FOREIGN DIRECT INVESTMENT IN TOURISM AND ECONOMIC DEVELOPMENT IN MOSHI, TANZANIA
By Godfrey A. Ngaiza
The main objective of this study was to assess the contribution of Tourism Investment on economic development of Tanzania, particularly in tourism sector. In order to examine the overall objectives, the study looked on the following specific objectives; it examined the factors accelerating the inflow of tourism economy, it assessed the prospects of tourism inflows in relative to the economic development of Moshi Municipality and the major challenges facing tourism inflows in tourism economy. The study used the input-output method to assess the impact of tourism investment in Moshi Municipality and inferential statistics to compare investment tourism and economic develop of Moshi Municipality. The study also used descriptive statistics to identify challenges facing the tourism sector in Moshi Municipality. The data of this study were analyzed using appropriate statistical using statistical package for Social Sciences (SPSS). Results of the study indicated that Tourism has a significant impact on income, employment and tax revenues. It also showed that there is a significant relationship between the tourism inflow and the inflow from other economic sectors in Moshi Municipality. Lastly results indicated that there are a number of challenges that must me addresses in order to enhance the tourism industry in Moshi Municipality.
After independence, Tanzania followed a socialist system whereby major means of production were owned by the majority (Umma). To date, tourism industry in Tanzania contributes over 17% to the national GDP and is ranked second in foreign exchange earnings after gold. It is estimated that for every tourist arrival in Tanzania, 12 Tanzanians benefit directly and indirectly. Tourism has become the largest foreign exchange earner for Tanzania, exceeding even gold exports, which is the top merchandise export item (UNCTAD, 2008).
In Tanzania, FDI holds the largest share of the foreign private capital flows, which also include foreign portfolio investment and long and short term loans (TIC, 2009). For example, in 2001 FDI stock contributed about 88.6 percent of foreign private capital stock. This shows that FDI is an important foreign investment in the Tanzania’s economy. As regards FDI components, direct equity investment forms an important component of FDI in Tanzania contributing about 78.9 percent of FDI stock in 2001(NBS, 2010). The number of international arrivals in Tanzania has raised from about 612,754 in 2005 to 720,000 tourists in 2007 (World Bank, 2008).
The tourism industry is growing at the rate of 6.2% on average annually since 2005. Tourism employed an estimated 208,000 people in 2008 compared to 189,000 in 2004 and has a potential of being one of the important source of revenue for Tanzania (MNRT, 2009).
Tourism is one of the world’s largest growing and dynamic economic sectors in many countries. The prospects for continued growth of this sector remain very high. The important rates of growth and development, the volumes of outflow of foreign exchange, infrastructure development, new management techniques and the training experience are affecting different sectors of the economy, which are positively contributing to the economic and social upgrading of a country (WTO, 2010). The tourism industry generates multiple economic and social benefits to the receiving countries and to the tourism-sending countries. In Tanzania, one of the main reasons to sustain and promote tourism is the expected economic and social upgrading.
There are considerable evidence that FDI has great effect on economic development, especially in developing counties, FDI tend to complement domestic investment and facilitating trade and transfer of knowledge and technology (Holger et el, 2010). FDI is particularly important because it is a package of tangible and intangible assets and because firms deploying them are important players in the economy (Ajayi, 2008). Governments began to ease restrictions on FDI and increasingly offer incentives in an effort to attract investment. During the 1990s, FDI soared, growing more than 20% per year. Since there is a link between foreign direct investments (FDI) and economic development in Tanzania. Nevertheless, the contribution of foreign direct investment (FDI) on the economic development, especially on Tourism industry in Tanzania is not clearly demonstrated. It’s for this reason; the study is undertaken examine the role of FDI on economic development, by taking case study of tourism industry in Moshi Municipality.
To assess the contribution of Foreign Direct Investment on economic development of Moshi Municipality, particularly in tourism sector.
- To examine the impact of tourism investment to the economy of Moshi Municipality.
- To examine the prospects of tourism investment relative to economic development of Moshi Municipality.
- To explore on the major challenges facing tourism investment sector to the economy of Moshi Municipality.
The theory was introduced by Saskia Wilhelms (1998) explores the importance of institutional framework on the flows of FDI. The theory highlights that political stability is the key factor of a healthy institutional framework. According to This theory, FDI is determined more by institutional variables, policies, laws, and their implementation and less by intransigent fundamentals. The four institutions contributing to FDI flows are governments, markets, education and socio-culture (Wilhelms, 1998). This theory have been used by the researcher is because the availability of political stability here in Tanzania appear to be one of the factor which do attract the Foreign Investors.
According to UNCTAD (2012), sub-Saharan Africa has historically received the smallest amount of FDI globally. The region accounted for only 5.1% of total world FDI inflows in 2009, compared to 26.0% for Asia and 11.9% for Central and South America. When compared to GDP levels, this figure is less surprising; since the region accounts for just 2.44% of World GDP, it is reasonable to expect that it should have a smaller share of global FDI than other regions. Nevertheless, inward FDI flows as a share of African GDP have increased rapidly over the course of the years, rising from 0.09% in 1980 to 1.84% in 2000, and accelerating even further to 4.22% in 2009.
The study area was Tourists Industry, in Moshi Municipality. The area was purposely selected being Tourist hub of Tanzania and based on its potentialities in attracting more tourists. So it’s a place of considerable significance to world history, both as an entry point for all Tourists arriving Tanzania via Kilimanjaro International Airport and others via Jommo Kenyatta International Airport. The area has a classical tourist hotel `and explorers investment opportunity for traders in East and Central Africa for Tourist destination. Basing on the above description, the area preside potential information pertaining the issues of FDI in tourism industry in relation to its influence on economic development in Moshi Municipality in Tanzania.
A cross sectional survey design is a snapshot of an ongoing situation provides external validity of the results so that the findings can be effectively generalized. It allows the possibility to collect data from a sizeable population using standardized instruments and control over the research process.
Thus, logical reasoning is applied to the research study so that objectivity and precision replace experience and insight as means of investigating a research problem. Since cross sectional survey allows different analytical techniques, this approach was guided by descriptive research a technique which is concerned with either determining the frequency with which something occurs or relationship between variables.
