therefore to make improvements in these policies to facilitate private investment in tourism sector in Rwanda.
Keywords: Investment, Tourism, Policy, Decentralisation, Mitigation, Environment.
Several countries consider tourism industry as part of the contributors to socioeconomic development (United Nations Economic and Social Commission for Asia and Pacific, 2007). Such contribution of tourism necessitates governments of the respective countries to embark on several programmes to nurture tourism industry. They therefore formulate policies to integrate tourism into national framework for socioeconomic development (Cameron,et al., 2001).The formulation of relevant policies enables number of politicians, responsible for that, to realise the benefits of tourism industry. In so doing, politicians influence changes in tourism industry by enacting government decisions that influence investments in tourism industry (Trevor, 2003).
According to Kotleret al, (1993) investments in tourism industry range from relatively economical market entry for festivals to multimillion infrastructure developments. Such investments include those for the state in infrastructures and the private sector in tourist amenities. Besides, security of tourism investments is considered; the fact that tourism development is considered as land banking; an outstanding slogan considered among a section of investment community (Sharma, 1999).
Recognition of private investment community, for instance, by the governments of the respective countries enables sustainable development of tourism sector to closely link social and economic development. The government intervention enables tourism to be an area where application of supporting policies is important. The supporting policies according to Ashley and Roe (1999) are those that stimulate mainly private investment in tourism. This is what Ashworth and Goodall (1990) consider as the best way to attain better creation of investment and job opportunities.
Additionally, several government policies enacted since 2002 in Rwanda recognize private sector as essential engine for tourism investment (Ashley, 2007). The government believes that its formulated policies facilitate private sector to diversify tourism products. However, twelve years down the road, gorilla tours have remained single government tourism product generating 90 per cent of the Rwanda’s tourism earnings (Ministry of Trade and Industry, 2009).
How do government policies facilitate private investment in tourism industry?
How does land policy facilitate private investors to secure land for their investment projects?
How does decentralization policy influence local governments to foster tourism investment?
How does environmental policy facilitate private investors to implement their investment plans?
How does tourism policy influence private investment in tourism industry?
The review of literature to have abroad overview about government policies that enhance private investments in tourism industry adopted theoretical framework that provides two types of explanations. The first explanation is about the relationship of variables under study, whereas the second explanation is about the anticipation of a particular set of outcomes (Fitzpatrick and Wallace, 2006). The study adopted a quadrant model illustrated below, which was derived from the four theories that prescribe public policy formulation process.
illustration not visible in this excerpt
Figure 1: indicates the quadrant model applied in the study
The applied theories in this study include urban land use theory which states how allocation of land for various uses in private markets is guided by government regulations (Fujita, 1989); public trust theory postulates need for appealing approach for environmental protection (Sax, 1971). Fiscal federalism theory stipulates performance of local government with the help of resources offered (Tiebout, 1961). Dependency theory highlights increase of unequal benefits from the partnership of rich and poor (Prebisch,1950 cited in Higgott, 1983).
The quadruple (urban land use, public trust, fiscal federalism, and dependency) theories stipulate how government decisions in form of policies play pivotal role to influence private investment with competitive position in travel and tourism industry (Organisation for Economic Co-operation and Development, 2008). Similarly, implementing government policies that affect tourism investment, to certain extent of regular incentives, should be legislated. Such regular incentives may give too much money away to enable national treasury get more benefits from its funds, for instance, to the private investors interested in tourism investments (Sharma, 2004).
Kandari and Chandra (2004) urge that private investments in tourism industry can be successful in the presence of government policies such as land policy that enables supply of land to the private investors at nominal price. In addition, government has to offer investment incentives such as tax concessions, subsidies, and special facilities for land purchase to encourage private investments in tourism industry (Bhatia, 2006).
According to Aylward and Lutz (2003), land policy calls for government intervention within land acquisition for private investment to ensure that the land prices differ according to the potential of tourism investment project. In addition, arrangements for grant of government owned land to the private investors were postulated by Bhatt and Bhargava (2006) as essential to increase tourism entrepreneurship. Chiaet al(1988) as well urge for Land Acquisition Acts, which make it possible for privately owned land to be acquired at affordable price. Land Acquisition Acts impose helpful restrictions in the matter of land acquirement by private and government companies (Kumar, 1979).
Not only land policy supports private investment in tourism industry, there is also decentralisation policy, which mandates local governments to devise mechanisms to foster tourism sector. Local governments, mainly at district level are tasked to foster private investment in tourism putting into consideration environmental standards (Jenkins and Tosun, 2004).
The principle of universal adoption of environmental management standards has obliged several countries to enact environmental policies to justify their positions on that. The governments of different countries have to make sure that tourism development do not deplete natural environment. This is what Batta (2000) describes as influence of polluters’ behaviors. The non polluting relationship between tourism development and environmental protection preserves buildings and heritages that later promote tourism investment (Gunn and Turgut, 2002).
The environmentally friendly private investments in tourism balance sustainable tourism development activities with the conservation of natural resources. At this point, environmental policy helps to identify natural resources, their conservation status and suitable development for that (Brebbia and Pineda, 2010). This is essential for tourism investment projects in the environmentally sensitive areas subject to the Environmental Impact Assessment (EIA). The successful conducting of EIA is performed by consultants employed by advocates for it. In this case, government is the suitable advocate for that. It enables the needed alternative investment project to be pursued and project objectives to be clearly demonstrated (Blewitt, 2005).
Preparing and conducting proper EIA for tourism investment require supportive tourism policy, which facilitates entrepreneurs to foster private investment in tourism industry. According to Duval (2004:82), tourism policy is a “set of regulations, rules, guidelines, development or promotion objectives and strategies within which the collective and individual decisions affecting tourism development and the daily activities within a destination are taken.” The policy prescribes politics and tourism correlation in the context of sustainability (Kunkel, 2008).