Tourism joint-venture models in Namibia – The pendulum is swinging

by Sem Shikongo, Director, Directorate of Tourism, Ministry of Environment and Tourism; Keith Sproule, Tourism Business Advisor, WWF-Namibia; and Usiel Ndjavera, Tourism Business Advisor, WWF in Namibia

Communal-conservancy tourism is a dynamic and growing sector of the national tourism industry, helping to distinguish Namibia as a destination committed to conservation and community-development objectives. The initiative for communal-conservancy tourism was enabled by Government’s visionary amendment of the Nature Conservation Act of 1975 in 1996, which returned rights over resource use to communities through the establishment of conservancies. 

The underlying philosophy is to provide incentives for conservation through sustainable use of natural resources by communities. Through this legislation it is possible to spread the benefits from tourism to previously disadvantaged Namibians in rural and communal areas across the country.

At the epicentre of tourism in communal conservancies today is the relationship between each conservancy and its private-sector partner, or partners formalised through the creation of tourism joint ventures (JVs). This relationship is critical to the growth and development of the sector.

There is a wide mix of joint-venture models in place throughout the country, ranging from simple ‘lease fee’ or ‘rental’ type agreements to those which incorporate ‘community capital’ or ‘community equity’, where the conservancy is an actual shareholding partner in the venture. The three different JV lodges in this article each represent a different example of how JV agreements can be structured.

Build, operate and transfer

As a result of experiences elsewhere in the Southern Africa region, the predominant model in Namibia has been a ‘build, operate and transfer’ (BOT) approach, which relies on a 100% investment by a private-sector partner, who builds and operates the lodge for a period normally ranging between 15 and 30 years. The agreement usually includes a lease fee or royalty payment ranging from 5–10% of net income, a guaranteed minimum payment to the conservancy, an empowerment plan that indicates what training and staff-development programmes will be implemented, and an environmental manage-ment plan.

In this approach, the private-sector partner brings 100% of the capital (any debt obligation is the responsibility of the private-sector partner), provides access to the market (brings tourists) and provides management expertise. The conservancy provides access to the land (leasehold), undertakes resource-management activities, ensures local community support for tourism, and provides local labour.

In addition to building and operating the lodge, the private-sector partner is often obligated to ‘hand over’ the fixed assets to the conservancy after the agreement expires. In Namibia, although this clause exists in some agreements, there is often a payment required from the conservancy to the operator for the conservancy to gain ownership of the fixed assets at the time of transfer.

The long-term viability of this approach has not yet been established, but indications are that the sustainability of these ventures is enhanced when essential components such as capacity building, good governance and skills transfer are built into the agreements.

100% private-sector investment

South of Torra, in the Namib Desert, is the Tsiseb (pronounced See-seb) Conservancy, which partnered with a private business to open White Lady Lodge. The lodge was named after Namibia’s most famous rock painting, the White Lady, which graces a rock overhang in the Brandberg Mountains. Built in 2003, the lodge offers stone chalets and tent sites. The swimming pool, providing respite from the stifling desert heat, is tucked behind the main building under the overhang of an eye-catching rock koppie.

The agreement is typical of a BOT model, where the lodge is owned by the private-sector JV partner for an initial 20 years, after which the assets are transferred in full to the conservancy. The JV agreement with Tsiseb Conservancy requires the owners to pay a minimum rent to the conservancy each month. As occupancy and revenue increase, the conservancy will also receive a percentage of profits. Payment from the White Lady Lodge JV is the largest source of revenue the conservancy has.

The Tsiseb area is blessed with mountains and rich mineral soil that yields gems such as amethyst and rock crystal. At one time digging out gems and selling them by the side of the road – standing for hours in the blazing sun hoping a tourist will come along – was one of the few job opportunities for community members. Now, however, many members of the conservancy are employed in the tourism industry.

100% community investment

A second JV model in Namibia is Grootberg Lodge – a partnership between the ≠Khoadi-//Hôas Conservancy and a tourism management company, EcoLodgistix.

