VZCZCXRO1234
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLS #0322/01 1311424
ZNR UUUUU ZZH
R 111424Z MAY 09
FM AMEMBASSY LUSAKA
TO RUEHC/SECSTATE WASHDC 6968
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORP 0119

UNCLAS SECTION 01 OF 03 LUSAKA 000322 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ZA
SUBJECT: Zambia's Tourism Sector 
 
LUSAKA 00000322  001.2 OF 003 
 
 
¶1.  (SBU) Summary: The global economic downturn and the subsequent 
drop in commodity prices, particularly copper, have forced the 
Government of Zambia (GRZ) to re-examine one of its most neglected 
economic sectors, tourism.  Despite Zambia's natural wonder - 
Victoria Falls - and abundant wild game parks, the ambivalent 
management of the sector by the GRZ reflects two key legacies: its 
socialist history and the related perception that foreign investors 
reap the benefits without giving back to the local communities.  To 
successfully unlock Zambia's potential in tourism, the GRZ must 
tackle these legacies.  End Summary. 
¶2.  (SBU) In its effort to diversify its economy away from its 
dependence on the always-undependable price of copper, the GRZ has 
identified tourism and agriculture as the two priority sectors with 
the most economic development and job creation potential. Government 
officials have recently been quoted in the press expressing optimism 
that tourism will create new jobs to offset job losses in the mining 
sector. 
¶3. (SBU) Despite its enormous range of tourism attractions, 
including world-class game-viewing opportunities and natural 
wonders, Zambia is one of the least-developed tourism destinations 
in southern and eastern Africa.  Although the 2010 FIFA World Cup is 
coming to nearby South Africa, Zambia appears ill-prepared to draw 
from (or cater to) the influx of tourists to the region. 
Zambia - the Real Africa... 
¶4. (SBU) Zambia's 17 protected game parks, 34 game management areas 
and natural attractions provide world-class tourism possibilities. 
However, beyond a few well-traveled destinations such as Victoria 
Falls and South Luangwa National Park (often cited as one of the top 
ten game parks in the world), tourism in Zambia is a 
still-developing sector that, along with other commercial sectors in 
Zambia, is still struggling to overcome a legacy of state control 
that only ended in the mid-1990s. 
¶5. (SBU) The Zambian Tourism Board (ZTB) introduced a five-year 
"Visit Zambia" marketing campaign in 2005, using a "Zambia - the 
Real Africa" tagline to entice potential visitors.  From a baseline 
of 515,000 tourist arrivals and $174 million in direct tourism 
receipts in 2004, the GRZ has set a goal of one million visitors and 
$300 million in receipts by 2010.  According to the ZTB, 2006 drew 
over 756,000 tourists, a 13 percent increase over 2005, and over 
850,000 tourists visited Zambia in 2008.  Much of the increase in 
recent years reflects the negative impact of political turmoil in 
Zimbabwe and redevelopment of 4 star and 5 star hotels near Victoria 
Falls by Sun International Hotels (Note: Victoria Falls can be 
viewed from both Zambia and Zimbabwe). The GRZ estimates that 
tourism currently contributes approximately six percent of GDP when 
direct and indirect linkages are included.  Despite this impressive 
growth, the economic downturn is likely to disrupt the GRZ's goal of 
one million tourists by 2010, and the receipts goal (reaching 8 
percent of GDP) is unlikely to be met. 
...With a Real African Approach to Business 
¶6. (SBU) The increases in sheer visitor numbers hide numerous 
problems plaguing the tourism sector, however, and recent government 
budgets have not addressed critical constraints to tourism, such as 
inadequate infrastructure, an expensive, unskilled, and unhealthy 
labor force, and high transport costs.  Additionally, tourism 
operators face the same obstacles as other private sector firms. 
Over-regulation and burdensome taxation make doing business in 
Zambia difficult and expensive.  Relative to other countries in the 
region, Zambia is a high-cost, high-effort destination; the average 
daily expenditure of a tourist in Zambia is about 30 percent higher 
than in competing countries, and as a landlocked country, Zambia 
must rely on increasingly expensive air links for the bulk of its 
tourist arrivals.  The USAID-funded Market Access, Trade and 
Enabling Policies Program (MATEP) conducted a competitiveness study 
which showed that, on average, a Zambian tourism enterprise is 
between 60 and 100 percent more expensive to operate than those in 
other countries in southern and eastern Africa. 
¶7. (SBU) In addition, Zambia does not have an effective tourism 
classification and standards system, and while a new Tourism and 
Hospitality bill was passed in 2007 to try and address the complex 
and costly licensing requirements, tourism operators complain that 
not many improvements have been made and, in some areas, the new law 
marks a setback.  These realities were highlighted in a 2007 World 
Bank Study, which illustrated that Zambia continues to underperform 
in tourism compared to neighboring countries.  As a result, most 
tourists visit only one site (only 12 percent of tourists more than 
one), stay less than seven days, and generally package Zambia with 
other destinations in the region. 
¶8. (SBU) The GRZ, particularly its officials who retain ties to 
previous socialist governments, perceives the private sector as a 
source of income, rather than an engine of growth and development. 
Consequently, regulatory barriers abound (hotels can be required to 
obtain several dozen operating licenses) and taxes are high (and 
generally rise if a sector begins to show promise).  In tourism, the 
government has underinvested in marketing and wildlife protection. 
Additionally, some in government believe that the tourist sector is 
controlled by and benefiting only foreign citizens.  The head of the 
Tourism Council of Zambia, a private sector-led industry 
association, told poloff that former minister of finance Ng'andu 
Magande once said to her, "Tell me what your tourism brings us," 
because he believed that foreign operators repatriated their profits 
 
