Article
Attracting Indian Outbound Tourists
to South Africa: A BRICS Perspective
Unathi Sonwabile Henama
India Quarterly
69(3) 229–247
© 2013 Indian Council
of World Affairs (ICWA)
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/0974928413489466
http://iqq.sagepub.com
[email protected]
Abstract
South Africa in the post-1994 era has experienced phenomenal growth in foreign tourism. The Tourism
White Paper (1996) had noted that South Africa missed its tourism opportunity because of the country’s
troubled past. The rapid economic growth experienced by the BRICS countries has changed the face
of international tourism. The tourism destinations have moved from developed to developing countries. In this context, the article highlights that South Africa enjoys 2.6 per cent of the lucrative Indian
outbound tourism market. This market share has the potential to be increased. India has been added
to South African Tourism’s (SAT’s) Core Markets List. A longitudinal analysis from foreign arrivals indicates two things, one, that India remains the top Asian foreign arrivals country, represented by 71,587
arrivals in 2010, and two, that India remains resilient to hold to its number one spot in Asian foreign
arrivals to South Africa. South Africa must gear itself up to encourage the trend.
Keywords
India, South Africa, tourism, development, diaspora, BRICS
Introduction
‘The end of apartheid in South Africa heralded a new chapter in the history of South Africa as it has
entered the global community of nations and also become integrated into the global economy.’ The legacy of apartheid has created a high monopolistic economy along the majority of economic activities,
with extraction industries, such as mining, as the main economic drivers. The increasing mechanisation
of mining and agriculture in an age of global competitiveness meant that machine replaced man in many
operations. The demand for labour in the mining and agricultural sector fell in South Africa, and these
shrinking sectors also tended to employ relatively less-skilled labour. Furthermore, that there was a
decline in demand for low skills, and that there was an influx of low-skilled labour was a ‘perfect storm’.
South Africa remains a highly unequal society which contributes to the duality in lives in South Africa,
a small rich strata living side-by-side with the majority of poor South Africans. The economic costs of
high unemployment rate and low growth have created the conditions for unrest amongst the population.
The growth of jobs is not at a steady pace to support the demand for jobs and tourism has been one
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Unathi Sonwabile Henama
industry that has been growing with jobs. According to Chandra et al. (2001), employment increase of
50 per cent or higher occurred in small, medium and micro entrerprises (SMMEs) located in three service sectors—tourism, IT and retail.
In fact, pre-1994 tourism industry in South Africa was anti-developmental due to apartheid legislation
which ensured that the industry almost exclusively catered to whites. This also ensured that the tourism
value chain was also catering the white tourists. This also impacted the aviation industry as many international airlines boycotted South Africa and the domestic market served white tourists almost exclusively. Tourism facilitates the process of poverty alleviation and income distribution between countries,
thereby contributing to a more balanced development in the world economies according to Satani (2004).
Tourism businesses have low barriers of entry that create the conditions for the majority of SMMEs
being owned by family members, spouses and extended family members. Community ownership is also
allowed and joint ventures can also be undertaken with local partners. Tourism is also attractive as it
creates the incentive for stimulating domestic production to cater the needs of the tourism and the tourism product owners. Local production should be supported to ensure that the economic expenditure of
tourists stays in the local economy and creates further multiplier effect.
The tourism industry is beneficial to the support infrastructure for tourism, such as transport, financial, telecommunication, energy and distribution services. Savings are important as a means of attaining
economic growth in a country; therefore, the shortage of local savings can lead to a country borrowing
money at interest to facilitate development and infrastructure. According to Landman (2003, 14), ‘low
savers like South Africa thus need foreign investment to overcome the shortage of local savings’. The
tourism industry is able to bring in much needed foreign exchange into the country as it is an export
product consumed at the destination area. The growth of tourism in a country will attract foreign investments as transnational capital will seek to benefit from opportunities that existed. As a result of the
development potential of tourism, a separate Ministry of Tourism was established owing to the growth
of tourism as an economic sector that demanded separated and dedicated attention. Tourism has featured
prominently as a priority sector in government strategy at all levels of government. Tourism outperforms
(The Presidency, 2008) most economic sectors in terms of job and entrepreneurial opportunities
created.
‘According to Visa (2012) the top ten source markets (United Kingdom, United States, Mozambique,
Germany, Botswana, Australia, Angola, Namibia, France and Canada) accounted for 67.3 per cent of
total tourism earnings.’ From a competitive position, the emergence of new markets especially in Asia,
countries such as India and China, have increasingly required the attention of tourism planners in almost
all countries. Already in the year 2010, according to Merrill Lynch and Gemini Consulting (2010), the
World Wealth Report 2000 had already identified that high-net-worth individuals (HNWIs) in Asia grew
from 1.3 million HNWIs in 1998 to 1.7 million HNWIs in 1999. The phenomenal growth of the HNWIs
in Asia was identified as having the potential to surpass the number of HNWIs in Europe. In as much as
Asia is a growing market for outbound tourism to South Africa, Europe and the USA remain the core
international tourism markets, especially the United Kingdom. According to a joint study by Grant
Thornton and Kessel Feinstein (2011) in the Western Cape, Asia only accounts for 8 per cent while
Europe accounts for more than 70 per cent of international visitors to the Western Cape. These results are
important considering that international visitors spend more days in the Western Cape than other provinces. Therefore, the targeting of emerging tourism markets must be well managed to ensure that core
markets are neglected in favour of emerging markets that have the potential in the middle to long term to
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A BRICS Perspective
become core markets. For the economic growth of the BRICS countries, new customers need to be
added from the growing middle class who have needs and demands that extend to leisure, recreation and
tourism (Shaw et al. 2007).
