Enhancing Internally Generated Revenue Through Tourism Development

Enhancing Internally Generated Revenue Through Tourism Development

Abstract

This study was carried out to examine whether tourism development enhances internally generated revenue in Akwa Ibom State with a particular reference to Ibeno Beach in Ibeno Local Government Area. To achieve this objective, three research questions and two research hypotheses were formulated to guide the study. The data were collected from primary sources. The primary data were collected with the help of a well-structured questionnaire of two sections administered to the respondents in Ibeno local government area.

The collected data were analyzed with tables and simple percentages to analyze the research questions while Chi-square statistical tool was used to test research hypotheses using SPSS statistical software. The study reveals that there is a significant relationship between tourism and economic development in Akwa Ibom State and there is a significant relationship between the level of revenue derived from tourism and socio-economic development. The study concluded with some recommendations that government should embrace public-private partnership in order to develop tourism sector in Nigeria.

Chapter One

Introduction

1.1 Background to the Study

The tourism industry is the world’s largest industry and is being utilized for economic development and rapid growth in many developing countries. Countries all over the world nowadays perceive tourism as a sustainable means for economic prosperity in macro and micro levels (Burinskiene and Rudzkiene, 2005).

Tourism has become the biggest economic activity of this day and age, with 476 billion dollars in the year 2000; tourism is doubtless the primary source of international trade receipts (Kweka, 2001). World tourist organization ( WTO) still expects over one billion international tourist arrivals in 2010 and over 1.5 billion tourists and US$ 2 trillion receipts in 2020 (Kweka 2001)

WTO‟s vision 2020 presents an optimistic picture for the tourism sector in Africa with growth of 5.5 per cent a year forecast of the period 1995 – 2020, as against the global rate of 4.1 percent of the 77 Million international tourist arrivals anticipated in the continent in 2020, an estimated 17 Million will be in the countries of East Africa producing an average growth of 5.3 percent.

In Akwa Ibom the tourism industry is growing at an annual rate of almost 11% (Akwa Ibom Economic survey 2013). In 2011 tourist arrivals reached 175,067 being 31.0 percent higher compared with figures in 2010, while in 2013, tourist arrivals was 181,301. In addition, according to figures compiled by the Commission for Tourism, there are currently 173 tourist accommodation establishments in Akwa Ibom, with a total of 3,089 rooms and 6,139 beds. The majority are located in Unguja, with 14 establishments (with a total of 110 rooms and 214 beds) in Pemba. Outside the hotels, there are approximately twenty restaurants of international standard, with several new highquality establishments opened in Stone Town in the past few years. All these reflect increase in touristic activities in Akwa Ibom. Despite this growth little is known to whether the increase in tourism in Akwa Ibom has increased revenue to the government. This tremendous growth in tourism prompted the researcher to carry out this study to find out the contribution of tourism in revenue collection in Akwa Ibom.

1.2 Statement of the Problem

Evidence of rapid Increase of tourism in Akwa Ibom is seen as confirmed by hotel beds occupancy, visitor‟s arrivals which are on the increase (Akwa Ibom tourism Commission Report 2013). In 2011 tourist arrivals reached 175,067 being 31.0 percent higher compared with figures in 2010, while in 2013, tourist arrivals was 181,301.

Despite this growth little is known to whether the increase in tourism in Akwa Ibom has increased revenue to the government to enable it provide service to its citizens. Every year government budget displays deficits. This brings the un answered question, “Does the boom in tourism in Akwa Ibom increase revenue collected by the government in Akwa Ibom? Recent data shows increased growth of 11% in tourism industry (Akwa Ibom tourism Commission Report 2013). With this evidenced significant increase in growth of tourism, there has not been major economic growth, public infrastructure remained poor, government services to citizens are inadequate and poor; poverty on the populace seems to be a disturbing issue and conflicts millennium development goals of reducing poverty. Thus this prompted the researcher to study how internally generated revenue are enhanced through tourism in Akwaibom with particular reference to Ibeno beach.

1.3 Research objectives

The general objective of this research was to assess the impact of tourism growth to revenue collection in Akwa Ibom.

