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Uganda, blessed with unimaginable beauty that adherents to the Lord of the Rings will equate only to the Elven town of Rivendell of the House of Elrond in Middle-Earth, is seemingly cursed beyond belief and not as fortunate as that little town. No less than the greatest Hobbit of them all, Sir Winston Churchill christened this place the Pearl of Africa!

There is so much print and online press about the stunning and awe-inspiring collection of flora and fauna, found in so compact a place that we couldn’t possibly have enough time to read them all. The commonest strand in all reports, is just how authentic, genuinely enchanting and poorly marketed or not, Uganda is!

The Prognosis

By 2030, Uganda shall have a minimum of 60 million souls and an estimated max of about 64 million. We shall be 75 million in 2040, according to the United Nations Population Fund. The framers of Vision 2040 thought we would only be 61.4 million by 2040, but we shall hit that by 2030 due to our fecund women and relentless men, contributing to the 2nd highest fertility rate in the world. This discussion will keep the decade ending 2029 in mind, but with an eye on the projections of 2040.

We have more than 7 out of every 10 people below the age of 35 without any employment or with employment that is way below their skillset, otherwise known as underemployment. Only 18 out of every 100 adults is paid a salary or wage, or about 7.6 million Ugandans. NSSF, the National Social Security Fund, has about 2 million contributors or only 4.7% of the population.

Over 35% of Ugandans will live in a city or town by the end of this decade. That is over 22 million people in cities with Kampala alone having over 8 million! The percentage could be higher depending on the effect of climate change and how the state responds, or empowers the populace to respond. Some people fear it could be 50% or more urban population.

The 4th Industrial Revolution

On 8th April, 2019, government launched the “Expert National Task Force on Fourth Industrial Revolution”. It is curious to note that on April 9, 2019, the Chinese Xinhua News Agency, in its online edition, had a more detailed story on the subject than any newspaper or governmental press release in Uganda. As we shall find out, this is all due to one 19-year-old Ke Jie, a Grand Master in the game of Go. Ke Jie faced Google’s Artificial Intelligence player AlphaGo on 23, 25 and 27 May, 2017, sparking a frenzy in China, described as China’s Sputnik moment, likening it to the time the USA, was beaten in the race to space by the Soviet Union in 1957.

Kai-Fu Lee in his book, AI Super Powers: China, Silicon Valley and the New World Order, Houghton Mifflin Harcourt [2018], China has already overtaken the USA in the race to AI superiority. One would be advised to quickly order for or download a copy on Z-LIB.ORG and read all 174 pages to fully understand what this means for the rest of us. It is the reason why the euphoria ushering in this decade wasn’t fully embraced by discerning leaders of multi-nationals, countries and academic institutions. The World is changed.

What is relevant for our purposes are the observations on AI’s effect on employment and industrialization as we know it. Kai-Fu Lee states thus; “…At the same time, AI-driven automation in factories will undercut the one economic advantage developing countries historically possessed: cheap labour. Robot operated factories will likely relocate to be closer to their customers in large markets, pulling away the ladder that developing countries like China and the “Asian Tigers” of South Korea and Singapore climbed up on their way to becoming high-income, technology-driven economies. The gap between the global haves and have-nots will widen with no known path toward closing it.The AI world-order will combine winner-take-all economics with an unprecedented concentration of wealth in the hands of a few companies in China and the United States. This, I believe, is the real underlying threat posed by artificial intelligence; tremendous social disorder and political collapse stemming from widespread unemployment and gaping inequality.”

The current low-level insecurity characterized by murder, robbery ending up in murder, rapes, violent crime, amongst others, even despite the deployment of, ironically, AI-enabled CCTV and other policing devices, will look like a small girl’s tea-party if we don’t tackle this problem heads on. It is important to note that Kai-Fu’s warning is against a backdrop of knowledge of the fact that all African governments have bent over backwards to attract investors into their countries, with incentives ranging from security, tax-free holidays, free utilities, etc, but all they get are basically warehousing for international fast-moving consumer goods companies, and usually of dubious extraction.

Tourism as a Messiah.

It is very surprising how much information is contained in the 314 page NRM Manifesto for 2016-2021.

