Kenya Suffers First Recession In 20 Years After Covid Cripples Tourism

The coronavirus pandemic might no longer give off the sort of doomsday vibes it gave off when it first struck, but its shockwaves are certainly still being felt across the globe.

Not least in Kenya which has slipped into a recession for the first time in the 20 years since the country’s statistics body began to keep tabs on quarterly GDP data.

As per data released by the Kenya National Bureau of Statistics (KNBS) on Thursday, January 28, Kenya’s economy fell 1.1 percent year-on-year in the third quarter of 2020 (Q3 2020), and that’s after shrinking by 5.5 percent in the second quarter.

With this, East Africa’s biggest economy finds itself mired in a recession for the first time in at least two decades. This decline is all the more telling seeing as the last time Kenya’s economy contracted was in the third quarter of 2008 when post-election unrest, and a global financial crisis, caused a 1.6 percent drop in output.

Kenya’s recent economic woes are in no small part connected to the slump suffered by its tourism sector — which alongside exports of tea, flowers, vegetables, and fruits — is one of the country’s main foreign income earners.

The movement restrictions and lockdowns that were necessitated by the pandemic effectively crippled travel and tourism across the globe for a huge chunk of the previous year.

This meant that Kenya’s tourism sector took a beating. In December 2020, the tourism ministry said the sector had lost KES 110 Bn (almost USD 1 Bn) in revenue between January and October.

Kenya is among the leading tourism hotspots in Africa. The country offers a broad range of tourist attractions which include sandy beaches, safari tours, and national parks, not to mention plush suites, exotic hotels, and accommodations.

Tourism earned Kenya USD 1.55 Bn in 2018 after the number of visitors rose by 37 percent. Those earnings were a 31.2 percent improvement from the USD 1.19 Bn earned in 2017.

In 2019, the country’s earnings from tourism rose 3.9 percent compared to 2018 when there were over 2 million international arrivals, with international tourists spending over KES 157 Bn (USD 1.47 Bn).

According to the World Travel and Tourism Council (WTTC), the tourism industry’s total contribution to GDP had reached KES 588.6 Bn (USD 5.9 Bn) in Kenya as of 2015.

But the covid-19 pandemic and the accompanying restrictions significantly slashed tourist flows into the country. The KNBS says accommodation and food service activity crashed 57.9 percent in Q3 2020 alone; a sharp deterioration from 9.9 percent growth in the third quarter of 2019.

However, the general picture of doom is somewhat enlivened by good showing put in by some other sectors. The agriculture, forestry, and fishing sector did grow 6.3 percent from a 5.0 percent expansion in the same period in 2019.

This, the KNBS says, was down to an uptick in tea production, exports of fruit and sugarcane production. Also, Kenya’s statistics body revealed that construction also picked up, registering 16.2 percent growth from 6.6 percent growth a year earlier.

Featured Image Courtesy: The Economic Times