The BRIC (Brazil, Russia, India and China) nations have made significant inroads in South Africa’s tourism industry, which in turn has also generated business and economic growth.
Compared to other foreign visitors, BRIC visitors have a lower propensity to visit South Africa for leisure, with more coming for business and investment purposes. Around a third of total tourist expenditure in South Africa is associated with business-related travel, with the remainder being leisure-related.
According to our economic assessment, visitors from the BRIC nations supported an estimated 26,000 South African jobs in 2016. These are some of the key highlights from an economic analysis issued today by PwC’s Strategy& on the South African tourism economy. South Africa will host the 10th annual summit of the BRICS bloc this week. The Summit will not only bring hundreds of visitors from the BRIC nations to South Africa, but also further stimulate the growth already seen in overall inbound tourism.
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South Africa is a much-desired destination among the BRIC nations. Tourism supports more than 1.6 million jobs in South Africa and accounts for more than 9% of the country’s gross domestic product (GDP).
While the opportunities are aplenty in the local tourism market, there are also a number of risks and challenges. Overall, the recent economic and political turmoil has not hindered or affected the influx of foreign visitors into the country. We also do not expect this to be a challenge in the near future.
According to our estimates, the BRIC visitors spend around R3 billion a year while in South Africa. Tourists visiting South Africa contribute to the economy through the activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services. It also includes activities such as the restaurant and other leisure activities.
For every R1 million spent by international tourists in South Africa, the industry contributes around 8 jobs to the economy. Nearly half of these direct, indirect and induced jobs are unskilled positions. The same R1 million in expenditure translates into R1.28 million in GDP.
Tourist expenditure and impact on GDP
Around a third of tourist expenditure in South Africa is associated with business-related travel, with the remainder being leisure-related. Transport (26.5%) and accommodation (15%) accounted for the largest proportion of international tourist expenditure in South Africa during 2016.
For every R1 million spent by international tourists in South Africa, the industry contributes around 8 jobs to the economy, and R1.28 million in GDP. Nearly half of the direct, indirect and induced employment supported by BRIC visitors are unskilled jobs.
Tourist arrivals from BRIC nations
Tourist arrivals from the BRIC nations increased by 6.1% in 2017 – higher than the average of all tourist arrivals – to 275,521 visitors.
The easing of visa requirements for several BRIC countries over the past several years have added to increased arrivals. BRIC tourists accounted for 2.7% of all arrivals in South Africa in 2017, up from 2.6% in the preceding year.
The BRIC countries each have their own typical traveller into South Africa, which are identified according to their reason for visiting, choice of accommodation, length of stay and activities incurred. This distinguishes Indian and Chinese travellers, for example: the former typically enters South Africa for business and stays in a hotel, while the latter stays with friends during a holiday into the country.
It is notable that Chinese nationals are taking advantage of South Africa’s growing reputation as a destination for medical tourism.
BRIC countries to benefit from Africa Continental Free Trade Area (AfCTA)
Under this year’s summit theme ‘BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution’, attendees will also consider the benefits of South Africa signing the AfCFTA agreement. The pact will open up trade and investment on the continent, providing opportunities for the BRIC countries.
Opportunities going forward
The 10th BRICS Summit present a great opportunity for South Africa’s tourism industry, the economy as a whole, and foreign investors. The event will help in reaching Minister of Tourism Derek Hanekom’s goal of attracting an additional 4 million international visitors to the country by 2021.
Beyond the country’s borders, the easing of movements in goods, services and people offered by the AfCFTA will attract more intercontinental visitors, especially from BRIC countries.
For African countries, tourism can be an engine for inclusive growth and sustainable economic development. The industry can promote structural transformation and economic diversification through linkages with other productive sectors. This can also play a role in reducing poverty and achieving the United Nations’ Sustainable Development Goals.