Chapter 7 is dedicated to tourism. It is given 8 pages, from 118 to 126. Starting off with bombast, an array of figures such as tourism accounting for 9.9% of GDP in 2014/15, the operation of a single Tourism Visa for East Africa (in reality, Kenya, Rwanda and Uganda), and ends with prospects. From cable cars on Mt. Rwenzori to construction of a high-bridge over Murchison Falls (hard to believe, but it is there!) as “additional scenery for tourism promotion”! The establishment of a national carrier to enable direct flights from source markets, is mentioned, including upgrading of Entebbe Airport to a regional hub. Whoever wrote the 17 targets to be achieved over this term of office, did their homework very well! About 5 of the 17 targets may be fully achieved by the end of May, 2021.

Tourism employs the largest number of skilled people in Uganda, and its total employment as per the World Travel and Tourism Council (WTTC) 2018 report on Uganda is 605,500 people. It is now 667,000 as per the latest report. This is for service to only about 1.8 million visitors! The long-term projection (2018-2028) by the WTTC of Uganda’s growth as a tourism market places it among the top 24 countries, worldwide. Currently, the WTTC ranks Uganda’s tourism in terms of importance to the economy at number 128 worldwide! The same report states that Africa, and Uganda in particular, has an ABSOLUTE advantage in some segments of tourism that are not being marketed and or curated well.Tourism contributed UGX 8 trillion to the treasury in 2018, yet this was from only about 1.8 million tourists and a direct figure of 325,000 to the major national parks, 364,000 to Uganda Wildlife Education Centre, and over 160,000 to the Source of the Nile!

Uganda has serious issues when it comes to marketing and branding this destination. There are policy fights over whether we go for value or volume tourism. Do we take the Botswana or Kenya route. Kenya combines both value and volume and used the volume model to grow the value sector. Botswana, a nation of about 1.5 million people can dally with value or high-end tourism. It has only 1/40th of Uganda’s population, anyway.

The budget to market Uganda has been constrained and is not matching the aspirations of the leaders of the sector. Kenya has a tourism development levy that has been collected since 1972 under the Catering and Tourism Development Levy Trustees, that was replaced in 2012 and a fully-fledged Tourism Fund established to finance investments in the sector by qualifying SMEs. Kenya’s population is only 48 million with a declining fertility rate. Kenya got over $7 billion in total contribution of tourism to GDP in 2018 and the sector employs at least 1.1 million people.Recently, Rwanda’s government shelled out a total of $50 million, $39 million to sponsor the shirt sleeve of Arsenal Football Club, targeting the UK market, and an estimated $11 million 3 year deal with France’s largest football club, Paris Saint Germain. The whole Ministry of Tourism, Wildlife and Antiquities budget for FY 2019/20 is about $52m which one country is spending on advertising alone.

The lack of Branded Internationals continues to hurt the economy. The reasons for this are many, sad and easily circumvented. The Triple A locations of Kampala, where most brands would prefer to have facilities, are served by a rapidly deteriorating transport system, poor or non-existent street lighting, are crowded with unplanned developments and are, when available, ridiculously priced. This is in addition to lack of patient capital for investors to access as most of the brands offer a franchise and only supervise the construction to ensure conformity to their standards. The Kampala Capital City Authority (KCCA) does not have the money to make targeted interventions in case a brand wanted a road constructed or rehabilitated. This makes investment into these hotels pricey as one has to consider construction costs including roads and other would-be municipal provided services as Mestil Hotel in Nsambya and Latitude on Makindye discovered.

With only about 5 branded international hotel chains, the country continues to lose out on the luxury travel market. Kenya has about 88 branded international hotels. Uganda has 5, with a new Twed Heights Hilton, Nakasero slated for completion in December, 2020 to make them 6, and an expectation of a Radisson Blu, plus a Kempinski and Marriott by end 2021. These brands come with their own clientele who are high-end luxury travellers, always spending an average of $1,200 in an economy they travel to. It is estimated that having a Hilton in a city could come with as many as 50,000 leisure tourists, not forgetting the fact that branded internationals signify stability and confidence in an economy as they are usually managed for long periods of time, including 30-year concessions, creating a knock-on positive on FDI by other investors. A 100,000 increase in this segment translates into a 1% contribution to GDP. Of the current 1.8 million international arrivals that are considered tourists, the leisure tourists are about 30% compared to Kenya and Tanzania who record above 75% of arrivals as leisure tourists.

