Bombings cause losses to Kenya

Recent bombings in Kenya have dented President Uhuru Kenyatta’s plans to boost tourism and undermined his pledge to restore security after last year’s Westgate shopping mall attack.

Travel warnings issued by the US, Britain, France and Australia last month have sent their citizens packing, emptying Kenya’s palm-fringed beaches and forcing hotels to lay off staff.

On taking office last year Mr Kenyatta vowed to lift tourist numbers to 5-million annually within five years, three times’ last year’s level, and get economic growth into double figures in his bid to raise incomes and lift millions out of poverty. Those targets looked optimistic to economists and seem further out of reach after a rise in attacks on Kenya, blamed on militants linked to Somalia, this year.

The travel alerts are also a fresh point of friction between the West and Mr Kenyatta, whose pending trial at the International Criminal Court (ICC) has cast a shadow over relations with a nation seen as an ally in the battle against militant Islam.

"The West risks opening a new divide with Kenyatta as they did with the ICC, but the tension so far appears more benign," said Macharia Munene, a university lecturer in Nairobi.

Western governments said they could have only limited contact with a leader facing charges of inciting ethnic killings after violence in 2007 elections left about 1,200 dead. Mr Kenyatta denies the charges. His case has been delayed due to lack of witnesses.

Travel advisories have put Mombasa, where suspected Islamist bombers killed three people this month, off limits to many tourists. Western governments have urged vigilance elsewhere.

As tourists fled, jobs have also gone. "I was sent home ... because there weren’t enough visitors at the hotel," said Tumaini Sidi, a maid at the luxury Sai Rock Beach & Spa Hotel in Mombasa.

Beach resorts and safari lodges now face the challenge of securing bookings for the crucial July-September period, as Somalia’s al Shabaab group has threatened more strikes if Kenya does not pull troops out of Somalia. Kenya said it would not quit Somalia.

Tourism is Kenya’s second-biggest source of foreign exchange after agriculture, earning $1.02bn last year or about 12% of gross domestic product.

But those figures tell only half the story. The industry is a major employer, providing about 500,000 jobs directly and generating work for a host of support industries, from food suppliers down to vendors selling trinkets on the street.

About 900 tourists cut short their holidays after Britain issued its warning on the coastal city of Mombasa on May 14, weighing on an industry that saw tourist numbers slide to 1.5-million last year after an all-time peak of 1.8-million in 2011.

If the decline deepens severely this year, some economists say it could shave one percentage point or more off economic growth, which the International Monetary Fund forecasts at 5.5%-6%.

"Mr Kenyatta’s double-digit target for economic growth was already overly optimistic, but the continued decline in the tourism sector will further complicate efforts to boost growth," said Sarah Collier at UK-based risk consultancy Maplecroft.

Worries of violence during last year’s election deterred many from visiting the country’s beaches and game parks. A peaceful vote raised hopes for an upturn, only to be dashed when al Shabaab gunmen stormed Nairobi’s Westgate mall September last year. At least 67 people died.

Mr Kenyatta, whose family business empire includes a chain of hotels, is trying to shore up the industry by encouraging domestic tourism: waiving taxes on air tickets and offering tax breaks to firms who pay staff holidays.

As Europeans, who account for nearly half of Kenya’s tourists, become wary, the government is eyeing more visitors from China, but that is a long-term plan. There were only 38,000 Chinese visitors in the 2012-13 fiscal year.

Central Bank governor Njuguna Ndung’u played down prospects for a downturn in tourism that would hurt growth. "It could only be a temporary hiccup," he said, citing a forecast of 5.6% for growth in fiscal 2014-15, starting July 1.

But if security worsens it could have a broader effect.

"The impact of the security situation on domestic confidence is far more important as a driver of growth," Standard Chartered Africa research head Razia Khan said. "This is where Kenya faces its greatest vulnerability."

Kenya insists it is on top of security and tracking militants.

Deputy President William Ruto said the government was being blamed for attacks that got through without being credited for many more it has stopped.

Some Western diplomats, though, voiced frustration that Kenya had not bolstered security after Westgate.