Effects of Uncertainty on Tourism Sector Performance during Election Period in Kenya

Effects of Uncertainty on Tourism Sector Performance during Election Period in Kenya

Tourism is a key economic activity in Kenya and contributes to economic growth and job creation through backward and forward linkages with various sectors, including hospitality (hotels and restaurants); transportation (road, sea, airline, and other passenger transportation services) and booking services (travel agents and tour operators); meetings, incentives, conventions and exhibition events; and tourism-related leisure activities. Over the last 5–10 years, Kenya’s tourism sector has, on average, been contributing about 10.0% to GDP annually, 9.0% to formal wage employment, and 3.5% to total employment.

In 2016, Kenya received 1,339,700 tourists, of which 65.3% were international and 34.7% were cross-border arrivals. Total arrivals grew by 13.5%, international arrivals by 16.8% and cross-border arrivals by 7.8% from the previous year. As a result, the sector was the second largest contributor in foreign exchange for the country after agriculture, with earnings amounting to US$ 0.97 billion or 17.3% of total earnings. Regionally, in 2016, Tanzania received a total of 1,284,279 tourists (72% international, 28% cross-border) accounting for US$ 2 billion in receipts, which was more than twice the receipts that Kenya earned. Uganda received 1,322,522 tourists (30% international, 70% cross-border) accounting for US$ 1.35 billion. Kenya has an estimated hotel bed-night capacity of 17.4 million, of which the coastal region accounts for 50%, providing ample accommodation to both domestic and international holiday makers.

Despite its potential in contribution to the economy, the performance of the sector is susceptible to both domestic and global macroeconomic and security shocks. Over the years, the performance of the sector has been largely affected by security concerns emanating from terrorism and the general elections. This article focuses on the effects of general elections on the tourism sector in Kenya.

Electioneering periods in Kenya have, more often than not, impacted negatively on the performance of the tourism sector. During the general election of 27th December 2002, the level of political uncertainty six months to the election was generally low and, overall, the political climate was generally good. As a result, tourist arrivals in the country were not negatively affected. Following the peaceful and undisputed election, tourist arrivals increased by 12.3% between the months of January and March 2003 (Figure 1).

This was, however, not the case in the elections of 2007, 2013 and recently in 2017. For example, following the disputed December 2007 elections, monthly inbound tourist arrivals declined by 61.6% between the months of December 2007 and February 2008 (Figure 1). A similar scenario was witnessed in the March 2013 election, which saw monthly tourist arrivals decline by 40% between the months of December 2012 and April 2013 (Figure 1), and only started picking up in June.

In the months preceding the recently held elections of 8th August 2017, the tourism sector witnessed increased tourist arrivals of 36% between May and June 2017 (Figure 1). This was expected to increase even further owing to the fact that the high tourist season sets in from the month of July. Monthly international arrivals in the country often peak around July-August as tourists arrive to watch the spectacular wildebeest north-bound migration from Serengeti National Park in Tanzania and crossing of the Mara River in Maasai Mara game reserve in September. The trend in arrivals continues to December as tourists arrive for end of year holidays.

Figure 1: Event analysis of inbound tourist arrivals, three periods before and after elections

Data Source: KNBS

The 2017 elections were the first ones in Kenya to be held during the high tourist season. Though the elections were held in a peaceful environment, the negative effects seem to have set in. For example, during July-September 2017, the country witnessed a decline in bookings and bed occupancy in tourist hotels, lodges and other tourism-related businesses in the country. According to the Kenya Association of Hotelkeepers and Caterers, bed occupancy dropped by between 20–60% in the North Coast due to cancellation of bookings. This, they claim, is likely to lead to temporary closure of more than 20 hotels and loss of more than 20,000 jobs during the high season in September to December 2017.

The drop in tourist arrivals is largely attributed to uncertainties surrounding the election of 8th August 2017, which were annulled by the Supreme Court, leading to a repeat in 26th October 2017. However, this was compounded by travel advisories issued by governments of the leading source markets, specifically the United Kingdom and the USA in September 2017.

Looking at the optimistic scenario, there is likelihood of increased travel and tourism activity in the country during this year’s holiday season, now that the post-election dust seems to be settling. This is premised on what happened in 2013 where, as a result of peacefully settling the election dispute in court, international tourist arrivals increased by 50% between March and June 2013 (Figure 1). Furthermore, bookings this year could be boosted by easier accessibility to the coastal region by both domestic and international tourists due to operation of the Standard Gauge Railway (SGR). The SGR, fares are fairly accommodative of middle income Kenyans. In addition to the reduced time of travel to the coast, train trips also add to the tourist experience since it passes through the Nairobi and Tsavo National parks, enabling tourists to view game on the way to the coast.

To stabilize the industry, there is clearly need to grow domestic tourism because domestic tourism is not seasonal as tourism numbers are spread out throughout the year as opposed to international tourism. Domestic tourism is also not affected by travel advisories, and has potential distributional effects of tourism benefits across the various counties, unlike internal tourists who only focus on Maasai Mara and coastal beaches.

Kenya should concentrate on developing local tourism market and products. New Zealand, for example, has succeeded in making its domestic tourism more resilience and sustainable, hence stabilizing the industry. Japan, on the other hand, has succeeded in promoting one product movement where each town is encouraged to develop one specialized product or service. Local tourism can be promoted through diversification of tourism products and services from safaris and tours to coastal beaches, national parks and game reserves. This can be achieved through promotion of cultural tourism (such as the Lake Turkana cultural festival, Lamu food festival, among others), sports tourism, medical tourism (in the region) and conference tourism, among others.

Thus, given that tourism growth is sensitive to insecurity and political instability, promoting the country as a safe destination and conducting smooth electoral process in line with the Kenya constitution is imperative in ensuring sustained growth of the sector. In addition, promoting domestic tourism cross-border arrivals from the East African Community will help stabilize the industry from shocks.

Augustus Muluvi and Nahashon Mwongera, KIPPRA, Productive Sector Division 

Photo: Kenya Year Book

Leave a Reply

Your email address will not be published. Required fields are marked *