Importance of International Tourism
Tourism is truly a global industry and it is reported to be the world’s largest industry. According to
Claver-Cortes et al. (2007, 727), ‘tourism has undoubtedly become the leading leisure activity in the
21st century. The industry employs 160 million people worldwide and generates $US700 billion in fiscal
incomes.’ The majority of tourism happens between the developed countries, in the West, which means
that the tourism industry is concentrated in the developed Western countries, the countries that least need
the benefits of tourism. The tourism industry is sought after by both developing and developed countries
because of its developmental ability. In the case of developing countries, Gerosa (2003) noted that tourism contributes more than 2 per cent of gross domestic product (GDP) in 11 of the 12 poorest countries,
in almost half of the low-income countries and in all lower middle income countries. In spite of the fact
that international tourism to the poor countries remains very low in relative terms, the impact of tourism
is huge in these developing countries. Cooper et al. (2005) noted that the tourism industry has had
consistent growth for 30 years and it is resilient as an activity and economic sector.
The growth of the services sector has been associated with the emergence of banking, insurance and
tourism as services that are produced for consumption. Services have provided a new platform for countries, regions and areas to achieve economic growth and development without industrialisation.
‘As noted by Altman (2006) the largest and fastest growing sectors of the South African economy are
located in the services sector which is an important location of future job creation.’ According to World
Economic Forum (2009), a growing travel and tourism industry contributes to employment, raises
national incomes and can improve a country’s balance of payments. The tourism industry is an attracter
of foreign exchange par excellent. Tourism is aggressively promoted by countries because it can diversify local economies. Taylor and McGlynn (2009) noted that in the case of Cuba, tourism has surpassed
sugar industry as the main source of foreign exchange, becoming the engine of growth for the economy.
‘Tourism is one of the main sources of foreign exchange for the majority of African countries’ (Gerosa
2003, 6). The tourism industry is an export industry because the tourism product offering is consumed at
the destination area, and hence it has to be consumed on site, at the destination. Tourism offerings are
characterised by fixed location, which means that the highly sought after tourism experience can only
be produced at the destination area, and the tourist must travel to the destination area. As noted by Lowitt
(2006), tourism is an export sector which earns foreign exchange but is consumed domestically, at the
destination. In addition, the tourism product offering cannot be physically distributed like normal goods
to be conveniently accessible to consumers. This is related to the fixed location character of tourism
product offerings, which means that information and communication strategies must be put in place to
promote the destinations, thereby creating the interest for tourists to travel to tourism destinations and
consume the tourism product offering at those destinations. In addition, as George (2008) notes, there is
physical product that the guest will accrue after the consumption of the tourism product offering because
of the service nature of the tourism consumption process.
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The travel and tourism industry can play a leading role in poverty reduction in developing countries
according to World Economic Forum (2009). The benefits of tourism will, however, not flow automatically to poor and vulnerable groups of people at a destination; concerted steps must be taken to
ensure that tourism is pro-poor. Economic growth can happen in the presence of widespread poverty, and
hence pro-poor tourism is very imperative. According to Ashley (2006), pro-poor tourism seeks to maximise the local economic impacts along the tourism value chain to see where linkages with the local
economy can be boosted. Therefore, the focus shifts from local benefits being exclusively associated
with employment creation by the tourism industry, to entrepreneurship by locals to ensure that the tourism benefit remains local. One of the reasons that the tourism industry is sought after is to ensure that the
standard of living of the locals is raised. This is achieved by ensuring that the locals benefit from the
tourism industry by owning companies, especially small, medium and micro enterprises. In the case of
South Africa, the tourism industry is especially relevant considering that South Africa has a high rate of
unemployment and inequality. The tourism industry is a proven job creator owing to its labour-intensive
nature because the tourism product offering is a service and an intangible experience that must be simultaneously produced and consumed.
According to Blaine (2013), unemployment hovers around 25 per cent, which means that (Equal
Education 2011) 47 per cent of South Africans are living below the poverty line, and 2.4 million young
people in South Africa between the ages of 18 and 25 are unemployed. South Africa is one of the most
unequal societies in the world and this is further compounded since a country like Brazil has managed to
reduce inequality when compared to South Africa. According to Bhorat and Van Der Westhuizen (2012),
South Africa was once one of the world’s most unequal societies and now is the most equal. Ginicoeficient is an indicator of the skewed distribution of income (May et al. 1997), measuring the degree
of inequality. Tourism, more than any other sector, has the ability to address inequalities, create jobs
simultaneously whilst the industry grows. The multiplicity of skills required by the tourism industry
ensures that jobs are created for the highly skilled, middle skilled and the un-skilled. The tourism industry provides many entry-level positions that would have not existed in other industries in the economy,
in as much as these entry-level positions may be low paying. As noted by Dinh et al. (2011), one in every
20 jobs in sub-Saharan Africa is in travel and tourism. The industry also creates opportunities for
the employment of more women and marginalised groups of people than other industries. The labourintensive nature of the tourism industry is a key factor in creating jobs with tourism growth. Rogerson
(2006) noted that the pro-poor attributes of tourism are related to tourism offering opportunities for the
informal sector participation, consumption is on-site; therefore, the customer must come to the site for
consumption. Pro-poor tourism cannot be a reality unless market access is granted to the poor in addition
to business linkages with established operators and the imparting of skills to ensure sustainability and
viability.
