Kenya’s economic growth prospects remained subdued in July on account of high interest rates, political noise in the country and a weakening Kenya Shilling against hard currencies, all combining to affect firms and key sectors of the economy.
A July CEOs Survey by the Central Bank of Kenya(CBK), however, found that most CEOs interviewed were optimistic that the reducing inflationary pressures, expected improved performance of the agricultural sector coupled with the Government focus on the digital economy, could support growth.
Kenya’s growth prospects weakened with CEOs citing the combined impact of the high cost of living and the weakening Shilling as constraining factors.
This CBK Survey assessed the CEOs optimism in the growth prospects for their companies, sectors, and the Kenyan and global economies over the next 12 months. Firms in the agriculture sector attributed their optimism to the adequate rainfall experienced in the country. This was expected to positively impact food production thus lowering the cost of food.
Firms in financial services noted increased demand for their services while firms in the ICT sector reported opportunities for growth owing to the government focus on digitization.
Kenya’s CEOs participating in the July Survey reported a slight uptick in business activity in 2023 Q2 compared to 2023 Q1. The CEOs also noted that increased taxes, especially on fuel, as well as the cost of food and other commodities had reversed any gains from the improved business activity.
The outlook for business activity in the third quarter (July-September 2023) remains mixed. Firms expect business activity to be affected by the elevated cost of doing business and high cost of inputs, notably fuel prices. Talent management, customer centricity, and expansion into new markets were identified as the key drivers of firms’ growth.
