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The East African : May 24th 2015
The EastAfrican 40 DOWNTURN Kenyan hotel rooms to stay empty But additional hotels have lined up investments, implying ≥enewed confidence By SCOLA KAMAU Special Correspondent S ecurity concerns and tourists’ preference for other countries will see hotel occupancy in Kenya fall further this year, says a new report. Stay nights are expected to de- cline by 2.8 per cent from 3.6 million in 2014 to 3.5 million this year, with occupancies just above 50 per cent. Revenue for the hotel industry is predicted to fall by 4.1 per cent from $585 million in 2014 to $561 million in 2015. “We look for a recovery begin- ning in 2016, but it will not be until 2018 before stay unit nights return to the level seen in 2011,” the PWC Hospitality Outlook report released last week says. In Mauritius, the average occu- pancy rate is predicted to rise from 63.1 per cent in 2014 to 63.7 per cent in 2019. Revenues are predicted to reach $736 million in 2015 from $725 million in 2014. Nigeria’s hotel revenues will fall by 2.3 per cent from $428 million to $418 million. The report has been released at a time Kenya is working to attract more tourists and investments in a bid to revamp its hospitality industry. For example, the Kenya Tourist Board is visiting Australia, China and India to market the country as a safe destination once again while the Tourism Recovery Task Force begun a drive to use social media to reach potential tourists. On its part, Kenya Airways is working to market and promote Kenya as a tourist destination n South Africa Resumption of flights to Liberia came as a relief to both Kenya Airways and businessmen. The Kenyan Ministry of Health lifted the suspension imposed in August 2014, for persons who had BUSINESS MAY 23-29,2015 New fees, p≥ices hu≥t mining BY KABONA ESIARA Special Correspondent A RISE in statutory levies and falling global mineral prices threaten to eat into the profits of mining companies in Rwanda. Through two ministerial or- ders, mining firms now have to pay new licence fees and a compulsory contribution to the Environmental Guarantee Fund. “Any additional cost at a time when prices of the 3Ts have dipped affects the industry negatively,” said Jean Malik Kalima chairman of the Rwanda Miners Association. The 3Ts—casseterite (tin), col- Tourists at a hotel in Kilifi in Kenya. Picture: File visited Liberia following the Ebola outbreak. KQ, which started operations between Accra and Monrovia on March 29, will now sell transit traffic through Nairobi to its entire network. KQ introduced new flights to China in 2014 and is considering a new destination in India. Global hotel investors meeting in Addis Ababa said African governments should invest more in infrastructure, open air routes, and anti-corruption efforts besides financing developers to enable the continent to compete favourably for new global hotel investments. Kenya alongside Angola, Nigeria, Rwanda and Senegal have planned five major airports, which will attract hotel investors. According to Kenya’s Ministry of East African Affairs, Commerce and Tourism, the country is diversifying into other tourism products $561m By BERNARD BUSUULWA The EastAfrican Improved tax revenues and stronger financial controls helped reduce Uganda’s domestic arrears during the first six months of 2014/15, with analysts optimistic about further declines as tax collections edge closer to official targets. Total domestic arrears fell by 9.6 per cent to Ush526 billion ($172.8 million) at the end of December 2014 compared with Ush582 billion ($191 million) recorded in June 2014, the latest IMF data shows. This translates into a performance rate of 80 per cent against an annual reduction target of Ush70 billion ($23 million). While a sharp rebound in revenue collections registered between July 2014 and February 2015 provided critical resources URA tent during the taxpayers week. Pic: File in specific counties. “Instead of relying solely on beach and safari holidays for marketing, we are promoting conferencing and county tourism to attract more visitors, while engaging the international media to portray Kenya as a safe destination,” said Cabinet Secretary for East African Affairs Phyllis Kandie. “In the near-term, however, we expect concerns about terrorism to remain an issue, exacerbated by the Garissa attack,” says the PWC report. Additional hotels have lined up Revenue for the hotel industry in Kenya in 2015, down from $585 million in 2014 investments, implying renewed confidence. Five medium-sized