July 22, 2010

Smart Tourism Investment Examined at DAI, Aspen, USAID Roundtable

Some of the poorest places on Earth are also some of the most beautiful – the Andean foothills, Africa’s national parks, and Indonesia’s rainforests, to name a few. But while developing tourism in these locales could create much-needed jobs and economic growth, investors often dismiss such ventures as being too risky.

Investors and tourism experts met last week at the Aspen Institute in Washington, D.C., to examine ways to design projects that provide investors with the safe, acceptable returns they need while also serving to improve lives in poor local populations.

The challenges discussed at “Impact Investment in Community-Based Sustainable Tourism,” a roundtable organized by DAI, the U.S. Agency for International Development, and Aspen Network of Development Entrepreneurs, focused on aligning layers of investors, donors, and other stakeholders behind market-driven projects; the projects, in turn, should meet diverse financial and social goals.

“We must have a constellation of goals in mind when we engage in tourism development,” said Keith Dokho, a DAI sustainable tourism specialist. “How do you customize a return on investment and also measure the social return in a way that makes commercial sense?”

Tourism development affects many local business sectors, including hotels, transportation, grocers, farmers, tour operators, and crafters. Equally diverse is the array of investors, donors, technical assistance, and local support required to build a foundation solid enough to sustain a tourism investment.

In considering the ingredients needed for a prospectus in which budgets make sense up front for investors, the roundtable discussed topics such as local money management, liquidity and seasonal cash flow, accreditation of intermediaries, local cultural norms and visitor expectations, and exit strategies for investors. The local legal and enabling environment was also among the many factors affecting investor and donor confidence.

Discussants included representatives from Wells Fargo, African Middle Market Fund, EcoEnterprises Fund, Small Enterprise Assistance Funds, the Overseas Private Investment Corporation, the U.S. Department of Commerce, the International Financial Corporation, and the United Nations Development Programme.

Representatives from the Maruleng and Bushbuckridge Economic Development Initiative, a project of ECIAfrica, DAI’s subsidiary for southern Africa, also led discussions.