The target population of this study were foreign investors in tourists sector, staff employed or working in tourists industry, community benefiting either directly or indirectly from tourist sector; farming, art or crafts, TRA and NBS office in Moshi Municipality, and the office of Regional Administration in Moshi Municipality. The population from the above mentioned areas was approximated to about 116. Given the population size N = 116, the sample size was computed using Slovin’s rule given as
Where is the margin of error. This gives the sample size of 90 at 95% confidence level. Finally data from these 90 datasets was tabulated ready for data analysis.
The researcher used various methods and techniques of collecting both primary and secondary data during the study. The researcher used interviews, documentary review and questionnaires as methods and techniques of collecting data.
. The first objective being analysis of the impacts of tourism investment on the economy of Moshi Municipality was analyzed using the input-output model described as described by Kweka (2001) as follows:
The input-output model assumes a classification of economic activity in a region, in general, into industrial sectors whose transactions (interindustry transactions) are described by means of a matrix A of technical coefficients. Each element , of the matrix represents the value of output from sector i needed to produce a dollar’s (or any other national currency) worth of output of sector j. Each industrial sector produces the amount of output necessary to meet interindustry demands, as well as final demand caused by household consumption, government spending, investment, and exports. In addition, because of the general equilibrium assumption of the model, the value of output produced by each sector equals the value of output it purchases from other sectors, plus the value of primary inputs such as imports, wages, dividends, profits, taxes, etc. If X is the vector of output of all industrial sectors and Y is the final demand vector, then the basic input-output model is written as:
Solving for gives
The matrix is known as the multiplier matrix or the Leontief inverse. Each element of the matrix shows the direct and indirect changes in the output of sector i needed to meet a unit increase in the final demand for the output of sector j. Summing down each column of the Leontief inverse, output multipliers for each sector are obtained showing the direct and indirect changes in sectoral output needed to meet one unit increase in final demand for the output of this sector.
The second objective being analysis of the comparative values on tourism investment inflows was analyzed using analysis of variance (ANOVA) while the third objective was analyzed through descriptive statistics, in terms of means and frequencies.
5.1.1 The Contribution of FDI’s on Tanzania Economy
The study has revealed that employees in Tanzania have a positive mind and attitude towards FDI investment in the economy. The major reason behind it is that more staff from and other local community that were examined are nowadays employed in most investment accrued by FDI’s in Moshi Municipality, their earning usually results in the trickle down effects to the economy at large. Most of local communities that were examined said they earn a living through their salaries and wages that they receive from FDI’s investments. The local community also gets a source of market for their produce; national revenue is also increased by the facilitation of FDI’s investment e.g tourist activities. Findings has also indicated that this investment do contribute great shares in the government budget through its contribution on government revenues. Furthermore the study has revealed the transfer of tourism management skills to the locals of Moshi Municipality which has a vital contribution on strengthening the Tourism Industry in the region which contributes a lot in regional GDP i.e about 20 %.
The study shows that almost 10.4 % of the staff working in FDI’s are foreigners while 89.6 % are local staff. Despite the fact that local staff consists of a significant number, tentative analysis has shown that a significant number of these local staffs are employed in less technical position and end being paid normal salary compared to foreigners. The study revealed that most of the FDI’s, especially in Tourist sector are employed as security guards, messengers, manual jobs e.g. cleaners and cooks. These in terms of percentage almost comprises of 30% of the total employees in the FDI’s investment, which is a greater contribution on income of the Local community in Moshi Municipality. Most of the administrative positions i.e. marketing, sales, training and senior officers and supervisory are mostly done by foreigners. So much more efforts is needed to be put in place to facilitate development and training so as to boost local staff to acquire standard skills and knowledge so as to acquire full potential benefits of FDI’s on tourism to the economy of Moshi Municipality.
The study has identified the following measures that can be put in place to enhance FDI investment in Tanzania economy. Some of this measures that were mentioned includes, the improvement of infrastructures such as roads, water and electricity supply, training of local staffs to acquire necessary skills on various employment issues in Tanzania, improving investment policy especially investment, the findings also indicate that more advertisement in international media about the Tanzanian investment environment has to be enhanced. This is not enough since the perception of investors has to follow the government policy, procedures and laws governing business environment. Therefore government intervention has to be streamlined to encourage more stakeholders’ participation and financial service has to be streamlined to facilitate construction and investment Tourism industry on the economy of Moshi Municipality, this will includes an improvement of the existing structures.
The study has identified that FDI has been very vital in the economic development; it has contributed in employing many local staff and facilitated in a trickle-down effects to the local economy, despite the facts that majority of labour force are employed as security guards, service delivery, operations and sales department, few are employed as managers. It has also contributed significantly in other related income generating activities. Moreover the study focused on assessing; the contribution of employment of local residents in FDIs; hotels, restaurants, diving centres and tour operators on household income, the influence of market chain of local products to the improvement of the quality of life, the income difference between households who directly depend on employment in hotels, restaurants, diving Centers and tour operators and those who are employed in other sectors such as mining, petty traders, manufacturing and small scale farming and final the contribution of local tourism entrepreneurs towards the growth of others economic sectors.
The study has identified the various challenges facing the FDIs on Tourism industry on the economy of Moshi Municipality, some of this factors that were mentioned includes, poor infrastructures, inadequate power supply, poor skills, lack of local familiarity and other as mentioned earlier. Though in response various measures on how to improve the FDI inflow on tourism industry in Moshi Municipality have been identified. .The study has briefly concluded that, there are many contributions of FDI’s on tourism to the economy of Moshi Municipality and income generation activities. Thus the null hypothesis that participation or involvement in FDI’s is positively related to local economic development, specifically on direct employment and other trickle down effects. It is also seen that FDI’s is likely to benefit the local community more than those far away and moreover those sectors with direct linkages to FDI’s investments and hence reduce poverty in the local community.
This research study has recommended the following measures that need to be implemented in order to facilitate actual benefits of FDI’s on tourism to the economy of Moshi Municipality. The recommendation has focused on three perspectives. They include recommendation to the government, foreign direct investors and the labour force in Tanzania.
