Majority of businesses have put on hold planned expansion of activities due to the uncertainties from recent protests in the country, an outlook of business activity for third quarter 2024 by Central Bank of Kenya CEOs Survey indicates.
- Many businesses are also worried more about elevated cost of doing business, economic environment as factors that could constrain growth in the coming months, concerns around taxation have notably declined.
- The Central Bank of Kenya Survey sought to establish the drivers of firm expansion and growth, domestic and external factors that could constrain their growth and or expansion over the next one year and their mitigating factors.
- Agriculture sector players are more concerned about weather condition, business environment, increased taxation and economic environment.
“Concerns around taxation are lower, following withdrawal of the Finance Bill 2024. The elevated cost of doing business and the uncertainty around protests are some of the key domestic factors that could constrain firms’ growth in the next 12 months,” Central Bank of Kenya said.
Chief Executive Officers from Service, Agriculture and Manufacturing reported key concerns such as business and economic environment, and constraints to financing, taxation issues are reflected across all sectors.
Top among the concerns in manufacturing sector is the business environment, increased taxation, constrain in business financing, reduced consumer demand while in the service sector, CEOs reported political uncertainty, weather condition, increased taxation and business environment as impediments towards growth in quarter three.
“However, easing inflation, stability of the shilling, and good weather prospects continue to support growth. Moreover, firm specific strategies such as customer centricity, talent management, and technological innovations are expected to boost performance. Firms have employed several strategies such as efficient management of costs and risks, increased sales and marketing, product diversification, digitization and increased use of technology to mitigate their constraining factors to growth in the next 12 months. However, concerns around external (non-domestic) threats to growth such as geopolitical tensions, macroeconomic volatility and energy prices remain,” the survey notes.
Asked on how the business environment in Kenya can be improved to enhance performance, respondents asked government to consider extending support to some sectors through stimulus programs. For example, players in the tourism and hotel industry can benefit from programs channelled through the Kenya Tourism Board.
Support to manufacturers through policies that reduce their cost of production such as lowering input costs, to allow for competitiveness, hastening of payment of pending bills to avail liquidity to businesses to facilitate operations and harmonization of regulations across counties to avoid multiplicity of policies are also areas respondents want government to look into.
