Determinants of domestic tourism in Uganda: An examination of macro-economic variables and Uganda’s visitation to national parks (2000Q1-2016Q4)

Abstract

The determinants of domestic tourism in Uganda were examined with the view to determine the existence of long-run relationship using the quarterly performance data for the 2000-2016 period. The study explored the effects of Uganda’s macro environment on domestic tourism performance with focus placed on four macroeconomic variables of inflation, market interest rate, exchange rate and real Gross Domestic Product (GDP). A quantitative methodological approach was employed with the adoption of the ordinary Least Squares (OLS) estimation approach to regress the number of visitors to national parks on the four macroeconomic variables. The empirical estimates indicate that amongst all the four determinants considered for the model, inflation and market interest rate have a negative impact on domestic tourism while GDP and exchange rate had a positive effect. The implication is that domestic tourism performance degenerates with increasing inflation and market interest rate. Market interest rate has the highest impact compared to all the other variables. The research recommends that due to the existence of a negative relationship between the two variables of inflation and interest rate and dependent variable of domestic tourism in Uganda, the government ought to formulate policies that drive interest rate, and inflation to desirable levels and still seek to achieve high levels of domestic tourism performance. Based on the study findings, the researcher concludes that despite the non-consideration of macro-economic variables in domestic tourism promotion, they have a great impact on its outcomes. It is therefore recommended that there ought to be a sychronised approach when determining national macroeconomic policies such that there is a balance between macroeconomic targets and domestic tourism, especially given the importance and impact of tourism on the growth of the services sector and the Ugandan economy at large.