Mba thesis in financial management

i

ROLE OF TOURISM REVENUE ON POVERTY

REDUCTION WITHIN NYANZA REGION IN KENYA

BY:

WILLIAM OLOO SATI

A RESEARCH PROJECT REPORT SUBMITTED IN

PARTIAL FULFILMENT OF THE REQUIREMENT

FOR THE AWARD OF THE DEGREE OF MASTER OF

BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND ECONOMICS

MASENO UNIVERSITY

© 2012

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DECLARATION

I hereby declare that this research project is my original work and has not been

previously presented by anyone for a degree in Maseno University or in any other

University.

No part of this work should be published without the prior authority or consent of the

author or that of Maseno University.

William Oloo Sati Signature:……………………. Date:……………

PG/MBA/037/2010

This research project has been submitted for examination with our approval as the

University Supervisors.

Dr. Moses N. Oginda Signature:……………………. Date:………………...

Department of Management Science

Maseno University

Dr. David Oima Signature:……………………. Date:………………...

Department of Accounting and Finance

Maseno University

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ACKNOWLEDGEMENT

The success of this research project is attributed to the tireless and relentless efforts of my

able supervisors; Dr. David Oima and Dr. Moses Oginda who assisted me with an

unassailable guidance during my research work. My compliments and thanks to the entire

staff at the school of Business and Economic of Maseno University for their contribution

and support towards this report.

My sincere appreciation is to all households residing around tourism sites in Nyanza

region who participated as respondents for this study. I wish to particularly thank M/s

Philistia and Mr. Edga Ndubi the Senior Tourist Officers in charge of Western Kenya

Tourism circuit of Ministry of Tourism for their efforts in provision of regional maps,

guidance and identification of Nyanza‟s tourism sites. I also thank the staff at Nyanza

Provincial Archives and Kenya Bureau of Statistics for availing the secondary data for

this thesis.

My final regards goes to my elder brother Mr. Collins Otieno and my friend Mr. James

Msodtsi for their financial support.

May the Name of our God be exalted higher for the free gift of life and resources.

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DEDICATION

My special dedication goes to my loving wife Bilhah Kasati, son Joash Koyo Kasati

Mc‟Oloo, lovely daughter Jescah Molly Kasati Mc‟Oloo and ever praying mom Eunice

Molly Elisha and my grandma Elsa Odiaw Koyo (Nyochola) for the moral, ceaseless

prayer and spiritual support they granted me during my study.

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ABSTRACT

Globally, Tourism is the major source of revenue for many countries from year to year.

In Kenya since independence in 1963 Tourism has been of much economic significance

in terms of GDP growth. The average revenue from tourism sector was 12% contribution

to GDP in 2004. Even though growth in the tourism sector has a multiplier effect which

stimulates growth in other sectors of the economy, Kenya Bureau of Statistics report in

2003 indicated that, besides many tourism attraction sites in Nyanza region, it was still

having many underutilized natural resources, lack of infrastructure, poor revenue per

household and high dependency ratio hence the high rate of poverty index level of 63%

and majority of the residents live below a dollar per day. The purpose of this study was to

analyze the role of tourism revenue on poverty reduction in Nyanza region. The specific

objective was to determine the average income per household directly generated from the

tourism sites, establish the status of infrastructure and accessibility around each tourism

sites and establish the relationship between tourism revenue and poverty reduction in

Nyanza region. The conceptual framework developed, showed both internal and external

contributing factors affecting the role of tourism revenue on poverty reduction in Nyanza

region. The study was conducted on an exploratory research design. The study target

population was 260 household living around the tourism sites in the region for the period

between 1990 to 2010. The desired sample size was 40 household. The data for the study

was both primary and secondary. A structured and semi-structured self-administered

questionnaires, and observation was used to collect primary data. Annually published

statistics of data reviews by Government, Periodic journals on poverty index and

Provincial reports in archives were used to collect secondary data. Data was analyzed

using descriptive statistics and Pearson‟s correlation coefficient to determine the

significance of the variables analyzed. Presentation of information was in form of

frequency tables, charts, figures and diagrams. The researcher established that, earnings

per household were the major factor that determined the poverty level of the Nyanza

region. The study recommendations will be of value to investors, policy makers, both

international and local tourists, Ministry of Tourism and scholars.

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TABLE OF CONTENTS

Declaration ......................................................................................................................... i

Acknowledgement ............................................................................................................. ii

Dedication ........................................................................................................................ iii

Abstract .............................................................................................................................iv

Table of Contents ............................................................................................................... v

List of Appendices, Figures and Tables .............................................................................ix

Defination of Terms ........................................................................................................... x

Abbreviations and Acronyms .............................................................................................xi

CHAPTER ONE ............................................................................................................... 1

1.0Introduction ................................................................................................................... 1

1.1 Background Of The Study ............................................................................................ 1

1.2Statement Of The Problem. ............................................................................................ 3

1.3 Objectives Of The Study ............................................................................................... 3

1.3.1Specific Objectives .................................................................................................... 3

1.4 Research Questions ....................................................................................................... 3

1.5Scope and Limitations of the Study ................................................................................ 4

1.6 Justification for the Study .......................................................................................... 4

1.7 Conceptual Framework .............................................................................................. 5

2.0 CHAPTER TWO : LITERATURE REVIEW........................................................ 7

2.1 Theoretical Review .................................................................................................. 7

2.1.1 Tourism as a leading foreign exchange ...................................................................... 7

2.1.2 Poverty as a result of Low Household Income ........................................................... 8

2.1.3 Poverty as a result of lack of infrastructure ................................................................ 8

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2.1.4 Poverty as a result of lack of strategic plan ................................................................. 9

2.1.5 Poverty as a result of laxity and lack of Inovation ...................................................... 9

2.2 Empirical Review ................................................................................................... 10

2.3 The Major concept .................................................................................................. 12

2.3.1 Increase Earning Per Household .............................................................................. 12

2.3.2 Building Infrastructure ............................................................................................. 12

2.3.3 Contribution to GDP ............................................................................................... 12

2.3.4 Improved Revenue collection .................................................................................. 13

2.3.5 Development of Infrastructure................................................................................. 13

2.3.6 Low dependency ration ........................................................................................... 13

2.4 Gaps in Literature Review ....................................................................................... 13

3.0 CHAPTER THREE : RESEARCH METHODOLOGY......................................... 13

3.1 Research Design ..................................................................................................... 14

3.2 Area of Study .......................................................................................................... 14

3.3 Target Population and Sampling Technique ............................................................ 14

3.4 Sampling Frame ...................................................................................................... 15

3.5 Data Collection ....................................................................................................... 15

3.5.1 Sources of Data ....................................................................................................... 16

3.5.2 Data Collection Procedure....................................................................................... 16

3.5.3 Instruments of Data Collection ................................................................................ 16

3.5.4 Reliability Tests for Research Instrument ................................................................ 17

3.5.5 Research Instrument Validation .............................................................................. 17

3.6 Data Analysis .......................................................................................................... 17

3.7 Data Presentation ……… .................................... …………………………………..17

3.8 Research Ethics ....................................................................................................... 17

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4.0 CHAPTER FOUR :RESEARCH FINDINGS AND DISCUSSIONS. ...................... 18

4.1 Presentation of Findings. ......................................................................................... 18

4.1.1 Factors affecting role of Tourism revenue in Poverty reduction in Nyanza region ... 18

4.1.2 Descriptive Analysis of factors affecting role of Tourism revenue in Poverty

reduction .......................................................................................................................... 18

4.1.3 Correlation Analysis of factors affecting role of Tourism revenue in Poverty

reduction .......................................................................................................................... 19

4.1.4 The major concept effect on role of Tourism revenue in Poverty reduction ............. 21

4.1.4.1Earning Per household ........................................................................................... 21

4.1.4.2 Building Infrastruture ............................................................................................ 22

4.1.4.3Contribution to GDP .............................................................................................. 22

4.1.4.4 Low dependency ratio ........................................................................................... 22