5.3.1 Recommendation to the Government
The government has to create an enabling environment for FDI inflows to the country, for instance, improvement in infrastructure has to be addressed with great efforts. The country transportation network is poorly developed, poor electricity services from TANESCO where currently there has been an increasing trend of fire outbreaks and power-rationing, in Moshi Municipality. Early this year, there was huge power rationing which contribute greatly in economic slow-down as most firms did not work to their full potential. This caused reduction of employment as means of emergency financial adjustment. Notwithstanding this, it has contributed to slow pace in the inflow of FDI in this sector of business.
5.3.2 Recommendation to the FDI Investors on Tourism Industry
Direct Investment reflects the aim of obtaining a lasting interest by a resident entity of one economy (direct investor) in an enterprise that is resident in another economy (the direct investment enterprise). In order to facilitate much benefit by Tanzania labour force from FDI’s, the investors has to put strategies that will aim in empowering the local labour force with required skills and knowledge that will enable them to hold senior administrative position within FDI’s in the economy.
- HOUSEHOLD SOCIAL-ECONOMICAL EFFECTS OF HALF-MILE FORESTRY STRIP WITHDRAW AMONG THE VILLAGERS ALONG MOUNT KILIMANJARO IN MOSHI DISTRICT
HOUSEHOLD SOCIAL-ECONOMICAL EFFECTS OF HALF-MILE FORESTRY STRIP WITHDRAW AMONG THE VILLAGERS ALONG MOUNT KILIMANJARO IN MOSHI DISTRICT
By Godfrey A. Ngaiza
(The founder of Africa Natural Tours)
1.1 Background of the Study
The concept of parks and protected areas and the aforementioned management approaches first became explicit in the creation and custodial management of different National Park. Mount Kilimanjaro is the oldest protected area in Africa and was first declared as a game reserve by the German colonial government in the early part of the 20th century. The area was further gazetted as a forest reserve in 1921.This designation was confirmed by the legislation of subsequent administrations. The area above the main forest line (2,700 metres) was reclassified in 1973 by the Tanzanian Government to form a National Park, covering 75,353 hectares, surrounded by a Forest Reserve of 107,828 hectares. Mt. Kilimanjaro National Park was inscribed on the World Heritage list in 1987, the seventh World Heritage Site in Tanzania (Dery et al., 2009).
The half-mile forestry strip on Mount Kilimanjaro has historically been a very important social forest. It was established in 1941 and was managed very successfully for 20 years by the Chagga Council during which the council emphasized the production of forest products for local use and for sell. In 1962, at time of independence the management of the half-mile forestry strip was transferred to the district councils which placed greater emphasis upon managing the half-mile forestry strip as a commercial forest. In 1972, the central government took control of the half-mile forestry strip and the primary objective of the management of the half-mile forestry strip became soil and water conservation. In 1987, the management of the half-mile forestry strip was transferred to the district councils who are currently managing the area for primarily forest products and watershed protection (Salmi and Monela, 2010).
The half-mile forestry strip (HMFS) on Mount Kilimanjaro is one of the oldest social and buffer forests in East Africa. A review of the history of the management of the HMFS on Mount Kilimanjaro is instructive in light of the current concern about the conservation of Mount Kilimanjaro. Such a review should be useful in providing forest managers with potential approaches towards improving the current management of the forest resources on Mount Kilimanjaro (Barrow, 2015).
1.2 Statement of the Problem
Mount Kilimanjaro is the dominant economic resource in Kilimanjaro Region, Tanzania (Monela, et al., 2015). The dominance of using Mount Kilimanjaro lays a foundation of the formation of HMFS benefits, because HMFS are believed to play a crucial role in social-economical benefits (Salmi and Monela, 2010). In Kilimanjaro Region, Moshi district in particular, every people would obtain HMFS benefits (Ghazi et al., 2015).
Despite the benefits assigned by the HMFS to the surrounding society, it is over untried such that there was environmental degradation. This situation caused Half-Mile Forestry Strip Withdraw along Mount Kilimanjaro in Moshi District. However, studies on the social-economical effects of half-mile forestry strip withdraw along mount Kilimanjaro in Moshi district are not available. Therefore, this study will explore the social-economical effects of half-mile forestry strip withdraw among the local people along Mount Kilimanjaro in Moshi district.
1.3.2 Specific objectives
Specifically, the study will intend to;
(i) To examine the HMFS on access to household energy among the villagers
(ii) To determine the effects of the household economic activities after the withdrawn from the use of HMFS to villagers
(iii) To examine the social effects of HMFS withdraw among the local people along Mount Kilimanjaro in Moshi district
(i) What is the HMFS access to household energy among the villagers?
(ii) ) What are the effects of the household economic activities after the withdrawn from the use of HMFS to villagers ?
(iii) What are the social effects of HMFS withdraw among the local people along Mount Kilimanjaro in Moshi district?
The study intends to assist policy makers including ministries; parliament and government agencies to appreciate the role of HMFS towards its surrounding villagers. Also it will broaden the literatures based on challenges use of HMFS. The result of this study may also be beneficial to national and international organization, donor agencies and other organization which aim to support HMFS. The study will generate new knowledge and idea to the public in the field of the study. This study will also help community villagers to get awareness on the position of HMFS in the communities.
Furthermore this study will help NGO’s to analyze various problems facing HMFS and the means of addressing such problems facing tourism industry in public organization. The study will help other research to add knowledge and facilitate the interest of the other researchers under the same field conduct further research on the same field. The study will be the policy makers to have knowledge that will help them to make informal decision towards developing HMFS that works effectively. The study will help the readers and other researchers of this work to understand different terms and concepts used in this study.\
The study is significant to TANAPA Management, Moshi district’s people and other related stakeholders as it will enforce TANAPA to restructure terms and conditions of providing benefits to Moshi district’s people towards HMFS along Mount Kilimanjaro. Also the study is of great importance as it addresses HMFS challenges as it limits the efforts of poverty reduction hence the Moshi district’s people found alternative sources of income for their life. Further finding will enable the TANAPA to develop better services of products to Moshi district’s people.
2.0 LITERATURE REVIEW
2.1 Theoretical Review
The present study is guided by Decision theory. The theory is famous known as choice under uncertainty theory. This theory represents the heart of decision theory. The procedure of the theory referred to as expected value. The theory is concerned with identifying the values, uncertainties and other issues relevant in a given decision, its rationality, and the resulting optimal decision. The idea of expected value is that, when faced with a number of actions, each of which could give rise to more than one possible outcome with different probabilities, the rational procedure is to identify all possible outcomes, determine their values (positive or negative) and the probabilities that will result from each course of action, and multiply the two to give an expected value. The action to be chosen should be the one that gives rise to the highest total expected value (Pascal, 1670).
