Tourism sector urges State to expand its kitty to spur growth
Kenya’s tourism sector which was hard hit by the coronavirus pandemic shocks requires an annual marketing budget above Sh20 billion to compete with its continental peers, says Tourism and Wildlife Cabinet Secretary.
Despite Kenya recording a 91 per cent growth in international arrivals in the period between January and August to post 924,812 arrivals compared to 483,246 recorded in the same period in 2021, the ministry has decried budget cuts.
Releasing industry performance results last week, Tourism and Wildlife Cabinet Secretary (CS) Najib Balala said the $2 million (Sh239 million) allocated to the sector by the National Treasury was not sufficient.
Pain of budget cuts
“Budget cuts destroy the plan and then you cannot achieve it. I think we need over $200 million (Sh20 billion) to invest into the sector annually for it to work,” said Balala.
Tourism is Kenya’s second-largest source of foreign exchange earnings after agriculture. Magical Kenya heavily relies on beach, safari and ecotourism products as well as meetings, incentives, conferences and exhibitions but is now leveraging sports to shore up its numbers and revenues.
The sector’s revenues doubled to Sh165 billion from 924,812 international arrivals for the eight months to August 2022, from Sh83 billion a similar period last year, majorly because of the vaccination.
Kenya Tourism Board has projected a final figure of Sh265 billion from 1.4 million arrivals by December.
Balala said KTB will make a major impact globally and domestically if it gets enough cash. This is in reference to a country like Jordan, which despite funding its tourism sector with Sh11.9 billion, had inferior products to Kenya’s but attracts 7 million tourists annually.
South Africa, he said gets $68 million (Sh8.1 billion) and 10 million arrivals.
Closer home, Rwanda spends £800 million (Sh1.5 billion) annually on promoting the country through English Premier League club Arsenal, a proposal Balala said had been considered but quashed for lack of adequate funds.
Balala, who relinquishes the docket, now almost synonymous with him for almost two decades on Tuesday, said he has left ongoing reforms that will increase the tourism promotion fund (TPF) collections from the current Sh2.4 billion to Sh9 billion per annum in the next 4 years, funds that will support the development, promotion and branding of the sector.
In a bid to streamline its revenue collection, TPF has contracted the Kenya Revenue Authority, whose cost of collection is 4 per cent compared to TPF’s 48 per cent.
“If we leverage KRA’s efficiency, TPF will cut their collection cost to the minimum and we will be able to raise over Sh5 billion in the next 3 to 4 years. And if the numbers go up, we can achieve another Sh3 to 4 billion in the next 3 to 4 years and that you can see we have almost Sh8 to Sh9 billion ready without doing anything to the sector, ” Balala said, adding that the maximum the fund has collected over the years is Sh2.7 billion, terming the 48 per cent cost of running the operation as unviable and impracticable.