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EU sets tough conditions on tourism funds

bdafrica.com

The European Union has set tough conditions for releasing money committed over the last three years for Kenya’s tourism sector, constraining the country’s efforts to take marketing promotions to non-traditional source regions.

Official sources said about Sh1 billion has not been released because the EU wants the money spent on tourism promotion activities within its member countries such as the World Travel Market (London) and the International Tourism Board (Berlin).

Specifically the EU does not want its money spent on promotion activities in two countries — believed to be China and another — but does not mind promotions on domestic tourism and in other African countries.

“Up to now we have no idea when the EU will release the money,” Mr Michael Opondo, KTB’s director of marketing said.

A Tourism Sustainability Project (TSP) that was to be launched in November last year — to which the EU was contributing Sh265 million — took off with only government funding due to the EU’s conditions.

Failure to release the funds has also hampered the tour operator partnership through which top tour operators like Kuoni and Somak are brought to sample the products before marketing them overseas. The last tour was held more than 18 months ago.

TSP was to help open up new tourism products across the country. All EU funding comes through the Tourism Trust Fund, a partnership between the EU and the government.

That has left the Kenya Tourism Board searching for partners to beef up its marketing kitty in the face of dwindling allocations from the Treasury.

KTB has moved towards partnering with interested parties like Virgin Atlantic to help market the destination. Virgin Atlantic, with Virgin Holidays, in partnership with KTB has helped raise the profile of the country.

Between June and September 2007 the destination has been able to get exposure worth Sh94 million (£700,000) through the partnership. This exposure is through strategic advertisements including the airlines website.

Unlike countries like South Africa, Egypt and the USA where the allocation criteria is structured, Kenya’s is ad hoc for sustained marketing campaigns.

“The government gives us money through Treasury but it is not based on any given criteria so we just wait and see the allocations we get,” the director of tourism Wanjiru Munene said.

In South Africa, a tenth of earnings from the sector are ploughed back into marketing the country. In Kenya this is not the case as the marketing budget does not reflect earnings from the sector.

Already the country is losing out due to lower allocations as other countries increase their tourism marketing budgets with key competitors.

According to Andrew Toboso, head of business development at Kenya Wildlife Service, the country needs to establish a framework from the national level that can guide the allocations of funds towards marketing the destination.

During this year’s budget allocations to the sector fell by 25 per cent to Sh864 million. This allocation is divided among various government agencies and bodies. The main marketing body, Kenya Tourist Board (KTB) has a budget of Sh300 million for the 2007/2008 financial year.

This is despite tourism being the leading foreign exchange earner and a key contributor to economic growth in the country. This year the sector hopes to earn Sh62 billion compared to last years earnings of Sh56.2 billion.

Despite tourism’s strong performance, recent years have seen other reductions in Government funding for tourism promotion. From 2005 to 2006, the KTB budget was reduced from Sh300 million to Sh200 million according to Tourism Trust Fund (TTF) data.

KTB is faced with financing constraints as they mainly rely on the government to fund their budget. The Catering and Tourist Development Levy Trustees (CTDLT) also contributes to the budget, on an ad hoc basis, and it all depends on the amount of funds collected through the Catering Levy.

 Printable Version  | published Nov 04, 2007