This theory has been adopted since HMFS withdraw, taken into account positive and negative value of the decision action. Upon their action, researcher is intrigued to undertake the study on the real social-economical effects of HMFS withdraw among the local people along Mount Kilimanjaro in Moshi district.
2.2.2 Natural Resources management in Developing Countries
In Ghana, natural resources are under continuous threat of degradation due to population growth, overexploitation, smaller farm lands, shorter fallow periods, excessive logging, charcoal production and land-use changes (TBI, 2005). A critical issue of resource management is the incessant forest degradation and loss of biodiversity associated with unsustainable harvesting in the high forest and savanna, and inappropriate farming practices. Hence, the survival of indigenous varieties of important food crops and an increasing number of medicinal plant species are being threatened. The aim of improving information use in agriculture is to reduce poverty by increasing productivity in food crops and conserving the biophysical environment. These problems are compounded by adverse social, political, and economic developments. Efforts to address these environmental problems have led to the emergence of donor-funded environmental initiatives some of which operate independently or in collaboration with the Government of Ghana (Monela et al., 2015).
In Zimbabwe, it was intended that decentralization for natural resource management would be through the development of a policy. This section argues that a policy failed to provide for meaningful rights of participation one aspect of which is the recognition of the diversity of stakeholders, their interests and value systems. a policy is a State-driven local natural resource management initiative adopted in response to a legitimacy crisis of the Department of National Parks, which had come to be seen as little more than a police unit given their control and command strategies. This devolution was driven by the need to establish management systems that promoted natural resource sustainability rather than from a concern for governance systems, human sustainability or the inherent rights of indigenous people to utilize a resource Mariki et al., 2011).
2.3 Empirical Review
Luvanga and Shitundu (2003) did the study which concern with the role of natural resources towards tourism in poverty alleviation in Tanzania. According to their study natural resources towards tourism activities can affect poverty alleviation positively or negatively. Positive contributions may be registered through employment creation, income generation, and increased asset ownership, contribution to basic needs and contributions to community contributions. However, together with contributions, linkages and multipliers, natural resources towards tourism effects may result in some costs or negative impacts. These may be seen through environmental problems, cultural pollution, immoral behavior and conflicts with other socio economic activities. The impact of natural resources towards tourism sector to an economy of the country direct derive from the income receive by the villagers through direct or indirect employment.
Haji (2011) through her study on prospects and challenges facing natural resources towards tourism industry in overcoming poverty. She considered role of women toward the poverty alleviation at the local level and revealed that natural resources towards tourism has the potential to reduce women poverty. She also observed that those who had participated have been positive by benefited from the natural resources towards tourism industry. However, there are several opportunities yet to be utilized by women entrepreneurs. In this respect therefore, it would be more beneficial and profitable for women and men who are entrepreneurs to organize them to reap maximum contributions from natural resources towards tourism industry. Indeed, efforts are needed to enable local entrepreneurs’ in particular local women to withstand the competition of foreigners.
Kweka (2004) did a research on Natural resources Economy of Tanzania. His paper employed economic analysis to demonstrate the potential contribution of natural resources towards tourism for economic growth in Tanzania, and his findings indicated that; natural resources towards tourism expansion has substantial impact on the economy as shown by increases in real GDP, total welfare and exports. Improvement of infrastructure appreciably amplifies the effects of natural resources towards tourism expansion and natural resources towards tourism taxation have an unambiguously favorable impact on tax revenue and welfare. As LDCs lack sufficient resources to enhance growth, natural resources towards tourism may provide as a source of tax revenue to finance infrastructure projects that will benefit the economy as whole, as well as tourists.
2.4 Conceptual Framework
The conceptual framework provides the relationship between independent and dependent variables. It also indicates the relationship between Half-mile forestry strip withdraw along Mount Kilimanjaro in Moshi district and its effects. From the empirical and theoretical review, factors identified from the literatures are categorized into independent and dependent variables showing relations therein. The conceptual indicates that half-mile forestry strip withdraw along Mount Kilimanjaro in Moshi district may had affected the access to services including Grazing, Firewood coll, timber production and poles collection.
Figure 1 : Conceptual Framework
3.0 RESEARCH METHODOLOGY
Cross-sectional research design will be applied on the basis that data can be collected using different methods at one point of time, to look at the prevalence of a problem in a given population. The benefit of a cross-sectional study design in this study is that it will allow the study to compare many different variables. This research design will be applied on the basis that, the design is widely used in descriptive studies and data can be collected using different methods at one point of time (specific period of time), to look at the prevalence of a problem in a given population. Thus, applying this design will help to gather data on the social-economical effects of HMFS withdraw along Mount Kilimanjaro in Mweka, Sungu, Lole Marera and Maringa villages in Moshi district.
The study will be conducted in Moshi district in Kilimanjaro region. Kilimanjaro region is composed of different districts with villagers along HMFS as it is shown in the Table 1.
Table 1: Number of villages involved in HMFS
Number of villages involved in HMFS
Source: NBS 2012
The population of this study will involve households in four villages including Mweka with 1102 households, Sungu villages with 551 households in Kibosho East ward and Lole with 1102 households and Lole Marera with 1408 households, Maringa villages with 773 households in North Mwika in Moshi district (NBS 2012). The target populations will be household members from Mweka and Sungu in Moshi District; this will be composed of a husband, wife, children and family. A household also can be composed of single father and mother, unmarried and widowed. Will be used because are villages around Mount Kilimanjaro.
3.2 Sample Size
n= sample size
N= the sample population
Z= is the standard normal distribution at 5% level
E= the precision error, which is assumed to be 10% (0.1)
Total sample size = 83
In this study, purposive sampling will be deployed to find out the respondents during the process of sampling. This will involve the target villages where they can be reached and then simple random sampling will be deployed in their respective villages. The reason for using simple random sampling is because the sample is capable of yielding research data that can be generalized to a large population and also provides an equal opportunity of selection of each element of the population. It is a procedure in which all the individuals in the defined population have an equal and independent chance of being selected as a respondent (Kombo and Tromp, 2006).The criteria for selection of the villages included the accessibility and are closer to half mile. Different target villages were identified in the respective Moshi districts.
