Analysis of and Recommendations for Kenya's Tourism Sector

Bachelorarbeit von Juliet Shali Shambi

Introduction:

This paper analyzes the performance of Kenya’s tourism sector with a view to assessing tourism cluster cooperation, competitiveness and its sustainability impacts on the overall economy. The theoretical foundation is based on Porter’s Diamond Model and builds on the cluster concept and typology. This integrates competitiveness and performance improvements within the economic, social, cultural, environmental and political dimensions. The results of the analysis provide possible strategic guidance for the public sector in regard to tourism policies. Similarly, it provides strategies for competitiveness, interaction, and sustainability between the public sector and the private sector.

In order for Kenya to achieve its goal of improving and sustaining tourism earnings (where do we want to go?), I examined the nation’s current position (where are we now?) and provided an analytical foundation for cluster development dialogue and design (how do we get there?).

Chapter 1-5 examines the sector’s external and internal environment with the help of the STEEP (Social, Technological, Economical, Environmental, and Political factors) analysis that builds in turn, on SWOT (Strength, Weaknesses, Opportunities and Threats) as an analytical tool. In addition, Porter’s model examines the cluster’s performances, identifies factors that trigger development and sustainability, and the role of the governments and related institutions in the sector.

After the agricultural sector, the tourism sector is the second largest contributor in foreign earnings. In 2008, the sector witnessed a major decline in revenues in as a result of post-election violence. Given that the tourism sector touches all sectors of the economy, the decline in tourism earnings was a huge blow to the nation as the sector employs more than 407,000 people directly and indirectly (World Travel and Tourism Council 2009). Furthermore, the sector has been susceptible to market price fluctuations, increasing competition, political instability, and the recent global recession.

Kenya offers several natural, geographical, historical and cultural assets namely; wildlife, coastal beaches, alternative tourism, which include sports, hiking mountain-climbing, golf, sports, cruise tourism, safari rallies, among others. However, some of these areas are underdeveloped and offer opportunities for diversification of the tourism product and market. The national government’s strategy targets high-end and mass tourism, sustainable tourism development as well as niche markets.

Despite the efforts undertaken by the public and the private sector to improve the situation, the sector still faces a number of challenges. These include: poor infrastructure, corruption and bribery, poor cluster linkages, outdated policies, lack of information, political instability, and inadequate financial structures.

Chapter 6 concentrates on how the country can achieve competitive advantage and improve tourism revenues. With the aid of reviews of the past and current data, policy initiatives, and literature on the cluster, the analysis concludes with recommendations to both the private and public sector stakeholders in order to improve the sector’s performance. Handling the aforesaid resources, a road map for the entire sector is required so as to promote these assets and increase productivity. However, this requires appropriate measures for improving infrastructure, curbing corruption, increasing investments, maintaining stability, implementing environmental policies, and investing on human resources and capability. To ensure a favourable tourism development scenario, it is of vast significance that grounds should be established for harmonious and effectively coordinating mechanisms within the tourism cluster.

As tourism plays an important role in Kenya’s economy, the aim of the country is to improve and stabilize the sector and ensure a permanent source of revenue largely independent from market volatility. Moreover, increased competitiveness and performance of the tourism sector regionally and globally will contribute to the country’s poverty alleviation.

Table of Contents:

	LIST OF FIGURES	4
	LIST OF TABLES	5
	LIST OF ACRONYMS	6
	LOCATION MAP	7
	EXECUTIVE SUMMARY	8
1.	INTRODUCING KENYA	11
2.	ANALYSIS OF KENYA’S TOURISM SECTOR	13
2.1	STEEP ANALYSIS	17
2.1.1	Social Factors	17
2.1.2	Technological Factors	18
2.1.3	Economic Factors	19
2.1.4	Environmental Factors	21
2.1.5	Political Factors	22
2.2	SWOT ANALYSIS	24
2.3	TOURISM CLUSTER MAP	25
2.4	COMPARATIVE REGIONAL POSITIONING	26
3.	PORTER’S DIAMOND MODEL	29
3.1	INTRODUCING THE DIAMOND	29
3.1.1	Factor Conditions	30
3.1.2	Demand Conditions	31
3.1.3	Related and Supporting Industries	31
3.1.4	Firm Strategy, Structure and Rivalry	32
3.1.5	The Role of Chance and the Government	32
3.2	CRITIQUES AND REASONS FOR USING THE DIAMOND MODEL	33
4.	APPLICATIONS OF PORTER’S DIAMOND IN THE KENYAN CASE STUDY	36
4.1	FACTOR CONDITIONS	36
4.1.1	Tourist Attractions	36
4.1.2	Human Resources	38
4.1.3	Infrastructure	39
4.2	DEMAND CONDITIONS	40
4.3	RELATED AND SUPPORTING INDUSTRIES	42
4.4	CONTEXT FOR FIRM STRATEGY AND RIVALRY	44
4.5	THE ROLE OF THE GOVERNMENT	45
4.6	COLLABORATION OF INSTITUTIONS	48
5.	STRATEGIC CHALLENGES AND RECOMMENDATIONS	51
5.1	CHALLENGES	51
5.2	RECOMMENDATIONS	52
5.2.1	Infrastructure and Utilities	52
5.2.2	Political Stability and Security	53
5.2.3	Curbing Corruption and Bribery	54
5.2.4	Marketing and Promotion	55
5.2.5	Strengthening of Cluster Linkages	57
5.2.6	Capacity Building	57
5.2.7	Investment and Finance	59
5.2.8	Policy and Legal Framework	60
5.2.9	Conservation of Resources	60
6.	CONCLUSION	62
	BIBLIOGRAPHY	65

