Mba thesis in financial management

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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 region25
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

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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

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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.

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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(0.012
)
(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)

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
REFERENCES
Arjun Appadurai (2004). Key To Environment of Poverty: Theories of Poverty.
Brian Cooksey & Masuma Mamdani (2000). “The poverty reduction strategy (PRS)”.
Basis of Tanzania‟s Post-millennium Social & Economic Development Efforts.
Harley,l. S. Julien, M. H., & Wright, A.D. Water Hyacinth (1997). “Proceedings of the
First meeting of the international water hyacinth consortium, World Bank”.
A tropical World Wide Problem & Methods for its Control.
Hill G. Waage, FS. & Phiri. G. (1997); The water hyacinth problem in tropical Africa,
Proceedings of the first meeting of the International water hyacinth consortium,
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file/tourism_trends_oct2006_revised.pdf
http://en.wikipedia.org/wiki/tourism_in_kenya
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Kerlinger, Fred N.,1986, Foundations of Behavioral Research (3rd
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Rinehart & Winston.

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Kenya National Bureau of Statistics (2007). Basic report on Wellbeing in Kenya:
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Lawrence E. Harrison (2000); Identifies Ten Values, Theories of Poverty.
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Green Theories of Poverty, “Poverty As Agency Filled”
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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 &
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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).
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Economic & Financial Review, Vol. 39, No. 4.
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Qualitative Approaches.
Stace Lindsay (2000); The Differences between Development-Prone & Development-
Resistant Nations, Theories of Poverty

38
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 ---------------------------------------------

41
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

42
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 ……………………..

43
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
KISIISUBA
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
ManufacturingUtility
-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 No tourism related business, residential
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 No tourism related business, residential
and normal farming
j) Rusinga Island No tourism related business, residential
and normal farming

46
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 No tourism related business, residential
and normal farming
o) Ruma National Park-Homabay No tourism related business, residential
and normal farming
p) Got Chilo on top of Ramogi hill No tourism related business, residential
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

47
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

48
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
PERIODOFSTUDY
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
Millions

49
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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