3.4 Data Collection
In this study, different types of data will be collected based on research objectives and study variables. The study will collect both primary and secondary data which will be of both qualitative and quantitative data.
The first objective which is to examine the HMFS on access to household energy among the villagers will be analyzed quantitatively through descriptive analysis by using frequencies and percent, mean and standard deviation.
The second objective which is to determine the effects of the household economic activities after the withdrawn from the use of HMFS to villagers will be analyzed qualitatively and quantitatively through narration of idea from respondent and mean and standard deviation respectively.
The third objective which is to examine the social effects of HMFS withdraw among the local people along Mount Kilimanjaro in Moshi district will be analyzed qualitatively and quantitatively through narration of idea from respondent and mean and standard deviation respectively.
CONTRIBUTION OF TOURISM TO THE HOUSEHOLD SUBJECTIVE WELL- BEING
IN MACHAME VILLAGE, TANZANIA
By Godfrey A. Ngaiza
(The founder of Africa Natural Tours)
This study aimed at assessing the contribution of tourism to the household subjective well- being. Specifically the study looked on identifying tourist activities carried out in Machame village, determining benefit of tourism activities towards household subjective well- being in Machame Village, identifying current challenges facing tourism towards household subjective well- being in Machame Village and examining means of strengthening tourism activities towards household subjective well- being in Machame. A cross- research design was applied. The population of this study involved villagers in Machame area. In this study 100 villagers in Machame area were sampled. The study used simple random sampling in gathering of data from study area. Interviews and questionnaires were used for collection of primary data. The study collected both quantitative and qualitative data which were coded, organized, processed and converted into tables, by using Statistical Package for Social Sciences (SPSS) Computer Software and Microsoft excel were used because it enabled proper description of ideas in form of tables, charts and figures which simplifies data interpretation. Villagers has responded on different tourism activities carried out in Machame village, such as business, handcraft, tour operator, guide and taxi, fruit selling, Hotel activities, Food vendor, Entertainment and Small business. Respondent had listed on different contributions such as employment creation, income generation, increased asset ownership, challenges such as cultural pollution and immoral behaviors were identified. Community perceived tourism as important and that it generally complemented and supported rather than conflicting with other economic activities.
Tourism is recognized as one of the fastest growing industries in the world and its significant in the majority of poor countries that currently affects the livelihoods of many of the world’s poor (WTO, 2009). According to the United Nations Report (2005), the number of international travelers worldwide has grown from 689 million in 2000 to over 764 million in 2004 (Jackson, 2007). Also the international tourism revenues also have grown from US dollar 484 billion to over 633 billion US dollar in same years which represents an average growth rate of six percent.
Tanzania’s most well-known tourist attractions are located in the northern part of the country and include Mount Kilimanjaro, Africa’s highest mountain. Serengeti National Park is world famous and has spectacular seasonal migrations of animals. The Ngorongoro Conservation Area includes the Ngorongoro Crater, which is an extinct volcanic caldera with lions, hippopotamus, elephants, various types of antelope, the endangered black rhinoceros, and large herds of wildebeest and zebra. Lake Manyara, Kilimanjaro, Arusha, Rubondo Island, Tarangire, and Saanane Island national parks are tourists attractions found in Tanzania.
The western part of Tanzania includes the Mahale, Katavi, and Gombe national parks, the latter of which is the site of Jane Goodall’s ongoing study which begun in 1960, of chimpanzee behavior. The southern part of Tanzania includes the Ruaha, Kitulo, Mikumi, and Udzungwa national parks and the Selous Game Reserve. Tourism is also focused on the coast, including Saadani National Park and especially the islands of Unguja and Pemba in Zanzibar and Mafia Island on the further south. Game fishing and diving are the main attractions in these islands. There is also a wide variety of destinations for cultural tourism such as Maasai boma and Bushmen settlement.
Kilimanjaro National Park (KINAPA) has tourist attractions like free-standing, snow-covered dormant volcano, majestic Kilimanjaro is the highest mountain in Africa. Located in northeast Tanzania, it can be seen from far into Kenya and Amboseli National Park. 75,000 people climb Kilimanjaro every year so it is not the most untouched mountain, nor is it the most arduous (BoT 2009). However, it is certainly a test of one’s endurance, with altitude sickness the main reason for climbers not to summit. Although it has become a very popular challenge and the experience slightly crowded with other climbers, we still highly recommend it for anyone with even a vague interest in mountaineering.
The United Republic of Tanzania has launched the National Strategy for Growth and Reduction of Poverty (NSGRP) which also encourages sustainable tourism for poverty reduction (URT, 2005).
It seems that the tourism activities within the area are mostly done by men rather than women. However, poverty is still pre-dominant in the rural areas for both men and women, meaning targeting needs to be intensified in the rural areas. Inequitable access to the means of production (land and capital), the distribution of wealth, reduced access to economic goods and services and remunerative employment are all causes of poverty (Benavides, 2011).
However, tourism is a complex industry, which is driven by the private sector and often by large international companies which have little or no interest in ensuring household subjective well- being. It is also possible that with the current technological development tourism earnings remain outside the destination country due to linkages. In addition, tourism can cause negative effects such as environmental problems, cultural pollution and immoral behavior. The study intended to assess contribution of Tourism towards household subjective well- being to the surrounding environment. Since Tanzania is rapidly becoming a major tourist destination, it was worthwhile to assess the contribution of tourism to the enhancement household subjective well- being.
1.3.2 Specific objectives
The study specifically aimed to:
(i) Identify tourism activities carried out in Machame village towards household subjective well- being
(ii) Determine contributions of tourism activities towards household subjective well- being in Machame Village
(iii)Identifying current challenges facing tourism towards household subjective well- being in Machame Village
(iv) Examining means of strengthening tourism activities towards household subjective well- being in Machame
2.0 LITERATURE RIVIEW
Economic Growth refers to an increase in a country’s production capacity. Growth may be stimulated by an increase in the quantity or quality of the factors of production such as labor and capital (Wickets, 2006) thus the theory of economic growth, general deals with economics long run trend or potential growth parts. Accordingly to Harold- Dormer model, a full employment equilibrium growth requires that the warranted role of growth should equal to the natural rate of growth. At the equilibrium level the mathematical formula is;
Where; I = Investment, S = Saving and Y = Income.