LUSAKA 00000322  002.2 OF 003 
 
 
to their home countries instead of keeping them in Zambia. 
President Banda also was in the headlines recently complaining that 
white safari operators were blocking Zambian operators from opening 
lodges in the popular South Luangwa area. 
¶9. (SBU)  A recent study of the economic impact of tourism in Zambia 
found that of the average USD 1,100  that each tourist spends in 
Zambia, only USD 200 is "leaked" - that is, leaves Zambia to pay for 
goods not available here.  The USD 900 per person expenditure that 
remains compares favorably with the amount spent per tourist in 
South Africa (USD 879).  This may explain the GRZ's renewed interest 
in the tourist sector, as it repudiates the public's perception that 
foreign investors in tourism are repatriating their profits. 
¶10. (SBU) The economic downturn and the subsequent loss of jobs in 
the mining sector have these traditionalists re-evaluating their 
skepticism toward tourism and hoping the tourism sector can absorb 
job losses from the mines.    Despite some resentment towards 
foreign investors, Minister of Tourism, Environment and Natural 
Resources Namugala recently promised that the GRZ "will do 
everything possible to ensure that all processes pertaining to 
facilitating investment in the country are expedited so that 
investors are able to start operations as quickly as possible." 
If You Build It, They Will Come 
¶11. (SBU) As part of this plan to attract investment, Zambia has 
bold plans to diversify the tourism sector and promote attractions 
outside of the popular Livingstone and South Luangwa areas. 
Minister of Finance Situmbeko Musokotwane recently urged World Bank 
Group's International Finance Corporation to partner with the GRZ to 
help develop Kasaba Bay, on Lake Tanganyika in Northern Province, 
into a major international travel destination, which Minister 
Namugala described as a "pristine ... world class destination." 
Minister of Commerce Trade and Industry told the Ambassador in 
November 2008 that the GRZ hoped to entice visitors to do a circuit 
of Livingstone/Victoria Falls, South Luangwa Game Park, and Kasaba 
Bay (for beaches).  He hoped that low-end tourism would be more 
immune to financial crises than high-end, but his strategy for 
attracting budget hotels was to attract five-star facilities first. 
In addition, he was not able to explain how to get budget travelers 
to take three (expensive) domestic flights to get to each of these 
places, to which there are not adequate roads.  Despite the lofty 
rhetoric, Kasaba Bay lacks the basic infrastructure required to even 
begin such a project.  Roads, airport facilities, electricity, water 
and telecommunications are currently insufficient or nonexistent. 
¶12. (SBU) To address the infrastructure shortfalls, the GRZ trebled 
the tourism budget in 2009, 65 percent of which (USD 10 million) 
will go toward electrification, roads and airports at Kasaba Bay. 
The GRZ assured skeptics that as many as 12 hoteliers had expressed 
interest in investing in Kasaba Bay to turn it into a world class 
conference venue. 
¶13. (SBU) The Zambia Wildlife Authority (ZAWA) and the Ministry of 
Tourism, Environment and Natural Resources - both key institutions 
given tourism's close links to nature in Zambia - have been severely 
under funded.  The Zambian Tourism Board also received very little 
government support - its budget was $1.5 million in 2006, compared 
to budgets for similar regional boards of $7 million in Botswana and 
$6 million in Namibia.  Minister of Tourism Namugala recently 
dissolved the boards of both the Zambia Wildlife Authority (ZAWA) 
and Zambia Tourism Board (ZTB), suggesting that she considered them 
obstacles to sectoral growth.  Namugala recently said that while 
"budget constraints are the national anthem of Zambia," tourism 
sector promotion does not require a large budget.  In her speech at 
the opening of the second annual Zambia International Travel Show 
(ZITS), Minister Namugala also suggested that the tourism sector 
should continue to look at Zambia as a regional destination and 
encouraged attendees to piggyback efforts of neighbors like Botswana 
to benefit from their better funded international tourism 
promotion. 
2010 World Cup; Is Zambia Ready? 
¶14. (SBU) With just over one year until the opening match of the 
2010 World Cup, Zambia seems largely unprepared to gain from the 
increased visitors to Southern Africa. While original estimates 
predicted over 900,000 visitors, South Africa World Cup organizers 
have drastically revisd that number by more than one-half, in light 
of the global economic downturn. 
¶15. (SBU) Despite te numerous obstacles, Namugala recently 
challengd the tourism sector to attract 20 percent of Worl Cup 
visitors to South Africa.  Her optimism, hoever, is not an accurate 
reflection of the sectors capability at this time, and her 
statement fro the ZITS further reflects the GRZ's haphazard 
aproach to tourism promotion.  Smply put, the capacity to bring 
such a large number of tourists to Zambia, let alone to house them 
all, in such a short period of time, does not currently exist.  In 
addition, a representative poloff spoke with at ZITS suggested that 
World Cup fans can not be viewed as typical tourists expected to 
travel extensively, particularly during the current economic crisis. 
 
¶16. (SBU) Comment: The GRZ's desire to exploit its tourist potential 
is prudent, but the challenges to unlocking Zambia's potential are 
considerable.  It does not have the resources or the capacity to 
create the infrastructure for mass tourism.  It would be better off 
focusing on the facilities that it does have and bringing their 
3-star quality up to the level of their 5-star prices.  In the near 
 
LUSAKA 00000322  003.2 OF 003 
 
 
term, however, it should focus upon alleviating the difficulty of 
doing business in the country -- regardless of the sector.  By 
rationalizing regulations and standardizing taxation, it could 
unleash potential in tourism and other critical sectors. 
 
BOOTH