Industry Risk/Reward Index - Zambia Tourism Risk/Reward Index
Key View: Zambia's score of 43.91 out of 100 in our Tourism Risk/Reward Index sees the country place eighth out of 20 countries in Sub-Saharan Africa. Zambia's score is strengthened by its Industry Risks score, one of the best in the region, showing the supportive environment for tourism companies.
Strong Risks And Steady Rewards
Zambia vs Sub-Saharan Africa Average, Tourism Risk/Reward Index (Q418)
This section offers an evaluation of the tourism sector's size and growth potential in each state, along with broader industry/state characteristics that may inhibit its development. The rewards score for tourism takes into account the numbers and percentage growth of tourist arrivals over the past year and our forecasts for future growth over the forecast period to 2022. Overall, Zambia has a rewards score of 38.90 this quarter.
Zambia is a small tourism market and total spending by visitors is low, but our forecasts show that it will expand from this low base over the forecast period to 2022. While growth in arrivals will be steady, growth in receipts will outperform from 2018 in local currency terms, as visitors see Zambia as a prime location for expensive safari and eco-tourism vacations and the kwacha gradually weakens against the US dollar. However, the expansion of the industry may be capped by the strong competition in Sub-Saharan Africa: South Africa, in particular, is a major rival in the tourism industry. Still, we assign Zambia a score of 37.50 for industry rewards this quarter.
The country rewards score takes into account labour costs and infrastructure. Zambia's score is hampered by the country's undeveloped road, air and rail infrastructure network, which means that there is little access to remote rural areas. There are also challenges in the labour market, including a lack of skilled workers. Consequently, Zambia has a country rewards score of 40.99, around the regional average.
This section offers an evaluation of industry-specific dangers and those emanating from the state's political and economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. Zambia has an overall risks score of 55.61, one of the region's strongest scores.
The industry risks score takes into account short-term political stability, regional stability and vulnerability to external factors. Zambia's industry risk score of 63.64 is just above the average score for the region. This reflects relative political stability and the prospects for stronger economic growth in the coming years. This score has been revised upwards since last quarter.
Our proprietary country risks scores cover aspects such as legal framework, bureaucracy, market openness and security risks. Though there as some risks stemming from an overspill of crime from neighbours and widespread domestic poverty, Zambia offers a relatively secure operating environment overall, and there is a low threat from terrorism. Zambia's score of 49.04 is slightly above the average for the region.
Source: Fitch Solutions