From above formula it shows that the growth rate of the investments resulted from the generation of the capital flows which attributed by the expansion of the private investors’ growth in a country (Wickets, 2006). Under economic perspective the linkage between the increasing rate of the of the personal income require the development of both foreign and domestic investors to the country by which eventually will facilitate the income generation for both the national and individual level
According to the Multiplier1 effect of tourism sector to the economic growth of the country, the tourism sector contribute to the development of the other sectors since the an increasing of the supply of the tourism investors led to the an increasing of the related tourism activities like restaurants, hotels, tour guides, selling the cultural hand craft and all others activities related with tourism sectors, thus those may led as the source of income of the household (Andronicou, 2009).
Luvanga and Shitundu (2003) did the study which concern with the role of tourism in poverty alleviation in Tanzania. According to their study tourism activities can affect poverty alleviation positively or negatively. Positive contributions may be registered through employment creation, income generation, and increased asset ownership, contribution to basic needs and contributions to community contributions. However, together with contributions, linkages and multipliers, tourism effects may result in some costs or negative impacts. These may be seen through environmental problems, cultural pollution, immoral behavior and conflicts with other socio economic activities. The impact of tourism sector to an economy of the country direct derive from the income receive by the villagers through direct or indirect employment.
Haji (2011) through her study on prospects and challenges facing women entrepreneurs involved in tourism industry in overcoming poverty. She considered role of women toward the poverty alleviation at the local level and revealed that tourism has the potential to reduce women poverty. She also observed that those who had participated have been positive by benefited from the tourism industry. However, there are several opportunities yet to be utilized by women entrepreneurs. In this respect therefore, it would be more beneficial and profitable for women and men who are entrepreneurs to organize them to reap maximum contributions from tourism industry. Indeed, efforts are needed to enable local entrepreneurs’ in particular local women to withstand the competition of foreigners.
3.1 Research Paradigms (Philosophy)
In this research, researcher adopted positivism as the philosophical approach in conducting the study. With this phenomenon, the only positive requirements to the respondents on the contribution of tourism to the household subjective well- being
3.2 Research Design
Research design is an overall plan that guides the entire process to which research question shall be answered and includes data collection procedures as well as data analysis (Saunders, Lewis and Thornhill, 2007). A cross-sectional survey research design was applied. The design was useful for description purposes as well as for the determination of the relationship between and among the variables. The method consumes less time in data gathering.
The study was conducted in Machame, in Hai District at Kilimanjaro region. The District is one of the seven districts of Kilimanjaro Region of Tanzania. It is bordered to the south and west by the ArushaHYPERLINK “https://en.wikipedia.org/wiki/Arusha_Region” Region, to the west by the SihaHYPERLINK “https://en.wikipedia.org/wiki/Siha” District, to the north by Kenya, and to the east by the MoshiHYPERLINK “https://en.wikipedia.org/wiki/Moshi_Rural_District” Rural District and the RomboHYPERLINK “https://en.wikipedia.org/wiki/Rombo_District” District (URT, 2012). The western breach part of Mount Kilimanjaro is located in the Hai District. According to the 2012 census, the population of the Hai District was 210 533. Machame Village was selected for study because was among of village having many with idea concerning tourism activities which enabled ensuring validity of data.
The population of this study involved villagers in Machame area which is 210 533. The target populations of villagers in Machame area were used to select sample size.
In this study 100 villagers in Machame area were sampled using Fisher et al., (1991) for large populations (Exceeding or equal to 10 000) this sample was selected using the formula indicated below
- n = is the sample size required;
- Z = Standard normal deviation, set at 1.96 (or 2) corresponding to 95% confidence level;
- P = Is % of population estimated to have a particular characteristics if not known use 50%;
- q = 1-P;
- d/e = degree of accuracy desired, set at 0.1 or 0.02
n = (1.962 x 0.5 x 0.5)
= 400 respondents.
3.4.3 Sampling Techniques
This study used simple random sampling in gathering of data from study area. Simple random sampling refers to that method of sample selection which gives each member or item an equal opportunity of being picked up and each item in the entire population has an equal chance of being included in the sample (Kothari, 2011). The study identified the target population and then picked up respondents that represented the entire population of the study. In this case, the study had chosen this technique because it eliminates the systematic bias and gives respondents equal chance of being selected.
3.5.1 Types of data
In this study, both primary and secondary data were collected based on study objectives. For the first objective, different tourist activities carried out in Machame village were identified such as hand craft, tour operator, selling fruits, hotel activities and entertainment. Those data were obtained from villagers. For the second objective, contributions of tourism sector in Machame Village were identified from both villagers and documents obtained in KINAPA. For the third objective, challenges facing tourism sector in Machame Village such as environmental challenges cultural pollution, immoral behaviors, and exclusive of local people from access to resource were obtained from the villagers. For the forth objective, means of strengthening tourism sector in Machame such as maintaining local culture, motivating domestic tourism and improving infrastructures were obtained from the villagers and KINAPA.
3.5.2 Sources of data
Primary data collection is essential, when researcher cannot collect right information from only from secondary source. Primary data were obtained from selected respondents (villagers) through questionnaires and interview. Secondary data were obtained from already published materials and documents, such as programmed learning text which tells about tourism sector in Machame and Tanzania in general. These sources enabled the researcher to acquire information’s that enabled him to accomplish the research report well as needed.
3.6 Data Analysis
The study collected both quantitative and qualitative data. Quantitative data includes data which were quantified and verified, and amenable to statistical manipulation. These data were coded, organized, processed and converted into tables, by using Statistical Package for Social Sciences (SPSS) Computer Software. Qualitative data cannot be expressed as a number. It includes virtually any information that can be captured and not numerical in nature. Nominal data, relating to social-economic characteristics were categorized based on the specific scales, numbers and frequencies. The ordinal data were simply placed into categories based on some common trait and then ranged accordingly from lowest to highest.
