Karim: Government gives tourism a wide berth yet again

This year’s budget is almost silent on tourism, a sector that plays a huge role in the economic well-being of the country.

Tourism generates 14 per cent of Kenya’s gross domestic product and employs 12 per cent of the country’s work force and is the largest foreign exchange earner after tea and coffee exports. Kenya is Africa’s fifth largest tourist destination, welcoming approximately 1.8 million visitors annually with nearly half coming from Britain and Europe.

In this year’s budget there were no specific tax incentives or other forms of measures announced to specifically boost the sector. This even after recent travel advisories occasioned by terrorism impacted negatively on the sector leading to loss of revenue and job cuts.

Recent measures to redeem the sector were most welcome but can only go so far.

President Uhuru Kenyatta’s announcement, for example, on new taxation measures aimed at generating greater value from domestic travel and tourism in the country by promoting affordable and accessible travel and tourism opportunities to Kenyans although most welcome can only do so much.

Other tax and measures the industry has forever been lobbying for and which are necessary to take tourism to a whole new level in our country include tax measures to stimulate the sector, lower rates of corporation tax and reduction in air travel tax.

Emerging markets

For example, strong support and promotion of other forms of tourism, sports tourism, cruise ship tourism and conference tourism are areas to look at. There is also a significant higher level of funding for aggressive marketing strategies in both source and emerging markets that need to be incorporated.

The need for a micro credit scheme, in close cooperation with large banks, providing special loan advantages for companies in the sector to encourage refurbishment and extension works cannot be overemphasised.

This would for example require an allocation from budget to meet part of interest cost by Government.

Other concerns by stakeholders, which should have been included in the budget, include specific tax breaks for key international players willing to invest in the tourism industry are necessary if new investments are to materialise.   

Fiscal incentives to promote other forms of tourism such as golf tourism, eco-tourism would have been most welcome in this year’s budget.

The above measures, in my view, are an absolute necessity if we are to compete with the likes of South Africa and other emerging destinations in Africa for the international tourism dollar from overseas destinations.

The writer is Deloitte Kenya Audit Partner. The views expressed in the article do not necessarily represent those of Deloitte.