Tourism, Poverty Alleviation and Local Economic Development

Many holidaymakers want to learn more about the countries they are visiting — the people and their cultures, traditions and cuisine.

The contribution of tourism to the local economy is often undervalued. It has five kinds of positive economic impacts on livelihoods, any or all of which can form part of  poverty reduction and LED strategies.

The Positive economic impacts are —

  • Wages from formal employment
  • Earnings from selling goods, service or casual labour
  • Dividends and profits arising from locally owned enterprises
  • Collective profits from a community run enterprise, land rental, dividends from a joint venture or levies — these incomes can provide significant development capital and provide finance for corn-grinding mills, a clinic, schools, school books etc
  • Infrastructure gains, for example roads, piped water, electricity and communications


All too often, particularly in rural areas, local people are denied any significant opportunity to participate in the tourism market. Tourists are not accessible to the local community when they are within their hotels, coaches and safari vehicles or inside sites or exclusive attractions. These are enclave forms of tourism, where those wishing to sell goods or services to tourists are often reduced to hawking at the enclave entry or exit points.


There are a number of strategies that can be used to enhance the overall economic benefits and can have a poverty reduction focus.

Women gather for an outdoor Community Participation workshop held in Tanzania.

The tourism sector in the poorest countries is generally very dependent on international markets, as they do not have significant established domestic markets. The challenge is to attract larger numbers of those international and domestic tourists most likely to benefit the poor — those predisposed to visit local markets and to seek tourism experiences based on nature, culture and daily life which are most likely to be provided by poor communities.

The importance of intra-regional tourism in this regard should also be noted. As an example 40 percent of Africa’s tourism comes from neighbouring African countries. Opening up the roads and improving the modes of transport between countries in a Region would greatly enhance the movement of people and contribute to poverty reduction. Intra-regional tourism is especially valuable for tourism and local economic development because of the greater likelihood of shared cultural values and familiarity with social systems between peoples of neighbouring countries.

The World Bank’s World Development Report recognised that economic growth does not necessarily result in swift poverty reduction; this requires an explicitly pro-poor strategy. Such growth requires that the benefits flow in a disproportionate way to the poor.


Strategies are required which extend the average length of stay through the development of the product, increase the numbers of bed nights sold and the expenditure of tourists on board and accommodation, and increase the economic returns from the same number of visitor arrivals. If the additional bed nights create extra employment or create greater opportunities for the poor to  sell goods and services to the tourists or to the tourism industry, then there will be a poverty reduction impact.


There is a market trend towards more experiential holidays; holidaymakers want to learn more about the countries they are visiting — the people and their cultures, traditions, cuisine etc. The trend is towards more active holidays, greater personal involvement and active participation instead of passive relaxation. This encourages the diversification and enrichment of the tourism product. Developing more activities and attractions, with interpretation, and providing the services of guides and transport necessary to their enjoyment increases both expenditure and length of stay. Making more extensive use of natural and cultural heritage, whilst carefully managing the tourism impacts so as to ensure the conservation of resources, can make an important contribution both to economic development and conservation. Special interest tourists tend to spend more money on and during their holidays and to stay longer, whether those interests are based on natural, archaeological, historical or cultural heritage or based on adventure and physical challenge.


In general, tourism experiences are shaped by the geographical diversity of beach, mountain, river, desert, wilderness and urban attractions, and holidaymakers can be encouraged to travel further, beyond established destinations (game reserve, coastal resort) in order to experience particular environmental, cultural or natural heritage attractions. Tourism routes and trails and other similar products have been developed to extend length of stay and to spread the advantages of tourism development to new areas and communities, and they can be used for initiatives that specifically benefit poor communities.

This will be continued in an ongoing series of blogs dealing with ‘Tourism and LED’, ‘Pro Poor Tourism’ and ‘Community Based Tourism’. Visit our Blog  and call back soon.

Lorton Consulting has substantial experience in Tourism Planning for Community Participation, Tourism as a driver for LED, and Community Based Tourism. Please contact us now so that we can assist you with your Tourism driven LED programme.