The majority of respondents indicated that tourism was supporting other livelihood activities rather than conflicting with them. Several economic activities are practiced in the area of study with varying on it. Thus apart from sale/provision of tourist related products such as tour operation, curio shops and handcraft, supply and sale of agricultural products are also important, there are differences in the intensity/ importance of participation in the different economic activities amongst the area of study. The main objective of this study was to analyze the direct and indirect livelihood impacts from tourism and their implications for poverty alleviation. The sector being the fastest growing sector in Tanzania, the study intended to investigate the contributions and costs of tourism on the society in general and on the poor in particular. In order to achieve this objective the study designed the questions related to generation of foreign exchange and public revenues, employment, incomes, accessibility to assets and basic needs and their effects on the poor, and the linkages of tourism to the local economy. Issues affecting participation/non-participation in tourism and the way respondents perceived tourism were examined.
The study identified that, tourism contributes significantly to the national economy through employment generation, foreign exchange earnings and public revenues. However, the sector is sensitive to global instability caused by phenomena such as terrorism and/or war. So tourism is an important economic activity in the areas of study particularly in activities such as tour operation, curio shops and handcraft sales. However, agricultural activities are also practiced. Employment opportunities for the locals are observed to be in the low cadres with low skills and remuneration. Furthermore Cultural tourism is emerging as an important tourist attraction with no significant investment requirements.
Machame the majority have low education and lack of capital and so tourism need to be encouraged in order to contribute towards poverty alleviation. Tourism in Machame is significant on both direct and indirect employment opportunities. Directly, it is observed that there was substantial employment generation in hotels and so tourism ensure poverty alleviation. Machame opportunities for the locals were mainly observed to be in the lower cadres with low educational/skills requirements and low pay.
There were observable general pattern of increasing contribution of incomes from tourism to villagers and there is a general increase in the number of people receiving incomes from tourist related activities. Given the fact or the ‘common norm’ that always it is difficult to get income data from individuals/villagers, the increase in number may be interpreted as a reflection of increasing opportunities for getting incomes from tourist activities. Moreover, the results reveal significant direct and indirect employment opportunities. Those opportunities provide important sources of incomes to the villagers.
Cultural tourism is emerging as an important tourist activity especially in Moshi and Machame. Given that this type of activity does not require specialized skills and the incomes accrues directly to the performer, it should be viewed positively as a way of reducing poverty in rural areas. As since about 82 percent of those interviewed perceived tourism to be complementing as opposed to only 3 percent who thought that tourism was conflicting other economic activities. However, at times there are competitions or conflicts in the use of resources between tourist activities and other/social economic activities.
Tourism in Machame has strong backward linkages to sectors and activities that most poor people participate in. The linkages thus create opportunities for locals to benefit and alleviate poverty. Total number of participation in various activities was 1050 from which 367 was deducted to account for the young, students and inactive.
There are some unquantifiable negative impacts of tourism that may act against the positive impact on poverty alleviation. These include, among other things, loss of access to resources, environmental degradation, distortion of traditional culture and immoral behavior.
Tourism in Machame has the potential to have both forward and backward linkages to become a pro-poor growth sector. However, there are times when tourism development competes with other activities (normally more familiar to local people) in the use of resources available. Competition may result in the diminishing of resources such as land, water, wood. Depending on the magnitude of the dependency on these resources, the quality of life may as well be affected in the same way (most probably negatively) as the pressure on those resources increase.
Based on conclusion the following recommendations are proposed.
- There should be an increase to locals perceive tourism to be important and that it generally complements and supports rather than conflicting other economic activities.
- Tourism sector should be advanced so that it contributes substantially to increased asset ownership and basic needs or livelihoods requirements of the villagers.
- Tourism should be made strong linkages to other sectors both at national level and at local areas of the study.
- Tourism should be made better for development as it plays an important role towards poverty alleviation.
- THE ROLE OF TOURISM INDUSTRY IN IMPROVING LIVELIHOOD OF THE POOR PEOPLE: A CASE STUDY OF MOSHI MUNICIPALITY
THE ROLE OF TOURISM INDUSTRY IN IMPROVING LIVELIHOOD OF THE POOR PEOPLE: A CASE STUDY OF MOSHI MUNICIPALITY
By Godfrey A. Ngaiza
(The founder of Africa Natural Tours)
This study focuses on how Tourism Industry can help in improving livehood of the poor in case of Moshi Municipal. Today different organization employs various management techniques to carry out the efficiency functioning of their different sector. Tourism industry is of the sectors that deals with everything that traveler does on a trip-eat, sleep, party, attend a conference, rent a car, take a taxi, shop, change foreign currency and other things of a sort. It means that all of the economic activities of famers, fishermen, cooks, shop keepers, bartenders, tour guides, bank, hotels carnival bands, entertainers, electricians, customs, immigration and literally every job that impacts directly every job that impact directly or indirectly on tourism chain. It is clear that the tourism industry is far reaching and is indeed every body’s business.
The United Kingdom is the world’s 7th biggest tourist’s destination with 29.2 million visiting in 2011. US $17.2 billion was spent in the UK by foreign tourists. Visit Britain data shows that the US remain the most –valuable inbound market, with American visitors spending E2.1 billion in 2010. This has made the economy of UK growth tremendously. In other countries such South Africa there is good tourist destination with around 860,000 arrivals per month (March 2008) of which around 210, 000 ie from outside the African continent. Review adding up to between 1% and 3% of Gross Domestic product (GDP) is generated by the tourism Industry. This has made the economy of South Africa growth in high percentage.
In Tanzania tourists attractions cover 44 percent of Tanzania, land area, all these are game reserves national parks. Tanzania is also home to the famous Roof of Africa, Mount Kilimanjaro. On 6 January 2012 the New York Times awarded Tanzania the 7th among 45 top destinations to visit this year 2012. Tourism industry currently supports 27,000 jobs and generates 25% of Tanzania’s foreign exchange. Tanzania expected to receive one million tourists by the end of 2011 and generate about US $1.7 Billion (About SH 2.7 trillion) in revenue these have resulted to the development of tourism and Tanzania economy at large. However a substantial amount of country expenditure should be spent on tourism to make it more contributing to the growth of national economy.
The general objective of this study is to assess the role of Tourist industry in improving livelihood of the poor specifically, the study will focus on.
- To find out the function of tourism industry towards improving livelihood of the poor.
- To examine the relationship between tourism industry and livelihood of people
- To examine the contribution of tourism industry to nation income.
