Saturday, September 24, 2016

Red tape and infrastructure: Brazil, India, Nigeria and Russia’s real roadblocks to tourism

Tourists steer clear of Brazil, Russia, India and Nigeria because of onerous visa requirements, EM Squared reported last week. But even with easy tourist visas in place, these emerging market giants won’t reach their full potential. The real key lies in enhancing the ease of doing business and developing adequate infrastructure.
Visa policies are certainly a real barrier to tourist arrivals. No matter how beautiful or intriguing your country is as a tourist destination, if you make it too complicated for tourists to visit, they will stay away. That problem is not limited to emerging markets. A few years ago, US Travel Association estimated that the US lost the equivalent of 467,000 jobs due to the difficulty for citizens of primarily Brazil, India and China to obtain a visa.
Still, visa policies are only a piece of the puzzle. In the World Economic Forum’s recent Travel and Tourism Competitiveness Report, “International Openness” – a measure of how easy it is for tourists to visit a country – was one of 14 studied pillars. A country’s enabling environment for doing business, price competitiveness, infrastructure and natural and cultural resources are others factors that were weighted and which mattered.
In the 2015 edition of the report, Brazil came in 28th place globally, followed by Russia (45th), India (52nd) and Nigeria (131st). The significant disparities in these countries rankings make it clear that reforming stringent visa policies is unlikely to be a panacea but rather a key component of a wider set of policy shifts needed. What are they?
Brazil, for starters, should work on its business environment. Despite its vast array of tourism hotspots, the country of carnival, the Amazon rainforest and Copacabana only welcomed 6.3m international tourists in 2014, while Mexico’s arrivals amounted to 32m. In the past, one reason for that may have been the lack of adequate infrastructure. However, in recent years, in preparation for the football World Cup and Olympics, significant progress and investment has been made on air transport infrastructure and connectivity.
The real challenges hindering Brazil’s travel and tourism industry today thus lies in its restrictive business environment. Its red tape in the construction sector and high taxation rates make it hard for the tourism sector to develop adequate infrastructure. A second issue it needs to address is safety and security. Both its crime rates and currently the fear of the spread of the Zika virus remain issues that scare tourists away even if a visa is within reach.
Like Brazil, India’s international arrivals fall short of its potential, with only 8m international tourists visiting the country in 2015, compared to China’s 55m. In addition to its incredible scenery and unique heritage and monuments, India is extremely price competitive compared to other destinations. In the past years, under Prime Minister Narendra Modi’s leadership, India has made significant changes in its visa policies which are starting to bear fruit.
Yet, anyone who has visited India will agree, that infrastructure gaps are a real challenge, ranging from accommodation availability to the quality of roads. The issue of environmental sustainability must also be addressed to ensure the preservation of India’s natural heritage. Tourists and business leaders alike will also speak to the need to tackle health and hygiene issues, including pollution, information and communications technology readiness, and safety and security.
Unlike Brazil and India, Russia welcomed more than 31m international visitors in 2015, a solid performance. The nation’s strong cultural resources and price competitiveness have attracted tourists despite the stringent visa restrictions and lack of prioritisation of the sector. Russia should continue building on its strengths, notably in air transport infrastructure and health and hygiene. Still, key challenges relating to safety and security, environmental sustainability and the overall environment for doing business need to be addressed.
Nigeria’s travel and tourism industry, finally, has been a real missed opportunity to date. In 2013, Nigeria welcomed 600,000 international visitors, with the industry only accounting for 1.5 per cent of gross domestic product. Yet, significant challenges constrain the potential development of the sector in Nigeria, starting with safety and security, which arguably remain the highest priority.
Nigerian business leaders consider the lack of infrastructure as the most problematic factor for doing business. While specific issues relating to travel and tourism remain, including the prioritisation of the sector, visa policies and price competitiveness; addressing the complex issues of security and infrastructure should be prioritised not only for the industry’s competitiveness but also to ensure Nigeria’s development path.
While visa restrictions are barriers to the travel and tourism industry’s potential in these four nations, it is the overall business environment and infrastructure gaps which are truly hindering the sector’s development and these nations overall competitiveness.
These issues may superficially not seem related to the tourism industry but have a significant impact on its development. There is a clear need for a systemic and coordinated approach to achieve competitiveness for the sector and beyond.

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