Paper

Tourism, Microfinance and Poverty Alleviation - Recommendations to Small and Medium-sized Enterprises (SMEs) and to Microfinance Institutions (MFIs)

Can tourism and microcredit walk an economy away from poverty?
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This publication, resulting from collaboration between the World Tourism Organization (WTO) and PlaNet Finance, gives an overview of the impact of tourism on poverty reduction. The report:

  • Identifies opportunities for tourism to reduce poverty in developing countries;
  • Pinpoints the potential role and the reality of microfinance in solutions for tourism micro-projects;
  • Aims to promote cooperation between microfinance institutions (MFIs) and the tourism sector;
  • Encourages MFIs to adapt their conditions for granting loans to the specific characteristics of tourism activity.

The report analyzes the following main points:

  • Characteristics of tourism in the world and in developing countries;
  • Tourism and poverty;
  • Small and medium enterprises (SMEs) and the sector;
  • Financing tourism SMEs and microcredit.

The paper concludes with the following recommendations,

  • To tourism SMEs:
    • Create local committees for the presentation of tourism development projects to public tourism authorities, MFIs and banks;
    • Conduct market research to determine occupancy rates;
    • Adopt a suitable price strategy and a marketing plan for the sale of tourism products.
  • To MFIs:
    • Evaluate the interests for tourism of the projects presented;
    • Make projections for future profitability;
    • Develop indicators to evaluate the implementation of tourism projects;
    • Adapt amounts and durations of microcredit to the specific needs of tourism investments.
  • To governments:
    • Inform tourism SMEs on the possibilities crested by microfinance;
    • Offer technical aid to applicants for microcredit;
    • Promote contacts between poor populations and MFIs.