In addition, the tourism industry relies on the natural resources that already exist, which can be
regarded as ‘free’ resources, such as wildlife, scenery and culture. ‘Tourism contributes to environmental protection, conservation and restoration of genuine heritages, biological diversity and sustainable use
of natural resources...Tourism protects and creates economic value for resources which otherwise have
no perceived value to residents, or are regarded as a cost rather than a benefit’ (Satani 2004, 35). By
creating the ‘free’ resources as sites of consumption, tourism creates the financial incentive to conserve
those sites. The barriers to entry in the tourism industry are low when compared to other industries,
because (Gerosa 2003) tourism is not impacted by tariffs and non-tariff barriers, such as, on agriculture
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A BRICS Perspective
and manufacturing. The low barriers of entry result in the domination of small, medium and micro
enterprises in the informal economy that will be locally owned and operated. One of the major reasons
why tourism is so significant for less developed countries is that the original market countries cannot put
protectionist barriers against the destination countries. Besides the aspects of having a passport and visa
(to certain countries), the industry is largely unregulated and can grow unimpeded as opposed to other
sectors such as agriculture. This can be attributed to the fact that tourism is service which is an export
product consumed at the destination area.
Tourist consumption is important to many destinations as local residents increase their local expenditure on day
visit whilst out of town tourist inject needed capital in the local economy. Tourists usually consume a bundle of
goods and services while travelling and the key elements of such a consumption bundle may be identified within
five broad commodity groups: accommodation, food, transportation, shopping and entertainment (Divisekera
2010, 631).
The tourism industry combines primary (land, labour, etc.) and intermediate (hotels, shops, mode of
transport, etc.) inputs to produce intermediate outputs, such as accommodation, meals or performances,
according to Sharpley (2004a). The intermediate outputs are used to produce intangible experiences that
are the final products that are valued. The fact that the tourists experience at the tourism destination
creates opportunities for other domestic enterprises to benefit from the tourism and creates backward
linkages in industries such as agriculture. Tourism can catalyse other industries, such as manufacturing,
through tourism demand. Therefore, tourism has a direct, indirect and induced impact at the destination
economy. Therefore, the effects of tourism can be experienced through the economy of a country. Local
production should be supported to ensure that the economic expenditure of tourists stays in the local
economy and creates further multiplier effect.
‘Tourism is associated with the movement of people to consume a tourism product offered at a
destination area.’ This means that tourists must undertake a trip or element of journey from the tourist
producing area pass through a transit area to get to the tourism destination area. ‘Aviation is indispensable for tourism, which is a major engine for economic growth, particularly in developing economies.
Globally, 51% of international tourists travel by air’ (ATAG 2003). According to the Commission on
Sustainable Development (2001), demand for air freight service is also primarily a function of economic
growth and international trade. Therefore, this means that the liberalisation of air services can help in
growth of the economy of a country, by allowing the free movement of goods and people. According to
a document titled ‘The Economic Impact of Air Service Liberalisation’ by InterVISTAS (2007), traffic
growth subsequent to liberalisation of air services agreements between countries typically averaged
between 12 per cent and 35 per cent, significantly greater during years preceding liberalisation.
Landlocked countries and small island countries can have aviation as an alternative to the high transport
costs over land.
With specific reference to BRICS, according to Pan African Investment & Research Services (2010),
emerging markets are expected to be the drivers of growth in tourism, boosting international tourism.
The majority of BRICS countries, with reference to South Africa, possess two characteristics: namely,
that they are long haul destination and secondly they represent a small market for South Africa with huge
potential for future growth. The rapid economic growth experienced by the BRICS countries is associated with rising incomes, a growing middle class and improved standards of living. It is, therefore,
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not surprising that in the case of the Asia-Pacific region (UNWTO 2006) China and India are fueling
intra-regional, outbound tourism and will continue to be leading tourist-generating regions for the future.
The rising incomes in the BRICS countries increase local spending and this leads to the demand for tourism consumption. The growth in the BRICS countries brings with it new customers, which, therefore,
presents a growth pole for the entire world. The ongoing economic crisis in the USA and Europe has
dampened the demand for outbound tourism, whilst Asia has been largely insulated. The growing influence of the BRICS countries (Ministry of Tourism 2012) can be accounted when you consider that China
overtook France as one of the top five source markets for overseas tourists with growth in South Africa
driven by increase in arrivals from emerging regions, namely, South America (54.4 per cent) and Asia
(40.7 per cent), for the first six months of 2012. Merrill Lynch and Gemini Consulting (2010) noted that
even during the recession of 2010 in the global economy, the Asia-Pacific region grew with GDP growth
of 8.7 per cent in China and 6.85 in India.
History of BRICS
According to Bliss (2010), the term BRICs was coined by Jim O’Neill in 2001 referring to the world of
emerging economies, namely, Brazil, Russia, India and China. These countries were significant in that
they represented growing population, new markets and had increased their share of global trade and were
important for global trade. ‘This represents a global shift in economic power from the West, eastwards’
(Asuelini and Jethro 2011, 3). The global shift in economic power occurred before the European
Sovereign debt crisis and the sub-prime crisis in the United States whilst both these crises may have
ascended the economic and political prominence of these countries and their associated grouping BRICS.
