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Pro-Poor Tourism

From philanthropy to a different way of doing business:
Strategies and challenges in integrating pro-poor approaches into tourism business

Caroline Ashley, Gareth Haysom


January 2005

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This paper explores some of the ways to optimise the impact of the tourism sector for local development and poverty reduction. It is not an overview of all aspects of ‘pro-poor tourism’ (PPT), but focuses on strategies that tourism companies can adopt. It draws on reflections from practical engagement with companies in Southern Africa, supplemented by secondary research. It has three main aims: firstly, to illustrate that there is much that ‘mainstream’ commercial tourism can do to embrace pro-poor approaches; secondly, to go beyond generalisations about what companies should do to look at some of the nitty gritty of how they can implement changed practice; thirdly, to put forward the argument that the tourism sector needs to go much further in shifting from philanthropic approaches to community benefit to pro-poor approaches that entail doing business differently.

The paper first puts pro-poor tourism in the context of other concepts relating to growth and tourism and corporate behaviour. It then outlines a distinction between philanthropic donations and adapting business practice to be pro-poor. The remainder of the paper explores this distinction though empirical material from South African companies that are attempting to change business practice. Their initiatives, the business benefits, and the lessons for others are assessed.

Some would question the very starting point – engagement with companies to promote pro-poor change. Tourism companies, after all, are profit-seekers, whose business is commercial tourism, not development. But the assumption underpinning the work presented here is that that ‘we’ (as society) should seek to optimise the impact of tourism business. The argument goes thus:
  • Poverty is widespread and direct approaches to poverty reduction are making insufficient progress – thus ‘pro-poor growth’ is also needed, i.e. growth which is inclusive of the poor.

  • Tourism is a major economic sector worldwide, with particularly rapid relative growth in poor countries, thus is potentially very important for pro-poor growth.

  • (Limited) evidence shows tourism can be developed in ways that increase net benefits for the poor. Furthermore, one approach to this is for companies to do business differently, and evidence indicates that doing business in pro-poor ways can make commercial sense. This should therefore be promoted.
Doing business differently will only ever involve change at the margin – tourism business remains a business. But marginal change in a massive sector can be significant for development.

The counter-argument needs to be recognised too. Conventional economics teaches that any policy instrument can only effectively be used for one objective. Trying to achieve two objectives with one tool is sub-optimal. Thus the ‘first best’ theoretical approach to achieving growth and poverty reduction may be for businesses to deliver growth, and for redistribution and public investment to deliver poverty reduction and equality. But what is first best in theory is not always deliverable in practice. Public expenditure alone cannot meet the enormous social goals. It seems a wasted opportunity – as well as unethical – to not try to harness business practice in ways that deliver more for local communities and local economies.

The paper also rests on assumptions that there is a ‘business case’ for change, which provides incentives for tourism companies to contribute more to society. Without a business case, promoting pro-poor change with commercial companies would be futile. As outlined below, experience indicates that there is not one single ‘business case’ but several reasons why businesses may gain from pro-poor behaviour.

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