In view to the stated objectives, the key research questions to be addressed are:
- How tourism industry help livelihood of the poor?
- What are the relationship between tourism industry and livelihood of the people?
- How much tourism industry contributes to national income?
Tanzania national tourism policy. A policy to promote the economy and livelihood of the people, essentially poverty alleviation, through encouraging the development of sustainable and quality tourism that is culturally and socially acceptable, ecologically friendly, environmentally sustainable, and economically viable. It is also sought to market Tanzania as a favored tourist destination for touring and adventure (a wildlife safari) in a country renowned for its cultural diversity and numerous beaches. (Ministry of natural resources and tourism.
Research design is the plan showing the approach and strategy of investigation aimed at obtaining valid and able data that achieves research objectives in this study, a case of Moshi Municipal will be adopted. Thus, the main areas of concentration will be top management and tourism industry department. This is simply because the case and study will enable to study deeply few cases in the system. Data from case studies are greatly comprehensive and reliable because of their ability to explore instances in depth and enables the research to get the information which is purposive and comprehensive. Also the researcher employing case study design is enabling to examine small number of units that are extracted from a large number of variables and conditions.
The study will be carried in Moshi region. The number of employees at Moshi Municipal is about more than two hundred. This means that all workers from different departments like tourism industry management, tourism staff, user of departments and accounting department.
Data is a source of information aimed at providing some facts (Kothari, 2004).Through this, the researcher will obtain the specific information the study area for the fulfillment of the research objective.
The study will apply both two types of data, that is primary data and secondary data. The primary data will be collected through interviews, questionnaires and observation. This include about the tourism industry activities carried out at Moshi Municipal, the role of tourism in improving livelihood of the poor people and the strategies used in improving tourism industry in Moshi Municipal. The secondary data are these which have already been collected by someone else and which passed through the statistical process. This involves collection and analysis of published materials and information from internal sources. This data will be obtained from the tourism industry department both published and un published research on Tourism Management.
Data can be obtained from different sources both published and unpublished materials and other internal sources such as books, journals, newspapers, articles and other relevant sources provided by the tourism industry, tourist and accounting department from Moshi Municipal that support the researcher to collect the valuable information about the role of tourism industry in improving livelihood of the poor.
The study will apply observation, interview, questionnaire and documentary review in order together information which is fact and focusing on the study.
Both structured and unstructured interview will be employed. The tool of data collection will be questionnaire which will consist of list of pre-set question. Both open ended and closed ended questionnaire will be applied especially issues which are difficult to be understood from observation and questionnaire. This will base on how to find out the function of tourism industry towards improving livelihood of the poor, to examine the relationship between tourism industry and livelihood of people in Moshi and to examine the contribution of tourism to National income.
Questionnaires will be prepared and printed on a paper concerning the study area. These questionnaire will be both opened ended and closed ended. They will be distributed to the respondents who will answer the questions. The significant behind this is to have more responses from the respondents whom it will be impossible to be interviewed due to time constraints and data can be collected from the large sample, confidentiality is upheld. These questionnaire are derived from the research objectives like to find out the function of tourism towards improving livelihood of the poor, to examine the relationship between tourism industry and livelihood of people in Moshi and to examine the contribution of tourism to National income. All these questions are posed to different respondents from the following departments of tourism industry, accounting departments and staffs.
This tools provides information about the actual behaviours, (Kothari, 2004( Direct observation allows the researcher to be put behavior in context and understanding it better. Observation will be used together first hand information or data from field. Observation will be useful techniques of data collection from the activities performed by tourism industry departments. This will be done through participating and observing the activities performed by tourism industry unit.
(iv) Documentary review
These include the relevant written documents both published and unpublished, prepared by the tourism industry in Moshi Municipal in which researcher is expecting to collect data. This includes journals, books, report and magazines. The researcher will use this method so as to obtain secondary data necessary to answer the research questions basing on to find out the function of tourism industry towards improving livelihood of the poor, to examine the relationship between tourism industry and livelihood of people in Moshi and to examine the contribution of tourism industry to National income.
Table 1: Data Collection table Matrix
Types of data to collected
Source of data
Actor or respondent
To find out the function of tourism industry towards improving livelihood.
How tourism industry help livelihood of the poor?
Both qualitative and quantitative data are to be clearly interpreted.
The data from various source sources the organization like National park.
Tourism Management unit and uses of National park.
To examine the relationship between tourism industry and livelihood of people.
What are the relationship between tourism industry and livelihood of people
Mostly qualitative data is relevant, insights verbal reports and verification of quotations can be used.
Data may be found from tourism departments and operation staffs which participate in day to day activities.
To management and employees can able to compare and interpret data given by the two.
To examine the contribution of tourism industry to the National income
How much tourism industry contribute to National income
Qualitative and quantitative data
Data from journals, papers published and magazine on the relevant topic.
Public tourism regulatory Authority.
Source (Wakuru, 2012).
This section will help the research to look on sample frame/population, sample size and the sampling techniques.
Sample frame is the elementary units or group of such unity may be from the basis of sampling process in which the case, they are called sample unit (Kothari, 2004). The population study will involve surveying of organization, to identify sample unit in Moshi Municipal. The population will be obtained from tourism industry management (TIM (tourism staff, user department and accounting department.
The study will take the sample size one hundred and fifty (150), people from four departments include tourism industry management, tourism staff, user departments and accounting department from Moshi Municipal. The researcher will collect data 30 members from tourism industry management, 30 members of tourism staff, 50 Members of user departments and 40 members from accounting departments.
Table number 2: Sample size
Name of respondent
Total number of respondent
Tourism industry management
Source: (Wakuru, 2012)
The researcher will use purposive sampling as it is based on the promise that the researcher judgment will enable him to systematically select these elements from which he can get the best and most reliable responses. The researcher sample with the purpose in the sample from the following departments, tourism industry management, tourism staff, user departments and accounting department.
The study will apply both qualitative and quantitative data analysis. Qualitative data analysis is used to describe a type of information that can be counted and expressed numerically. Quantitative data can be represented visually in graphs, histograms, table and charts statistical package for social science (SPSS) will be used to analyze quantitative data obtained from the field. Qualitative data analysis is used to describe a type of information inform of explanation, understanding or interpreting of the people and situation that investigated. Qualitative data analysis is usually based on an interpretation of the information.