Politically these countries were increasingly organising themselves as a group at global stages, such as
the G-8 and the United Nations. China and Russia are the only BRICS members that are Security Council
members whist Brazil, India and South Africa are members of the Security Council through reforms to
the Security Council to include non-permanent members. The shifting of power from the West to the East
through the involvement of the emerging economics of BRICS countries can be associated with the
influence the BRICS countries have in the United Nations and in the Security Council. According to
Patel (2011), during a vote on imposition of sanctions on Syria, Russia and China vetoed that resolution,
whilst the other BRICS countries including Lebanon abstained from voting. This earned Russia, China
and the other BRICS members the wrath of the Western powers, indicating that the Security Council is
a battleground between the world’s established powers and the emerging powers represented by BRICS
countries. The BRICS countries are more vocal in G-20 meetings and even within the International
Monetary Fund (IMF) according to Chan (2012).
With the original BRICs and the new BRICS grouping, the two countries that have received a lot of
attention are India and China. According to Bussolo et al. (2007), in 1980 China and India accounted for
2 per cent of global output and by 2005 it was 7 per cent of global output, nearly a quadrupled increase
in output. South Africa was later invited to join BRICs and represented the last S, making the group
BRICS. According to Alden and Sidiropoulos (2011, 1), ‘the BRIC decision to invite South Africa to join
in late December 2010 gave Africa a direct voice within the grouping, although it is only South Africa
that feels that at forums such as these, it must represent the region as well as itself’. Membership of
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A BRICS Perspective
BRICS for South Africa represents many economic opportunities for South Africa; however, it must be
borne in mind that many of the BRICS member countries are competing with South Africa to access
markets in Africa. According to Khan (2011, 493), ‘the original BRIC nations include the factory of
the world (China), the garden of the world (Brazil), the gas station of the world (Russia) and the back
office of the world (India). South Africa comes to the club as jeweler of the world and gatekeeper.’
According to Cheng et al. (2007), China and India would become dominant suppliers of manufactured
goods and services while Brazil and Russia would become suppliers of raw materials. Economic growth
in the BRICS countries has improved the standard and quality of life. In as much as economic growth is
not a sufficient condition for development, the economic growth has lifted many families out of poverty.
The power of China as a BRICS member (Chan 2012) is associated with the allegation that China caused
the global financial crisis by undervaluing the Chinese currency to support the export of its manufactured
produce.
South Africa’s inclusion in the BRIC community that later changed to BRICS is not only about mere
economics but also geopolitical considerations. According to Kruger (2012), South Korea, Mexico and
Turkey have much bigger economies than South Africa. South Africa has been able to ‘punch above its
weight’ in most global issues, has earned a non-permanent seat on the Security Council of the United
Nations and is regarded not just as the voice of the African continent but a gateway to access the African
continent. This is confirmed by Draper and Scholvin (2012) that a closer look at economic interaction in
sub-Saharan Africa confirms that South Africa interlinks many of its neigbouring countries globally.
Many African countries depend on the financial services sector and transport infrastructure of South
Africa to conduct transactions. OR Tambo International Airport in Johannesburg is the most important
hub in Africa, whilst the rail network is provided by Spoornet (state-owned enterprise). Durban is the
busiest port in Africa, complemented by Richard Bay and the new Ngqura Port in Port Elizabeth. Kruger
(2012) acknowledges that the strategic location at the tip of Africa would allow BRICS countries to better compete with the G-7 as the Cape is one of the key naval routes from East to West. South Africa has
well-developed port infrastructure that can be resourceful to the BRICS countries. Access via the Suez
Canal is affected by the volatile political situation in many countries, and the operation of pirates around
the Horn of Africa has made travel past the region too risky and would be increasingly avoided as ransom
has been demanded when people and cargo have been impounded by pirates. As ships have increasingly
become bigger, they cannot access the Suez Canal and the route around the Cape is increasingly becoming the most important maritime route. The geography of the individual BRICS countries is spatially
dispersed with one representative from South America in Brazil, one representative from Africa, South
Africa, and three representatives from Asia, namely, Russia, India and China. The BRICS countries are
geographically dispersed and represent newly industrialised countries (NICs) in continents that are
economically marginalised. For the purposes of this article, only India will be profiled. According to
Hubacek et al. (2007), these two countries are home to 37 per cent of the world’s population today.
India
‘India is the seventh-largest country by geographical area, the second-most populous country with
over 1.18 billion people. India is a federal constitutional republic with a parliamentary democracy’
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(Simon 2011, 43). India is one of the world largest and fastest growing economies and according to
Dahlman and Utz (2005), India’s economy surged to a growth rate of 8.2 per cent between 2003 and
2004. India has developed around the services economy (Simon 2011); total IT business process outsourcing (BPO) reached aggregate revenues of US$73.1 billion in 2010. According to Simon (2011),
64 per cent of the population in the working age group (15–60 years) are employed. India’s middle class
(Deutshe Bank Research 2010) consumption is roughly equivalent to Ireland’s total private consumption. This confirms the huge potential that the Indian middle class represents from a business perspective. From a military perspective, according to Van Rooyen (2010), India’s army is the fourth largest in
the world, and has used its military power in various peacekeeping missions in Africa. Trade between
India and South Africa increased more than fivefold between 2003 and 2009, according to Sidiropoulos
(2010). Trade between the two countries has resulted in conglomerates, such as First National Bank
having a presence in India, whist Mahindra and TATA have reciprocal presence in South Africa. MTN, a
South African cell phone operator, was involved in a failed merger in 2009 that would have formed one
of the largest cell phone companies in the world. India is faced by rampant corruption according to
The Economist (2012).
