The Role of Tourism Investment Incentives for the Tourism Development in Ethiopia: The Case of Addis Ababa
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Date
2021-07
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Addis Ababa University
Abstract
A study was conducted to assess the role of tourism investment incentive for the tourism
development in Ethiopia: The case of Addis Ababa, using selected agencies from Addis Ababa
City Administration. The study employed both qualitative and quantitative methods and used
questionnaires, interview and document review for data collection. A total of 236 stars rated
hotels and tour operators and travel agents have participated through questionnaires and 5 key
informant interviews from Addis Ababa. Ethiopia introduced tourism investment incentive
system in 2002, with the proclamation no.280/2002 in which exemption from customs import
duties (tax incentive) granted. The present study findings indicated that there is strong
relationship between tourism investment incentive and tourism development (at a correlation coefficient of r=0.6, p=0.0). The study participants echoed the increase in number of employee in
the sector, flow tourists and increase income earnings due to increasing of tourist service both in
quantity and quality as a result of the incentives. About 78.4% of the respondents have
responded by saying that the incentive has served as driving factor for investment in the tourism
sector. The limited kind and amount of incentive offered and the bureaucratic hurdle to obtain
the incentives were mentioned as major challenges. To promote sustainable tourism development
and associate sectors, diversifying incentive types, employing the incentive for small tourism
firms, take the experience of other competing countries like South Africa, Egypt, Kenya etc and
the government should be considered for the way forward.
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Keywords
Investment Incentive, Tourism, Sustainable Tourism Development