In this segment of all the above strategy for development, we are exploring how the concept of trade without money can factor into the development strategies of African countries. In my book, Compensatory Trade Strategy, How to Fund Import-Export Trade when Hard Currency is in Short Supply, there are several illustrations of compensatory trade techniques. No-money-down concepts are the basis for the illustrations. Like the ones taught by the late Leo G. Welt, then of Welt International, in seminars in the U.S. and shared in his book, Trade without Money, Barter Countertrade. Compensatory trade techniques also figured prominently in Euromoney Seminars in U.K. Every major Western and Eastern company and all the governments were practicing it on some level. It was trade alchemy created precisely to deal with the economic challenges that made cash a huge premium in global trade between and within nations in the 1970s and 1980s. It is still very relevant to African countries because for now, at least, they are in a fiscal environment that is limiting their ability to develop their economies from internal resources because they are cash poor.

Trade and Financial “Alchemy” is the Key for African Nations

In the limited fiscal environment in which African countries exist, the countervailing antidote, “necessity being the mother of invention” is creativity.  Compensatory trade is a term coined to tent all barter & countertrade transactions, including counter-purchase, evidence accounts, offset, buyback/industrial cooperation, etc. Barter, the original form of the trade alchemy, had been around since before recorded history because primitive people practiced a simple form of barter exchange. After WWII, barter technique was heavily used because Germany and most of Europe lacked cash. But its modern reincarnation was in the 1970s and ‘80s, when the world economy was in a recession. Tight fiscal policies and high-interest rates in the U.S. and U.K., instituted to combat inflation in both countries, cascaded its effect on the world by shrinking the global economy. It made it very difficult for poorer countries to service their dollar-denominated debts or to afford important imports. East-West trade became almost exclusively dependent on barter and countertrade because the then-Soviet bloc of COMECON nations had little to no hard currency resources.

In the structure of a thriving economy there is a sector that is capable of weaving through all opportunities of financial growth and development. That sector is tourism.

In the book Unleashed: A New Paradigm of African Trade with the World, John I. Akhile Sr. notes that tourism is as vital to a nation’s brand as the exchange of goods and services, because it presents the country to the world and opens up a rapid flow of economic activity. With their natural resources, rich culture, and thriving international business engagement, developing African nations have the potential to successfully incorporate tourism into their plans for economic growth.

Tourism is one of the fastest growing industries worldwide. According to the World Travel & Tourism Council (WTTC), it is responsible for the creation of 258 million jobs, contributing $6 trillion to the GDP, and $652 billion of investment worldwide. This growth has extended across Africa with a reported 33 million visitors to the continent in 2013, visiting destinations such as South Africa, Cairo, and Kampala. Leading hospitality companies, such as Marriott International and W Hospitality Group are tapping into the region and building hundreds of new hotels in major African cities.

While tourism has provided major economic stimulus for some African countries, building the capacity for its development is not without its challenges. Internal factors such as infrastructure and land access continue to be a barrier for the establishment of related businesses in some areas. Public health and safety continue to be concerns for tourists. Negative perceptions following events such as the Ebola crisis and recent terrorist acts have disrupted tourism in places like Kenya, which experienced an 11% decrease in foreign visitors following the attack at Westgate Mall in Nairobi in 2013. It is in the hands of individual countries and their governments to address such issues and bolster their positions as destinations that provide pleasant experience for visitors.

Nevertheless the outlook for tourism in Africa remains positive. Angola is slated to be the next prime tourist attraction by the WTTC and projects to experience a 7% rise in tourism by the year 2024. Gabon is also reported to be actively taking advantage of its natural resources to attract recreational tourism. In 2016, Rwanda will host the Africa Hotel Investment Forum, in which government and business leaders will strategize on creating vital tourism infrastructure in Rwanda and setting it as an example for other emerging African countries.