Opportunities for Micro and Small Scale Businesses in the Tourism Sector: The Case of The Kenya Coast1

Tourism has been considered as an economic boon in Kenya as it is the largest contributor to the country’s foreign exchange earnings. In the past, Kenya has concentrated on developing large scale tourism but this has led to high foreign exchange leakages as well as minimum benefits to the locals. In order to benefit the local economy, focus is now shifting to developing linkages between tourism and the local economies. This paper analyzed the proportion of hotel products purchased from MSEs and the opportunities available to micro and small businesses (MSEs) in the hotel industry in Kenya. Data from a survey of 49 hotels was used to determine the opportunities for MSEs in the hotel sector in Kenya. From the analysis, MSEs were found to have most potential in hotel food supply, child care services, room cleaning services, garbage collection, handicrafts and souvenir as well as maintenance and repair services. The results have implications for the role of tourism in small business growth and improving rural livelihoods and poverty alleviation. Keywords: Tourism, Micro and Small Business, Opportunitie

Exploring the nexus between tourism, remittances and growth in Kenya

Recently there has been a surge in remittances inflow to Kenya while tourism receipts appears to be declining, albeit gradually. In light of these developments, the paper explores the plausible effects of tourism and remittances on per worker output. We use the annual data over 1978–2010 periods and the ARDL bounds approach within the augmented (Solow in Q J Econ 70:65–94, 1956) framework. The regression results show that tourism has a marginal net negative effect in the short-run however positive effect in the long-run. Remittances, on the other hand, have a net positive effect in short-run and negative effect in the long-run. The key results from the Toda–Yamamoto Granger non-causality (Toda and Yamamoto in J Econom 66:225–250, 1995) results show a unidirectional causation from remittances to output per worker; and from output per worker to tourism. A unidirectional ‘combined effect’ of all variables causing output and remittances, respectively are evident as well. Conclusively, tourism is one of the leading drivers of Kenyan economy. To boost gains from tourism, the sector needs to align policies to the Kenya 2030 strategic framework with significant focus on expanding markets, boosting investment, and growth. Remittances market need to be further developed strategically with the view to improving Kenyan migrant led growth initiatives with plausible links to tourism development