11.01.2008 Kenya

Kenyan crisis: An adversity for the tourism sector

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Sally Mullens, owner of Charlie Claws, a tour company that runs diving and snorkelling trips along the spectacular coastline, is deeply concerned about the Kenya crisis.

"I just don't know what we'll do," she says "We've already had to lay off about half of our staff, and almost all the other hotels and resorts have had to do the same.

"Normally we'd expect about a hundred tourists a day for this time of the year. Tomorrow we're down to 12."

Her fears stem not from any risk of violence or looting, but from the potentially catastrophic collapse in tourism that looms as a result of Kenya's ongoing political crisis.

Cancellations for her business, as well as most others along the waterfront and for those who run wildlife safaris in the interior, have been coming thick and fast, despite the fact that no tourists have so far been caught up in the troubles.

According to her, the conditions are perfect. “If it weren't for the news reports, we wouldn't know that anything was wrong in other parts of the country. But all the publicity and the travel advisories have really hit us hard. If only they'd make a more realistic assessment of the risk to tourists, we'd be fine."

Long-term impact

Tourism is easily Kenya's biggest foreign currency earner, bringing in an estimated $1bn (£500m) per year - more than horticulture and tea exports combined. Kenyans are an incredibly industrious and entrepreneurial people. They've recovered from big hits in the past, and they'll do so again, but this is going to be very difficult for a while to come, says Robert Shaw, an economist.

It has also been one of the economy's most spectacular performers, with visitor numbers doubling over the past three years.

But it is a notoriously fickle industry. Already, tourism is the industry most dramatically affected by the recent crisis, and analysts warn it could take years to recover.

"Tourism is dead," says Tasneem Adamji, chair of the Kenyan Association of Tour Operators (KATO) for the coast region.

"The coast depends on charter flights for most of its tourists. This week, they've lost 5,400 seats on those flights mostly from Europe. That represents an 85% loss on their usual numbers.

This, she adds, means "20,000 direct job losses are imminent along the coast between now and March" so that when indirect jobs are included, the total job losses will reach 100,000.

Given that each employed Kenyan feeds 10 people, the tourism industry's difficulty could affect at least a million people, KATO estimates.

The dilemma about this pressing issue is that there has not been a single incident involving tourists since the whole crisis began, but in ten days, all the hard work of the past six or seven years to recover from the last collapse in tourism has been undone.

Analysts, including Professor Terry Ryan, believe the entire economy is staring at a recession and this after growing at a blistering 7% last year.

In an interview with the Business Daily newspaper, he said he would "expect the economic growth rate to scale down to between 2% and 4.5%, and that is assuming that the situation returns to normalcy soon."

And what about nervous investors; Already, Kenya's finance minister estimates that the economy has lost $1bn since the post-election crisis began on 28 December, and industries like transport and agriculture and financial services are still struggling to get back on their feet.

Another economist, Robert Shaw, believes one of the biggest problems has been the loss of business and investor confidence.

Tourists have therefore stopped coming to Kenya

"Things might be calmer now," he says. "But parliament is going to be stormy for the foreseeable future, and there is no sustainable solution anywhere on the horizon. "Investors are all incredibly nervous," he adds. "The last thing they want is instability, and that's exactly what we have right now."

Part of the problem has been the focus of opposition anger on President Kibaki's Kikuyu community.

The Kikuyu dominate economic life in Kenya, but many of their businesses have been burned, and farmers driven from their properties in the post-election violence.

"The movement of Kikuyus takes a lot of the dynamism out of the economy," Mr Shaw says. And it is not just Kenya that is suffering as a result. No fewer than five neighbouring states channel their exports and imports through the Kenyan port of Mombasa on the Indian Ocean.

In a statement, the World Bank says a quarter of the gross domestic product of Uganda and Rwanda and a third of Burundi's pass through Kenya, including essential commodities.

South Sudan, the eastern Democratic Republic of Congo and northern Tanzania also lean heavily on Kenya both for trans-shipments and imports of essentials such as maize.

Although road transport has returned to normal across much of the country, ongoing instability in the west of the country near the Ugandan border continues to make trucking dangerous, and shortages of fuel and other essentials are continuing inside Uganda which is already driving up inflation across the region.

Tough times ahead

The government insists it has taken control of the situation.

On Tuesday afternoon, President Kibaki announced half of his cabinet, including re-appointing his finance minister, Amos Kimunya, who told the BBC that what investors wanted was continuity and stability, and that, he insisted, is what the president has delivered.

But economic analyst Mr Shaw disagrees.

"They're pretending that everything's normal, but it isn't," he says. This is really the lull before the storm, whether it's a political storm or more than that.” The fundamental fault lines, which caused the troubles in the first place, are still there.

"Kenyans are an incredibly industrious and entrepreneurial people. They've recovered from big hits in the past, and they'll do so again, but this is going to be very difficult for a while to come."


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