Influence of BRICS
The phenomenal growth that the BRICS countries have experienced in the world economy can be
associated with the success of the globalisation, as part of the capitalistic system of production. The force
of globalisation ensured that companies were searching for new areas, and site for capitalist accumulation, new markets, new places to source raw material and new sites for production. The movement of
capital from one country to another has been encouraged as part of foreign direct investment (FDI)
which is highly sought after as bringing in financial injection into an economy. The reduction of barriers
to entry of capital has been associated with the Washington Consensus.
Countries that had distinct advantages, such as abundant labour, low costs of production, technology
and high skills and expertise, attracted FDIs. The fundamental influence of the BRICS countries is that
they have increased the global marketplace for skills through increased knowledge acquisition,
and opened up new markets for consumer goods that also include tourism. Many of these BRICS
countries are already engines of growth, through increased trade and increasing their share of global
income, and associated standard of living for their inhabitants. The phenomenal growth that these countries have experienced have led to increased wealth and increased disposable income. For the consumption of tourism to happen, there must be an existence of disposable income and discretionary time, with
the former being the most important. In the case of an unemployed person, they may have unlimited
amount of time to consume tourism products or services, but because of the price that must be paid for
the consumption to occur, the unemployed may be disadvantaged because of economic challenges such
as lack of income.
It can be assumed that price discriminated in that it grants access to those that have the money and are
willing to spend it for the activity, whilst those that do not have the money to pay the price are discriminated from consumption. The increasing wealth, development of a middle class and the education of
these consumers in middle class consumption may lead to eventual consumption of tourism products
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A BRICS Perspective
Table 1. Numbers (millions) and Share (percentage) of the Global Middle Class
2009
North America
Europe
Central and South America
Asia-Pacific
Sub-Saharan Africa
Middle East and North Africa
World
338
664
181
525
32
105
1,845
2020
18%
36%
10%
28%
2%
6%
100%
333
703
251
1,740
57
164
3,249
2030
10%
22%
8%
54%
2%
5%
100%
322
680
313
3,228
107
234
4,884
7%
14%
6%
66%
2%
5%
100%
Source: Kharas (2010).
domestically and outside their countries. The population of the Asia-Pacific region has a strong desire
and ability to travel as disposable income increases. The above average growth rate of these emerging
economies beyond growth rates achieved by many developed economies has ensured that the BRICS
countries are taken seriously. According to IPK International (2012), the rising income in emerging
economies is one of the drivers of world GDP. Asia is definitely the main geographical area that will
drive the future growth of the world economy. The fast growth experienced by the BRICS countries mitigates the mature travel markets in the developed world. The global economic crisis experienced by
Europe and North American countries has reduced growth forecast for economies, limiting the expenditure on tourism and outbound tourism. The Asia-Pacific outbound tourism has, according to IPK
International (2012), experienced double digit growth in excess of 14 per cent. The consumer nature of
the populations in these newly industrialised nations can be ascertained (Simon 2011) from the fact that
in 2010, BRIC countries accounted for 13 per cent of global demand, whilst China is the world’s largest
producer of ICT products (see Table 1).
As noted by Honkanen and Mustonen (2007, 43), ‘tourism holds an important part in the lives of
Western citizens’. Tourists from these countries consume tourism more readily as they are experienced
traveller, and the consumption is part of their lifestyle that enhances life experiences and can be a status
symbol, and consumption is over a lifetime. If the tourists generating countries are experiencing reduced
demand for tourism consumption due to the not compulsory nature of tourism consumption, looking for
new growth markets is a realistic response. Many countries have joined the BRICS bandwagon to try and
attract particularly the Indian and Chinese tourism markets. The Western countries are the dominant
tourism-generating countries and any negative economic conditions have an adverse impact on the
developmental potential of tourism. According to Sharpley (2004b, 17),
international tourism is still largely dominated by the industrialised world, with the major tourism flows being
primarily between the developed nations and to a lesser extent, from developed to less developed countries.
Indeed, despite the emergence of new, increasingly popular destinations such as China, Poland, and Thailand,
the economic benefits of tourism remain highly polarized.
This means that tourism occurs between countries that need tourism the least. However, the developmental potential of tourism is great despite the low levels of tourism as the developing countries share a
small percentage of the total tourism market. According to Kharas (2010), Asia’s emerging middle class
will be large enough to become one of the main drivers of the global economy. The BRICS countries
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present markets that must be targeted by means of stimuli to benefit from their great spending potential.
George (2008) noted that tourism is a great example of a fashion item. In addition, Sharpley (2004b)
noted that tourism-generating countries have a dominant consumer culture that influences all forms of
consumption including tourism. The consumer culture has also impacted on the BRICS countries which
represent not just an ‘untapped tourism market’ but market with high growth potential.
Market Selection: Why India not China
The reason that India is put forward as a better travel destination can be related to several reasons that
include language, history, common interest, trade relations, sports relation and a common history.
India’s Outbound Tourism to South Africa
According to The Hindu Business Line (2012, 1), ‘in, 2005, nearly 85,000 Indians visited South Africa’.
