Blockchain’s Impact in Tourism Industry
Nigerian states are blessed with natural tourist sites that attract both local and foreign tourists that if well managed can serve as an internal revenue-generating scheme. These states are richly endowed with highly literate population, mineral and material resources of all kinds, which can be harnessed for economic development through investments.
However, all these natural endowments in the state have not translated into many notable industrialization and economic prosperity. The economic development has been at a very low pace despite government interventions and schemes.
Nigeria has great prospects when it comes to tourism. A country with diverse landscapes, beautiful scenery and many destinations with historic significance should have a thriving tourism sector. Unfortunately, this is not the case and hence this post highlights major problems of tourism in Nigeria and possible solutions.
In this article, we will be deep-diving into how blockchain can help the tourism industry and how various states in the country can leverage on it to aid their revenue generation scheme.
Tourism is a vital sector for every nation in the world. It is not just about people going on vacation from one place to another. It is important because it has the capacity to boost a nation’s GDP, in fact, in 2017 according to NBS, tourism contributed 34% to Nigeria’s GDP and generated 20% employment.
Nigeria still ranks outside of the top ten international tourist arrivals in Africa. Besides, the World Economic Forum scores Nigeria 2.8 (on a scale of 1–7) and 129th in the world on its Travel and Tourism Competitiveness Index. These statistics show that if properly harnessed, tourism is an industry that could generate more revenue for the country alongside Oil and agriculture.
Here are some of the major issues facing tourism in Nigeria:
1. Low Revenue: The revenue generated in some states is inadequate to fund capital projects across the state. The federal Government allocation is not enough and the internally generated revenue is insufficient; few industries like the textile and food-processing mill are low on production, there is low tax income across all local governments. The agricultural and Real Estates potential in the land is not being put to optimal use. This has a major impact in all sectors of the state ranging from education to health. There is visibly low productivity in private businesses with few enterprises and scanty industrialization, while the public service has had difficulty remunerating workers in the last few years.
2. Misappropriation of funds: Corruption and embezzlement of allocated funds have also contributed to the growing challenge of the tourism industry in these states. The public sector is riddled with cumbersome processes and a lack of accountability.
3. Inadequate investment and funding: This is a major problem considering that tourism is one of the largest employers of labor all over the world and its development has immense benefits to the economy. Tourism is underfunded relative to its potential if one takes a look at our budgets over the years. This has caused development in the sector to move at a very slow pace. Nigeria is a country that has focused so much on Oil and has ignored other important aspects of the economy like agriculture and tourism.
How Blockchain can Impact the Tourism sector
Tokenization: refers to the process by which an asset is digitally represented on a blockchain-based system and divided into fractional ownership interests that are capable of being traded digitally. Owners of assets raise funds, in fiat or cryptocurrencies, by selling tokens that operate on a network or exchange platform. To get a full understanding of Tokenization, read this article.
The process of offering assets for sale through a public fundraising process is called Security Token Offering (STO). Similar to Initial Public Offering, once tokenization is performed, tokens essentially become digital stocks with irrefutable proof of ownership. A tokenized asset can be instantly and directly transferred between parties, with ownership recorded on a distributed, universally accessible ledger. Ownership over a vast majority of real-world assets is still signified by pieces of paper. That’s why most transactions can take weeks or even months to complete. Asset trades are also plagued by extensive amounts of red tape, countless fees and various geographical restrictions.
Furthermore, most assets are very difficult to subdivide, which makes their respective markets highly illiquid, e.g Real estate, Tourism, Art, etc.
Easy, safe, and traceable payments: One of the main advantages of blockchain is seen in payments. With cryptocurrency, payments will be more secure and can be traced. As earlier said in the article, transactions carried out on blockchain remain registered in the chain and cannot be tampered with. Also, no middleman can intercept payment or delay it. With this, there won’t be a need for tourists to exchange currency in the countries they visit.
Hotel or Transportation Management: With decentralized management systems, large firms are able to get rid of middlemen which results in significant savings for them. It also ensures that information flows in a secure manner and its availability is guaranteed when there is a need to access it.
Baggage tracking: This can be done effectively using blockchain. Once you leave your baggage at the check-in counter, it changes hand throughout the trip and you can track between companies and be aware of the location at all times.
Rewards systems: One way travel firms use to make their customers repeating customers is to create loyalty programs for them. With blockchain, customers are able to check their points and exchange them for cryptocurrency for travel firms that allow this.
Every Nigerian state is blessed with natural resources that are enough to attract tourists from all over the world. Recently, the Osun state government has planned to explore the tourism sector for internal revenue generation. The best way for any state to make the most out of their God-given resources is to leverage the power of blockchain technology.