4.2 Interpretation and Discussions of Results ................................................................ 23

4.2.1 The Effect of factors affecting role of Tourism revenue in Poverty reduction .......... 23

4.2.2 The Extent usage of Infrastructure by Tourism ......................................................... 24

5.0 CHAPTER FIVE : SUMMARY, CONCLUSION AND RECOMMENDATIONS25

5.1 Summary of Major Finding ..................................................................................... 25

5.1.1 Important factor affecting Tourism revenue on Poverty reduction in Nyanza region 25

5.1.2 Effect of low Earning Per Household ...................................................................... 25

5.1.3 Perfomance of Tourism revenue on Poverty reduction in Nyanza region ................. 26

5.2 Conclusion ............................................................................................................... 26

5.3 Recommendations ................................................................................................... 26

5.4 Limitation of the Study ........................................................................................... 27

5.5 Suggestions for Further Research ............................................................................ 27

REFERENCES ............................................................................................................... 28

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APPENDICES ................................................................................................................ 30

Appendix i: Questionnaire .............................................................................................. 30

Appendix ii: Inter-Region Poverty Index ......................................................................... 33

Appendix iii: Nyanza Region graphical area and Administration units .............................. 33

Appendix iv: Chart for Tourism as a base for Inter-relation with others sectors ................. 34

Appendix v: Kenya Vision 2030 Implementation Strategic Chart..................................... 34

Appendix vi: List of sampled Tourism sites in Nyanza region ........................................... 34

Figure 2: Trend of GDP .................................................................................................... 35

Table 5: Balance of Payments ........................................................................................... 36

Table 6: Time schedule for data collection ........................................................................ 37

Table 7: Research Time Plan ............................................................................................ 38

Table 8: Research Budget ................................................................................................. 39

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LIST OF APPENDICES, FIGURES AND TABLES

Appendix i Questionnaire

Appendix ii Inter-Region Poverty Index Appendices

Appendix iii Nyanza Region Graphical area and Administrative units

Appendix iv Chart for Tourism as base for inter-relation with other

sectors

Appendix v Kenya Vision 2030 Implementation strategy chat

Appendices

Appendix vi List of sampled Tourism sites in Nyanza region

Figure 1 Conceptual Framework

Figure 2 Trend of GDP contributions by major sectors

Table 1 Sample Frame

Table 2 Field Data

Table 3 Correlation of significant

Table 4 Kenya Inflation rate chart (Consumer prices)

Table 5 Balance of Payments

Table 6 Time schedule for data collection

Table 7 Research Time Plan

Table 8 Research Budget

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DEFINITION OF TERMS IN THE STUDY

Variables - Measurable characteristics that assumes different values

among subjects.

Poverty - Condition of people living on less than a dollar a day;

lifestyle of people not able to afford the basic needs of life

from their personal income e.g. food, shelter and clothing.

Foreign Exchange - Any instrument other than the local currency, such as paper

currency, notes, and cheques, used in settling international

transactions curried out at tourism sites

http://www.businessdictionary.com/definition/transaction.html

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LIST OF ABBREVIATIONS AND ACRONYMS

KBS - Kenya Bureau of Statistics

GDP - Gross Domestic Product

TSE - Tourism Small Enterprises

TRH - Trade, Hotel and Restaurants

NGDP - National Group Domestics Product

FPO - Fruit Product Order

PEC - Poverty Eradication Commission

PPT - Pro Poor Tourism

PMS - Poverty Monitoring System

PRS - Poverty Reduction Strategy

R&AWG - Research & Analysis Work Group

SGSY - Self-help Group under Swarnjayanti Gram Swarozgar Yojara

TTF - Tourism Trust Fund

EPA - Eicosa-Pentaenoic Acid

DHA - Docosa-Hexaenoic Acid

SME - Small and Medium-size Enterprises

I.V. - Independent Variable

Int. V. - Intervening Variable

D.V. - Dependent Variables

WTO - World Trade Organization

P. I. - Personal Income

TTF - Tourism Trust Fund

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CHAPTER ONE : INTRODUCTION

This chapter highlights the background of the study, statement of the problem, the objectives of

the study and the research questions. It also provides the justification of the study, the scope and

limitations of the study, theoretical framework and the conceptual framework that guided the

research study.

1.1 Background of the Study

Globally, Tourism revenue is the major source of income for many countries from year to year.

The tourism in Kenya has been the leading source of foreign exchange since 1997, when it

overtook coffee, and the trend continued, with the exception on 1997-1999 (KBS, 2000). Growth

in the Tourism sector has a multiplier effect which stimulates growth in other sectors of the

economy being the best placed sector that would market Kenyan heritage and natural resources

available to be explored. The sector's contribution has been estimated in the current national

accounts as Trade, Hotels and Restaurants (TRH).

According to Provincial Labor office (2006) in Nyanza, Tourism revenue has provided an

average job opportunities of about 32% of the population within Nyanza region, if the

underutilized resources in the region are rejuvenated then more GDP would be realized, increase

in the earning per household and building of infrastructure would come up.

Globally, poverty is the lack of basic needs anywhere, that is; food, shelter and clothing. Arjun

(2004), Nyanza region is one amongst the leading in the eight regions with the poverty index of

63% with many residents attesting to it, meaning; poor revenue per household, lack of

infrastructure and high dependency ratio among others. Nyanza‟s potentiality to explore natural

recourses available to increase the livelihood of the residents has not been vigorous; this leaves

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the residents to survive on less than a US$1 per day due to low household income. Kenya Bureau

of Statistics (2003).

Nyanza region has a rural poor population estimated at 2.4 million; it has very high poverty rates

across most Divisions and Locations. Poverty gaps are also very high. South Asembo Location in

Bondo District, for example, has a poverty gap of 34%, meaning that the average adult below the

poverty line would require an additional Kshs.421 per month to get out of poverty (KNBS-2010).

This regional perspective is an indication of little efforts or incapacity to develop the region due

to low income per household.

Other contributing factors to high poverty level is the poor infrastructure in Nyanza region, much

of the fish-catch from Lake Victoria are transported to Thika in Central region for processing due

to unavailability of fish processing plant locally, this has also brought down the economies of

scale for the Lake Victoria products.

Incorporating water games and sports like; swimming, skating and many more in Lake Victoria

has not been done to generate more revenue for Nyanza region. Lack of professionalism and

poor service delivery by hospitality industries, the pending need to terminate Lake Victoria

hyacinth into economic benefit like its been confirmed and approved by many researchers and

organizations, Majumdar (1997); the negative culture and beliefs of the natives and the local

politics of the region are some of the drawback factors to poverty.

Majumdar AKMA Hannan (1997), Senior Research Officer, states the possible practical

application of water hyacinth to; Paper, Biogas production, Fibre board, water purification, Yarn

and Rope, Animal feed, Basket work, Fertilizer, Charcoal briquetting and Fish feeds all these

would be resourcefully utilized and be made to promote tourism products for local and

international markets.

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The Nyanza region‟s rich natural economic resources, wildlife, culture and tourism attraction

sites has the economic potentiality, however, they are greatly underutilized. Some renowned

tourism sites and features underutilized are; the legendary bottomless dead Lake Simbi Nyaima

in Kendubay, Kit Mikai en-rout to Bondo from Kisumu city.

The mysterious spiritual healing power at „Got‟ Ramogi hill in Bondo, The legend foot-prints of

„Nyamgodho-a lady fished from Lake Victoria in Gwasi, Dunga beach and Hippo point for

perfect lake view of Crocodiles and Hippopotamus, Celebration of Luo Culture at Kisumu

Museum is probably the only tourist attraction site that combines both fun and education in equal

measure.

The museum's ethnographic displays are complemented with zoological and botanical exhibits,

and to the credit of the curator, all the artifacts are showcased with incredible finesse. e.g.

Cultural Artifacts, Luo homestead, Fresh water Aquariums, Live Reptiles, The historic Port

Victoria (1898) currently Rift-valley railway Kisumu terminus and port for the Uganda railways.

All these and other resources sites and Tourism features have stayed idle for decades without

generating viable revenue in the Nyanza economy.

1.2 Statement of the Problem.

Globally tourism revenue has contributed to National GDP of many countries. Even though in

Kenya it also has a multiplier effect to other sectors growth, Nyanza region still have many

underutilized natural resources, lack of infrastructure, high dependency ration and poor revenue

per household. It therefore means that, the Tourism revenue contributed from this region is very

little, hence incapacity to develop the region due to low income per household, this has definitely

contributed the high poverty index. The role played by tourism revenue on reducing poverty

from Nyanza region is therefore a question yet to be answered; however much the region has

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many tourism sites, the dependants‟ ratio is still high, due to poor household income and lack of

accessible roads to the tourism sites.

