Tourism numbers plummet on back of insecurity, VAT Act

By MARGARET KANINI

Earnings from tourism sector declined two per cent while tourist numbers declined 11.7 per cent last year for the third consecutive year. The decline is on the back of growing insecurity and recently imposed value added tax on tourism services.

Arrivals from major traditional as well as new tourist source markets also reduced. Kenya also experienced a decline of tourists from the populous China that was among those earmarked as key growth market for the country as it looks for alternative markets to cushion against reduction in visitor numbers from West European and North American countries.

Last year, the industry earned Kenya Sh93.97 billion compared to the previous year (2012) where the country closed with a total of Sh96.2 billion and Sh97.9 billion in 2011.

Sharp decline

Tourism Cabinet secretary Phyllis Kandie attributed the drop to increased insecurity incidences, especially Nairobi and Mombasa. “Security is the single most factors that tourists consider before visiting any destination in the world and lack of it in our country clearly demonstrates this sharp decline,” she said at a press briefing yesterday.

Kandie also said the total number of international arrivals for 2013 by air and see reduced to 1.09 million compared to the previous year that saw a total of 1.23 million tourists entering the country. This translates to 11.7 per cent drop in total number of arrivals from the year 2012.

“Insecurity in the largest part of last year saw the number of tourist source markets issue advisories against non-essential travel to Kenya and potential tourists chose alternative destinations offering similar products,” she explained.

The Cabinet Secretary also said other major causes of the drop in tourism activities last year included the poaching menace and the 16 per cent VAT tax on all taxable goods and services imposed by government. Kandie said the VAT imposition increased the cost of doing business in the country, which meant that tourists had to dig deep to pay fees to national parks, book hotels and tour packages.

“This also affected the existing contracts between the travellers and the tour operators and they had to put up with a complicated situation of increased charges on every service,” she said.  She said increased cases of poaching targeting rhinos and elephants led to decline in product and service quality for the tourists and threatened Kenya’s pride as a world’s leading Safari destination.

General performance

Chinese visitors to Kenya declined from 41,303 in 2012 to 37,062 in 2013 representing a 10.3 per cent decline.

Also, the general performance from UK market declined by 19.5 per cent, followed by US (6.7 per cent) and Italy (2.8 per cent). The level of commitment and doing business with Indians remained almost the same as that of 2012 while the German market in Kenya reduced by 1.3 per cent.

However, According to the report, Europe still remains the main regional source of market with a share of 43 per cent followed by Africa with 24 per cent, Americans with 13 per cent, Asia with 13 percent and Middle East and Oceania at five and three per cent respectively.

Jomo Kenyatta International Airport had the highest share of in-bound traffic, with 83 per cent of total arrivals coming in through this airport.

Kandie said her ministry is planning on carrying out various interventions to revive this sector which contributes to 11 per cent of Kenya’s GDP, so far Treasury has allocated Sh200 million towards the strategy.

Some key strategies will include diversification of the sector, venturing into new markets, domestic and regional tourism marketing.