Kenya’s Tourism: Public Disclosure Authorized Polishing the Jewel Public Disclosure Authorized Finance and Private Sector Development Africa Region Final Report Public Disclosure Authorized 2010 Public Disclosure Authorized World Bank Group Africa Region Finance and Private Sector Development Abbreviations and Acronyms BBC British Broadcasting Corporation BOK Bomas of Kenya CAS Country Assistance Strategy CC Africa Conservation Corporation Africa CCK Communications Commission of Kenya CDA Coast Development Authority CLEF Community Leaders Education Fund CNN Cable News Network DFI Development Financial Institution DMO destination management organization DRDRS Department of Resources Surveys and Remote Sensing ECMA Environmental Management and Coordination Act EMG Emerging Markets Group ENWDA Ewaso Nyiro South Development Authority ESOK Eco-tourism Society of Kenya EU European Union FIAS Foreign Investment Advisory Service GDP gross domestic product GDS Global Development Solutions, LLC GIG Gambia Is Good GNI gross national income HIV/AIDS Human Immunity Virus/Acquired Immune-Deficiency Syndrome IATA International Air Transport Association ICA Investment Climate Assessment ICCA International Congress and Convention Association ISP Internet service provider JRO Kilimanjaro Airport (Arusha) KAA Kenya Airport Authority KAHC Kenya Association of Hoteliers and Caterers KATA Kenya Association of Travel Agents KATO Kenya Association of Tour Operators KCAA Kenya Civil Aviation Authority KIA Kenya Investment Authority KICC Kenyatta International Convention Centre KLM KLM Royal Dutch Airlines KMA Kenya Maritime Authority KPA Kenya Port Authority KRA Kenya Hotels and Restaurants Authority KTB Kenya Tourism Board KTDC Kenya Tourism Development Corporation KTF Kenya Tourism Federation KUC Kenya Utalii College KWS Kenya Wildlife Service MCTA Mombasa Coastal Tourism Association MENR Ministry of Environment and Natural Resources MICE Meetings, Incentives, Conferences and Exhibitions MMMA Maasai Mara Management Association MOF Ministry of Finance Kenya’s Tourism: Polishing the Gem 2 Abbreviations and Acronyms MOT Ministry of Tourism MSF Multi-Stakeholder Forum NEC National Environmental Council NEMA National Environment Management Authority NBO Jomo Kenyatta Airport (Nairobi) NGO nongovernmental organization NHIF National Health Insurance Fund NSSF National Social Security Fund NTIMS National Tourism Information Management System OECD Organisation for Economic Co-operation and Development PERAK Pub, Entertainment and Restaurant Association of Kenya PSV public service vehicle RPED Regional Program on Enterprise SME small and medium enterprise TAP Tanzania Airfreight Project TLCT Tanzania Land Conservation Trust TPU Tourist Police Unit TSMPP Tourism Strategic Marketing and Promotion Programme UFTAA Universal Federation of Travel Agents‘ Association UNWTO United Nations World Tourism Organization VAT value-added tax VCA value chain analysis WTTC World Travel and Tourism Council Vice President: Obiageli K. Ezekwesili Country Director: Johannes Zutt Sector Manager: Gerardo Corrochano Task Team Leader: Hannah Messerli Kenya’s Tourism: Polishing the Gem 3 Table of Contents ABBREVIATIONS AND ACRONYMS .............................................................................................................. 2 EXECUTIVE SUMMARY ................................................................................................................................ 8 ACKNOWLEDGMENTS ................................................................................................................................ 11 I. KENYA’S TOURISM SECTOR A. Why Tourism in Kenya? ................................................................................................................. 13 1. The Importance and Approach of This Study ............................................................................ 13 B. The Tourism Sector ......................................................................................................................... 14 C. Kenya‘s Tourism Product Lines ...................................................................................................... 14 1. Safari tourism ............................................................................................................................. 14 2. Coastal tourism .......................................................................................................................... 14 3. Business and conference ............................................................................................................ 15 D. Demand for Kenya‘s Tourism Product ........................................................................................... 16 E. Economic Profile ............................................................................................................................. 16 1. Tourism‘s Contribution to GDP ................................................................................................. 17 2. Employment ............................................................................................................................... 19 3. Taxation ..................................................................................................................................... 19 F. The Tourism Value Chain ............................................................................................................... 20 1. Value Chain Analysis and Tourism ........................................................................................... 20 2. Value Chain Summary Findings and Implications .................................................................... 22 G. Institutional Framework and Resources .......................................................................................... 24 Overview ......................................................................................................................................... 24 1. Public Sector .............................................................................................................................. 26 2. Private Sector ............................................................................................................................. 28 H. Enabling Environment .................................................................................................................... 33 1. Licensing and Regulatory Issues ................................................................................................ 33 2. Taxation ..................................................................................................................................... 36 3. Utilities and Infrastructure ......................................................................................................... 36 4. Telecommunications .................................................................................................................. 36 5. Roads.......................................................................................................................................... 36 6. Electricity ................................................................................................................................... 39 7. Water and Sanitation .................................................................................................................. 39 II. ISSUES A. Economy-Wide Issues ..................................................................................................................... 41 1. Land ........................................................................................................................................... 41 2. Environmental Regulation ......................................................................................................... 44 3. Infrastructure .............................................................................................................................. 47 4. Disenabling business climate ..................................................................................................... 48 B. Industry Specific ............................................................................................................................. 49 1. Access to Natural Assets and Ensuring Sustainability ............................................................... 49 2. Product Competitiveness............................................................................................................ 50 3. Safety and security ..................................................................................................................... 52 4. Public Sector Capacity to Support Tourism ............................................................................... 52 5. Lack of Trained Workforce ........................................................................................................ 53 Kenya’s Tourism: Polishing the Gem 4 Table of Contents III. OPPORTUNITIES AND RECOMMENDATIONS A. Natural and Wildlife Assets ............................................................................................................ 55 B. Product Offering and Market Development .................................................................................... 56 C. Enabling Environment .................................................................................................................... 57 D. Institutional Framework .................................................................................................................