Kenya’s tourism stakeholders livid over budget cuts for marketing
(eTN) - When a budget analysis was done in Kenya last Friday in a series of breakfast and lunchtime presentations by leading accounting, audit, and financial service consultancy firms, the stark reali
(eTN) – When a budget analysis was done in Kenya last Friday in a series of breakfast and lunchtime presentations by leading accounting, audit, and financial service consultancy firms, the stark reality began to sink in with Kenya’s tourism industry, namely that significant cuts in purchasing power for marketing activities and campaigns abroad had been inflicted on them.
A similar situation unfolded across the region, hitting home hard in Uganda, too, where half a billion Uganda shillings were shaved off an already laughably small budget as it was last year, showing that the governments in the region, with the notable exception of Rwanda, do not seem to understand tourism and live under the illusion it just happens, and is not being planned, nurtured, and developed just like any other business. The business school wisdom, that whatever you spend on marketing comes back in multiples, in terms of added sales and turnovers, seems to have eluded the powers that be in several countries of the East African Community.
Yet, with Kenya always seen as the engine of growth in the region, and any downturn in tourism likely to affect the entire region, it is here that this report focuses on, with a closing aside to my own country, Uganda, where another opportunity was lost to finally step out of the shadows and make the destination shine in the spotlight.
With elections in Kenya now less than 9 months away, and the dark shadows of the last elections once again hanging over the country, foreign operators have expressed caution and are likely to tune down their own hard sales for Kenya in the immediate run-up to the elections, now widely expected to take place in March next year, but more so in the immediate aftermath of election day, when the potential of a run-off presidential election might set angry mobs against each other, and when disputes over the declaration of winners in constituencies could spell trouble as it was in 2008.
A leading stakeholder in Nairobi, on condition of anonymity, said in an overnight communication: “Sorry for taking a bit by my colleagues; had to absorb what the budget meant for us in Kenya. As you know, the elections next year are held in the crucial time ahead of the annual low season. Easter, if at the end of March, a time when traditionally many Kenyans and East Africans would travel to the Kenya coast or go on safari with their families and then from April to the end of June, our lodges and resorts offer the lowest rates each year to East Africans to help fill the beds. After the 2007 late-December elections, we had several months of turmoil and unrest, and while as you always pointed out not one tourist came to harm, it made tourism operations very, very difficult at the time.
“It will be that time frame foreign operators will be wary about next year and that means if we get less charters to the coast, less passengers into Nairobi on scheduled flights, the 2013 low season will be very low. I know from hotels in Mombasa that they are seriously looking at doing a partial shut down for the low season to carry out maintenance and overhaul their properties, because they expect too little traffic for the post election time next year.
“The reduction of the budget for KTB [Kenya Tourism Board] is a catastrophe under these known and widely-presented circumstances, and we don’t know why our government could not see the implications of such a decision. Instead of empowering the sector to promote and mitigate the fears in the market, we now have less money, and at a time when for 2012, the signs are already clear at almost half-year results available, that we are losing ground over 2011. Last year, we established a new arrival record and a new revenue record, just missing the 100 billion shillings mark by a narrow margin.
“Coast arrivals are down, charters are down, and with money not available to work new and emerging markets, which may have a greater resilience towards our political events next year, the outlook is worrying the sector. We frankly think our government has lost the plot here, and our minister failed to impress upon his cabinet colleague in finance how important tourism is. Now we miss Bwana Najib more than ever, because he would have ranted and raved in public and pushed and demanded behind closed doors.”
Stark sentiments indeed, and with added communications available from the Kenya coast, where the Chairman of the Mombasa and Coast Tourism Association, Mohammed Hersi, also took government to task when he issued the following statements in the light of figures emerging that coast arrivals by charters are down by over 21 percent compared to last year, “The government has been notorious and continues to give preference to ministries with serious misappropriation issues, yet the Ministry of Tourism can create more wealth if given enough resources [sic: for the promotion of tourism through KTB].” While appreciating the role of domestic and regional tourism in particular at his own The Sarova Whitesands Resort and Spa, where the mix of international, domestic, regional, and business travelers has been fine tuned to make the most out of each market segment, he nevertheless added: “We need to have a good mix and balance. It is largely the international tourists who bring in the much-needed foreign currency,” having to point out to government the inevitable that 2 and 2 indeed is 4 and cannot be stretched to 4 plus or even 5, as much as the finance ministry technocrats would want the sector to believe their lamentable excuses for the budget cuts.
