Ghana seeks to transform its tourism offering to attract investment and increase visitor numbers

Ghana’s tourism sector is playing an increasingly important role in the country’s development, contributing to both economic growth and job creation. The results of the World Economic Forum’s “Travel and Tourism Competitiveness Report 2019” indicate that Ghana has significant opportunity to build competitiveness through its history, culture and abundance of natural sites, raising the country’s international profile as a tourism destination.

Performance

Tourism provides a significant source of foreign exchange in Ghana, contributing to the government’s tax revenue, economic growth and job opportunities. The Ministry of Tourism, Arts and Culture (MoTAC) estimated that the sector accounted for 4.9% of GDP in 2018, making it the fourth-largest contributor after cocoa, gold and oil. Tourism supported 602,425 direct and indirect jobs that year, up 10% compared to 2017, when the sector employed 550,000 people. The World Travel & Tourism Council (WTTC) estimates that by 2029 around 746,400 people will work in Ghana’s tourism sector.

The Ghana Tourism Authority (GTA) anticipated significant growth in 2019 on the back of the Year of Return initiative, marking 400 years since the first enslaved Africans arrived in Jamestown, Virginia (see analysis). The GTA estimated that 500,000 Africans from the diaspora would visit Ghana in 2019, up from 350,000 the previous year. As a result, revenue was projected to reach $925m, up 50% on 2018. According to the GTA, average tourism expenditure in 2018 was $2708 per person, unchanged from 2017 but up 50.3% compared to $1802 in 2016. The main source of public funding is the tourism levy, a 1% tax introduced in October 2012, which applies to all licensed tourism enterprises. The tax generated over $2.5m in 2017 and funded the entire budget of the GTA, as well as other state entities operating in the sector.

Visitor Numbers

According to MoTAC, international tourist arrivals grew by 5%, from 980,141 in 2017 to slightly over 1m in 2018. The WTTC estimated that Ghana saw a total of 1.1m visitors in 2019. The recent growth in tourist numbers has been largely attributed to the increase in business travellers. The latest figures from the GTA found that business travellers accounted for 46% of visitors to Ghana in 2016 and leisure tourists accounted for 13%, while other forms of tourism collectively made up the remaining 41%.

Despite this, the majority of revenue is generated by leisure tourism. According to the WTTC, leisure tourists accounted for around 69% of sector revenue, while business spending made up the remaining 31%. Both are expected to grow in the years ahead: leisure travel spending is predicted to increase by 4.7% per year to $2.1bn by 2028, while business travel spending is expected to grow by 2.6% per year to approximately $569.6m over the same period. “As business travellers generally use the same services and facilities and engage in leisure tourism during their trip, there is significant potential to expand this segment,” Nutifafa Attah, commercial manager of local corporate travel agency Stellar Travel, told OBG.

Source Markets

Data from the Ghana Airports Company (GAC) found that out of a total international passenger volume of 478,621 in March 2019, Europe accounted for the largest share, at 37.9%, followed by West Africa (19.8%), East Africa (14.3%), the Middle East (10.1%), Southern Africa (8.7%), North Africa (4.8%) and North America (4.1%).

In the same period, 153,629 domestic passengers passed through Ghana’s airports. This segment is expected to grow significantly in the next decade. According to the WTTC, domestic spending accounts for 65% of sector revenue, with international spending contributing the remaining 35%. These figures are supported by the country’s growing middle class, higher purchasing power and a series of recent initiatives to promote domestic tourism. “Demand from regional, expatriate and local leisure tourists is increasing, particularly as economic conditions in West Africa improve,” Ernestina Abroquah, managing director of local travel services company Litina Tours, told OBG.

Tourism Assets

Ghana boasts a rich network of historical landmarks, cultural attractions, national parks and reserves. The traditional leisure tourist circuit is a triangular route from Cape Coast to Kumasi via Accra, with visits to Kakum National Park and the beaches along Cape Coast. The main attractions for leisure visitors from overseas are the forts and castles, beaches and national parks. Ghana has two UNESCO World Heritage sites: the forts and castles in the Volta Region, and the Asante traditional buildings in the Kumasi area. In June 2019 the Forestry Commission announced that Mole National Park, the country’s largest national park, was also to be given UNESCO status.

Ghana’s tourism assets have the potential to deliver significant economic growth and boost state revenue, but many require extensive maintenance. For example, of the country’s 64 slave trade exit points, lodges and castles built between 1480 and 1760, 32 remain standing and 18 are in good condition. There is a pressing need for renovation work on those in disrepair. Ghana also needs to develop tourism infrastructure at some of its natural attractions; there are five resource reserves in Ghana, but Shai Hills is the only reserve that currently has specific visitor facilities.