Nyanza‟s rural poor population estimated at 2.4 million has created high poverty gaps such as

South Asembo Location in Bondo District has a poverty gap of 34%, this regional perspective is

an indication of little efforts or incapacity to develop the region, therefore, this study seeks to

establish role of tourism revenue on poverty reduction within Nyanza region in Kenya.

1.3 Objectives of the Study

The main objective of this study was to analyze the role of tourism revenue on poverty reduction

within Nyanza region in Kenya.

1.3.1 Specific Objectives

The specific objectives of this study included;

i) Determine the average income per household directly generated from the tourism sites

ii) Establish the status of infrastructure and accessibility around each tourism sites in Nyanza

iii) Establish the relationship between tourism revenue and poverty reduction within Nyanza

region in Kenya.

1.4 Research Questions

The study was guided by the following research questions:

i) What is the average income per household directly from Tourism revenue?

ii) What is the status of infrastructures surrounding tourism sites in Nyanza region?

iii) Is there a relationship between tourism revenue and poverty reduction?

1.5 Scope and Limitations of the Study

This study focused on the role of Tourism revenue on poverty reduction within Nyanza region in

Kenya. Tourism revenue was chosen because of its unique characteristics of a multiplier effect

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which stimulates growth in other sectors of the economy. The research covered a period of 20

years between 1990 to 2010 in twelve districts with tourism sceneries within Nyanza region.

This is the period when Tourism took over coffee in leading with revenue.

One of the limitations that the study faced was the unwillingness of some respondents to give

information due to lack of exposure, lack of concern and the belief that, it was purely the

Government‟s responsibility to answer questions related to poverty in the region. The researcher

countered these limitations by choosing a larger sample and conducting intensive literature

review.

1.6 Justification for the Study

The importance of analyzing the role of tourism revenue in poverty reduction cannot be

overlooked. This is because Tourism revenue with a multiplier effect in other sectors growth

translates into increased National Gross Domestic Product. In Nyanza region, it will promote the

growth of SME‟s by boosting the interest of the residents residing around tourism sites. The

findings shall have important implications on the updated information to Tourism sectors for

resource allocation in the annual budgetary exercise and planning on rejuvenating the

underutilized sites, it will also create a wakeup call to local residents not to wait for the

Government to create small enterprises around the already existing tourism sites for the sake of

region‟s development. This will in return lower the poverty index. The tourism policy makers

will also find first hand data for their strategic policy making, while research students and

scholars may find ready reference databank for their case study work.

As the Government works towards the “Vision 2030” the baseline is to transform Kenya into a

middle income economy by the year 2030, this would be attained easily, through creating more

income opportunities to residents and exploring the underlying idle resources back to

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productivity. Again, this will definitely improve the Nyanza per capita income hence increase in

income per household and reduction of poverty level.

1.7 Conceptual Framework.

The analytical methodology in this study will be based on the Theory of Poverty eradication. The

theory states that, „Poverty becomes something to be eradicated or attacked‟ Maia Green (2006)

argues that, It is always portrayed as a singular problem to be fixed. When a negative view of

poverty is fostered, a recession time i.e. tourism activities should be created in order to refresh

the mind for poverty reduction.

The internal factors contributing to high poverty are: High dependency ratio, low income per

household, some negative Culture and beliefs; while external factors are; Poor revenue earning,

lack of Infrastructure and politics of the region among others.

Independent variables Dependent variables

Intervening variables

Fig. 1:- Conceptual Framework

Source:- Self Conceptualization (2012)

Internal contributors: Good lifestyle standard per household

Improved community trade

Innovation of new SME‟s

External contributors:

Accessibility of roads

Creation of strategic plan committees

Depolitizitation of regional development

Poverty Reduction

Improved income per household

Development of infrastructure Low dependency ratio

Improve social wellbeing

Tourism Revenue

Increased earning per household

Contribution to GDP Increase in per capita

Improved revenue

http://en.wikipedia.org/wiki/Theories_of_poverty#CITEREFGreen2006

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The role of Tourism revenue on poverty reduction in Nyanza region rest wholly on the effect of

both internal and external contributors from the intervening variables as shown in the above

conceptual framework.

The increased tourism revenue would generate better income per household, while building of

infrastructure around the sites would generate accessibility to the tourism sceneries and due to

the above factors, a positive contribution to GDP will automatically be registered from tourism

trade resulting to low dependency ratio.

The Community sensitization on tourism SME‟s and campaign against some negative cultural

influence and the reduction of dependants will be an indication of internal contributing factors,

while, the external contributors will be; Increase in current average revenue to GDP;

accessibility, constructions and repairs of the worn-out roads and security personnel deployment

in the identified sites will certainly bring about the confidence in local and international investors

to beef up the business in hospitality and increase the household income, hence poverty decrease.

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CHAPTER TWO : LITERATURE REVIEW

Literature review highlights the theories and empirical studies of Tourism revenue on poverty

reduction within Nyanza region in Kenya. This chapter also analyses the various factors that

contribute to poverty index in Nyanza and the suggestions by various studies on poverty

reduction through revenue generated from tourism.

2.1 Theoretical Review

This section discusses the various theories on poverty reduction, the elements of tourism revenue

and the factors that determine the role of Tourism revenue in poverty reduction within Nyanza

region in Kenya.

2.1.1 Tourism as a leading foreign exchange earning

According to Michndelle and Mc Combien (2006), Tourism revenue is one of the economic

growth factors out of poverty for developing nations. In 2004, Kenya was the fifth international

tourist destination in Africa after receiving 1,360,000 International tourists representing 4.1% of

international arrivals in the whole of Africa WTO (2004).

Earnings from Tourism revenue have continued to play an important role in improving our

balance of payments position. This is critical given that our economy is largely agriculture based

and international commodity prices for our main export earning products like tea and coffee are

very volatile and keep on fluctuating now and then. Recently the net earnings form tourism has

shown good signs of recovery. It is also important to note that the import content for the sector is

not very high. Refer to table 2 (KBS-2006).

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The contribution of Tourism revenue in Kenya is a major source of employment. About 175,700

jobs (between 9-10 percent) in the modern sector employment is in tourism and an allied service

(KBS-2006), employment levels within the sector has been on a constant growth pattern. This

will go along way in fulfilling the government‟s commitments to create over 500,000 new jobs

annually. An impact assessment study conducted in 1996 estimated that tourism generates a

further 360,000 jobs in the informal sector.

2.1.2 Poverty as a result of Low Household Income

According to Cooksey and Masuma (2000) of the Republic of Tanzania, Poverty Reduction

Strategy (PRS) is the theory of Reducing income poverty; Improving human capability survival

and social well-being, and containing extreme vulnerability among the poor.

When PRS was launched, they noted that, Tanzania‟s post-Millennium basis of social and

economic development efforts was based on the strategy towards poverty reduction, which was

revised for a second phase (2004-09). Within this mandate, R&AWG commissioned a number of

studies concerning the nature and extent of income and non-income poverty in Tanzania.

2.1.3 Poverty as a result of lack of infrastructure

According to Obadan (2000), the poverty reduction and development of a country is not just a

matter of tourism revenue from trade and growth in per capita income. It is possible to record a

high growth rate in per capita income while the masses of the people continue to be in abject

poverty and lacking in the basic necessities of life e.g. housing and assessable roads for

businesses, particularly in a situation as in Nigeria between 1996 and 2000, where the

momentum of growth derives from a sector whose direct impact on the bulk of the population is

small, young professionals with innovative minds were encouraged to venture in tourism

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investment focusing tourism sceneries which have direct revenue collection in order to improve

their lives.

In India, according to Ministry of Rural Development, the Government research on poverty

reduction strategy (2000) came up with a proposal for promotion of local tourism activities

through group work support with relevant economic activities and handmade ornaments and

items which were sold both locally and internationally for the better growth of their regional

economy, hence improved income per household, this was done to identify job opportunities for

the huge Indian population through tourism, and to establish the number of underutilized natural

resources and the average dependency ratio. One of the easiest ways of poverty eradication was

communally coming to work together for the benefit of all, i.e. improved lifestyle due to

development of infrastructure hence, increase in revenue per household.

