Tourism new frontier in Nairobi and Dar sibling rivalry in 2024

Tourists are entertained by traditional dancers after coming out of the world Odyssen cruiser ship at the port of Mombasa. 800 tourists from different countries came to Kenya for 10 days on January 26, 2023. [Omondi Onyango, Standard]

Tourism is one of the contributing sectors that will see Tanzania overtake in GDP growth next year, according to a new report by a global consulting firm.

Deloitte in a new projection on how six East African economies would progress in the coming year expects Kenya's to expand at 5.2 per cent, while Tanzania's will grow at 6.1 per cent.

This is despite these two economies having grown at almost the same pace in the last three years.

Both economies, according to Deloitte's East Africa Macroeconomic Outlook - Volume IV, shrunk in 2022 at 4.7 per cent for Tanzania and 4.9 per cent for Kenya. Kenya's economy grew at 7.5 per cent in 2021 compared to Tanzania's 5.0 per cent.

Kenya's GDP is expected to expand at 4.5 per cent this year compared to Tanzania's at 4.9 per cent.

This bridge, however, will expand further in 2024 with Tanzania's economy projected to expand at 6.1 per cent compared to 5.2 per cent for Kenya.

"Further, GDP growth in 2024 is forecast to stand at 6.1 per cent, predicated by the scaling of production of Liquified Natural Gas and increased activity in the tourism sector," says the report on Tanzania's economy.

Tourism is one of the sectors Kenya has been taking a beating from Tanzania, with one of the factors being the taxman's aggressiveness in tax collection at the country's major point of entry -Jomo Kenyatta International Airport (JKIA).

The decision by the government, through the Ministry of Tourism, to review upward entry fees into national parks has also worked against the sector.

This is considering Kenya and Tanzania not only share a coastline along the Indian Ocean but also their key national parks - Masai Mara and Serengeti - border each other respectively.

Deloitte uses words like "potential," "beautiful coastline" and "fast-growing middle class" to describe Kenya's tourism sector.

Top destination

However, the sector, which is a major source of foreign reserves for the country, faces security-related challenges for such visitors to stream in.

"As a destination for both safari and beach holidays, Kenya has a lot of potential for long-term growth in its tourism market. The country boasts many natural reserves and a beautiful coastline," the report published on December 13 states.

"However, Kenya faces challenges from ethnic and political conflicts, which make it one of the 20 most unsafe countries in the world according to the Global Terrorism Index for 2023."

Last year, Tanzania was named one of the top 23 destinations to visit globally by CNN.

Deloitte cites Kenya's middle class as one of the markets it can utilise to compensate for a shortfall in international visitors.

"Kenya has a huge potential for domestic tourism, driven by a fast-growing middle class. The Kenya Tourism Board (KTB) launched a series of golf tournaments under the 'Magical Kenya Golf Tour' in September 2022 to showcase key local tourism attractions," it says.

One front that will put Tanzania ahead of Kenya in this sector and hence contribute to the expected 6.1 per cent GDP, Deloitte says, is the anticipated completion of Msalato International Airport.

"Tanzania is currently constructing the Msalato International Airport, which is expected to have an annual passenger capacity of 1.5 million and is expected to be completed in 2024," the report says.

"This will help drive growth in the total tourist arrivals in the country."

Direct flights

This is even as Tanzania recently partnered with France and Saudi Arabia to create direct travelling access, and the first flights having flown in the first half of 2023. Similarly, Kenya, which relies more on international arrivals is also targeting China.

"Kenya is strengthening its connection with Mainland China and other wealthy Asia-Pacific markets, which will boost travel in the medium term," the report says.

The Nairobi-New York direct flights, especially by the national carrier Kenya Airways have boosted the country's tourism sector.

"The inbound market is composed of a large share of European and North American arrivals, which are expected to increase in 2023 due to more charter flights from the EU and stronger travel links between Kenya and the US," the report says.

Tanzania's earnings from tourism increased from $1.3 billion (Sh198.9 billion) in 2021 to $2.5 billion (Sh375 billion) in 2022, a 92.2 per cent year-on-year growth.

This is while Kenya's international earnings rose from $0.5 billion (Sh75 billion) in 2021 to $0.8 billion (Sh120 billion) in 2022.

"Tourism earnings are expected to further increase to Sh195 billion (USD 1.3 billion) in 2023, and $1.8 billion (Sh270 billion) in 2024 as the sector recovers to pre-pandemic levels," says the report.

"Kenya is investing in developing transport and accommodation infrastructure, and global marketing campaigns that are expected to boost the tourism industry."