Hotel Infrastructure

With a range of new projects announced by both the government and private operators, hotel room capacity in Ghana increased significantly between 2015 and 2019. Growth has been driven by the arrival of several large hotel chains such as Kempinski in 2016 and Marriott in 2018, following on the heels of global companies such as Holiday Inn, Mö venpick and Golden Tulip. Recent developments include a Protea Hotel at Kotoka International Airport (KIA), announced in November 2018, and the construction of a Hilton hotel in Ada Foah on the south-east coast.

According to global hospitality research firm STR, hotels in Accra have the second-highest average daily rate (ADR) in Africa, after Addis Ababa. STR estimated that the highest ADR between July 2018 and June 2019 was $160.34. This is a significant factor hindering the rise of occupancy rates in Accra, which stood at around 60% in the same period. “Hotels in the capital remain expensive, even within the region,” Roman Krabel, general manager of Accra City Hotel, told OBG. “This is a deterrent to expanding domestic tourism.”

The government continues to encourage large-scale hotel construction projects. An incentive package was introduced under the Investment Promotion Act in 2013, providing hotel companies with reduced value-added tax, five-year tax breaks, and duty exemptions for specific equipment such as air conditioners and refrigerators. However, these benefits are limited to projects worth at least $50m, which does not encourage smaller firms to enter the market. “Government support has been limited in terms of investment opportunities and incentives for smaller and new operators,” John Mason, founder of Ghana EcoLodge Company, told OBG. “This is especially true for some segments of the tourism industry, such as rural tourism and ecotourism, which would ideally be limited to an investment range of $2m-5m.”

Niche Markets

Indeed, the potential to expand niche tourism segments in Ghana is significant. A World Bank report published in 2018 showed that high-end leisure and ecotourism has already had a positive impact on local income and job creation around key sites including Mole National Park, Kakum National Park, and coastal areas such as Takoradi and Elmina. According to the Global Business Travel Association Foundation, demand for ecotourism, cultural attractions and adventure tourism is expanding faster than traditional segments such as wellness, business and cruise tourism, both in Africa and globally. Importantly, tourists in these niche segments often spend more time and money on their trip.

Ghana’s community-based ecotourism offering, in particular, has expanded in recent years. The segment aims to foster a close relationship between tourists, tourism operators and communities. The country’s main ecotourism sites include Mole National Park, Kakum National Park and the Buabeng Fiema monkey sanctuary. Although the segment is still in its early stages, Ghana has made significant progress in developing ecotourism facilities at some of its main nature reserves. The country’s first eco-hotel – accommodation designed to be environmentally sustainable and have minimal impact on the natural environment – opened in 2018 at Mole National Park, and a second is under construction at the Shai Hills resource reserve.

Competitiveness

Despite improvements in the country’s economic outlook in 2018, the sector still has some way to go to improve its competitiveness and attract the investment needed for it to expand. According to the World Bank, Ghana’s tourism sector is held back by municipal government regulations, and high costs of access and doing business. Tellingly, the cost of credit and energy tariffs are estimated to be four times higher than the regional average. In addition, more than 15 different permits, taxes and levies must be paid by tourism operators to various government agencies each year.

Nevertheless, Ghana has improved its international standing in recent years. The country ranked 115th out of 136 countries in the 2019 World Economic Forum’s travel and tourism competitiveness index, compared to 120th in 2017. However, Ghana still scored behind Rwanda (107th), Senegal (106th) and the Gambia (111th), demonstrating the need to improve tourism infrastructure and reduce accommodation prices. “Attracting private sources of financing and ensuring sustained spending and investment in infrastructure remains a priority. Addressing high prices and low competitiveness is also important,” Krabel told OBG. “Allowing Ghana to become a more affordable destination is crucial to expand the country’s tourism base and attract revenue by targeting individual segments.”

Air Travel

According to the GAC, a total of 2.4m passengers travelled through Ghana’s airports in 2018, a slight increase on 2.3m in 2017. The majority of passengers in 2018 were international travellers, making up almost 2m, while the remaining 483,261 were domestic passengers.

Ghana has six airports located in the major cities of Accra, Ho, Kumasi, Takoradi, Tamale and Wa. In October 2019 Wa Airport officially launched its first commercial flight, operated by Africa World Airlines (AWA). It is hoped that the new airport will open up the Wa region to tourism and investment. The country’s only international airport, KIA, is located in Accra. In recent years KIA has expanded to support rising visitor numbers: in 2014 the Terminal 2 arrival hall was expanded by 5148 sq metres and a number of new facilities were added, including up-to-date security systems and two new baggage-handling stations. In September 2018 the new Terminal 3 building opened, positioning KIA as one of the region’s major airports. The $250m terminal is designed to welcome up to 5m passengers per year and 1250 passengers per hour (see Transport chapter).

