Diversifying the Economy: The Economic Potential of Nigeria’s Tourism and Hospitality Industry -By Dovish Okojie

The tourism and hospitality sector in Nigeria holds significant economic importance. It can contribute to the country’s GDP, create employment opportunities and stimulate economic growth in various ways. Unfortunately, this sector has not gotten the the necessary attention it should. In our quest for double digit growth and economic diversification, this sector can be a major “Cash Cow” for Nigeria. Strengthening and developing the tourism and hospitality sector in Nigeria will have positive ripple effects on the overall economy, leading to inclusive economic growth, poverty reduction and sustainable development. In this article, the focus will be on highlighting the economic importance of this sector and proposing practical solutions for the challenges that have hindered the growth and massive potential in this amazing industry.

Economic importance of the tourism and hospitality sector

1. Foreign Exchange Earnings: The tourism and hospitality sector in Nigeria can generate foreign exchange earnings through international tourist arrivals and expenditures. Foreign tourists spend money on accommodation, food and beverage, transportation, souvenirs and other tourism-related services which can contribute to the country’s foreign exchange reserves. This will help to strengthen the country’s balance of payments position, improve its international trade and enhance its economic stability.

2. Cultural Preservation: Nigeria is a country with rich cultural heritage and diverse cultural assets including traditional arts, crafts, music, dance, festivals and historical sites. The tourism and hospitality sector plays a vital role in preserving and promoting Nigeria’s cultural heritage by creating demand for cultural tourism experiences. This encourages the preservation of traditional practices, promotes cultural exchange and raises awareness about the value of Nigeria’s cultural assets.

3. Entrepreneurship and Small Business Development: The tourism and hospitality sector in Nigeria can provide opportunities for entrepreneurship and small business development, as it offers a favorable environment for micro, small, and medium-sized enterprises (MSMEs) to thrive. Local entrepreneurs can start small-scale businesses in the tourism and hospitality sector such as guesthouses, restaurants, tour guiding and souvenir shops which can contribute to economic diversification and reduce dependence on traditional sectors.

4. Forward and Backward Linkages: The tourism and hospitality sector in Nigeria has forward and backward linkages with other sectors of the economy such as agriculture, manufacturing, transportation and services. For instance, hotels and restaurants rely on local agricultural products for food supply, creating demand for agricultural produce and supporting local farmers. Similarly, the sector creates demand for manufactured goods such as furniture, textiles and handicrafts, thereby stimulating local manufacturing and handicraft production.

5. Infrastructure Development: The tourism and hospitality sector in Nigeria drives the development of tourism-related infrastructure such as hotels, resorts, restaurants, transportation and other facilities. The development of such infrastructure requires investment in construction, renovation and maintenance, which generates economic activities and creates employment opportunities in the construction and related industries.

6. Government Revenue Generation: The tourism and hospitality sector in Nigeria can contribute to government revenue generation through various means such as taxes, fees, permits and licenses. The government can collect revenue from the tourism and hospitality sector, which can be used to fund public infrastructure development, social services and other government programs, contributing to the overall economic growth and development of the country.

7. Regional Development: The tourism and hospitality sector in Nigeria can also stimulate regional development by promoting tourism in lesser-known destinations and rural areas. This can help in reducing regional imbalances and promoting inclusive development. Tourism development can create opportunities for local communities to participate in the sector and benefit from the economic gains.

8. Foreign Direct Investment (FDI) Inflow: The tourism and hospitality sector in Nigeria can attract foreign direct investment (FDI) inflow, which can contribute to economic growth and development. International hotel chains, restaurants and other tourism-related businesses may invest in Nigeria, bringing in foreign capital, technology, expertise and global best practices. This can stimulate economic growth, create employment opportunities and enhance the competitiveness of the sector.

Challenges in the tourism and hospitality sector in Nigeria and practical solutions.

1. Inadequate Tourism Infrastructure: Nigeria’s tourism infrastructure, including transportation, accommodation and attractions is often inadequate, which hinders the growth of the tourism sector.

