BRICS membership drives growth for South Africa's tourism industry

30 July 2018 Authored by Consultancy.co.za

As the leaders of Brazil, Russia, India, China, and South Africa (BRICS) converge for the 10th annual BRICS summit in Johannesburg, PwC’s consulting arm Strategy& has found that the direct, indirect, and induced impact of tourism from BRICS countries on South Africa’s economy is likely to create nearly 30,000 jobs in the country’s tourism industry. 

Today is the final day of the three-day BRICS summit held in Johannesburg this year, and the main topics of discussion covered pertinent subjects such as peacekeeping and partnerships to facilitate industry 4.0 and some specific plans such as the establishment of a vaccine research centre, a gender and women forum, and a BRICS Tourism Track of Cooperation.

The last of these initiatives pertains to the substantial tourism that these countries generate amongst each other. Overall, the tourism sector in South Africa is a crucial contributor to the economy, generating more than 9% of the country’s GDP and providing jobs to as many as 1.6 million people, in addition to being one of the most diverse sectors in the country.

Last year, South Africa was the destination for 10.3 million tourists from across the world, a figure that stood at 7 million nearly a decade ago in 2009. Growth in the sector resulted from targeted initiatives from the South Africa government under the National Tourism Sector Strategy 2010-2020.

South Africa's travel and tourism competitiveness factors

The compound annual growth rate (CAGR) of the country since 2009 – around 5% – exceeds the targets set under the NTSS, which is aimed at making South Africa the largest tourist destination on the continent. According to the World Economic Forum, South Africa is currently ranked 53 out of 136 countries in the Travel & Tourism Competitiveness Index.

In some areas, however, the country was well entrenched in the top 10% in the rankings. These include, brand strategy, hotel pricing, quality of air transport, general tourism infrastructure, aesthetic appeal of natural assets, and, perhaps less significantly for the most part of the year, the number of large sport stadiums.

The sector is also due to continue growing over the near future. According to Big Four accounting and advisory firm PwC, the number of tourists to South Africa will likely increase at a CAGR of nearly 4% over the next four years to reach a staggering 12.3 million by the year 2022.

Moreover, the firm attributes a significant portion of this growth to South Africa’s membership in BRICS, particularly given the country’s position as host this year. Collaborative efforts amongst BRICS countries have led to the relaxation of visa regulations between the countries, which has further prompted an increase in tourism.

Increasing tourist arrivals from BRIC nations

BRICS nations accounted for over 275,500 tourists to South Africa last year, which represents a 6% increase from the previous year, and the group of nations is currently debating methods to drive these numbers even further up for all countries.

The 6% growth was driven primarily by Brazillian tourists in South Africa, who registered an increase in number of nearly 75% between 2016 and 2017 alone. Russia also saw a large increase of 51% in the number of tourists to South Africa during the same period, while the number from India increased by a relatively small 2.7%. China’s tourist arrivals actually fell by 17% between 2016 and 2017.

“The 10th BRICS summit will not only bring hundreds of visitors from the BRIC (Brazil, Russia, India and China) nations to South Africa, but further stimulate the growth already seen in overall inbound tourism from these four partners,” said the report.

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