Small And Medium-Sized Tourism Enterprises As Drivers For Inclusive Growth: Perspectives Of The Regulatory Framework In Mombasa County

ABSTRACT

The Tourism sector plays a significant role in the development of many economies worldwide. Ideally, the sector has been credited with the creation of millions of jobs to populations globally. Although tourism has experienced continued growth over the years, the nature of employment the sector has generated still remains an issue of discussion. In fact, there has been wide-ranging apprehension that despite this growth, the sector has not availed satisfactory opportunities for the creation of productive employment that could lift a bulk of the population out of poverty particularly in sub-Saharan Africa. Further, the major characteristic of the sector is its fragmented nature characterized by a large number of very small operators hence an enabling regulatory environment is critical to support the industry’s central role in economic development. However, the regulatory environment in Kenya has been reported to present a mixed picture and not sufficiently conducive for the development of the sector. This study therefore delved into the implications of the regulatory framework on the performance of SMTEs and the nature of employment created; implications of the employment created on the employees’ quality of life and the most appropriate approaches to create an enabling regulatory environment for inclusive growth with specific focus to Mombasa County. A mixed methods research design was adopted specifically using the embedded approach. Primary data was collected using researcher administered semi-structured questionnaires and semi-structured interviews while secondary data was sourced from academic journals, books, internet, newspaper articles and other appropriate documents related to SMEs, regulatory framework and inclusive growth. Stratified Sampling was used for SMTEs owners/managers; purposive sampling for interview respondents while Probability Proportional to Size Sampling was used for the SMTEs employees. A total number of 68 respondents formed the sample size for SMTEs owners/managers while 464 formed the sample size for employees. Descriptive analysis, linear regression and standard multiple regression were used to analyze quantitative data while data from government documents and interviews were analysed using content analysis. Pie-charts, bar graphs and tables were used for data presentation. The findings indicated that compliance to regulations governing business operations had a statistically significant effect on the performance of SMTEs (R=0.857; P=0.012); the regulatory framework and performance of SMTEs had a statistically significant effect on the nature of employment created (R=0.802; P=0.007; 0.535=V=0.733) and the nature of employment had a statically significant effect on employees’ quality of life (R=0.881; P=0.000; V=0.804). In addition, approaches to simplify the regulatory framework had a statistically significant moderating effect on the relationship between the regulatory framework, performance of SMTEs and nature of employment (R=0.574; P=0.008). This study therefore recommends that the Ministry of Tourism and Wildlife and the Tourism Regulatory Authority should engage with Counties and other Government Departments at the national level to conduct a cost-benefit analysis of all the regulations that SMTEs need to comply with and initiate the necessary regulatory reforms. Further, SMTEs owners/managers and employees through industry Associations should lobby the Government for an enabling regulatory environment as envisaged under the Vision 2030.