Solution: To address the challenge of inadequate infrastructure, the government can collaborate with private investors and international development agencies to fund and implement infrastructure projects such as;

i. Building and improving roads, seaports and other transport networks leading to tourist destinations, particularly in remote areas to ease access for tourists.
ii. Upgrading and expansion of major airports to accommodate more international flights and improved passenger experience.
iii. Develop and manage quality accommodation facilities that cater for different segments of tourists, from budget to luxury.
iv. Provide basic amenities such as water supply, electricity and waste management in tourist destinations to meet international standards.
v. Develop and promote tourist attractions, such as natural sites, cultural heritage and events to attract tourists.

2. Limited Marketing Efforts: Nigeria’s tourism sector lacks effective marketing and promotion, resulting in low awareness and limited visibility in the international tourism market.

Solution: To address the challenge of limited marketing efforts, the Government can collaborate with the private sector to create comprehensive tourism marketing strategies such as;

i. Destination branding campaign that showcases Nigeria’s unique tourism products, its rich cultural heritage, natural attractions, vibrant music and arts scene.
ii. Partner with travel agencies, tour operators and media outlets to promote Nigeria domestically and internationally as a preferred tourist destination.
iii. Utilizing social media influencers and digital marketing platforms to raise awareness and promote Nigeria’s tourism offerings.
iv. Participate in international tourism fairs, such as World Travel Market and ITB Berlin, to network with international travel professionals and showcase Nigeria’s tourism offerings.

3. Security Concerns: Security challenges including issues of insurgency, terrorism and crime have affected Nigeria’s image as a safe and secure tourist destination leading to decreased tourist arrivals.

Solution: To address the challenge of security concerns, the Government should work towards improving the overall security situation in the country and Implement effective security measures to enhance safety and security awareness among tourists. This can be achieved by;

i. Collaborating with security agencies, local communities and tourism stakeholders to establish community-based security initiatives, such as neighborhood watch programs to enhance security in tourist areas and restore confidence among tourists.
ii. Deploying security personnel, including police and tourist police to popular tourist destinations to provide visible security presence and ensure the safety of tourists.
iii. Installing surveillance and monitoring systems in tourist areas, enhancing emergency response mechanisms and providing training to staff on safety protocols to create a safe environment for tourists.
iv. Private sector operators can also take steps to ensure the safety of tourists by implementing appropriate security measures at their facilities.

4. Limited Tourism Product Development: The diversity and potential of Nigeria’s tourism products have not been fully developed, resulting in limited options for tourists and reduced competitiveness in the global tourism market.

Solution: To address this challenge, the Government should invest in the development of a diverse range of niche tourism products that cater to different types of tourists. These includes;

i. Cultural tourism, such as festivals, traditional crafts, indigenous music and dance performances to showcase Nigeria’s rich cultural heritage.
ii. Eco-tourism, such as wildlife viewing, hiking and nature trails in national parks and reserves.
iii. Others are adventure tourism and medical tourism. Niche tourism products helps attract specific target markets.
iv. And also support and collaborate with local communities and stakeholders to create unique community-based tourism initiatives, such as homestays, cultural tours and craft workshops that provide authentic experiences for tourists and generate income for local communities.

5. Inadequate Service Quality: Service quality in the hospitality sector in Nigeria can be inconsistent, with issues such as poor customer service, lack of trained personnel and substandard facilities.

Solution: To Improve service quality, there should be investment in training and capacity building for hospitality industry personnel. This include;

i. Training programs on customer service, communication, technical skills and best practices in the tourism/hospitality sector.
ii. Language proficiency programs for frontline staff to enhance communication with international tourists.
iii. Education and training programs can be offered by collaborating with educational institutions to develop a skilled workforce in the sector and private sector operators can offer scholarships, internships and on-the-job training.
iv. Implementing and enforcing quality standards and regulations for tour operators and other tourism-related businesses, such as star-rating systems for hotels and restaurants to ensure that accommodation facilities and dining establishments meet international standards in terms of cleanliness, safety and service quality.

