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

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.