In this case, the ≠Khoadi-//Hôas Conservancy was given access to ‘community equity’ financing from the EU-funded Namibia Tourism Development Programme, which was located inside the Ministry of Environment and Tourism (MET).

The lodge was built with 100% community equity and is therefore 100% owned by the conservancy. However, the conservancy contracted a management company – the EcoLodgistix Company – to manage the lodge.

Signed in May 2005, the initial management agreement was for five years, with a renewal option. Given that the management partner was required to borrow capital only for moveable assets and initial operational costs, the ‘lease fee’ or levy was negotiated at a higher level of net income compared to the BOT model. In addition, the agreement contains clauses that ensure staff training and in particular promotion of local staff to management-level positions within the lodge.

As the first 100% community-owned lodge project in Namibia, both the ≠Khoadi-//Hôas Conservancy and its management partner, EcoLodgistix, have been on a steep learning curve about how to make their relationship work and how to respond to challenges facing them as partners in this venture, while at the same time ensuring that Grootberg Lodge thrives. Fortunately, the lodge is performing well and both partners have signed a Memorandum of Understanding to carry on working together for another five years.

The lodge currently employs 31 full-time staff, with all but the general manager coming from the local community. Outside of Government, the lodge is the largest employer in the conservancy. It is also the largest source of conser-vancy benefits, having generated over N$1 100 000 in conservancy income, employment and related benefits in 2008 (see graph below).

Joint shareholding

A third JV model in Namibia is Damaraland Camp – a partnership between the Torra Conservancy and Wilderness Safaris.

Damaraland Camp was a market success from the time it first opened its doors. In accordance with the original agreement, after 10 years of operation, Wilderness Safaris began to donate 20% equity annually in the business to the Torra Conservancy. By the end of 15 years, Torra owned the lodge 100%. An offer was then made to Wilderness to purchase 60% of Damaraland Camp (Pty) Ltd back from Torra, which it did.

The two parties are now operating as equity partners in a JV, leasing the land from the Torra Conservancy for a lease fee based on a percentage of revenue. Both parties, as shareholders, have since invested their own capital to upgrade Damaraland Camp – the community members using the cash earned from selling a portion of their lodge to afford this development. This ‘community capital’ came from the deal struck with Wilderness Safaris and involved no outside donor or lender.

From the outset Damaraland Camp has been breaking down traditional perceptions of how JVs can operate. Not only was it the first example of a conservancy choosing to operate as an equity partner in a JV; Damaraland Camp also had the first black woman manager in Namibia, Lena Kaisuma Florry, the daughter of a local goat herder who grew up in the conservancy.

Partners in the process

It is important to note that this relationship between community members and their private-sector partner also involves a whole range of other stakeholders working towards making the relationship work. The Government and civil-society service providers work tirelessly with the JV partners to iron out differences, test new proactive approaches and facilitate co-operation, communication and the marketing of these ventures.

While the success and benefits of Namibia’s Communal Conservancy Tourism Sector are far-reaching, there is still room for innovation, building on the best practice already established. Job creation, income generation and contribution to rural development and community empowerment are some of the real benefits demonstrated over the years. With a vested interest in their land, conservancy members have eliminated poaching and set aside land for exclusive use of wildlife and the expanding populations of all wildlife, even animals such as elephant, lion and black rhino. Less tangible social benefits include greater confidence and empowerment, on-the-job training, travel and exposure opportunities, improved governance, accountability and transparency at local levels.

These are new or additional activities that give many households access to cash, opportunities and other benefits that they never had before, and that would not have been possible prior to the passage of Namibia’s innovative conservancy legislation in 1996.

These types of successes are shifting the pendulum of expectations about how communal conservancies and the private sector can work together. At the same time, they are re-crafting the image of Namibia as a global leader in achieving both conservation and community-development objectives.

This article appeared in the 2010/11 edition of Conservation and the Environment in Namibia.