» Projects: Sub Saharan Africa

Kenya Tourism: Integrated Value Chain Analysis

Global Development Solutions has extensive experience in Kenya having performed numerous value chains (e.g. several agriculture products, floriculture, manufacturing, the music industry and sanitation) and engaged in programs to support micro, small and medium enterprise development. We have also applied our IVCA to Kenya’s tourism industry.

We adapted the integrated value chain analysis to be applied to tourism and have implemented the model in several countries. This powerful tool breaks down the traveler’s expenses and categorizes them by significant cost drivers in a uniform manner so that data can be benchmarked against other countries. Addressed by the tourism IVCA are critical industry-specific considerations. Two such examples are:
  1. Does the local population enjoy the economic benefits of a strong tourism sector? and
  2. Particularly critical in developing countries with unique resources, can the delicate ecological balance support increased tourism?
Kenya’s tourism IVCA encompassed ten different product profiles within the three major tourism categories: business and conference, wildlife safari, and coastal. Field work was conducted both before and after the political strife of 2008. Although the turmoil had a severe impact on tourist arrivals, the critical underlying challenges in Kenya tourism development remained the same, those being:
  1. An independent legal framework to protect and sustainably manage both marine and terrestrial habitats and to facilitate benefits from these resources flowing to custodial communities which is leading to a degraded, overexploited and neglected asset base; and
  2. High public sector charges that do not get channeled back into the sector and undermine the opportunity for reinvestment or for more socially and environmentally responsible and sustainable business models to emerge.
The full study is available by clicking here.

The value chain for a premium wildlife safari package revealed that the package's highest expenditures are 1) camp/food and beverage, 2) inland transport and 3) out-of-pocket expenses. More significant, however, is that based on a detailed cost breakdown, over 50% of the in-country expenditures are consumed as public sector charges: taxes, levies and fees. with corporate income tax, VAT and service tax contributing 77% to these charges. As a result, the opportunity for the private operator to contribute to local community efforts towards conservation and revitalization is greatly diminished.