Attracting Investment in Tanzania s Tourism Sector: The Investor Outreach Program A Case Study in MIGA s 1 Investing in Development Series

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1 Attracting Investment in Tanzania s Tourism Sector: The Investor Outreach Program A Case Study in MIGA s 1 Investing in Development Series Iain T. Christie Senior Research Associate, GWU 1. Multilateral Investment Guarantee Agency, a World Bank affiliate

2 Tanzania s Tourism Assets 25% of landmass protected as conservation areas, Coastal zone management to protect marine and coastal resources. Tanzania has 12 National Parks, 17 Game reserves, and 50 Game controlled areas and marine parks. Natural, cultural, historic and archeological assets include 7 World Heritage sites Ngorongoro Conservation Area, Serengeti National Park, Lake Manyara, Selous Game Reserve, Mt. Kilimanjaro and its National Park, Stone Town of Zanzibar, and Ruins of Kilwa Kisiwani and of Songo Mnara Sandy beaches north and south of Dar es Salaam, Spice islands of Zanzibar and Pemba, Sports fishing off Pemba and Mafia, Swahili and Arab cultures that dominated the East African coast Olduvai Gorge, in the interior of the Rift Valley, traces of earliest man. Masai culture and Makonde wood sculptures.

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4 Tourism Master plan With financial support from the European Union, Tanzania produced a Tourism Master Plan in 1996, updated in 2002: -- Roadmap; and -- Strategic framework The Tourism Master Plan emphasizes: Enhancement of the Northern Circuit and its extension to Usumbara Mountains Pangani River and port of Tanga Strong Southern Circuit building on its four national parks (Selous, Mikumi, Uszungwa and Ruaha) Coastal zones and the off-shore islands Enhancement of Dar es Salaam and its waterfront Linking the northern and southern circuits via a corridor A draft tourism plan for Zanzibar was also completed in 2003

5 Photo credit: Martin Wolter Hotel Kilimanjaro Kempinski

6 The Kilimanjaro Kempinski a short history Kilimanjaro Hotel, Dar es Salaam, Tanzania, opens in Main hotel for foreigners visiting the country. Imposing building, on a prime site in the harbor area. It served the country well for 20 years but lost its preeminence as the country s leading hotel in the late 1980s. The hotel was starved of funding and did not carry out renovations to compete with newer, privately-owned hotels. In 1996, the Kilimanjaro was forced to close its doors. It become an ominous presence for nearly 10 years. In a dramatic turn of events, the five-star Kilimanjaro reopened in August, As an investment project, the Kilimanjaro is noteworthy, tangible result of the country s recent efforts in investment promotion.

7 Kilimanjaro Kempinski Hotel The Private Players The investing company Albwardy Investment 1 founded in 1976 in Dubai Turnover, over US$250 million Forty companies in the group, many with an ISO accreditation: - Food distribution and logistics, - Industrial construction and engineering, and - Leisure and lifestyle in Dubai, Europe and Africa. The management company. Kempinski Hotels 2, founded in Germany over a hundred years ago Owned by the Thai royal family (85%) and Bahrain interests (15%). Kempinski has approximately 40 hotels in 20 countries, Kempinski also operates international resorts. In Africa, it operates hotels in Dubai, Mali, Morocco Tourism Confederation of Tanzania (TCT) Umbrella organization for tourism related associations 1. Adapted from the website, 2. Adapted from

8 Kilimanjaro Kempinski Hotel Public Players Ministry of Natural Resources and Tourism (MNRT) MNRT is responsible for: Tourism Division, responsible for Sector policy and planning Supervising the Hotel and Tourism Training Institute Tourist Agency Licensing Authority (TALA); Promoting investment, particularly to sell portfolio of state-owned hotels, working with the Privatization Commission Wildlife Division, responsible for Wildlife management outside designated national parks Hunting concessions and licenses. Tanzania National Parks Authority leases sites for photographic safari lodges from time to time, within and surrounding national parks. Tanzania Tourist Board, responsible for destination marketing, also plays a role in investment promotion.

9 Kilimanjaro Kempinski Hotel Public players (cont.) Tanzania Investment Center (TIC) Responsible for investment promotion, under National Investment Act, 1997 Substantial progress in becoming a one-stop shop for investors Functions are to: Support the investment climate for local and foreign investors Collate and disseminate information on investments Consult with other public institutions on investment facilitation; and Assist investors to obtain permits, licenses, approvals, etc. Presidential Parastatal Sector Reform Commission (PSRC), created in 1972 to implement the country s privatizations and to: Improve the operational efficiency of public enterprises; Reduce their burden on state finances; Expand the role of the private sector; and Encourage wider (local) ownership of productive assets 309 of a total 359 parastatals have been privatized.

