Kenya’s banking industry is expecting to hire more workforce this year to support their planned business growth and bank functions to fulfil strategic objectives.
Market Perceptions Survey by the Central Bank of Kenya, however paints an opposite picture in the non-banking industry where respondents are cautious about adding new employees into their system.
Non-bank respondents are more cautious about creating new jobs due to low business turnover, expected low production volumes, harsh economic environment, high cost of living and the need to optimize the existing workforce to contain operational costs, and high cost of production due to increase in prices and, in some cases, scarcity of inputs.
The agricultural and manufacturing sectors attributed the lower new hires to increased cost of production, and to low business volumes, to concerns about the levels of demand, increase in cost of production, and lack of raw materials such as maize which has led to temporary shutdown of mills.
Additionally, the construction sector cited the need to optimize the existing workforce to contain operational costs and increased cost of inputs and imports, while the trade sector cited low business and sales, slower market absorption of products, low demand and depressed revenues as reasons for the low expected new hires.
The tourism sector however, expected a pick-up in business and a stable economy in 2023.
The Central Bank of Kenya (CBK) undertakes a Market Perceptions Survey, prior to every Monetary Policy Committee (MPC) meeting to obtain perceptions of banks and non-bank private sector firms on selected economic indicators including inflation, economic growth, demand for credit, growth in credit to private sector and exchange rate.
The Survey also enables respondents to indicate their levels of optimism in the country’s economic prospects and business environment, and perspectives on the current and expected economic conditions, focusing on economic activity and employment.
The Survey asked respondents to indicate how the business environment could be enhanced.
Banks suggested a number of interventions to improve credit growth and the business environment. These included acceleration of approvals for risk-based pricing models and requests for new or revised products for banks, commitment by the national and county governments to settle their pending bills to spur demand for credit and lower Non-Performing Loans (NPLs), and increased efforts in the fight against corruption.
In addition, more public education to raise awareness on cyber frauds which have been on the rise, efficient and speedy turnaround time for pending court cases on NPLs and creation of enablers for commercial banks to provide credit to SMEs would further improve business environment.
Non-bank private firms on the other hand, suggested review of taxation policies, provision of low interest credit facilities by banks, lower money transfer charges, provision of incentives to industries such as tourism, and introduction of favourable policies and incentives for both foreign and local investors especially in the manufacturing and tourism sectors as measures that would improve the business environment.