Marine tourism is at 2% utilization, with a report suggesting that East African countries lose about $60 billion each year due to poor exploitation of the marine transport, tourism and fishing resources of Lake Victoria, the world’s largest freshwater lake, of which Uganda has got a huge chunk. Mountain Rwenzori, famously described by the Greek great Ptolemy as the mythical Mountains of the Moon, are enchanting in their location astride the Equator, but having a snowcap atop its highest peaks, Margherita and Stanley throughout the year. They are among the most challenging mountains to climb standing at 5,109 metres or 16,761 feet. They only receive about 15,000 visitors a year, with very few accommodation facilities to support the ecosystem. The Human Capital in tourism is also inadequately tooled to meet current demands.

Vision 2040 and Tourism

$580.5 billion. Yes, billion with a B. That is how large the Ugandan economy should be by 2040 to enable the National Planning Authority figure of 61 million people- a figure we have already said is unrealistic, as it is going to be arrived at much earlier in 2030- to live an upper-middle-income life having a GDP Per Capita of $9,500 (UGX 33.1 million per year or UGX 2.93m per month at $1= 3,700/-). According to UNFPA, we shall actually be 75 million, and that means the per capita GDP will be $ 7,740 (UGX 28m per year or UGX 2.38m per month). That is nice.

The economy’s average annual growth rate of 6% per year, keeping all factors constant, shall in 2040 make Uganda a of $111 billion economy, unadjusted for inflation if one used the base year of calculation as 2019 and GDP size of $35 billion. Adjusted for inflation (4%) this will be an economy of $243 billion. This gives a per capita income of $3,240 (UGX 11.9 million per year and UGX 999,000 per month per person). These figures are dizzying to some, but they are here to provide context. Currently, tourism contributes 7.7% of GDP. Our GDP is $35billion. That means tourism contributes, in total, $2.8 billion. This is the net benefit. The real tourism receipts are $1.6 billion collected from 1.8 million tourists.

Now, the NPA claims we shall be a $580.5 billion economy in 2040. I don’t think we shall make 2/3 of that, but there have been economic miracles before. If we used the NPA figures of GDP being $580.5 billion in 2040, and kept the structure of the economy as is, with tourism taking 8% of GDP, then, tourism would contribute $46.44 billion to the economy! Now, 1.8 million arrivals bring in $2.8 billion, representing an average expenditure of slightly above $1,500 per individual. So, how many individuals should we attract to get $46.44 billion from tourism in 2040?

$1,500 today, adjusted for inflation at 3% will be $2,709 in 2040. That means that to make our $46.44 billion, we shall need 17,142,857 visitors (gotten by dividing the $46.44 billion by $2,709). Consider that the sector employs directly and indirectly, a total of 667,000 Ugandans, yet the country receives 1.8m arrivals, if we were to just extrapolate, that means we shall have at least 6,670,000 people directly and indirectly employed in the sector. Of course, that would be simplistic. The largest tourism market in Africa is South Africa which got about $30 billion(R 425.5 billion) from tourism in 2018. This is not surprising as their main airports at OR Tambo and Cape Town, recorded 22 million and 10 million passengers last year, with at least 16 million of those being tourists both international and domestic. The sector employs about 1.5 million South Africans.

Due to the differences in markets, one can assume that tourism is more labour intensive in Uganda and Kenya than in South Africa. Kenya earned $7 billion with 1.1 million workers employed. South Africa got $30 billion with 1.5 million souls providing the service. Uganda got $2.8 billion with about 667,000 workers. How many more would we need to get $46 billion? We can assume that even 3 million employed in the sector would be a massive dent in the unemployment figures and reduce the dependency ratio.

Not that AI or technology has not infiltrated tourism. After all, one can now view some Kenyan National Parks from Google Street View, but what tech has done to tourism, is blow it up. Tech to tourism in Africa and Uganda, is better looked at from the Hollywood to USA lens. Despite watching Times Square a million times in movies, that doesn’t stop the world from a desire to see the place first hand. Shall we survive the onslaught of AI on industrialization? Is tourism the new ladder to modernity for developing countries?

I would daresay, that there is really no alternative. Even agriculture’s long-standing reputation as the largest sector for most poor countries is going to be massively eroded by AI. 

Welcome to the new decade.

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Written by Daniel Bwambale B. Mutahunga (1)

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Jessie and Benja