2.1.4 Poverty as a result of lack of strategic plan

In Nigeria, according to Mike (2000) the Director General, National Centre for Economic

Management and Administration (NCEMA) and Federal Ministry of Finance, on the rural

poverty increase besides Tourism revenue improvement. An important objective of the plan was

to involve small and medium enterprises (SME) in tourism sector in order to spread the benefits

of domestic economic development to rural so the people involved would experience a marked

improvement in their standard of life. Nonetheless, in the same vein as concern with poverty

alleviation, the strategies in the plan were not lucidly direct and explicitly specific. The

embarrassing paradox of poverty in the midst of plenty in Nigeria suggests the compelling need

for a single-minded pursuit of the objective of poverty reduction and its eventual elimination. To

this end, there is the need for an agreed poverty reduction agenda that can be used by all

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stakeholders both in the urban and rural regions - Federal Government, State Government, Local

Governments, NGOs and the International Donor Community.

There is also the need for strong political commitment to the poverty reduction goal, as well as a

depoliticisation of poverty alleviation programs and projects. Very importantly, in order to make

a meaningful dent on poverty it is crucial for poverty reduction programs and measures to be

implemented within the framework of rapid broad-based economic growth with equity,

controlled population growth, sound economic management and good governance, among

others. Finally, it is important to give expression to poverty alleviation objectives in national

development plans with the strategies and measures integrated into the countries overall

development and policy management framework” this will improve countries foreign exchange.

2.1.5 Poverty as a result of laxity and lack of Innovation

In Tamil Naduin Mathur village of the Dharmapuri District, a remote and poor village without

viable trade or tourism attraction sites was made one of the most tourism attraction region due to

the natural fruit beverage the locals were introduced into by an NGO, it attracted local and

international visiting tourists that later was a source of income to residence. A case study on one;

Self-Help Groups under Swarnjayanti Gram Swarozgar Yojana (SGSY), 100 women from eight

self-help groups were trained in fruit processing by a non-government organization (NGO). They

assistance under SGSY to run a fruit processing unit registered under the name of Sathyamurthi

Mahalir Mandram, in May 2000.

In addition, the unit was provided Rs.8 under the SGSY infrastructure fund for purchasing

pouching, shrink pack and other machines.

The unit produces fruit squash, jam, ready-to-serve beverages, pickle, etc. made from mango,

pineapple, grape, lemon and onion under the brand name of SWARNA. It has been granted a

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Fruit Products Order (FPO) license. The unit has engaged the services of a food technologist and

emphasis is laid on the quality of the products, proper hygiene and attractive packaging.

SWARNA products are sold to local retail shops and in district and state-level exhibitions, the

marketing of SWARNA products is done by two NGOs - Sarvodaya Sangam Vellore and

Sarvodaya Sangam, Thirupatthur. The group members maintain accounts themselves, hence

accountability on improved lives out from poverty.

2.2 Empirical Review

Various studies have attempted to analyzed tourism revenue on poverty reduction of different

regions. Some of the studies as reviewed in this paper are outlined below.

In Geneva at International Labour Office, Dain and Weinz (2008) used the Sectoral activities

programme working paper for the study of Pro-Poor Tourism Partnership.

The finding for „Pro-poor Tourism‟ was that “tourism results in increased net benefits for poor

people are not specific product or niche sector but an approach to tourism development and

management.”

The conclusion reached was that, it enhances the linkages between tourism revenue and poor

people so that tourism‟s contribution to poverty reduction is increased and poor people are able

to participate more effectively in product development. Links with many different types of “the

poor” need to be considered: staff, neighbouring communities, land-holders, producers of food,

fuel and other suppliers, operators of micro tourism businesses, craft-makers, other users of

tourism infrastructure and resources. There are many types of PPT strategies, ranging from

increasing local employment to building mechanisms for consultation. Any type of company can

be involved in PPT-a small lodge, an urban hotel, a tour operator, an infrastructure developer.

13

The critical factor is not the type of company or the type of tourism, but that an increase in the

net benefits that go to poor people can be demonstrated”.

Dain and Weinz identified practical factors that influence the rapid eradication of poverty from

various regions through Tourism revenue. One characteristics of Tourism revenue is its extensive

links with other sectors. The more these linkages can be strengthened, the greater the benefit to

wider economic development and poverty reduction. At the same time, there should be greater

efficiencies and other benefits for the tourism and living standard in the region.

According to Grondona (2000), a research study done in Sweden and Finland on the poverty

reduction through cultural characteristics and practices, in his findings he outlines tourism

approaches on twenty “cultural factors” which may be turned into tourism attraction activities,

thereby generating revenue, depending on the culture's view of each can be indicators as to

whether the positive cultural environment is favorable or resistant to development.

The findings was that; positive cultural development in tourism trade plays a central role to

poverty reduction in third world countries, as some authors felt that the national mindset itself

plays a role in the ability for a country to develop and to thus reduce poverty.

In turn, Harrison (2000) identifies ten “values” which, like Grondona's tourism cultural factors,

can be indicative of the nation's developmental environment.

Lindsay (2000) also claims the differences between development-prone and development-

resistant nations are attributed to mental models of the culture in practice within a region which,

like values, influence the decisions humans make. Mental models are also cultural creations.

Conclusions reached by; Grondona and Lindsay all feel that, without development orientated

values and mindsets, nations will find it difficult if not impossible to develop efficiently, and that

14

some sort of positive cultural change, promoting the livelihood of residents will be needed in

these nations in order to reduce poverty. According to their argument, poverty is fueled by

negative cultural characteristics that demine the prospects of the residents in under-developed

nations, and in order for poverty to be brought under control; the negative culture factors should

be minimized.

According to Green (2000), a research study in Norway explains that modern development

literature tends to view poverty as agency filled while an inclusion of tourism activities during

holiday or recession may rejuvenate the mind, hence the ability to perform and produce more

enterprising results in any business.

Findings of Green confirm that, tourism activities that relaxed ones mind from the routine work

create a more enterprising and reasoning environment for more production.

While the way poverty is approached, defined, and thought about, plays a role in its perpetuation.

When poverty is prescribed “agency”, tourism activities is prescribed “relief” since tourism

activities impact on poverty reduction. Poverty absorbs people into itself and the people, in turn,

become a part of poverty, devoid of their human characteristics.

He concludes that, development literature and poverty becomes something to be eradicated, or,

attacked. It is always portrayed as a singular problem to be fixed. When a negative view of

poverty is fostered, a recession time i.e. tourism activities should be created in order to refresh

the mind for poverty reduction.

2.3 The major concept

This research study will analyze the role of Tourism revenue on poverty reduction within Nyanza

region in Kenya by establishing the effect of both internal and external contributing factors on

tourism revenue on poverty reduction in Nyanza region.

15

2.3.1 Increased Earning per household

Tourism revenue in Nyanza region would create a positive impact by increasing earnings per

household through creating conducive business environment for small and medium enterprises

around the tourism sceneries.

2.3.2 Building Infrastructure

Newly built infrastructure at the tourism sites would create business friendly environment for

investors both locally and internationally, hence attracting tourism related trade and engaging the

local residents through employment and SME‟s, this will improve the lives of the residents of

Nyanza region besides others from the neighborhood.

2.3.3 Contribution to GDP

Tourism revenue has been a major contributor to national GDP that is 12% (KBS-2004), in the

event of rejuvenating more sites which currently are underutilized, then, more business

transactions and tourism trade will improve, this means that, money circulation within the region

will improve, thereby increasing revenue collections by the government from Nyanza region.

This will definitely increase the percentage up from 12% contribution to GDP.

2.3.4 Improved revenue collection

Once earning per household is improved, there will be an improvement in revenue collection,

since revenue per household is directly proportional to individual member earnings. Improved

revenue collection impacts on the living standards of the residents of Nyanza region.

2.3.5 Development of Infrastructure

The accessibility to the tourism sites will be easy once the erections of the infrastructure are

done. People, traders, tourists and many activities will be curried out in and around the sites,

which will also attract schools and hospitals besides other institutions.