6. Limited Access to Finance: Access to finance for tourism/hospitality businesses, especially for Small and Medium Enterprises (SMEs) can be challenging in Nigeria, hindering their growth and expansion.

Solution: Establish dedicated funding schemes or venture capital funds specifically for the tourism/hospitality sector to provide affordable and accessible financing options for businesses. This can be achieved by;

i. Collaborate with financial institutions and international development agencies to establish tourism development funds and favorable financial products, options and incentives tailored for the tourism/hospitality industry, including low-interest loans, longer repayment periods, grants, tax breaks and equity investments.
ii. Providing support and mentoring programs for entrepreneurs and small businesses in the tourism/hospitality sector on business plan development and financing options for expansion, upgrading and innovative projects.
iii. Private sector operators can offer financing options or partnerships to support local businesses in the tourism value chain, such as tour operators, accommodation providers and handicraft producers.

7. Lack of Skilled Manpower:

Solution: Invest in education and training programs to develop a skilled workforce for the tourism/hospitality sector. This can be achieved by;

i. Collaborate with educational institutions to offer specialized courses and programs in hospitality management, tour guiding, culinary arts and other relevant fields.
ii. Providing scholarships, internships and apprenticeship programs to students and young professionals and offering on-the-job training and mentoring programs to attract and retain talent in the tourism/hospitality industry.
iii. Establishing hospitality and tourism training centers in key tourist destinations to provide training programs for locals, and this will also create employment opportunities and enhance the quality of services provided to tourists.

8. Lack of Destination Management Organizations (DMOs):

Solution: The Government should establish and support Destination Management Organizations (DMOs) at the local, regional and national levels to coordinate and promote tourism development efforts. This can be achieved by;

i. Establishing DMOs in key tourist destinations, such as Lagos, Abuja, Calabar and Enugu, to coordinate tourism development efforts, conduct market research and promote tourist destinations.
ii. Government providing funds, training and technical support to DMOs to enable them effectively develop and manage marketing strategies, branding campaigns and promotional materials.
iii. Fostering collaboration among DMOs, local communities and tourism stakeholders to ensure sustainable and inclusive tourism development.

9. Inadequate Information and Data:

Solution: The availability and accessibility of accurate and up-to-date information and data on Nigerian tourism should be improved. Steps to achieve this include;

i. Collaborating with local communities, tour operators and other stakeholders to collect and share accurate and up-to-date information.
ii. Developing a comprehensive and centralized tourism information system that includes an online database to disseminate information of tourist destinations, attractions, accommodation facilities, transportation options, safety guidelines and other relevant information to potential tourists, tour operators and other stakeholders.
iii. Creating user-friendly websites, mobile applications and social media platforms to provide information and engage with potential tourists.

10. Limited Community Involvement:

Solution: Local communities should be involved in tourism planning, development and decision-making processes. Their representation in tourism governance structures should be ensured to foster community engagement, ownership and empowerment. These can be achieved by;

i. Creating community-based tourism initiatives that promote the conservation of cultural heritage and provide economic opportunities for local communities.
ii. Implementing benefit-sharing mechanisms, such as revenue-sharing arrangements, employment opportunities and capacity building programs, to ensure that local communities directly benefit from tourism development and this will ensure that tourism development is sustainable and inclusive.

Addressing the challenges in the tourism and hospitality sector in Nigeria requires a multi-stakeholder approach. Implementing the above solutions and collaborations between the government, private sector operators, educational institutions and local communities will unlock the potential of the tourism/hospitality sector and create a conducive environment for tourism development in Nigeria. This will lead to economic growth through improved revenue generation, job creation, cultural preservation and sustainable development in the industry.

Dovish Okojie is a Management Consultant and Public Affairs Commentator. He writes from Abuja and can be reached on dovishokojie@gmail.com