PAUL MWIJAGYE

KAMPALA, UGANDA - With a few weeks remaining to the next financial year's budget, tour operators are asking for the extension of incentives in the sector because most of them have not been able to utilize them.

As one of the fastest growing service sectors of the economy and the second highest foreign exchange earner after Ugandans in the Diaspora, it was only befitting that the tourism sector gets incentives to boost growth.

During her 2009/2010 budget speech, Uganda's Minister of Finance Syda Bbumba announced that taxes on vehicles for tourists bought by licensed tour agencies had been waived.

She also announced tax exemption on construction materials for hotels. However tour operators have not been able to exploit the incentives, saying the incentives came at the wrong time when the industry had a lot of challenges.

"Most of the tour operators were not able to buy the cars because this came at a time when there was the world economic crisis. This reduced tourist arrivals by almost 60%," Amos Wekesa, the chairman Uganda Tourism Association told East African Business Week in an interview recently. "We therefore request the government to extend the incentives for at least one or two years," he said.

Despite tax exemption on construction materials for hotels, there remains a big deficit in accommodation in most of the national parks in Uganda.

Besides the deficit in accommodation in national parks, the hotel industry in Uganda is yet to address challenges like lack of trained personnel to manage the hotels and hotel grading.

"The tourism industry needs commitment from government towards training players in the hotel sector because they play a vital role in tourism," noted Wekesa. Other necessary infrastructure for tourists such as stopovers along highways where tourists can relax are still lacking.

Ismail Sekandi, the chairperson Uganda Hotel Owners Association had earlier told EABW in an interview that the issue of grading hotels in Uganda still remains pending yet this affects service delivery in the sector. " The word 'hotel' should be discretionally used to differentiate it from Inns and guest houses," he said.

Wekesa said besides the incentives given by government, there are still challenges like marketing the image of the country which needs to be done urgently. "Marketing the image of the country has not been well done. If we can, as a country, we should have a budget to market tourism," Wekesa said.

In last year's budget UShs2b (about $1m) was allocated for the promotion and development of tourism. Industry experts however see this as too little compared to what is required to take the sector that contributes about $630m annually to the another level.

So far there are indicators that funding for the sector is not likely to increase in the next budget, with the national budget framework paper for 2010/11 indicating that the total allocation for the Tourism Uganda under vote 117 of the paper is projected to remain constant in the 2010/2011 financial year at UShs2.05b.

Tourism is now number three on the list of the national primary growth areas of the newly-released National Development Plan, after agriculture and forestry.

Some players however argue tourism should have been given the first priority because of its returns to the economy.

"One permit for tracking gorillas costs UShs1m ($500) just for a day. How long would it take for someone involved in agriculture to get that money," argued Wekesa.

While tourism earning are on the increase, recent statistics show a continuous decline in earnings from Uganda's traditional exports of coffee, cotton and tobacco.

In 2008, tourism contributed 9.2% ($1.2b) to the gross domestic product, while in Kenya tourism contributed 10.8% ($3.5b) to GDP, according to the World Tourism and Travel Council (WTTC).

This disparity maybe directly linked to the investment that Kenya puts into the sector. According to the draft corporate strategy plan 2009-2012, Kenya spends Ksh1b on marketing alone.

Kenya beats Uganda in the arrival figures. Tourism arrivals in Uganda increased from 512,000 in 2004 to 844,000 in 2008, an increase of 65% in five years whereas Kenya registered 1, 816,800 tourist arrivals in 2008.