10 Kilimanjaro Kempinski Hotel The Investment Forum: Key Parameters MIGA, Department of Tourism, TIC and TCT propose investment forum Steering Committee and a Technical Committee set up: Director of Tourism, MNRT, Chair Department of Tourism, MNRT TIC TTB Tourism Confederation of Tanzania Steering committee, met by video conference and staff travel Two consulting firms were hired to target investors One familiar with investors in Africa One familiar with investors in Europe, Middle East Content Forum in Arusha on October 2, 2002 Then-President Mkapa to attend Focused, tight program Site visits

11 Stakeholder Meeting, Dar es Salaam, 100 participants from all over the country Professional associations and individual entrepreneurs Government officials from interested agencies Issues raised Perceived high levels of taxation Complicated and costly licensing processes Need for better infrastructure and promotion SMEs questioned whether Tanzania needed foreign investors Agreement to provide additional support for SMEs Capacity-building on preparing a business plan, marketing program Design a Guarantee fund Design Business incubator scheme

12 Kilimanjaro Kempinski Hotel Logistics for Investment Forum MNRT arranged logistics through a local conference planner MIGA prepared the documentation, including tourism opportunities, and covered marketing costs Telephone follow-up calls were made, by consultants Forum website was set up

13 Kilimanjaro Kempinski Hotel Forum funding, admission and attendance Admission was set at US$100 per participant -- most costs were met by there fees Registrations were very slow at first, brisk in the last ten days -- three weeks before Forum, no confirmed attendees Attendance reached 280, including: Conservation Corporation of Africa, South Africa Holiday Inns, South Africa Serena Group, Kenya Golden Tulip, Netherlands Legacy Group, South Africa Protea Hotels, South Africa Albwardy Investments 30 international investors (Dubai, Ethiopia, Kenya, Mauritius, South Africa) Delegates: Austria, Cyprus, the Netherlands, Portugal, UAE and USA. MIGA invited other donors: World Bank; International Finance Corporation (IFC); Development Bank of South Africa (DBSA); European Union

14 Results Purchase and redevelopment of the Kilimanjaro Hotel (US$35 million) Kikoni camp in the Southern Circuit (US$0.5 million) Zamani Hotel 1, Zanzibar (US$36 million) Sale of Mafia Lodge (an estimated US$0.6 million) IFA Hotels and Resorts (a proposed US$50 million investment in Zanzibar) Construction of a Hotel School in Dar es Salaam (US$4.6 million from France; 2.5 million from the European Union. 1. Albwardy Investment, the same group investing in the Kilimanjaro Hotel.

15 Creating a Process for Actionable Follow-up Master Plan should be implemented Expressions of interest from investors should be pursued Information from the forum to be made available to wide readership Capacity building for preparing business plans and for locating facilitation and support mechanisms, and finance MNRT to continue to work closely with private sector -- continuous dialogue to be strengthened Strengthening of the Tourism Confederation of Tanzania (TCT) Steering Committee and a Technical Committee formed with: MNRT (Department of Tourism), TIC, TTB and TCT Above parties to take responsibility for coordinating follow-up promotion and facilitation of tourism investments.

16 Actions Contact database. List covered close to 200 investors Also useful elsewhere in Africa, Information on financing sources. Preparation of 35 profiles of financing institutions. Investment profiles. 38 tourism investment project profiles compiled Projects ranged from $100,000-2,000,000 Projects classified as follows: Beach tourism City properties Wildlife Resorts Tour operations; and Other investments Quality of dossiers. Best efforts were made to ensure that data is accurate (not full due diligence process)

17 Business Assistance and Capacity Building MIGA developed proposals for: business incubator; and guarantee fund (both now part of World Bank-supported project to the private sector) Support for tourism associations Investor outreach. Full-day strategy session moderated by experienced international consultants Outreach missions to investment forums:

18 Moving forward On-going services under the investor outreach program must be realized efficiently and effectively Three main activities are being implemented: Information dissemination: -- circulating the investment profiles to potential partners on the list, and updating investors on recent progress in tax reform and the tourism market. New market outreach: -- Investment promotion trips to Middle East (close to $300 million in SSA in the past two to three years; -- SME investment to be bolstered through outreach to investors in the North; and Capacity building.

19 Kilimanjaro Kempinski Hotel Known fondly as the Kili, this elegant hotel is both a testament to Dar es Salaam s historical past and its independent future. It is a favored meeting place for discerning locals, as well as visitors to town. Rooms Facilities Guest rooms 180 Internet access Presidential Suite 1 International LCD TV Diplomatic Suite 1 Multilingual Voic Executive Suites 13 Tea and Coffee Executive Rooms hour room service Deluxe Rooms 132 Laundry / dry cleaning Shoe-shine service Each with: Make-up mirror and hair dryer In-room safe Minibar Bathrobes Hotel Services Butler service Private club 24-hour concierge service Luggage storage 7 Restaurants and bars Shops and boutiques Foreign currency exchange Florist Hairdressing salon Security parking Travel agent Limousine service Emergency services Car rental Health and beauty spa Translation services Business center Private beach club 15 km. from hotel 13 meeting rooms accommodating from 2 to 500 people Source: Management of Kilimanjaro Kempinski Hotel

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