The growth of air travel has also been supported by the liberalisation of the air service market across Africa, in accordance with the Yamoussoukro Declaration of 1999 – allowing open skies between most African countries – and the creation of the Single African Air Transport Market in 2019. As a result, there has been a growing tendency to promote the participation of private sector operators to meet the market’s needs. Despite this, the high cost of access and fuel, landing fees and airport taxes, which are reflected in the price of airline tickets, continue to limit Ghana’s ability to attract price-sensitive international visitors.

Airlines

AWA is the only indigenous regional airline connecting Accra to various capital cities in West Africa, and is the main operator offering a daily service from Accra to Lagos, Abuja, Freetown and Monrovia. It also launched a new service from Accra to Abidjan in 2019. Air Peace and Asky Airlines are the other major regional operators in Ghana.

In August 2019 Joseph Kofi Adda, minister of aviation, announced plans to launch a new home-based carrier. According to local media, the airline will connect several cities in the region with affordable airfares in order to target price-sensitive travellers and make Ghana a regional air transport hub.

Reform Agenda & Oversight

Despite underlying challenges, Ghana’s government agencies have shown a strong commitment to push through the necessary improvements in the tourism industry. In 2012 the government unveiled the 15-year National Tourism Development Plan (NTDP). By 2027 the plan aims to increase the annual number of visitors to 8m and raise sector revenue to $8.3bn per year. The 2019 budget highlighted the authorities’ commitment to boosting tourism, allocating GHS75m ($14.5m) to MoTAC, up 70% compared to GH43.9m ($8.5m) in 2017.

In 2017 Ghana joined other countries such as Mauritius, Rwanda and the Seychelles in introducing a visaon-arrival policy for visitors from most African nations, in line with the African Union’s Agenda 2063 strategy. According to the “Africa Visa Openness Report 2018”, Ghana is the seventh-most open country on the continent in terms of granting visas to other African nationals. In April 2019 Vice-president Mahamudu Bawumi announced the introduction of a new e-visa, emphasising the government’s commitment to making Ghana a business-friendly country while leveraging technology to improve service efficiency.

The GTA has implemented a series of measures to formalise the sector. In February 2019 the authority announced that all tourism sites would require licensing and certification, in order to improve overall quality and ensure that they meet international standards. Over 30 facilities in the Eastern Region, including restaurants and hotels, were closed in June 2019 following inspections to ensure compliance with the regulations.

Efforts to improve the quality of tourism facilities have also been enacted at a regional level. The African Continental Free Trade Area (AfCFTA), the Free Movement Protocol and the African Union Development Agency’s Tourism Action Plan are chief examples of initiatives to promote the industry’s development. The AfCFTA, for instance, is expected to increase intra-regional trade from 15% to 20% by 2040, with tourism identified as one of five key pillars of economic growth.

Marketing

In 2019 the government and the GTA announced several promotional and branding initiatives to raise Ghana’s profile as a destination for international visitors, while also seeking to stimulate domestic and leisure tourism. In 2018 President Nana Akufo-Addo announced that the GTA had recorded more than 600,000 visitors to various tourist sites under the See Ghana, Eat Ghana, Wear Ghana and Feel Ghana campaign. The initiative sought to promote the visibility of local products, such as food, handicrafts, clothing and beverages, in order to stimulate the country’s economy.

Ghana’s commitment to supporting the development of the creative arts industry is also considered crucial to expanding business opportunities for local suppliers. The government finalised the Creative Arts Bill in 2019, which will lead to the setup of the Creative Arts Fund to build the capacity of the country’s arts and culture facilities and events.

President Akufo-Addo has identified 2019 as the Year of Return, marking 400 years since the first enslaved Africans arrived in Jamestown, Virginia. The initiative aims to capitalise on historical links with the African diaspora, as well as boost Ghana’s marketability as a tourist destination. A number of different platforms have been employed to promote the initiative, including social media, promotional shows and trade fairs. “With a growing number of promotional events under way, the government has made a dedicated push to transform Ghana into a mainstream tourism destination,” Sajid Khan, general manager of Tang Palace Hotel in Accra, told OBG.

In order to tap into new markets, the GTA has initiated partnerships with niche hobby and interest groups across the world. For example, the authority is looking to attract more Chinese tourists through exhibitions and conferences at tourism events such as China International Travel Mart, China Outbound Travel and Tourism Market and Shanghai World Travel Fair.

Outlook

Ghana’s ability to transform the tourism sector, particularly the leisure segment, depends on its ability to attract private investment and maximise available resources. This means addressing underlying constraints that have held back development, such as regulatory policy, deteriorating tourism assets and infrastructure gaps. Despite the sector’s importance, Ghana has yet to develop a comprehensive strategy to capitalise on tourism as a source of foreign exchange. Creating an enabling environment will include supporting a skilled workforce, promoting Ghana as a tourism destination worldwide and implementing a parallel set of reforms to ensure long-lasting change. As the country’s hotel offerings, transport infrastructure and visitor numbers continue to improve, increased tourism flows could become a reality in the coming years.