10 February 2015

Why haven’t digital platforms transformed firms in developing countries? The Rwandan tourism sector explored

christopher_fosterThere has been a lot of hope and publicity about the economic potential of increased Internet connectivity in the East African region; including the hope of disintermediation and better connection to global markets. Chris Foster discusses the findings of an OII project on Development and Broadband Internet Access in East Africa. Through surveys, interviews and in-depth observations, the project examines the expectations and stated potentials of broadband Internet in East Africa, comparing those expectations to the on-the-ground effects of broadband connectivity.

Tourism is becoming an increasingly important contributor to Rwanda’s economy. Image of Homo sapiens and Gorilla beringei beringei meeting in Rwanda’s Volcanoes National Park by Andries3.

One of the great hopes for new Internet connectivity in the developing world is that it will allow those in developing countries who offer products and services to link to and profit from global customers. With the landing of undersea Internet infrastructure in East Africa, there have been hopes that as firms begin to use the Internet more extensively that improved links to markets will positively impact them.

Central to enabling new customer transactions is the emergence of platforms — digital services, websites and online exchanges — that allow more direct customer-producer interactions to occur. As part of our work exploring the impacts of growing internet connectivity and digital ICTs in East Africa, we wanted to explore how digital platforms were affecting Rwandan firms. Have Rwandan firms been able to access online platforms? What impact has access to these platforms had on firms?

Tourism is becoming an increasingly important contributor to Rwanda’s economy, with 3.1% direct contribution to GDP, and representing 7% of employment. Tourism is typically focused on affluent international tourists who come to explore the wildlife of the country, most notably as the most accessible location to see the mountain gorilla. Rwandan policy makers see tourism as a potential area for expansion, and new connectivity could be one key driver in making the country more accessible to customers.

Tourist service providers in Rwanda have a very high Internet adoption, and even the smallest hotel or tour agency is likely to have at least one mobile Internet-connected laptop. Many of the global platforms also have a presence in the region: online travel agents such as Expedia and Hotels.com work with Rwandan hotels, common social media used by tourists such as TripAdvisor and Facebook are also well-known, and firms have been encouraged by the government to integrate into payment platforms like Visa.

So, in the case of Rwandan tourism, Internet connectivity, Internet access and sector-wide platforms are certainly available for tourism firms. During our fieldwork, however (and to our surprise) we found adoption of digital tourism platforms to be low, and the impact on Rwandan tourism minimal. Why? This came down to three mismatches – essentially to do with integration, with fit, and with interactions.

Global tourism platforms offer the potential for Rwandan firms to seamlessly reach a wider range of potential tourists around the globe. However, we found that the requirements for integration into global platforms were often unclear for Rwandan firms, and there was a poor fit with the existing systems and skills. For example, hotels and lodges normally integrate into online travel agencies through integration of internal information systems, which track bookings and availability within hotels. However, in Rwanda, whilst a few larger hotels used booking systems, even the medium-sized hotels lacked internal booking systems, with booking based on custom Excel spreadsheets, or even paper diaries. When tourism firms attempted to integrate into online services they thus ran into problems, and only the large (international) hotel chains tended to be fully integrated.

Integration of East African tourism service providers into global platforms was also limited by the nature of the activities in the region. Global platforms have typically focused on providing facilities for online information, booking and payment for discrete tourism components — a hotel, a flight, a review of an attraction. However, in East Africa much international tourism is ‘packaged’, meaning a third-party (normally a tour operator) will build an itinerary and make all the bookings for customers. This means that online tourism platforms don’t provide a particularly good fit, either for tourists or Rwandan service providers. A tourist will not want the complication of booking a full itinerary online, and a small lodge that gets most of its bookings through tour operators will see little potential in integrating into a global online platform.

Interaction of Rwandan tourism service providers with online platforms is inevitably undertaken over digital networks, based on remote interactions, payments and information flows. This arms-length relationship often becomes problematic where the skills and ability of service providers are lower. For example, Rwandan tourism service providers often require additional information, help or even training on how best to use platforms which are frequently changing. In contexts where lower cost Internet can at times be inconsistent, and payment systems can be busy, having the ability to connect to local help and discuss issues is important. Yet, this is the very element that global platforms like online travel agents are often trying to remove.

So in general, we found that tourism platforms supported the large international hotels and resorts where systems and structures were already in place for seamless integration into platforms. Indeed, as the Rwandan government looks to expand the tourism sector (such as through new national parks and regional integration), there is a risk that the digital domain will support generic international chains entering the country — over the expansion of local firms.

There are potential ways forward, though. Ironically, the most successful online travel agency in Rwanda is one that has contracted a local firm in the capital Kigali to allow for ‘thicker’ interactions between Rwandan service providers and platform providers. There are also a number of South African and Kenyan online platforms in the early stages of development that are more attuned to the regional contexts of tourism (for example Safari Now, a dynamic Safari scheduling platform; Nights Bridge, an online platform for smaller hotels; and WETU, an itinerary sharing platform for service providers), and these may eventually offer a better solution for Rwandan tourism service providers.

We came to similar conclusions in the other sectors we examined as part of our research in East Africa (looking at tea production and Business Process Outsourcing) — that is, that use of online platforms faces limitations in the region. Even as firms find themselves able to access the Internet, the way these global platforms are designed presents a poor fit to the facilities, activities and needs of firms in developing countries. Indeed, in globalised sectors (such as tourism and business outsourcing) platforms can be actively exclusionary, aiding international firms entering developing countries over those local firms seeking to expand outwards.

For platform owners and developers focusing on such developing markets, the impacts of greater access to the Internet are therefore liable to come when platforms are able to balance between global reach and standards — while also being able to integrate some of the specific needs and contexts of developing countries.

Read the full report: Foster, C., and Graham, M. (2015) The Internet and Tourism in Rwanda. Value Chains and Networks of Connectivity-Based Enterprises in Rwanda. Project Report, Oxford Internet Institute, University of Oxford.

Chris Foster is a researcher at the Oxford Internet Institute. His research focus is on technologies and innovation in developing and emerging markets, with a particular interest on how ICTs can support development of low income groups.

Note: This article gives the views of the authors, and not the position of the Policy and Internet Blog, nor of the Oxford Internet Institute.