Hard times ahead for Kenya tourism then? Very likely challenging years, and what is clear is that the sector will have to immediately engage with government in talks at the highest level to prevent a further market erosion and potential melt down in the low season next year, which could throw the sector into some serious problems with much wider implications for Kenya’s economic outlook and giving a newly-elected President and his government – President Kibaki cannot stand for another term of office due to term limitations – the worst possible start on the economics front.
Across the western borders of Kenya, here in Uganda, the mood is no better, though, since only a budget of 1.51 billion Uganda shillings was set aside for tourism marketing, half a billion less than the medium-term budget framework had foreseen. Taking into account an exchange rate of roughly 2.500 Uganda shillings to the US dollar, this translates into a budget of some US$600,000, a figure which has made it all but clear that government continues to give crumbs to the tourism industry instead of a buttered slice of bread and is largely seen as the main reason why the sector continues to underperform vis-a-vis attractions and potential.
Standard repetitions of decades-old promises have also so far not yielded any tangible results, as crucial roads identified as much as 15 or even 20 years ago, which could open up tourism attractions and link them directly rather than via Kampala, have not been paved, key elements in the country’s tourism policy still not been implemented 8 years down the road, and the one available financing mechanism outside budget allocations, the tourism levy, never been implemented as squabbles persist over both the method of collection and where the money then goes. The sector rightfully opposes there the transfer of such collected monies to the government’s general fund, which is known to take but not to give back and has advocated a different solution of all collections going directly into a Board of Trustees controlled account. Again, the budget speech said nothing on that score and the initial upswing mood at the Ministry of Tourism, when a year ago Prof. Kamuntu took over from his hapless and controversial predecessor, has literally dissipated in the face of much silence on such crucial issues.
Hence, the mood in Uganda is much the same as in Kenya, of worried anticipations and jittery forecasts for 2012/13, and yet here we celebrate not just our 50th anniversary of independence from Britain on October 9, but have, for the current year 2012, been named by the Lonely Planet guide as their top destination of the year. With half a year gone, statistics are hard to come by, though, to actually compare this year’s arrivals with those of 2011 and 2010 and see where the trend actually goes.
Said a Ugandan stakeholder: “… of course, we are watching what is happening in Kenya. If there are the slightest problems with their post election period, it will have a very negative effect on the entire region. A lot of air traffic still connects via Nairobi. We have more direct flights now to Entebbe, but if Kenya has any problems, like it was in 2008, traffic via Nairobi is immediately going to reduce, and that will affect us here in Uganda and the other member states [sic: of the East African Community] also. And if it is true what you say that they reduced their marketing budget in Kenya for such a crucial year, I have not seen their budget data or spoken to association leaders there so far, it will post an even greater challenge for us all.
“What I hope for is that the launch of the East African Tourism Platform will give the private sector an effective voice at [the] EAC level with the ability to lobby the respective governments also. Because nationally, we have largely failed to impress upon our governments the need to facilitate our sector. You, I remember 10 years ago, telling them the same story we still tell them, that tourism’s growth potential expands exponentially by injecting more funds into marketing and that investments, job creation, forex earnings, will all instantly be boosted. But our top association is mismanaged, and we now have hope for EATP to fill some of those voids and lobby for our cause.”
It is understood that the East African Tourism Platform, which leadership met last week in Kigali alongside the annual gorilla naming festival celebrations of Kwita Izina, will meet next weekend in Nairobi for the planned Kenya launch alongside their annual Kenya Tourism Federation’s annual tourism awards, and that these issues resulting from unsatisfactory budget allocations might well be on the agenda.