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The tourism industry will have to do more with less money in its bid to recover from the impact of Covid-19 after the National Treasury slashed its allocation for the current financial year.
The cash for the Tourism ministry has been reduced by Sh3.42 billion, which means that State agencies charged with marketing the country in key source markets will have to reduce their activities.
Tourism is among the sectors hit hardest by the coronavirus pandemic over last year as a result of various measures adopted by countries to slow the spread of the virus.
In a Supplementary Budget released this week, Treasury reduced the budget for the Tourism ministry to Sh9.4 billion from Sh12.8 billion.
The explanation was that the allocation had been rationalised, cutting funds meant for tourism marketing while giving more to entities housed by the ministry that did not have much revenue in 2020 owing to near zero number of tourists to enable them pay their employees as well as meet other obligations.
“The approved estimates have been adjusted to Sh9.4 billion under Supplementary Estimates No.1. This comprises of Sh5.8 billion and Sh3.6 billion for current and capital expenditure respectively,” said Treasury in the mini budget.
“The adjustment is on account of budget rationalisation and additional funding of Sh1.3 billion to cater for the payment of salaries and other mandatory expenses for Tourism Regulatory Authority, Bomas of Kenya, Kenya Tourism Board, Kenya Utalii College, KICC and Tourism Finance Corporation - whose revenue performance are adversely affected by the Covid-19 pandemic – and a reduction in Appropriations in Aid (AIA) by Sh3.7 billion in the Tourism Development and Promotion programme on current expenditure.”
Tourism is a leading foreign exchange earner for Kenya, with sector earnings reaching Sh163.5 billion in 2019, according to data by the ministry, from 2.05 million tourists who visited the country during the year.
The earnings are expected to significantly drop, with Treasury projecting this to be by about Sh16 billion over the 2020-21 financial year, compared to earlier projections of over Sh220 billion.
The number of visitors is expected to stand at 204,000, down from an earlier projection of 2.9 million. Tourist numbers were last at that level in the late 1960s, when the industry was still young and posting double digit growth.
Following the first Covid-19 and the subsequent measures that government introduced, hotels have reported massive layoffs, many of them opting for temporary closures.
Since the local economy started reopening, there has been a ray of hope but the industry has to grapple with reduced capacity due to social distancing requirements, as well as additional operation costs.
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