Tourism and Value Addition in Rwanda’s Economy

Abstract

Measurement of tourism economic impacts is important in monitoring progress towards meeting planned socio-economic goals. However, there has been insufficient attention to rigorous analysis of ramifications of tourism beyond accounting for initial impacts. This study evaluated economic impacts of tourism in Rwanda by examining its effects on value addition. Rwanda’s 2014 Input-Output table was used to compute direct, indirect, induced and total (SAM Type) multipliers which were interacted with internal tourism demand data from Rwanda’s 2014 tourism satellite account to estimate these impacts. Value added multipliers indicated that tourism has strong linkages with service sectors. Results showed that tourism internal tourism demand generated 11.1% of total value added in the economy in 2014. Thus increasing internal tourism demand in Rwanda would potentially lead to increased value addition in agriculture and other associated sectors. This study’s main contribution is taking into account the predominantly informal sector of Rwanda’s economy especially with respect to the domestic tourism market. Future studies could estimate value addition in the economy using computable General Equilibrium models in order to capture dynamic aspects.