Assessing the poverty impact of the COVID-19-induced tourism crisis in Tanzania: A social accounting matrix microsimulation analysis

The COVID-19 pandemic has caused major disruptions to international tourism and has stimulated research interest. This study examines links between COVID-19-induced tourism disruption and poverty in Tanzania. Unlike previous studies linking COVID-19, tourism and poverty, this paper uses a social accounting matrix (SAM) microsimulation analysis that allows decomposition of poverty indices by population subgroup and assessment of the drivers of aggregate poverty. The results of the SAM multiplier analysis indicate that all households will experience reduced incomes, and that this effect will be more pronounced in urban than rural households. The microsimulation results suggest that the COVID-19-induced tourism crisis will exacerbate the poverty headcount, poverty gap and poverty severity, with urban and rural non-farm households being most affected. The results of the poverty decomposition show that the growth effect has a stronger impact than the inequality effect on increased poverty. Poverty increases and inequality decreases simultaneously. The paper suggests several demand- and supply-side policies that may help to build tourism resilience and recovery and alleviate poverty in Tanzania in the post-COVID world.