Estimating the direct contribution of tourism to Rwanda’s economy: Tourism satellite account methodology

Abstract

The tourism industry is poised to command a significant role in the economy of Rwanda, a low-income developing country that is rapidly transforming into a service-oriented economy. However, the industry does not exist as a distinct entity in a country’s national accounts leading to difficulties in estimating its role. Besides, the existence of a significant informal sector aggravates the situation. This study used tourism satellite accounts approach to estimate the economic contribution of tourism. Using primary data from various tourism surveys, six core tables of the tourism satellite accounts framework are presented to esti- mate the direct economic contribution of tourism to Rwanda’s economy in 2014. In this year, a total of 1,219,529 international tourists visited the country while 560,000 residents took part in domestic tourism trips resulting in internal tourism expenditure/consumption amounting to RWF 261.2bn. This generated an estimated RWF 197.5bn as gross value added by the tourism characteristic industries. Direct tourism gross value added was estimated at RWF 120.0bn while direct tourism gross domestic product, a measure of the direct effects of internal tourism consumption on gross domestic product of the economy was computed at RWF 128.3bn (or 2.5% of Rwanda’s gross domestic product) in the year. In addition to the core six tourism satellite accounts tables, the levels of tourism employment (about 89,000 jobs) tourism gross fixed capital formation (slightly over RWF 200bn) and tourism collective consumption (over RWF 7bn) were estimated. Under this study, the international methodological recommendations on tourism satellite accounts were implemented for Rwanda. The contribution of tourism to gross domestic product, employment, investment, and collective consumption was quantified and estimated. Informal sector tourism activities were included in these estimates. Gross fixed capital formation and collective consumption estimates are tentative due to conceptual considerations documented by the methodological framework.