This was nearly 10 per cent more than the previous year’s number of 72,000. From a numbers perspective, the nearly double digit growth of tourists from India compared to other BRICS countries is
testimony to the Indian tourism miracle. According to South African Tourism (2012), the number of tourists travelling from India to South Africa increased by more than 122 per cent between 2005 and 2010.
India, therefore, displays faster outbound tourism growth to South Africa, far ahead of any other AsianPacific tourism-producing countries. Travel agencies remain an important intermediary in tourism and
they play an important role in influencing customer choice. The fact that Durban had hosted the Travel
Agency Federation of India (TAFI) in November 2012 is an important step in winning over Indian travel
agencies that are an important intermediary in the tourism value chain. South African Tourism (2008) has
placed India as one of the core markets that delivers the ‘bread-and-butter’ income and where SAT must
deploy 60 per cent of the budgeting expenditure on this category of markets. India with six major airports
is well connected and the liberalisation of aviation has benefited the customers in terms of lower fares
and increased air capacity. Of the eight core markets of outbound tourism to South Africa, according to
Statistics South Africa (2011), India represents 4.2 per cent of the outbound market to South Africa at
number 6, while China represents 3.1 per cent at number 8.
From Table 2, it is clear that in numbers game, India has been able to attain greater outbound tourism
market to South African than China.
Table 2. Arrivals by Country: China and India
Arrivals by Country of Residence
Asia
China
India
1999
2000
2010
2011
14,208
1,874
2,529
14,073
1,773
2,488
15,043
3,893
4,498
21,776
5,365
7,193
Source: Statistics South Africa (2011) and adapted by the author.
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Services and Knowledge-based Economy in India
‘Services have become the major engine of economic growth, accounting for half of India’s output and
employing less than one quarter of the workforce’ (Cheng et al. 2007, 147). The economy of India is
more service orientated than the economy of China. Services have shown enormous growth potential,
and the service economy is represented by middle class labour which means that the service
economy grows, there would be a corresponding growth of the middle class. Call centres, health
tourism and outsourced industries have driven the service economy contribution to GDP whilst creating
employment for the middle class. The service economy demands higher levels of skills, requiring corresponding level of skills amongst the current and potential employees. The demand for higher skills in
the economy means it will have an incentive impact on upskilling of the population and higher interest
in higher education. The middle class is the focus not exclusively for outbound tourism to South Africa
from India; the middle class in India (Deutshe Bank Research 2010) is the fastest growing section of the
population although the middle class represents less than 30 per cent of the population of India. This
therefore means that the scope for the growth and development of the middle class in India is enormous.
The middle class, as their salaries increase, will experience increased discretionary income that can be
used for leisure, recreation and tourism service offering. The services economy will increasingly require
a higher skills set especially considering the knowledge-based economy (KBE) we are experiencing in
the world. The challenges faced by many countries are related to acquiring the required skills to respond
to the KBE. Therefore, all countries that seek to attain sustained economic growth can either produce
their own skills or attract them from elsewhere. According to Finegold et al. (2011), India already has the
largest number of college and universities in the world and the government plans to more than double
higher education capacity in the next decade. These graduates would increase the size of the middle class
in India and increase the expenditure of the middle class, hopefully also on leisure and tourism. The
movement towards a knowledge economy in India is underpinned by strong emphasis on education that
will produce a pool of skilled workers and entrepreneurs that will enter the middle class.
Democratic India
The fact is that India is a democratic republic with institutions such as an independent judiciary that are
important prerequisites for success. Democracy is not an end in itself but increasingly destinations that
have democratic institutions offer transparency and greater business opportunities. The challenge facing
China is the lack of robustness of its judiciary as arbitrator of disputes and a lack of an independent and
robust judiciary makes China an investment risk. China is described by Shaw et al. (2007) as a Marxist
authoritarian state.
Language: English
According to Dahlman and Utz (2005, 3), India has ‘a critical mass of skilled, English-speaking knowledge workers, especially in the sciences’. Since English is the world’s primary language of business, it
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means that from an outbound tourism perspective to South Africa, Indian tourists can be engaged using
English as a primary language of communication. This is, however, not the case with regard to China.
According to the Tamil Federation of KwaZulu-Natal (2012), many Indians in South Africa speak
English to overcome language barriers.
Population Growth
Many developed nations are facing negative natural population growth, while countries in the developing world are experiencing high population growth, meaning that new consumers are entering these
markets all the time. As noted by Bussolo et al. (2007, 9),
the two significant changes occurring are that: a) all the increases in the global population will be in developing
countries, and b) today’s high-income counties and China will become significantly older. The largest contribution to the nearly 1.5 billion increase in developing regions can be attributed to India.
The fertility challenges in China are still being faced with the one-child policy. According to Aiyar
and Mody (2011), India will be the single largest contributor to the global workforce as the working-age
ratio increases from 64 per cent to 69 per cent by 2040. The attraction about Indian outbound tourists is
that they travel with family and spend a significant amount on shopping, according to Tripathi (2004).
In order to cater for the needs of the Indian inbound tourists, significant research must be undertaken as
to find out how this market can be exploited in South Africa.
