- Kenyan CEOs want the government to cut business costs, make credit cheaper and clear pending bills owed to firms.
- High operating expenses, weak purchasing power and policy uncertainty remain major concerns for businesses.
- Despite the challenges, firms see technology adoption, stronger demand and market expansion as key growth opportunities.
Kenya’s private-sector leaders have intensified calls for urgent economic reforms, asking the government to reduce the cost of doing business, make credit more affordable and clear pending bills owed to businesses as part of measures to stimulate investment, job creation and economic growth.
The concerns emerged from the latest Chief Executive Officers’ Survey by the Central Bank of Kenya (CBK), which captures the views of business leaders on prevailing economic conditions, business performance and the outlook for the coming 12 months.
The CEOs singled out the high cost of doing business as the leading domestic challenge threatening firms’ growth and expansion, warning that rising operational expenses continue to squeeze businesses and weaken their ability to invest, hire and expand.
CEOs demand lower cost of doing business
Among their key recommendations is a reduction in levies, licensing charges and compliance costs imposed on businesses.
The CEOs also want the government to review the cost of critical production inputs, including fuel and energy, arguing that expensive inputs ultimately increase the cost of goods and services while reducing the competitiveness of Kenyan enterprises.
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The private sector further wants greater predictability in taxation and regulation.
Business leaders are calling for a stable and transparent policy environment in which tax and regulatory measures are predictable, equitable and consistently implemented. They argue that frequent policy changes make it difficult for businesses to plan investments and manage long-term operations.
Pressure for cheaper credit intensifies
Access to affordable financing also emerged as a major priority for the private sector.
The CEOs urged the government and financial-sector stakeholders to address the high cost of credit, particularly for small and medium-sized enterprises that often struggle to secure affordable financing.
They want businesses to have greater access to funds for investment, expansion and employment creation, arguing that cheaper credit could unlock new investment while helping enterprises increase production and absorb more workers.
Government urged to clear pending bills
The business community has also placed the settlement of government pending bills high on its list of priorities.
CEOs said timely payment of money owed by government would ease cash-flow constraints facing companies that supply goods and services to public institutions.
Delayed payments can leave businesses struggling to meet salaries, supplier obligations, loan repayments and other operating expenses. Clearing pending bills would therefore provide additional liquidity to firms and potentially inject more money into the wider economy.
Weak purchasing power remains a concern
Beyond taxation and financing, business leaders identified weak consumer purchasing power as another significant challenge.
Taxation, regulatory pressures and supply-chain disruptions were also identified among the factors weighing on private-sector performance.
Businesses still see growth opportunities
Despite the challenges, Kenyan CEOs remain cautiously optimistic about the country’s economic prospects over the next 12 months.
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They expect increased demand, market expansion, the introduction of new products and services, improved efficiency and greater adoption of technology to provide opportunities for growth.
Business activity during the second quarter also showed mixed but encouraging signs, with some sectors recording improvements in demand, production and sales.
Technology emerges as a key business strategy
Digital transformation is increasingly becoming an important tool for businesses seeking to reduce costs and improve productivity.
The survey indicated that 71 per cent of firms had adopted technology, automation or digitisation to enhance efficiency and reduce operating expenses.
Global risks threaten local businesses
While domestic policy remains a major concern, CEOs also highlighted international developments that could undermine Kenya’s economic performance.
High energy and production costs, geopolitical tensions and uncertainty in the global economy were identified as major threats to business growth.
The continuing conflict in the Middle East was particularly cited as a potential risk to energy prices, freight costs and international supply chains.
Firms expect stable third-quarter activity
Looking ahead to the third quarter, most businesses expect economic activity to remain relatively stable.
However, increased demand, sales and production could provide additional momentum and strengthen firms’ growth prospects over the next year.
They argue that addressing these concerns would strengthen individual enterprises while stimulating investment, employment creation and broader economic activity.
By Hillary Muhalya
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