16

2.3.6 Low dependency ratio

General improvement of the tourism sites will attract many business activities, and with busy

trading, earning per household will improve. Thereafter impacting positively on reducing the

dependency ration, since many opportunities for skilled, semi-skilled and non skilled will

provide open earnings for all levels of professionals in every household.

It is most important to be aware that tourism, like any other activity, can have both positive and

negative effects on people, especially the poor. It should not be assumed that all the contributing

factors will have only positive effects. For example, the introduction of new tourist resorts at any

site can fit the poor through job creation, but may have negative effects through increased prices

for land and commodities, or reduced access to beaches and fishing grounds. Strategies that aim

to reduce poverty must assess the net impact in order to give a true picture. Future approaches

need to consider net effects as well as benefits.

2.4 Gaps in Literature Review

The review of the relevant literature has pointed out various gaps that this study will seek to fill.

First, the growth in the Tourism revenue sector with a multiplier effect which stimulate growth in

other sectors of the economy should both directly and indirectly impact on the residents living in

the regions of tourism sites, but instead Nyanza region leads with the highest poverty index. This

implies that an in depth analysis on the SME‟s activities and revenue generated from the tourism

sites is lacking. Secondly, the Government policy on infrastructural development and local

participation for their own benefit is also lacking. This study sought to fill this gap by examining

the role of tourism revenue on poverty reduction within Nyanza region in Kenya.

17

CHAPTER THREE : RESEARCH METHODOLOGY

This chapter discusses the research design for the study, its area of study, model for the study,

data collection method, sampling techniques and research instruments to be used. It also

highlights how the data was analyzed and presented.

3.1 Research Design

This research study applied exploratory research design. An exploratory design was used due to

its suitability and flexibility to provide opportunity for all aspects of problems under study and to

understand factors affecting poverty reduction through role of Tourism revenue. (Kerlinger

1986). Exploratory studies also aim to gain a better understanding about a problem and to seek

new insights and to assess phenomena in a new light (Saunders et al 2007) since little had been

done on tourism revenue to reduce poverty in Nyanza.

3.2 Area of Study

This research study was conducted on the household residents living around the tourism sites

within Nyanza region in Kenya, it‟s about 15,788.3 Km2. This is about 2.5% of the total area of

the country (KBS-2007). Ref: Appendix 2.

3.3 Target Population and Sampling Technique

The study targeted a population of two hundred and sixty (260) household that was drowned

from around the tourism attraction sites in the Nyanza region; the target population according to

Ministry of Tourism regional office in Kisumu was the average household residing around the

tourism sites. The sample size was forty (40). The sampling technique was considered for a

period of 20 years between the years 1990 to 2010, after-which, a regional data sampling per

district was be tallied, in the study time frame, a census was also used in the study.

18

Sampling technique: (Olive M. Mugenda and Abel G. Mugenda 2003)

n = Z2 Pq

d2

Where: n = required sample size

z = level of accuracy at 95% (standard value 1.96)

d = margin of error at 5% (standard value 0.05)

p = population standard deviation

q = confidence interval

Therefore the desired sample size is; n = 1.962 x 260(0.01

2)

(0.05)2

3.8416 x 0.026

0.0025

n = 40

3.4 Sampling Frame

The distribution of population targets and sample size was presented in the sampling frame as

detailed below;

19

Table 1: Sample Frame

Districts No. Names Household No. Sample Size No.

1 Bondo District 21 4

2 Rachuonyo District 27 3

3 Suba District 25 4

4 Kuria District 22 3

5 Homa-bay District 10 3

6 Nyamira District 21 3

7 Kisii District 20 4

8 Gucha District 28 3

9 Siaya District 18 4

10 Nyando District 28 3

11 Migori District 22 3

12 Kisumu District 18 3

Totals 260 40

3.5 Data Collection

This section highlights the data and research instrument used for the study. It also explains the

reliability and validity tests conducted for the data collection instrument.

3.5.1 Sources of Data

This study used both primary and secondary data. Primary data was collected through 260 copies

of questionnaire and non-participant observation. The copies of the questionnaire were

personally presented by the researcher to the household residing around tourism sites in Nyanza

region.

20

The respondents were chosen from around the sites because their day to day lives are directly

influenced by the activities from tourism sites, they are also involved in the formulation and

implementation of local committee for representatives for any regional development. To improve

the response rate of the questionnaires, the researcher chose a larger sample and conducted

intensive literature review.

Out of the 260 targeted respondents, 256 responded. This represents a response rate of 98.5%.

Secondary data was sourced through reviews of the annually published statistics of data by

Government, Periodic journals on poverty index and Provincial reports in Nyanza archives.

3.5.2 Data Collection Procedure

The researcher used purposive sampling to select Tourism sites in Nyanza from the eight (8)

regions formerly called Provinces of Kenya. Nyanza region was chosen because of its unique

tourism sceneries.

It is believed that the available natural resources found in the tourism sceneries and the growing

population of this region in terms of economy and infrastructure, make it ideal for a research

study on role of tourism revenue on poverty reduction within the region.

Stratified sampling was used to classify the districts of the region. Stratified sampling results in

more reliable and detailed information (Kothari, 1990). Simple random sampling was then used

to proportionately select sample households from each stratum. Simple random sampling was

preferred in the final step because it helps minimize bias

21

3.5.3 Instruments for Data Collection

The instruments used for this data was a structured and semi-structured self-administered

questionnaire and non-participant observation for primary data collection, while annually

published statistics of data reviews by Government, Periodic journals on poverty index and

Nyanza Provincial reports filed in archives were used as instrument to collect secondary data.

3.5.4 Reliability Tests for Research Instrument

The reliability for this research instruments was administer both participatory pre-test (Conserve

and Presser, 1986) and an undeclared pre-test in order to conduct it for real by use of the pre-

designed questionnaires to the chosen household individuals picked from the tourism sites. The

consistent responses from respondents was assessed and found to be the reliability and validity of

this research study. Weisberg et, al (1989)

3.5.5 Research Instrument Validation

Before engaging in data collection, the researcher tested the validity of the research instrument.

This involved administering the copies of questionnaire to ten households who qualified to be

respondents in the sample frame, but were not included in the final sample. The necessary

corrections were then made to come up with an effective questionnaire.

3.6 Data Analysis

The descriptive statistics was used in analyzing the data due to its elaborative and efficiency,

because the study was to analyze a number of variables and the Pearson‟s correlation analysis

was used to determine the significance of the variables analyzed. The computer package SPSS

was used to summarize the data collected for ease analysis and interpretation.

22

3.7 Data Presentation

The information was presented in the form of frequency tables, charts, figures and diagrams as

the case may be.

3.8 Research Ethics

During the study, the research adhered to the regulations of every region visited from one

location to another by first seeking permission from the local authorities before any data

collection was done, and explaining any further enquiries to respondents in line with the study,

giving the purpose of the study and the genuinenity of the whole research study session.

23

CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSSIONS

This chapter deals with the results obtained from the study, analysis and interpretation of the data

in view of the objectives of the study.

4.1 Presentation of Findings

The findings of the research were analyzed as per the research objectives. Out of the 260 target

respondents, 251 responded giving a response rate of 96.5% which was considered reasonable

for providing data for the study.

4.1.1 Factors affecting role of Tourism revenue in Poverty reduction in Nyanza region

The internal factors that are contributing to role of tourism revenue in poverty reduction are:

High dependency ratio, low income per household, some negative Culture practices and beliefs;

while external factors are; Poor revenue earning, lack of Infrastructure and politics of the region

among others.

4.1.2 Descriptive Analysis of Factors affecting role of Tourism revenue in

Poverty reduction in Nyanza region

In this section, the researcher focused on the descriptive analysis of factors affecting role of

tourism revenue in poverty reduction in Nyanza region contained in the questionnaire and gave a

descriptive analysis of the responses from the targeted households living around tourism sites in

Nyanza region. The factors were measured on a Likert scale of 1 to 4, with 4 being better

standard of life and 1 being poor standard of life. The data relating to factors affecting the role of

tourism revenue in poverty reduction within Nyanza region is presented in table 4.1.

