How terrorist attack on Lamu is bound to affect tourism in Kenya

Kenya has once again been shaken by a terrorist attack, this time on a military base in Lamu. Journalist Joseph Bonyo joined CNBC Africa to discuss the implications of the attack on the country. The attack led to the death of three U.S. forces, with uncertainty surrounding casualties on the Kenyan side. The Kenyan government has been tight-lipped about the extent of the impact on its military personnel. Bonyo highlighted the strategic location of Lamu on the Kenyan coast, which has been a significant contributor to the country's tourism earnings. The recent attacks by Al Shabab in Lamu have raised concerns about the safety of tourists in the region. Bonyo pointed out a series of attacks by Al Shabab in the past week, including an incident where three people were killed in an attack on a passenger bus. These events have created an atmosphere of fear and uncertainty, leading to potential cancellations of tourist bookings and a decline in tourist arrivals. The close ties between Kenya and the U.S. raise concerns about the country being a target for extremists in times of heightened global tensions, such as the recent U.S.-Iran conflict. The impact of the terrorist attack extends beyond the immediate casualties to the economic repercussions for Lamu. As a popular tourist destination, Lamu's economy heavily relies on tourism revenue. The attack is likely to deter tourists from visiting the region, disrupting the peak tourism season from October to mid-January. The potential decline in tourist numbers would have a ripple effect on businesses and livelihoods in Lamu and neighboring coastal areas like Mombasa and Kwale. The recurring pattern of terrorist attacks in January has created volatility in Kenya's tourism sector over the years. These attacks not only threaten the safety of visitors but also pose a significant challenge to the country's economy. The reliance on tourism as a major foreign exchange earner makes Kenya vulnerable to fluctuations in tourist numbers due to security concerns. The government has intensified security measures in collaboration with international partners to safeguard the tourism industry. In addition to the immediate impact on tourism, the terrorist attack in Lamu could have broader economic consequences for Kenya. As a net importer of oil, any escalation in global oil prices could lead to higher costs of basic commodities and transportation in the country. The rise in oil prices would have a cascading effect on various sectors, affecting consumer prices, energy costs, and overall inflation rates. This external economic shock adds to the existing challenges faced by the Kenyan economy. Moreover, the looming repayment of the SGR loans to China poses a financial burden for Kenya in the coming years. The repayment schedule for the loans signals the end of a grace period granted by the Chinese government. The increasing debt obligations highlight the importance of revenue collection for the government to meet its financial commitments. The repayment of the SGR loans will put pressure on the national treasury and necessitate prudent financial management to ensure sustainable debt servicing. In conclusion, the terrorist attack in Lamu not only raises security concerns but also underscores the interconnectedness of security, tourism, and economy in Kenya. The country faces a challenging period ahead, balancing the imperatives of safeguarding its citizens, preserving its vital tourism sector, and managing its financial obligations. The resilience of the Kenyan economy and the effectiveness of its response to these challenges will be critical in navigating the uncertainties brought about by such tragic events.