A survey by the Central Bank of Kenya (CBK) reveals that only 34.4% of CEOs believe their companies recorded growth in Q3, while 19% of them stated the opposite.
- Comparatively, 28.7% of the CEOs felt that Kenya’s economy grew in the previous quarter, compared to 29.5% who stated that its status declined.
- Sector-wise, the respondents to the CBK survey felt that Agriculture outpaced the manufacturing and services sector in Q3 due to good weather prospects and rising demand in export markets.
- Some executives felt that purchase prices outstripped other business activities in Q3, recording a 45.6% growth nod, while those who said it was mostly demand followed by 28.7%.
“A higher proportion of respondents in the agriculture sector reported improved business activity in 2024 Q3, as reflected in increased demand orders and sales growth. Production volume and number of full-time employees were reported to be stable, while purchase prices remained elevated, in line with the increased input costs for the sector during the quarter,” the survey noted.
The survey, which sought responses from 1,000 CEOs from different sectors, also unveiled that in Q2 there was 50% in demand growth for agriculture. On the other hand, 50% also perceived a fall of demand in manufacturing. Similarly, 53.8% of the respondents felt that manufacturing sales declined.
“More respondents in the manufacturing sector recorded subdued business activity. This is reflected in lower levels of demands orders, sales growth, and production volume. However, the number of full-time employees was largely unchanged, intimating the appropriateness of the staffing levels relative to the level of business activity,” the report added.
Despite higher demand in agricultural produce, 50% of the executives under survey responded that production capacity declined and prices rose considerably. A similar trend was witnessed in the manufacturing and services sector. A majority of the respondents across board felt that things would not change much in Q4. More than 60% predicted that purchase prices, sales prices, and the employee situation will remain the same.
“A higher proportion of respondents expect business activity to improve in 2024Q4 relative to 2024Q3. More respondents expect higher demand orders and production volume, and stability in sales growth and the number of full-time employees,” the report said.
“Additionally, prices of goods and services (input and output costs) are expected to decline, reflective of price developments in the domestic and global markets,” the survey added.
About 49% of the CEOs felt that the business conditions would be seamless in Q4. Those in the Agricultural sector, however, foresaw difficulties in credit access – with a whooping 40% citing extreme difficulty. More than 60% said that no difficulties are projected in the manufacturing sector.
“More respondents highlighted the business environment, particularly the cost of doing business, taxes and levies, reduced consumer demand and political uncertainty as key domestic factors that could constrain their growth in the next 12 months,” the report said.
Geopolitical tension, energy prices, and inflation remain the most pertinent global factors that businesses expect to contend with. Internally, the cost of doing business remains the major concern for the CEOs in the subsequent period, followed by high taxation and political uncertainty.
“An enabling business environment, stability in the economic environment, as well as certainty around taxation are some of the external factors that could strengthen firms’ outlook over the next 12 months,” the CBK survey concluded.
