Tourism development in the Virunga National Park

There are plans to develop tourism in the Virunga National Park, in the East of the DRC.  One of the planners says that the Congolese tourism sector could equal that of Kenya.  Certainly, the region and lodging looks glorious, and the price of the accommodation is reasonable for high quality international tourism.  The climate is also suitable for visiting all year.

Evidently, the critical issue for many tourists will be security.  The UK government advises against all travel to Eastern DRC.  The DRC faces competition from the Volcanoes National Park in Rwanda, which is praised to the skies by tourists, and is far safer.

I think Virunga certainly could be a viable proposition, but the regional or park authorities would have to provide more security.  It is financially possible.  If a tourist is spending $5,000 on a three week trip, then dozens of security staff could be hired over the period, and the holiday would still generate a healthy profit for the company running the project, and tax for the government.  The area of the visit would be necessarily fairly circumscribed, perhaps a hundred square kilometre area near the Rwandan border.  The security would have to be established before the tourists came, of course, so risky investment would be required by investors or the government.  The administrators on the Rwandan side may be a good source of advice and expertise.

Update on the security situation in Burundi

I haven't written about the security situation in Burundi for a while.  There are reports today of heavy weaponry being used on the outskirts of Kibira forest, near the Rwandan border (French here, English here).  Since the failed coup in May there have been frequent grenade and gun attacks, although not full conflict, so today's news is another unwelcome stage in the unrest.

The government has a new website with more frequent updates and commentary, describing recent infrastructure projects among other things.  The projects would probably benefit the economy, but are dwindling in importance compared with the security situation.  The cost of recent civil conflict in the Great Lakes region has probably been hundreds of billions of US dollars, and outbreaks often result in tens of thousands to millions of deaths (here, here, here, here, here, here, and here).

Does being part of a group help start-up companies in DRC?

In my last post, I discussed the innovation advantages enjoyed by Congolese companies when they are part of a larger group.  Start-up companies may get an even larger advantage from group membership, since they are setting up their structures from new, and don't have much experience to use.

 

Data: http://www.enterprisesurveys.org/

The table shows rates of different innovation types for start-up companies, split by group membership.  There is again a large advantage for subsidiaries of larger groups.  Comparing with the table in my last post, it is apparent that start-up companies get more advantage from group membership than established companies in innovation in new production methods and organisational structures.  These results are broadly as expected.

Innovation advantages for subsidiaries compared with stand alone companies in DRC

If a company is a subsidiary of a larger group, then it may enjoy advantages over "stand alone" companies which are not part of groups.  Among other things, a larger group may offer its subsidiary access to increased finance or specialised management knowledge.  The extra resources may be especially felt when companies are innovating in products or practices, since innovation can be demanding.

The table shows the rates of innovation for DRC companies, for various types of innovation.  Innovation is assessed over the three year period running up to 2013.

Data: http://www.enterprisesurveys.org/

Being part of a larger group is associated with increases in all types of innovation.  For innovation of products new to the company, 14 percent more subsidiary companies innovated, compared with stand alone companies.  For new production methods, the gap was 22 percent.

I haven't controlled for size and other features of the companies, so it could just be that subsidiary companies are larger, for example, and therefore innovate more.  But something that is noticeable is the larger gap in innovation of internal company processes, and the smaller gap in product innovation.  To me, this says that stand alone companies could benefit from business advice on improving their internal processes, and that this advice is already available to subsidiaries.

Education and innovation in Burundi

Many forms of innovation require formal education.  In medical sciences, for example, innovation often comes from large teams of people with biology doctorates.  However, other forms of innovation may not require many highly educated staff, as it may not have much technological demand, or could be handled by a small team.

Here's a graph of the percentage of Burundian companies who have recently innovated in new products, plotted against the percentage of the workforce who completed high school:

Source for data: http://www.enterprisesurveys.org/

It doesn't look like there is a strong relation between widespread high school education in companies and innovation.  Perhaps university education might give a different result.

Does gender equality offer any advantages to Burundi's companies?

Burundi (and Rwanda) has many women in prominent positions in public life, both in politics and in business.  But does gender equality offer companies any competitive advantage?  It is reasonable to think that promoting talented people to jobs, regardless of gender, will help companies.  If talent is distributed fairly evenly across men and women, and they both participate in the labour force, then **on average** companies with equal numbers of men and women should perform well.

One measure of performance is whether a company is innovating in new products.  Here is a graph from Burundi showing the probability that a company introduced a new product in the last three years, plotted against the percentage of the company owned by women:

Source for data: http://www.enterprisesurveys.org/  Results are smoothed using probit estimation with linear and quadratic dependence on the percentage owned.

It looks like innovation is maximised with the percentage of female ownership at about 30 to 35 percent, based on this very quick graph.  The results are in rough agreement with my more detailed work in Europe, where innovation is maximised for roughly the same managerial percentages for each gender.  So it seems that Burundi is benefiting economically from its gender equality.

UK arrest of a Rwandan official

A Rwandan government official was briefly arrested in the UK, following an international request relating to alleged activities in Rwanda and the DRC.  The Rwandan authorities have been angered by the arrest.  The arrest comes as the UK and Rwandan governments have been growing slightly more distant in the last year, having previously had close ties.

It isn't clear whether wider commercial ties between the two countries will be affected.  They shouldn't be - the profitability of a project isn't affected by the relations of governments.  But there is always the possibility that the tone of personal relations between citizens of the two countries will follow that of their governments.  I don't know why, but that's often how it is in my experience.  It isn't me or the people I usually meet who set policy.