Hotels to get cheap loans in Sh10bn credit scheme

Hotels ravaged by the coronavirus crisis will access cheap loans at interest rate of between five to seven percent under a Sh10 billion State-backed credit scheme.

Tourism Cabinet Secretary Najib Balala announced Wednesday that the scheme will offer affordable credit to hotels and firms operating in the tourism sector, especially small and medium enterprises (SMEs).

The loans will run for 10 years, lowering the monthly obligations, and borrowers will start repaying the debt after two years.

Kenya has lost Sh80 billion so far in tourism revenue, about half of last year’s total, due to the coronavirus crisis, Mr Balala said earlier.

From Indian Ocean beaches to the Maasai Mara wildlife reserve, tourism contributes 10 percent of Kenya’s annual economic output and employs over 2 million people.

Hotels, airlines and transport firms as well as auxiliary sectors like handicraft makers, taxi drivers, fishermen and farmers have been hit hard.

Mr Balala said the credit will only be available to registered tourism establishments that are tax compliant.

“This will enable them maintain their staff, reinvest or refurbish their products and redesign their experiences in order to make them competitive and adaptive to the ‘new normal,’” Mr Balala told the Senate committee on Tourism, Trade and Industrialisation yesterday.

He said the government has already established the credit scheme at 50 percent of the proposed amount with an allocation of Sh2 billion for hotel refurbishment and Sh3 billion for credit guarantee scheme for SMEs in the last and current financial year respectively.

“The Sh3 billion hotel refurbishment fund will be channelled through the Tourism Finance Corporation (TFC). The credit policy has been developed and approved by the TFC board and frame work for operationalisation of the fund has submitted to Cabinet Secretary for National Treasury for concurrence,” Mr Balala told the committee.

Travel restrictions imposed to curb spread of the virus, which has affected 14, 805 people, has hurt tourism.

The government has also ordered all bars and nightclubs to be closed and it has imposed a daily, night time curfew to curb the spread of the virus.

Despite its wide variety of tourist products, Kenya attracts fewer visitors than competitors like South Africa due to frequent political upheavals and insurgent attacks.