Kenya's tourism sector losses hit $1.54 bn amid coronavirus

Kenya’s hoteliers estimate the country lost in excess of Ksh150 billion ($1.36 billion) in tourism earnings to the Covid-19 pandemic as the tourism industry collapsed across the world.

The sector is one of the leading sources of foreign exchange, earning Ksh163.56 billion ($1.54 billion) in 2019, and which had been expected to grow by one percent in 2020.

Tourism contributes 10 per cent of Kenya’s annual GDP and employs over two million people.

However, restrictions on travel to combat Covid-19 reduced airline travel and accelerated cancellations of hotel reservations.

These measures continue to affect receipts, thereby reducing foreign exchange inflows, and impact service sector-related employment in East African countries with a high dependence on tourism.

According to data from Kenya Private Sector Alliance at least 3.1 million jobs in travel and tourism were affected in the year 2020 as hotels, bars and restaurants, tour operators, airlines, travel agents and their suppliers and support services recorded low business.

“The amount the tourism sector lost in Kenya is even higher than what the World Bank reported. We lost in excess of Ksh150 billion last year,” said Mike Macharia of Kenya Private Sector Alliance (Kepsa) and chief executive of Kenya Association of Hotel Keepers.

“What happened is we had 1.2 million tourists coming in between June and December 2019. In 2020, we only got tourists in January and February. The numbers were 40,000 tourists per month. So the rest of the year was a total loss,” said Mr Macharia.

The September 2020 arrivals showed an 84.7 per cent drop compared with the same in 2019 when arrivals for the month closed at 169,574, an increase from 114,539 visitors the same month the previous year.

The tourism sector is not likely to recover anytime soon as the Covid-19 situation worsens in the traditional tourism market of the US, the United Kingdom, and large parts of the European Union including Sweden, France and Germany.

“International arrivals were non-existent in January 2021. We are just dealing with domestic travel. The Covid-19 situation will get worse before it gets better,” said Mr Macharia.

With vaccination campaigns seeing a slow start globally, many countries are coming to grips with a fresh (second) wave of infections.

Second wave

A fresh wave of the pandemic has gripped the world, possibly due to a new strain of the virus.

On daily new cases, the US recorded 260,973 on January 27, followed by Brazil (62,532), UK (62,322), Germany (26,651) and France (25,379).

Sweden, which had avoided lockdowns and restriction of movement of its citizens unlike other European countries, has now introduced tougher rules for social distancing at shopping complexes, private gatherings and gyms.

In East Africa, the situation is no better in Tanzania, Rwanda, South Sudan, Burundi and Uganda.

A report titled State of EAC Economy amid Covid-19 compiled by the East African Business Council reveals that in Tanzania, tourism and travel receipts which, mostly comprise receipts from tourism, declined by 39.1 per cent to $1,726.60 million and accounted for more than 60 per cent of services receipts from 61 8 percent.

Payments drought

The drop was attributed to measures taken by countries to limit the spread of Covid-19, which included lockdowns and suspension of international passenger flights.

Annual services payments amounted to $1,614.70 million in September 2020 lower than $1,883.80 million in the year ending September 2019.

This was driven by a travel payments drought, which dropped by 41.2 percent to $396.5 million.

The UK ban on travellers from Tanzania and DR Congo in an attempt to block the South African Covid-19 variant has made the tourism situation worse.

In Rwanda, a second wave of coronavirus has led to a fresh lockdown making it harder for tourism. According to Rwanda Development Board the country registered more than $490 million in revenues, in 2019.

“The pandemic has cost Rwanda $45 million, due to dwindling tourist numbers and after 55 international meetings scheduled to be held in Kigali were postponed or cancelled,” said Peter Mathuki, CEO EABC while releasing the report.

In Uganda, hotels have lost $320 million in business since March 2020.

The country recorded a loss of $500,000 by December 2020 as 85 percent of all booked conferences were cancelled, resulting in a 10 to 20 percent fluctuation in occupancy rate.

According to the World Bank April 2020 Africa’s economic growth projection for 2020, sub-Saharan Africa’s economic growth was projected to fall sharply from 2.4 per cent in 2019 to between 2.1 per cent and 5.1 percent in 2020 the first recession in the region over the past 25 years.