A new levy is set to provide increased funding for Ghana's tourism sector

As well as establishing the Ghana Tourism Authority (GTA), Ghana’s Tourism Act granted the organisation significant new scope by setting up the Tourism Development Fund (TDF). The TDF does not replace state funding for tourism but substantially supplements it, and could provide a multiplier effect, with more revenues from tourism providing funds for reinvestment to develop the sector.

The TDF’s aim is to “provide funding for tourism and tourism-related projects and programmes”. The GTA can determine which activities this can apply to on a case-by-case basis, including five main areas: marketing and promotion; capacity building, market research and the development of tourism infrastructure; development and promotion of other entrepreneurial activities within the sector; tourism export activities; and education and training.

New Levy

The key source of finance for the TDF is the new tourism levy, a 1% tax on tourism enterprises. Other financing comes from government seed capital, donations and grants, money earned from the operation of projects financed by the TDF or other investments, and other cash allocated by the Ministry of Finance and Economic Planning.

The levy, however, is central to the fund’s operation. The secretariat administering the TDF was officially inaugurated in March 2015 and launched a two-year process of field visits to all certified tourism enterprises in the country to implement the levy. By the end of this period, all hotels, restaurants and catering centres should be registered and making payments into the fund, and the secretariat itself should have all its organisational structures in place, the local press reported. The levy will also apply to tourist sites, tour operators, car hire companies, banqueting facilities, conferences, nightclubs, spas, cinemas and theatres.

The secretariat will oversee how the funds are allocated and work with operators to address their needs and concerns. Members of the secretariat – as well as regional tourism officials working to implement the levy and fund – have undergone training to streamline the process. Eligible businesses can pay their receipts from the levy to the TDF via Unibank, Universal Merchant Bank and GCB Bank. “Payment has been good, as we have trained staff who go out to village tourism facilities to monitor the levy and ensure that the right thing is being done,” Sampson Donkoh, deputy executive director of the GTA, told OBG.

Implementation

The fund was established in October 2012 and by October 2014 had generated GHS7m ($1.94m), with an average of GHS350,000 ($97,000) being raised monthly. Some 2600 businesses were registered – 96% of all licensed facilities. Of the money generated, 86% came from star-rated hotels and the rest came from non-starred hotels and catering establishments. The amount collected through the levy varies depending on the time of year and the volume of visitors. In 2014, albeit in the levy’s earlier phase, the amount collected in July was three times larger than that in January. As of March 2015, 56% of these businesses were paying into the TDF, as the levy is being rolled out incrementally. By mid-2015 the GTA had extended it to most hotels and was rolling it out to tour operators and travel agencies; it will move on to car rental agencies by the end of 2015.

The fund has started supporting international tourism fairs and exhibitions attended by the GTA, including the ITB Berlin 2015 and the China Outbound Travel & Tourism Market in Beijing. The authority hopes to tap the fund again for the World Travel Market in London in November 2015. The TDF has also been used to support the expansion of the GTA itself. “The levy has come at the right time and I think it will boost tourism faster than expected,” said Donkoh. “One of our major challenges has been funding, and now we have a source of funding. The industry is gaining traction, and in the very near future Ghana can emerge as one of the tourism giants in the region.”