Text Sample:

Kapitel 4, APPLICATIONS OF PORTER’S DIAMOND IN THE KENYAN CASE STUDY:

In an effort to understand the loss of competitive success of the tourism industry in Kenya, the Diamond Model provides insights in its primary strengths and weaknesses.

4.1, Factor Conditions:

4.1.1, Tourist Attractions:

Kenya’s key comparative advantage lies in its unique natural endowments. The climate is generally warm and humid at the coast, cool in the central highlands, hot and dry in the north. Not to mention, the country has a diverse landform and landscape types ranging from equatorial, savannah, tropical, and volcanic.

Kenya has 32 national parks and reserves that cover approximately 8 % of the total area. Wilderness safaris and the beaches along the coast are the backbone of the sector. However, the impact of tourism on the natural resources has left its scars behind. The over-exploitation of the coastal and safari resources as well as the poaching and pollution of the environment are factors contributing to the decline in the quality of Kenya’s natural resources.

The coastal province is a popular destination for tourists from Europe as it consists of beaches and well developed resorts, marine parks, coral reefs and warm water suitable for windsurfing and swimming. The Swahili coastal region has quite a number of historical sites dating back from the 9th century and a number of monuments, antiques which reflect Arabic, Asian, and European influences. Kenya is also home to fossil sites for archaeology, palaeontology and research. The remains of Homo erectus were found around Lake Turkana and since then the country is known as the ‘the cradle of mankind”. The Snow-capped Mount Kenya and Mount Kilimanjaro on the Tanzanian border offer climbing routes and diverse flora and fauna. Lakes Nakuru and Baringo are famous for the concentration of pink flamingos and other bird species.

Kenya has a history of hosting various sports events due to its altitude and landscape. Examples include: athletics high training camps, international cricket games, international safari motor rallies, and horse racing.

The underdeveloped tourist attractions offer an opportunity for the country to variegate its products and increase tourism revenues. Over-reliance on wildlife and beach tourism to the exclusion of other potential tourism products limits the sector from augmenting.

4.1.2, Human Resources:

Kenya has a well-educated work force in comparison to its neighbouring countries. The country was ranked in position 95 out of 133 in 2009 by the Travel and Tourism Competitiveness Report. However, labour productivity has been declining while costs remain high on the other end. Kenya lags behind with respect to job-training. According to the Investment Climate Survey, only 40% of Kenyan firms offer training for their employees.

The Kenya Utalii College (KUC) is a public institution formed to offer training and establish hospitality standards. In 2007, the number of graduates from KUC declined by 36.1% from 3.523 to 2.250 in 2008. The decrease in number of graduates is attributed to the students’ preference for degree programmes instead of the other existing courses. For this reason, the college now offers university degree programmes in collaboration with the University of Nairobi.

Porter recognizes the significance of language and multicultural skills in the service sectors. Kenya’s national language is Kiswahili and the formal language is English, with a large number of the work force capable of conducting work in English. This is a significant benefit to the sector due to the extensive demand for communication with tourists from all over the world. In addition, the people’s familiarity with multiple cultures and their hospitality attract tourists from all over the world.

Firms’ awareness of HIV/AIDS response is disappointingly low. However, Kenya seems to be doing much better in comparison to Tanzania and Uganda. Approximately 44 % of Kenyan firms offer at least one HIV/AIDS programme compared to 31% in Tanzania and 32% in Uganda. Health conditions of workers in the tourism industry are important as these have the potential to disrupt labour productivity in the industry.

4.1.3, Infrastructure:

Poor quality transport infrastructure in some parts of the country has affected access to tourist attractions, thus directly and dramatically diminishing the country’s competitiveness and profitability. Air transport in Kenya is operating well and in a liberalized environment. However, the airport facilities are deteriorating due to poor maintenance.

The existing electric network is unreliable and volatile. Specifically, the coastal area which attracts the largest number of tourists faces intermittent supply failures. By the same token, the region faces high costs of electrical supply in comparison to other regions. At least 80% of Kenyan firms lose up to 7% of their sales as a result of power disruptions.

The country has a fairly developed telecommunication network though quite expensive. Despite the huge potential to attract tourists and increase earnings, rural areas lack communication networks and information, which are vital for their development. Furthermore, information inadequacy, lack of computers, and other resources are major hurdles for small businesses in the tourism sector.