• Sun. May 28th, 2023


Oct 20, 2021

By Paul Nyasulu

Guests enjoying the ride on a Roller Coaster

It is exciting to imaginer amusement and theme parks investment not that it reminds us of Nicolas Cage in his 2012 Movie -The Stolen but the economic benefits associated with the industry. For readers that are not familiar with amusement and theme parks, I will first begin talking about these as necessary. An amusement park is a park that houses various attractions including food and beverage booth, rides such as roller coasters, water rides and other events for entertainment purposes. A theme park on other hand is a type of amusement park that has themed attractions, be it food, costumes, entertainment, retail stores and/or rides. Amusement and theme parks share many similarities and commonalities but they also have distinct differences. They are similar in such way that both offer rides and attractions, however, theme parks are differentiated by having a consistent topical focus, such as Disney World in Florida USA and Gold Reef in Johannesburg South Africa.

The Amusement and theme parks industry has seen super scale development in USA, Asia, Europe, South America and even in Africa expect in Malawi of course. The global amusement and theme parks market is said to be US$73.5 billion and is expected to grow at a CAGR of 9% to reach US$ 89.5 by 2023. Experts argue that when done right, parks generate enormous economic impacts to neighbouring businesses like restaurants, parking lots, hotels, and other merchants.

 Studies reveal that there are certain factors that have and will continue to fuel the amusement and theme park industry. One of it is the symbiotic market that encapsules the increased utilization of amusement in conjunction with leisure and entertainment activities. This includes the utilization of amusement facilities in movies and casinos gaming establishment. The other major segment in this arena is the use of amusements in conjunction with shopping malls to produce leisured marketing environment. Another important factor is that theme parks firms have successfully integrated well into the economic, social and ecological environment of their hosting destination by creating and implementing well defined corporate responsibilities.

How do these parks make money? Park entry tickets cover the bulk of the costs but leave little to filter down to the bottom line. The real cash is however generated from merchandise, food and beverage which have low fixed costs, and can be sold for a huge premium as the guests are a captive audience. The revenues also come from gift shops which are usually located at the park ride exits so guests have to pass through them and buy merchandise.

What are the prospects of theme park and amusement park investment in Malawi? First movers can expect huge return of investment. The industry has for some time been discussed as one of the sectors with a remarkable impact to contribute towards the social economic development of our beautiful country Malawi.  For instance, The Public Private Partnership Commission’s Theme Parks and Recreational Parks report dated 4th January 2017 states that the Blantyre City Council is planning to build amusement parks at Rangeley Park, Jubilee Park, Chiwembe dam and Chimwankhunda dam, which will have joy rides including the Octopus, Dodgems, Paratrooper, Jeeps, Swings, Lilt a Whirl, Dive Bomber and Slides. The country has many locations that offer good topography for amusement parks and theme parks.  The amusement parks and theme parks require land which should be mainly flat with perhaps some gently rolling hills. There are plenty of types of topography in Malawi. For example; Lilongwe, Kasungu, Phalombe, some parts of Mulanje, Nyika plateau, Zomba – Jalia and Domasi areas, Chitipa – central areas, Mzimba, Blantyre – Zalewa along Shire River, Balaka and resort towns of Nkhotakota, Karonga, Salima and Mangochi sit on flat lands that can accommodate any type of amusement park or theme park. The areas mentioned are not just accessible by all major forms of transportation systems available in the country but they also have demand generators.

In other words, locations already have businesses like Water sports, Entertainments, Retails, Shopping Malls, lodges, mountain hikes and game parks that can help to bring people to amusement parks and theme parks. The locations offer adequate sources of utilities such as water, sun and wind that can support park essential activities including water and power supply. The locations are adjacent to major interregional roads including M1, M2, M3, M4 and M5 and of course our beautiful lake which could offer great park visibility to road passers-by or sailing by. Some of the most popularized theme parks like Gold Reef in Johannesburg in South Africa, Kings Island in Cincinnati, Ohio and Disney World in Orlando, Florida both in the USA are located where passers-by see them and are enticed to visit. Malawi offers an all-weather operation that ensure a continuous business and declutch service from environmental factors. In other words, Malawi does not have bad weather conditions such tornados, heats and snows that could force park closures. 

How much does it cost to build an amusement park or theme park? Studies found that when planning for the construction of a theme park, developers should anticipate investing $100 per expected first-year guest. Geoff Thatcher of Ask. Buzz argues that in order to calculate the cost of a park with attractions and theme riders that create stories, the projected guest attendance needs to be multiplied by the cost price per attendee.

What are methods of funding an amusement park or theme park project? Studies reveal that with manifold economics benefits to the areas surrounding them most parks are funded by governments through public-private partnership model of financing. Governments can typically provide grants and loans at favourable rates to potential investors.

At micro level, government and other potential investors may seek funding from international and regional financial institutions such the UN agencies and European Union (EU).  According to International Association of Amusement Parks and Attractions (IAAPA&), the EU offers funding for amusement park, park groups and theming companies of any business size. Other sources of funding include the Initial public offerings (IPOs), sponsorships and peripheral land uses where theme park firms often sell off strata-title retail shops within the grounds of their attraction to raise funds. The other alternative sources of funding for amusement parks and theme parks are Joint Ventures and Franchises. Potential local investors can raise funds by partnering with foreign investors through joint venture arrangments. One good example of Joint Venture could be the Virtual Operation where local investor does not invest in proprietary physical assets but rent capacity from an integrated owner operator company in this case the foreign investor.

Malawi has a hidden treasure for Amusement Park and Theme Park first mover investors. The country has untapped market which depending on theme park include children, teens and their families. The country is surrounded by mid income countries which are potential markets as they do not have popularized theme parks and amusement parks.  Local and foreign investors contact the Malawi Investment and Trade Centre in the capital city Lilongwe (ww.mitc.com) to unveil the treasure.

An amusement park

About the author

Paul Nyasulu is an Adjunct Faculty at Malawi Institute of Management and former Cast/Crewmember of Disney Cruise-line a Walt Disney Company based in Florida USA.

Feedback: paulnyasulu@gmail.com

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