hotels (over 700 rooms) will be built in Nairobi in the next two years while the Simba Corporation is opening three mid-priced hotels. At the upper end of the market, the Golf View Hotel (220 rooms), the Radisson Blu (256 rooms) and the Grand Sapphire (196 rooms) are scheduled to open this year. Over the next two years, approximately 1,600 rooms are expected to be added, with additional airport hotels expected in subsequent years. However, more global hotel chains are lining up aggressive in- DEVPT Though s tay nights are expected to decline by 2.8 per cent to 3.5 million this year from 3.6 million in 2014, with occupancies just above 50 per cent, approximately 1,600 rooms are expected to be added over the next two years. Five medium-sized hotels (over 700 rooms) will be added in Nairobi while at the upper end of the market, the Golf View Hotel (220 rooms), the Radisson Blu (256 rooms) and the Grand Sapphire (196 rooms) are scheduled to open in 2015. vestments in Mauritius, Nigeria and South Africa — countries that top tourists’ preferences — implying confidence in availability of occupants of those rooms including tourists. In Mauritius, available hotel rooms are predicted to increase at a rate of 2.8 per cent annually rising to 14,630 in 2019. The average occupancy rate will rise from 63.1 per cent in 2014 to 63.7 per cent in 2019. The number of tourist arrivals to Mauritius increased 4.6 per cent in 2014, exceeding the one million level for the first time. tan (niobo-tantalite) and wolframite (tungsten) are key minerals mined and traded in Rwanda, placing the mining industry second after tourism in export revenues. Protest Mr Kalima said the associa- tion has protested the charges and formally started negotiations with the government to revise the fees downwards to attract more investments in the industry. The April 24 order, for exam- ple, compels investors in artisanal mines to sink a total of Rwf70 million as capital investment within five years while small scale mines are required to spend Rwf700 billion in five years. Large scale miners have to part with Rwf500 billion. Another order requires the in- vestors to contribute 20 per cent of their capital to environmental protection. Global commodity market watchers say tin prices have fallen 23.1 per cent to $18,345 per tonne from the peak of $23,849 late in April. At least 34,000 people are employed in mining and the government expects the figure to increase to 60,000 by 2018. Last year, 17,100 tonnes of mineral exports generated more than $190 million, and the government targets $400 million by 2017. Imp≥oved ≥evenues, financial cont≥ols lowe≥ domestic a≥≥ea≥s required to offset part of the government’s short term liabilities, enforcement of tough financial management rules similarly contributed to this outcome, observers noted. The ar- rears include electricity and water bills, supplier invoices plus court awards issued against public institutions. A steady accumu- lation of domestic arrears can cripple private businesses. Affected suppliers can go for more than 12 months before getting paid for goods and services delivered to government bodies, sources say. Though technocrats blame the accumu- lated domestic arrears on accounting officers who delay entry of external invoices into the public financial management system, significant declines recorded in tax revenues during the financial years 2012/13 and 2013/14 have also complicated matters. Significant revenue deficits registered in previous financial years have also led to the slow pace of reduction of domestic arrears. A decline in tax collections led to a revenue deficit of Ush120 billion ($60 million) at the end of 2012/13 but this figure surged to Ush503 billion ($167 million) in 2013/14 on account of high lending rates, diminished government spending and suspension of donor support, analysts said. Total revenue collections for July 2014- February 2015 yielded a surplus of Ush18.09 billion ($6 million) against a target of Ush6,113.20 billion ($2 billion), data compiled by Uganda Revenue Authority shows. This was driven by gains from removal of tax exemptions previously granted to sectors like real estate and stronger enforcement measures targeted at informal sector players. New tax measures are projected to raise about Ush460 billion ($151 million) compared with Ush400 billion ($131 million) targeted during 2014/15 in a policy effort intended to raise the country’s tax to GDP ratio by 0.5 per cent every financial year, government data indicates.
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May 31st 2015