High Inequalities in China
The middle class of China is regarded as larger when compared to the Indian middle class. According to
Bussolo et al. (2007), in China 56 million people belong to the global middle class, earning more than
90 per cent of all Chinese citizens. This presents a worrying picture on the sustainability of the demand
for discretionary income dependent expenditures such as tourism. The high inequality in China, therefore, means that it is not a better choice than India, rather China requires special measures to tap into that
market. The high inequalities limit the spending. In a paper titled ‘Tourism Outlook: South Africa’
(Visa 2012), it emerged that Indian tourists had spent US$17.3 million in 2011, up 13.1 per cent year on
year. According to Cheng et al. (2007), India has the potential to grow the fastest among the four BRIC
countries over the 30 to 50 years because the decline in the working age will happen later for India
compared to the other BRIC countries.
Indian Diaspora in South Africa
According to Cloete (1982, 46),
the first Indians were brought into Natal around about 1860 as labourers for the sugar cane estates, but were
soon followed by others who did other work and mostly served as traders. Some also moved to the Transvaal
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A BRICS Perspective
and the Cape Colony, but not to the Orange Free State where a law was passed in 1890 to keep them out.
At first it appeared that the Indians would be accepted as part of the population of Natal and some males were
even registered as voters.
The arrival of the Indians was a result of the comfortability of the Natal Zulus with their tribal land
ownership and they did not provide reliable and regular labour to the white sugar entrepreneurs, who
turned to India as a source of alternative labour sources. The first Indian arrivals were followed by
Indians that paid the costs of their own travel to South Africa. Indian contract (indentured) labour by
providing cheap and secure supply of labour (Vavi 2010) entered the working class struggle in South
Africa. ‘India has deep historical and cultural ties with the countries of Africa’ (Beri 2011, 5). Furthermore
according to Beri (2011, 12),
the Indian diaspora in Africa is another factor for the region’s increased importance. In the past, despite around
two million people of India origin living in Africa, the Indian government did not consider that the Indian community abroad had any political, diplomatic or economic relevance to India…The Indian government has revised
its policy and is actively engaging in building bridges. The recently held Mini Pravisi Bhartiya Divas in Durban,
South Africa, signaled India’s growing interest in interacting with its diaspora in Africa and building relationships based on mutual dependencies.
The majority of Indians in South Africa reside in the province of KwaZulu-Natal and their influence
is quiet evident in the province. The apartheid policy of separate development led to the development of
race-based dwelling areas resulting in Indians being allocated Indian only locations, such as, Chatsworth,
Azaadville and Lenasia. After the enactment of the Land Tenure Act of 1946, Indians were also subjected
to forced removals. According to Vavi (2010), forced Indian removals resulted in their relocation to
townships, such as Laudium, Lenasia, Phoenix, Cato Manor and Chatsworth. Indians also participated in
the struggle for the liberation of South Africa from the racist segregation policies of apartheid. The South
African Indian Congress (SAIC) when led by Dr Yusuf Dadoo and Dr Naicker understood that it could
only advance the Indian question when it cooperated with other national liberation organisations in
South Africa. According to South African History Organisation (2012), what was to be called a ‘Three
Doctors Pact’ was signed by SAIC’s Dr Yusuf Dadoo and Dr Naicker and the African National Congress
(ANC) President, Dr A. Xuma, to cooperate against the apartheid and segregation policies in place for
people of colour in South Africa. In 2010 South African Indians commemorated 150 years in South
Africa. Indians, even though they are a small section of the total population in South Africa, are known
for their entrepreneurship, hard work and creativity, and enrolments in well paying fields, such as medicine, actuarial studies and the engineering sciences field. Vavi (2010) concurs with the fact that Indian
traders were removed from city centres during apartheid because of the competition they posed to white
capital interests. Luiz and Mariotti (2008) confirm the entrepreneurship nature of Asians in a study about
entrepreneurship amongst MBA students in South Africa. Asian students had a conservative view
towards risk and were more willing to become entrepreneurs because of the family businesses that they
are exposed to.
According to Table 3, it is clear that Indians spend on average more nights than other groups of
outbound tourists to South Africa. This extended stay can be attributed to visiting friends and relatives
(VFR) that may be related to the fact that there is a dominant Indian diaspora in South Africa. The
familiarity with the country also means they are worthwhile as repeat visitors to South Africa.
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Table 3. Length of Stay
Length of Stay, 2011
Average Number of Nights
Most Common Length of Stay
4.6
14.8
15.7
17.9
19.2
19.2
11.6
29.1
10.1
20.4
8.1
2.0
5.0
6.0
13.0
5.0
13.0
5.0
2.0
4.0
9.0
2.0
Africa Land
Africa Air
Americas
Europe
Asia & Australasia
Australia
China (including Hong Kong)
India
Japan
Other Asia and Australasia
All Foreign Tourists
Source: South African Tourism (2011).
A Shared History
Indians represent one of the minority race groups in South Africa that were suppressed under apartheid
laws, such as Black Africans and Coloureds. Apartheid created a dual society with whites enjoying
exclusive rights in the country whilst other race groups enjoying citizen rights at a descending level with
Indians regarded as second class citizens, Coloureds being regarded as third class citizens and lastly,
Black African as fourth class citizens (Table 4). Indians played a prominent role in the struggle against
oppression in South Africa and apartheid. Indians represented by the SAIC formed an alliance with the
ANC that later formed the first democratic government in 1994. One of the alliance partners of the ANC,
the Congress of South African Trade Unions (COSATU), was established (Vavi 2010) in 1985 with the
leadership comprising two Indian leaders, Jay Naidoo as General Secretary and Elijah Barayi as
President. Both these alliance partners, including the South African Community Party (SACP), have had
Indian leaders.
