About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Monday, June 4, 2018

Inside the Rwanda-Arsenal deal

How ignorance and stupidity combined to make the UK press hostile to a highly profitable sponsorship 

Last week Rwanda and Arsenal, an English Premier League football club, signed a $40m sponsorship deal for three years. According to the deal, a “Visit Rwanda” logo will be emblazoned on the left sleeve of all first team, Under-23 and Arsenal Women’s shirts beginning with the new season this summer. Many people were impressed because the country is selling itself as product and branding itself like a private enterprise.

However, sections of the British press have been denouncing the deal. They claim President Paul Kagame (who supports Arsenal) spent $40m on “his club” – as if the money is a gift to Arsenal without any quid pro quo. The British government gives Rwanda $85m annually in foreign aid. So this deal became part the policy debate on aid: why should a country that spends $40m on sponsoring an English football club continue to receive British aid.

A section in the regional talking heads on social media argued that Rwanda is “wasting” $40m sponsoring a rich English football club when its citizens are poor. It is true Rwanda is still a very poor country. It has one of the lowest per capita incomes in the world – sitting on the bottom 20 countries. Over 30% of its population live in poverty. But is spending $40m to advertise itself on a T-shirt of a major European football club a waste of money?

Let’s look at the facts. Rwanda wants to promote itself globally as a tourist destination. How do you attract customers to your product or visitors to your country? The first step is to create top of mind awareness about your existence among targeted segments of the global population.
Now the Arsenal T-shirt is seen 35 million times per day around the world. Arsenal has the largest fan base of any English football club on the African continent. It has an even larger fan base around the world. Thus, placing “Visit Rwanda” on the sleeves of its T-shirts gives the country a lot of visibility and has great potential to entice many people to visit the country.

Why does Rwanda need more and more tourists visiting it? In 2017 it got 1.5 million visitors and earned $400m from tourism. Holding many factors constant, we can project that the deal with Arsenal will triple these visitors in three years. That will give Rwanda 4.5 million visitors and revenues from tourism worth $1.2 billion. Surely investing $40 million to earn an extra $800 million is one of the highest rates of return on investment anyone can get anywhere in the world. Even if we cut this by 50% it still remains a high rate of return.

Secondly, increasing tourist visitors has a direct impact on the incomes of the poor, whom sections of the British press claim are disadvantaged by this deal. As early as 2007 when Rwanda adopted the policy of targeting high end tourists, the Overseas Development Institute and SNV did a study on the impact of tourism on the incomes of the poor.

The study looked at where the poor participate in tourism and tried to estimate the cash flowing to them. They found that an influx of 17,000 upmarket tourists generates $1.5 million as income for poor households in Kigali – that is to say the semi-skilled and unskilled workers, food producers and artisans.

The people who work in hotels where touristsstay as waiters and waitresses, cleaners, cooks, bartenders, front desk etc. are beneficiaries of the tourism industry because their incomes are generated by tourism. Farmers whose food produce is purchased by hotels are among the poor.
This is not to mention the crafts industry that sells its products to tourists and even donations tourists make. Rwanda needs to earn foreign exchange to import many of the things it needs and currently tourism is the largest foreign exchange earner. So what is wrong with the country investing $40 million in an activity best positioned to promote it as a tourist destination?

I do not like ad hominem debates, and I dislike arguments that pit Africa against the “racist West.” But I find it difficult to believe that anyone of the critics in the British press would fail to see the value of Rwanda’s investment in this sponsorship of Arsenal. If the benefits are this obvious, what really could have led sections of the British media and some politicians in continental Europe to denounce the deal if it is not racism combined with individual ignorance and stupidity?

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