1.4 Specific Objectives

1. To determine the effectiveness of tourism revenue collection in Akwa Ibom
2. To determine the relationship between tourism growth and revenue collection in Akwa Ibom.
3. To identify the challenges facing tourism revenue collection in Akwa Ibom

1.5 Research questions,

1. What is the contribution of tourism to revenue collection in Akwa Ibom?
2. How is the effectiveness of tourism revenue collection in Akwa Ibom?
3. Is there relationship between tourism growth and revenue collection in Akwa Ibom?

1.6 Significance of the Study

The study will have both, empirical significance as well as managerial implications. On the side of empirical significance, this study will help to fill the knowledge gap concerning the contribution of tourism in revenue collection in Akwa Ibom; the findings will contribute greatly to the body of knowledge as it will be used as a base for further studiesOn managerial implications, the findings of the study will give solutions to managerial questions posed by Akwa Ibom Revenue Board and other stakeholders on the impacts of tourism on revenue collection, thus improving the Akwa Ibom performance economically, administratively and socially. The findings will also facilitate further reforms geared towards better performance and assist policy makers to come up with appropriate bylaws to curb tourism actors who refuse to pay revenue.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary

The study aimed at finding out the impacts of tourism growth to revenue collection in Akwa Ibom. The study considered all groups of the respondents from the AkwaIbom Revenue Board. The study found out that that tourism growth increases revenue collection in Akwa Ibom. Surprisingly, majority of employees had worked for more than a year, making them able to understand how FIRS works. Interestingly, our findings found that education level is not a factor in understanding revenue growth. However the study found that lack of voluntary compliance by tax payer was the leading challenge as reported by the respondents. Among the respondent‟s 90% representing 69.8% indicated lack voluntary compliance by tax payer, 10 respondents representing 7.7% said lack of commitment from FIRS, 2 Respondents representing 1.6% observed poor structure of tax bracket, 8 Respondents representing 6.2 indicated poor tourism policy, 10 Respondents representing 7.7% observed poor administration while 9 Respondents representing 7% indicated poor administration of revenue collection.

Reforming revenue laws were the most preferred way of improving revenue collection. The respondents‟ agreed that compliance by tax payers to pay revenue is the most hindering challenge the FIRS faces in revenue collection.

5.3 Conclusion

Tourism has become one of the most significant in economic development as pointed out by David, (2005), Given the current environment for many countries, no one can afford to attract, invest in and then lose revenue that comes out of tourism. Since the objectives of the study were; to asses the internally generated revue from tourism in Akwaibom state, to determine the effectiveness of tourism revenue collection, to determine the relationship between tourism growth and revenue collection and to identify the challenges facing tourism revenue collection in Akwa Ibom. From the findings the researcher concluded that growth rate in tourism in Akwa Ibom is high, FIRS employees are committed and corruption free and that a bigger percentage of the government budget that finances government programs is collected from Tourism revenue and that there was significant relationship between tourism growth and revenue collection.

The study concluded that revenue collection from tourism sector was faced by challenges which include; lack of voluntary compliance by tax payer, lack of commitment from FIRS, observed poor structure of tax bracket, indicated poor tourism policy, observed poor administration and poor administration of revenue collection.

The best way to address these challenges is to collect and each and every coin that accrues from tourism. This means that countries or the agency with mandate of collecting revenue need to work to develop awareness of revenue payment tourism revenues. No wastage should be allowed as it affects the revenue collected and then derailing economic development of the country.

5.4 Recommendations

The study had the following recommendations;

1. Management must ensure participation efficiency in tourism revenue
   collection.
2. Employee’s working with FIRS should be motivated such that their morale increases and also seal loopholes for corruption within them.
3. The FIRS management should do whatever possible to disseminate
   information to the stakeholders on the meaning of revenue paying.
4. The Ministry responsible should review tax laws related to tourism revenue collection. This will help in collecting more revenue.
5. The FIRS top management should change their mind set of not emphasizing revenue payment. They should bear in mind that revenue collection from tourism sources increases revenue collection and in turn increases economic development in our country.

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