Table 4. Demographic Profile of the South African Population
Population
Group
Eastern
Cape
Free
State
Gauteng
KwaZuluNatal
Mpuma- Northern
langa
Cape
North
West
Western
Cape
South
Africa
Black
5,635,079 2,381,073 6,522,792 8,002,407 2,886,345 293,976 3,358,450 1,207,429 35,416,166
African
Coloured
478,807
83,193 337,974 141,887
22,158 424,389
56,959 2,438,976 3,994,505
Indian or
18,372
3,719 218,015 798,275
11,244
2,320
9,906
45,030 1,115,467
Asian
White
304,506 238,791 1,858,398 483,448
203,244 102,042 244,035 832,901 4,293,640
Total
6,436,763 2,706,775 8,837,178 9,426,017 5,273,642 3,122,990 822,727 3,669,349 44,819,778
Source: Statistics South Africa (2003).
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Mahatma Gandhi
The history that India shares with South Africa is related to the late democratic leader Mahatma Gandhi
who was born in present-day India and spent more than a decade in South Africa. According to Cloete
(1982), the Natal Indian Congress (NIC) formed by Mahatma Gandhi in 1894 was apparently the first
political organisation for South African Indians. Satyagraha, the active non-violent defiance campaign,
initiated by Mahatma Gandhi in South Africa was exported to India after being conceived in South Africa.
India which was under British rule was liberated through the Satyagraha defiance campaign. The link of
Mahatma Gandhi is a fine link between the countries. The NIC was formed as a body to represent the
interest of Indians in South Africa and Gandhi was instrumental in its establishment. The NIC and the
SAIC formed a pact with the ANC for the liberation of South Africa from apartheid policies. According
to Zuma (2010), the United Nations has declared Gandhi’s birthdate, 2 October, as the International Peace
Day owing to the great sacrifices he made for world peace. Therefore, the engagement with the Indian
population could include selling justice tourism tours associated with the struggle for liberation in South
Africa and Mahatma Gandhi. The house in which Mahatma Gandhi lived in Johannesburg from 1908 to
1909 has been converted into a museum and has been named Satyagraha House.
Political: India’s Foreign Policy towards Africa
‘The main tenet of India’s Africa policy has been support for the struggle against decolonization and
racial discrimination in South Africa’ (Beri 2011, 5). This resulted in India becoming a member of the
Non-Aligned Movement (NAM) during the Cold War era with other non-major power countries. India
already view Africa very positively as a partner in the reform of global institutions including the United
Nations Security Council, where both South Africa and India have served as rotating non-permanent
members. The military of India has been involved in many peacekeeping missions on the African continent. Therefore, from a political perspective, India can be regarded to be closer to African governments
than China. China, however, has provided various military supports to African liberation movements.
According to Van Rooyen (2010), India’s participation in peacekeeping missions on the African continent include Congo (1960–1964), Namibia (1989–1991), Angola (1989–1991), Ethiopia-Eritrea (2000
onwards), the Congo (1999 onwards), Mozambique (1992–1994), Somalia (1993–1994) and Rwanda
(1993–1996). Political instability has a detrimental impact on the economies of African countries, stifling economic growth and human development. Therefore, the attainment of peace and stability in
African countries has a developmental dividend for the continent, and the commitment of India to this
objective is commendable. India’s participation on the African continent gave the continent a status as an
emerging superpower.
Sports: Cricket
Cricket is one sport that links South Africa and India as both countries are superpowers in global cricket.
The Indian Premier League (IPL) has attracted many South African players that ply their trade in India,
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including AB de Villiers, Jacques Kallis, Faf du Plessis and Morne Steyn. Sports provide an avenue for
promoting South Africa as tourist destination, and former Proteas player and fielding coach for IPL team
Mumbai Indians, Jonty Rhodes (The Hindu Business Line 2012), volunteered to promote South African
tourism in India. The power of cricket in India is unrivalled by any other sport, with Jonty Rhodes being
one of the greatest cricketers, benchmarking fielding on the cricket pitch. According to Tripathi (2004),
Australia used Steve Waugh, former cricket player, to promote Australia as a destination for Indians,
tapping into the familiarity of Steve as a cricket personality.
Conclusion
Outbound tourism to South Africa can only grow at a faster pace with the liberalisation of air travel in
South Africa allowing free competition. The attraction of outbound tourism markets whilst South Africa
remains a long-haul destination can only be attained through a progressive aviation strategy. There is a
need to ensure that the support services for attaining visas to visit South Africa are increased. BRICS
countries, from the tourism business perspective, present great opportunities for outbound tourism to
South Africa. Restrictive aviation policies hell bent on protecting the monopoly of the national carrier,
South African Airways, will not be in the best interest of the country and the future tourism for the country. As South Africa attains tourism growth in double digits above the global average, there is a need to
achieve customer satisfaction by responding to the growth surge by increasing the capacity of the tourism industry. Each of the individual BRICS countries must be catered to and portfolio be managed as
they show phenomenal growth, as Europe is still in the doldrums. The concentration of outbound tourism
to South Africa from Europe especially the United Kingdom is a risk as it presents a challenge of sustainability. As the nature of the tourism industry is very averse to risks and change of situation, being highly
dependent of one source market is a concern. Therefore, the BRICS countries’ growth have been encouraging in increasing tourism to South Africa and providing a means of market diversification. With India
as the primary focus of outbound tourism growth from Asia, tourism numbers will increase with double
digit growth owing to the success of the middle class project in India.
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