24

Table 2

Factors

Poor life

(Not Important)

Fair life

(Least Important)

Good life

(Important)

Better life

(Very Important)

Frequency

%

Frequency

%

Frequency

%

Frequency

%

Earnings per

household

0

0%

13

5%

88

35%

150

60%

Status of

Infrastructure

0

0%

19

7.5%

144

57.5%

88

35%

Low

dependency

ratio

6

2.5%

138

55%

100

40%

6

2.5%

Contribution

to GDP

9

3.5%

200

80%

38

15%

4

1.5%

n=40, Source: Field data 2012 (responses from sample households)

As presented in table 4.1, increased earnings per household is regarded as the factor contributing

to better standard of life, with 60% of the 251 respondents citing it as a very important factor.

The status of infrastructure is regarded as the second most important factor, with 35% of the

respondents pointing it as important for a good life. Low dependency ratio is the third most

important factor in determining the tourism revenue in poverty reduction with 2.5% of the

respondents citing it as very important in reducing poverty.

25

Finally, revenue contribution to GDP is regarded as the least important factor with 1.5% of the

respondents pointing it very important.

4.1.3 Correlation Analysis of the Factors Affecting role of Tourism revenue in

Poverty reduction within Nyanza region.

In order to establish the relationship between the factors affecting role of Tourism revenue in

Poverty reduction within Nyanza region, the data in table 4.1 was used to conduct correlation

analysis. The results of the analysis are presented in table 4.2

The relationship between factors affecting role of Tourism revenue in Poverty reduction

within Nyanza region.

Table 3: Correlation significant

Earnings Per

Household

Status of

Infrastructure

Low

Dependency

Ratio

Contribution

to GDP

Earnings Per

Household

Pearson Correlation 1 .745 -.301 -.476

Sig. (2-tailed) . .255 .699 .524

N 4 4 4 4

Status of

Infrastructure

Pearson Correlation .745 1 .142 -.335

Sig. (2-tailed) .255 . .858 .665

N 4 4 4 4

Low

Dependency

Ratio

Pearson Correlation -.301 .142 1 .845

Sig. (2-tailed) .699 .858 . .155

N 4 4 4 4

Contribution to

GDP

Pearson Correlation -.476 -.335 .845 1

Sig. (2-tailed) .524 .665 .155 .

N 4 4 4 4

Correlation is significant at the 0.05 level (2-tailed).

26

The correlation table 4.2 shows the relationship existing between the factors affecting role of

Tourism revenue in Poverty reduction in Nyanza region. Increase earning per household has a

strong positive relationship with Status of Infrastructure (r = 0.745) at 5% level of significance.

This conforms to the pull theory of promotion since Tourism revenue can only initiate market

promotion on the SME‟s that they can afford.

Earnings per household has negative relationship with both Low dependency ratio (r = -0.301)

and Contribution to GDP (r = - 0.476) at 5% level of significance.

Finally, Contribution to Gross Domestic Product has a strong positive relationship with Low

dependency ratio (r = 0.845). This supports the views of Kottler (2003), who argues that products

are produced to satisfy customer needs and wants. And so, with the satisfaction of produce from

SME‟s, revenue generated will increase the GDP.

4.1.4 The major concept effect on role of Tourism revenue on Poverty reduction in

Nyanza region.

In order to establish the effect of the major concept on role of Tourism revenue in Poverty

reduction in Nyanza, the researcher examined the annually published statistics of revenue data

reviews by Government treasury and periodic journals on poverty from Nyanza Provincial

archives between 1990 to 2010 as below;

4.1.4.1 Earnings per household

The periodic journal by Government treasury GK(2000) stated the terrorism-related downturn as

one of the major contributors to low Earnings Per Household for the period of study. The

downturn followed the 1998 bombing of the U.S Embassy in Nairobi and later negative travel

advisories from Western governments.

27

This affected the Tourism revenue thus little or no income for those who run SME‟s around the

tourism sites, and those who earn their income directly from Tourism sites, since the largest

number from Germany and the United Kingdom were attracted mainly to the coastal beaches and

the game reserves, notably the expansive Tsavo National Park (20,808 square kilometers) in the

southeast.

Josephine, a senior Archivist commented; the Government did little to initiate any mechanism to

curb similar economic crisis in order to sustain the earning per household of those directly

affected.

Researchers also established low earning per household due to inflation after the Tourism

revenue downturn.

Table 4: Kenya Inflation rate (Consumer prices)

Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

% 11.2 19.1

04

27.33

2

45.979 28.814 1.55

4

8.86

2

11.9

24

6.716 5.753 9.955

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

% 5.73 1.97 9.81 11.79 9.87 6.041 4.26

5

15.1

01

10.55

2

4.086

Source: International Monetary Fund - 2011 World Economic Outlook (Inflation, average

consumer prices)

http://www.imf.org/

28

4.1.4.2 Building Infrastructure

The researcher established that, the government and tourism industry took steps to address the

security problem and reverse negative publicity. Steps included building of a tourist police and

launching marketing campaigns in key tourist origin markets. Tourism has seen a substantial

revival over the past several years and is currently the major contributor to the country‟s revenue

growth. However, the respondents of Got Ramogi in Bondo viewed it differently, in-terms of old

inaccessible roads and other infrastructure to access the sites.

This has created slowly or no conducive business environment in the region hence poverty

increase. Newly built infrastructure around tourism sites is believed that will create business

friendly environment for investors both locally and internationally, hence attracting tourism

related trade and engaging the local residents through employment and SME‟s, this will improve

the lives of the residents of Nyanza region besides others from the neighborhood.

4.1.4.3 Contribution to GDP

The researcher established that, Tourism revenue has been a major contributor to national GDP

that is 12% (KBS-2004), since 2006 in tourism generated US$803 million, up from US$699

million the previous year. The event of rejuvenating more sites which currently are underutilized

was expected to create more business transactions and tourism trade will improve, this means

that, money circulation within the region will improve, thereby increasing revenue collections by

the government from Nyanza region.

29

4.1.4.4 Low dependency ratio

The researcher established that, improvement of the tourism sites will attract many small

business activities, this will create employment opportunities to locals, and earnings per

household will improve due to active trade within the sites hence, reduction in the dependency

ration.

Researcher also noted that, tourism can have both positive and negative effects on people, mostly

to the poor. It should not be assumed that all the contributing factors will have only positive

effects. For example, the building of Kogelo Information and Communication Center in Siaya

and Ramogi Tourism Resort in Bondo district did fit the poor through job creation, but also

increased prices for land and commodities. Researcher further observed that, strategies that aim

to reduce poverty must assess the net impact in order to give a true net effects as well as benefits.

4.2 Interpretation and Discussions of Results

This section highlights the interpretation and discussions of the results of the study in relation to

the research objectives

4.2.1 The effect of Factors affecting role of Tourism revenue on Poverty reduction

The results of the study indicated that, the relationship between role of tourism revenue and

poverty reduction are the actual factors affecting Tourism revenue role on Poverty reduction

within Nyanza, this include: earnings per household, Building and development of Infrastructure,

Contribution to GDP, Improved revenue collection and Low dependency ratio. Earning per

household is regarded as the most important factor affecting role of tourism revenue in Poverty

reduction in Nyanza region, with 60% of the respondents citing it as a very important factor.

30

This finding supports the position of Cooksey and Masuma (2000) that Poverty Reduction

Strategy (PRS) is dependant on Increasing Earning per household; Improving human capability

survival and social well-being, and containing extreme vulnerability among the poor. The

approach by Government through Tourism on increasing earnings per household at the tourism

sites also supports this finding.

It was established that the resident‟s ventures into relevant SME‟s around the tourism sites, and

then seek any viable assistance from the Ministry of Tourism that would promote, finance and

further expand the small ventures of the locals. This implies that the locals‟ residing around the

tourism sites choose the business activity of their interest and invest their little resources then,

seek Government‟s support if need be. Contribution to GDP is regarded as the least important

factor affecting the role of Tourism revenue in Poverty reduction in Nyanza region, with 80% of

the respondents citing it as the least important. This can be attributed to one reason that is; the

indirect link of National Gross Domestic Product and the Individual Earnings per household

makes them to be two incomparable accounts as a factor in determining the role of Tourism

revenue in Poverty reduction in Nyanza region.

