Tourism and household welfare in Uganda

Abstract

Enhancing household welfare is a key priority in Uganda’s development agenda, as highlighted both in Vision 2040 and the Third National Development Plan. Similarly, the tourism sector is recognized as one of the key growth sectors with the potential to significantly improve household welfare. However, empirical research on the effect of tourism on household welfare has received limited attention. Thus, this study empirically examines the relationship between tourism and household welfare using the pro-poor growth theory and trickle-down effect. The study used a nationally representative data extracted from the Uganda Harmonized Integrated Survey (UHIS), undertaken between 2020 and 2021 by Uganda Bureau of Statistics, categorised as cross-sectional data within the new panel household survey. A total sample of 4,208 households was analysed using STATA software version 18. Tourism is conceptualized in terms of engagement in tourism wage employment and tourism-related enterprise, while household welfare is measured in terms of average household consumption expenditure.

The findings of the study show a significant and positive association between tourism and household welfare. Disaggregated analysis shows that both tourism wage employment and tourism-related enterprise positively affect household welfare, with engagement in tourism enterprise having a relatively greater effect. Based on these findings, the study recommends continued government investment in the tourism sub-sector to create job opportunities and targeted policies supporting local households to start and grow tourism-related enterprises which ultimately generate income and enhance welfare. In addition, addressing barriers to entry into the tourism sub-sector, such as access to credit, will expand income generation opportunities for the local people and enhance household welfare.

Keywords: Tourism, household welfare, tourism wage jobs, tourism enterprise, OLS.