The correlation analysis of the factors affecting the role of Tourism revenue in Poverty reduction

in Nyanza region shows a strong positive correlation (r = 0.745) between earnings per

households and the status of infrastructure. Since the status of Infrastructure significantly affects

accessibility to the sites.

31

4.2.2 The Extent to which Tourism uses Infrastructure in Poverty reduction in Nyanza

The findings reveal that the Tourism uses the infrastructure in poverty reduction by erecting

hotels and resorts to create job opportunities and conducive business environment for the sites

residents who would wish to venture in SME‟s. Trade environment is the most needed condition

in the improvement of personal income, with 57.5% of the respondents regarding it as a

important and a necessity for a good for life. This result supports the findings of Obadan, who

established that, poverty reduction and development of a country is not just a matter of tourism

revenue from trade and growth in per capita income. It is possible to record a high growth rate in

per capita income while the masses of the people continue to be in abject poverty and lacking in

the basic necessities of life e.g. housing and assessable roads for businesses (Obadan, 2000).This

is also supported by the importance that Tourism revenue is directly attached to the status of the

tourism infrastructure. In addition, the households around tourism sites get ready market for their

goods to local and international tourists visiting the sites. The importance of the business

environment for SME‟s is their interaction with various clients creates an exposure to open

market for the local produce and learning environment of cultures of different regions.

32

CHAPTER FIVE : SUMMARY, CONCLUSION AND RECOMMENDATIONS

This chapter summarizes the study findings, draws conclusions from the findings, provides

recommendations to policy makers, and gives suggestions for further research.

5.1 Summary of Major Findings

The overall objective of the study was to explore the role of tourism revenue in poverty reduction

within Nyanza region in Kenya. In order to achieve this objective, the researcher attempted to

explore the relationship between role of tourism revenue and poverty reduction and the factors

that lead to their application. This section presents a summary of the study findings.

5.1.1 Important factor affecting Role of tourism revenue in Poverty reduction in Nyanza

The study established that increase earning per household is the most important factor affecting

role of Tourism revenue in poverty reduction, with 60% of the respondents citing it as a very

important factor. The respondents further ranked Infrastructure with 35%, Low dependency ratio

with 2.5% and Contribution to GDP with 1.5% as very important factors respectively. The

results of the correlation analysis of the factors affecting the role of Tourism revenue in Poverty

reduction within Nyanza region show that there is a strong positive correlation (r = 0.745)

between increased earnings per household and the status of infrastructure at 5% level of

significance

5.1.2 Effect of Earning per Household by Tourism revenue on Poverty reduction in Nyanza

The study established that earning per household by tourism revenue positively affects the

poverty reduction. The results of the regression analysis show that provision for household

earnings explains 11.5% of the Tourism revenue annual allocation to sites development and

running cost.

33

The findings of the study indicate that there has been a decrease in the tourism annual allocation

for poverty reduction as compared to marketing over the 20 year period of this analysis.

5.1.3 Performance of Tourism revenue on Poverty reduction in Nyanza region

The study found out that, the general performance of Tourism revenue on Poverty reduction in

Nyanza for 20 years beginning 1990 has not been effective in terms of developing and

rejuvenating the old and idle tourism sites that are slowly dying out.

5.2 Conclusion

Based on the findings of the study, the researcher concluded that the average income per

household directly generated from the tourism sites is the most important factor affecting the

poverty reduction in Nyanza region, with 60% of the respondents regarding it as very important.

Additionally, the status of infrastructure and accessibility around each tourism sites in Nyanza

region is the link to tourism sites and all relevant business and job opportunities found around the

sites, with 57.5% of the respondents citing it as important element. Finally, the study established

the close relationship between tourism and poverty reduction through revenue generation as the

determinant of income per household.

5.3 Recommendations

The following recommendations were made based on the results of the study:

1. The Tourism sector is urged to rejuvenate the idle tourism attraction sites in order to create

more business environment for households living around the sites to open as many SME‟s,

hence creating more earning per household and revenue for the Government through GDP.

34

2. The households residing around the tourism sites should identify the idle tourism sites and

immediately start working in collaboration with the Tourism sector with a view to owning

and managing the facility with the recommended knowledge and skills for a long term gain

in terms of earnings per household.

3. The regional politics should be monitored closely and guided not to interfere with tourism

sites development by any investor.

4. The households to form committee with strategic goal of improving and developing the

tourism sites for a common gain rather than waiting for the Government financial input.

5.4 Limitation of the study

The limitations that the study faced was the unwillingness of some respondents to give

information due to lack of exposure, lack of concern and the belief that, it was purely the

Government‟s responsibility to answer questions related to poverty in the region. The researcher

countered these limitations by choosing a larger sample and conducting intensive literature

review.

5.5 Suggestions for Further Research

The following areas deserve further research

1. There is need for further research on community inter-trade sensitization and self-help group

training for income generating activities from the locally available natural resources.

2. A comparative study can be conducted to find out if the findings of this study apply to other

regions with high poverty index.

35

3. Since the study focused on the role of tourism revenue on poverty reduction in Nyanza region,

studies can be conducted to find out if there is reverse relationship among the variables. For

example a study may be conducted to investigate the effect of poverty on tourism revenue within

Nyanza region.

4. Tourism sector need to improve on their percentage allocation for tourism sceneries‟

improvement and development, this will create more room for business environment that is

conducive for SME‟s which will in turn increase earnings per household thereby improving their

standard of lifestyle while poverty reduces.

36

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Mariano Grondona (2000); Outline of Twenty Cultural Factors, Theories of Poverty

Michndelle Baddeley & John S.L. Mc‟Combien (2006). New direction in Theory &

Policy: Economic Growth, pg. 253

Obadan, M.I. (1996) “Analytical Framework for poverty Reduction: Issue of Economic

Growth Versus Other Strategies”, Proceedings of the 1996 Annual Conference of

the Nigeria Economic Society (Ibadan: NES).

Obadan, M. I. (1996) “Poverty Reduction in Nigeria: The Way Forward”, CBN

Economic & Financial Review, Vol. 39, No. 4.

Olive M. Mugenda & Abel G. Mugenda 2003; Research Methods, Quantitative &

Qualitative Approaches.

Stace Lindsay (2000); The Differences between Development-Prone & Development-

Resistant Nations, Theories of Poverty

http://en.wikipedia.org/w/index.php?title=Lee_Jolliffe&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Tea_and_Tourism:_Tourists,_Traditions_and_Transformations&action=edit&redlink=1

http://en.wikipedia.org/wiki/Theories_of_poverty#CITEREFGreen2006

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APPENDICES, FIGURES AND TABLES

Appendix i: Questionnaire (Please tick appropriately)

The objective of this study is to collect data for an MBA degree study titled, “Role of Tourism

revenue on poverty reduction within Nyanza region in Kenya” The respondents are requested to

answer the questions as objectively as possible. The responses to the questions will be treated

with high level of confidentiality. Thank you for your cooperation.

a) The respondent’s profile

1. What is your position in the family or community around this tourism site

-----------------------------------------------------------------------------------------------------------

2. How long have you stayed around this tourism site

-----------------------------------------------------------------------------------------------------------

3. What do you do for a living

-----------------------------------------------------------------------------------------------------------

b) Earning per household evaluation

5. What is your average annual income?

Under 10,000/=

10,000 - 29,999/=

Above 30,000+

39

6. How important are the following in your direct tourism site earnings.

4= very important, 3 = important, 2 = least important 1 = Not important

1 2 3 4

Increased household earning

Infrastructure and accessibility to site

Low dependency ratio

Contribution to GDP

7. How would you grade the rate of individual upcoming SME‟s created around the site

Very fast

Very slow

None has been created

Others, please specify ………………………………………….

8. In your own observation, rank the factors that contribute to your good lifestyle

4 = very important, 3 = important, 2 = moderately important 1 = least important

Earning per household ( )

Status of Infrastructure and Accessibility to sites ( )

Low dependency ration ( )

Contribution to GDP ( )

9. In your own opinion, are the tourism sites able to generate income for the locals?

Yes (please, narrate how in question no.5)

No (please narrate how in question no.5)

Don‟t know

Others, please specify ……………………..

40

10. If the answer in question 4 is Yes or No; please specify accordingly

Yes:………………………………………………………………………………………….

……………………………………………………………………………………………….

No:…………………………………………………………………………………………...

……………………………………………………………………………………………….

c) Status of infrastructure

11. How would you grade the status of old buildings around the site?

Above average (good)

Average (fair)

Below average (poor)

12. How would you grade the condition of the roads leading to the tourism sites?

Better condition

Fair condition

Poor condition

13. Are there new roads and buildings constructed around tourism site between 1990-2010?

Yes (please, narrate how in question no.5) -------------------------------------------------

No (please narrate how in question no.5) ---------------------------------------------

Don‟t know ---------------------------------------------

Others, please specify ---------------------------------------------

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14. From your own observation, how would you grade the link between local politics and the

tourism sites in terms of development?

Politics contribution to tourism site is positive

Politics contribution to tourism site is negative

Others, please specify………………………….

I don‟t know

15. How often do you witness Government maintenance of infrastructure around the sites?

More often

Less often

Never at all

d) Contribution to GDP

16. How busy is the trade/business transaction among the community around the sites?

Very busy

Averagely busy

Never busy

17. How frequent do you see local or international tourists attracted to the site?

More frequent

Less frequent

Never

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e) Low dependency ratio

18. How many people in your household earn their income directly from Tourism

attraction site activities?

Less than 3

More than 3

Non

19. How many dependants do you have in your household?

Less than 3

More than 3

Non

20. How would you categorize the social welfare of people living around the sites?

Above average

Below average

Others, please specify ……………………..

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Appendix ii:- Inter-Region Poverty Index

Inter-Region Graph poverty Index and to GDP growth in Kenya.

Appendix iii:- Nyanza Region Graphical area and Administrative units

The Nyanza region geographical area is divided into 12 Districts, namely; Bondo, Gucha, Kisii

Central, Nyamira, Kisumu, Homa Bay, Ranchuonyo, Nyando, Siaya, Suba, Kuria and Migori as

summarized below:

L. VICTORIA

KISUMU

SIAYA

NYANDO

RACHUONYO

HOMABAY

GUCHA

NYAMIRA KISII SUBA

BONDO

MIGORI

KURIA

Inter-Regional Poverty Index 1999 -to- 2001

Source: Kenya National Bureau of Statistics 1999 and 2001

Poverty Index-1999

Standard Error of Headcount Index

Poverty Gap as Percent of Poverty Line

Linear (Poverty Index-

1999) Regions (formerly called Provinces)

44

Appendix iv: - Chart for Tourism as a base for Inter-relation with other sectors:

Source: ILO sectoral activities program wp266 (October 2008)

Appendix v: Kenya Vision 2030 Implementation Strategic Chat

Opportunity for Kenya to join the rank of middle income countries by the year 2030.

Source: Kenya Vision 2030 Implementation Strategy

Construction

Transport

-Moto

-Cab

-Bus

-Boat

-Plane

Agriculture

Fishing

Food Processing

Furniture

Manufacturing Utility

-Internet

-Electricity

-Phone

Infrastructure

-Electricity grid

-

Telecommunication

-Roads -Bridges

-water ways

-Ports

Services

-Beauty

-Massage

-Security

-Crafts;

-Micro-finance;

-Entertainment

TOURISM

High growth countries

Singapore (1986-1996)

Dubai (1992-2002)

Hong Kong (1978-1988)

Chile (1998-1998)

Malaysia (1990-2000)

Medium growth

countries India (1995-2006)

Singapore (1995-2005)

Malaysia (1996-2005)

Nigeria (1995-2005)

South Africa (1995-2005)

Kenya today

Kenya (1995-2005)

Real GDP growth rates % CAGR

Potential Kenya GDP Nominal Sb

Potential Kenya GDP/capita

*Assuming 2% population growth rate similar to 1990-2005 period

Opportunity for Kenya to

join the ranks of Middle Income

countries by 2030

45

Appendix vi: List of sampled Tourism sites in Nyanza region

NO. LIST OF SAMPLED TOURISM SITES IN

NYANZA REGION

SURROUNDING CONDITION

FOUND

a) Impala Park Sanctuary in Dunga Lake

Victoria beach in Kisumu

No business, only youths doing Carwash

at the entrance

b) Kit Mikayi in East Seme, Kisumu county

No business, only neighborhood farming

c) Dunga Beach for perfect view of Lake

Victoria lake reptiles and animals

No tourism related business, residential

and many rental house

d) Hoppopoint along the lake Victoria Beaches


and many rental house

e) National Museum of Kenya-Kisumu No tourism related business, residential

and tree nursery along the Nairobi road

f) Thim lich Ohinga

Very idle and deserted, no tourism

related business around

g) Ramogi Hill in Bondo

Only one good resort built by TTF, but

locals still unable to manage

h) Bur Dimo in yimbo Usenge

No tourism related business, residents

not aware of site opportunity

i) Kanjira Hot Spring enrout to Homa-bay


and normal farming

j) Rusinga Island


and normal farming

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k) Tom Mboya Mauselium in rusinga No tourism related business, residential

and normal farming

l) Foot marks of Nyamgodho Wuod Ombare in

Gwasi Hills

No tourism related business, there was

no sign or information from local

m) Lwanda Megere stone along Nyando river

No tourism related business, the big

stone is deserted near river nyando

n) Simbi Nyaima in Kendubay


and normal farming

o) Ruma National Park-Homabay No tourism related business, residential

and normal farming

p) Got Chilo on top of Ramogi hill


and normal farming

q) Odino falls at border of Rachuonyo and

Nyakach constituencies

No tourism related business, residents

only queue for seeking blue collar job at

the Odino electricity plant

r) Lambwe valey in Koguta location in Suba No tourism related business, residential

and normal farming

s) Hyacinths on Lake Victoria Very few tourism related business by

individual Organization called Kick,

t) Kogelo information center

Government built an info. and

communication center, but its yet to

function due to household demand that

Government manages the plant herself

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u) Ahero rice Scheme Project

A rich site but no tourism related

business, residential and normal rice

farming

v) Asumbi Rock (Agulu dhoge ariyo) No tourism related business, residential

and normal farming

w) The Sacred Lake on top of Ramogi hill No tourism related business, residential

and normal farming

x) Aloe species abundant in the forest

The only source of cactus in the region

but no tourism related business,

residential and normal farming

y) Omuonyo le the sacred tree Abandoned and everyone fear to draw

near.

The historic Port Victoria (1898) currently Rift-valley railway Kisumu terminus and port for the

Uganda railways.

National Museum of Kenya-Kisumu is an ethnographic displays which is complemented with

zoological and botanical exhibits, and to the credit of the curator, all the artifacts are showcased

with incredible finesse. e.g. Cultural Artifacts, Luo homestead, Fresh water Aquariums, Live

Reptiles

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Figure 2: Trend of GDP contributions by major sectors

Table 5: Balance of Payments - Travel (Kshs Million)

Year 2000 2001 2002 2003 2004 2005

Credits 21553 24256 21735 26382 38457 43747

Debits -10018 -11241 -9889 -9652 -8511 -9359

Balance 11535 13016 11845 16729 29946 34388

Source: Central Bureau of Statistics-2006

Table 6: Time schedule for data collection

LOCATIONS: REGIONS OF STUDY

PE

RIO

D O

F S

TU

DY

Locations

Period

Kisumu Bondo Siaya Nyando Rachuo Kisii Gucha Kuria Migori H/Bay Suba

Jun, 2012

Jul, 2012

Balance of Payments - Travel 5000

4000

3000

2000

1000

0

-1000

-2000

2000 2002 2003 2004 200 (CBS-2006)Years

Credits Debits Balance

Mil

lio

ns

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Aug,2012

Sep, 2012

Oct, 2012

Nov,2012

Table 7: RESEARCH TIME PLAN

Date Activity Place

April 2012 Presentation of proposal Maseno University

May 2012 Data collection The sampled tourism sites

July 2012 Data analysis Nyanza Region

August 2012 Submission of the final report Maseno University

Table 8: RESEARCH BUDGET

No. Nature of Expense Amount(Kshs)

1. Stationery and printing expenses 60,000.00

2. Travelling expenses 35,000.00

3. Miscellaneous expenses 20,000.00

Total expenses 115,000.00

Mba thesis in financial management

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