Kenyan CEOs concerned over declining demand for goods, high cost of doing business

Kenyan Chief Executive Officers (CEOs) are a worried lot about the business environment for the next 12 months.

According to the company bosses, the business environment and particularly the cost of doing business, increased taxation, the economic environment, and declining consumer purchasing power are the main domestic constraints to growth and expansion in the near term.

The executives are also concerned that external factors could threaten their ability to expand.

The latest Central Bank CEO survey for the month of March shows that despite an increase in optimism in the private sector, the sector is still concerned by the cost of doing business in the country, occasioned by high taxation and declining income for consumers, citing these as a threat to businesses operating in Kenya.

In the survey, at least 26 per cent of CEOs are extremely concerned about the cost of energy, while another 31 per cent are very concerned about the same, with only 4 per cent of those surveyed stating they are not concerned.

Although the firms in sectors such as agriculture, health, real estate, education, ICT and communication, wholesale, and retail recorded increased activity, the executives remained bearish that external factors like energy prices, macroeconomic volatility, geopolitical tensions, and global increase in commodity prices, could constrain their growth and expansion in the near term, even as they remain optimistic the second quarter of 2024 will see better growth than the first quarter ending march.

Among those surveyed, 20 per cent are extremely concerned about geopolitical tension, while another 29 per cent are very concerned about the same; only 3 per cent are not concerned.

The CEOs have also expressed their concerns over the prevailing macroeconomic volatility where 38 per cent are very concerned while another 16 per cent are extremely concerned, with only 14 per cent of those surveyed expressing mild concerns.

The survey which sought to establish the drivers of firm expansion and growth shows that the majority of the firms surveyed indicated that talent management was a key driver of firms’ growth at 18 per cent, followed by customer centricity at 14 per cent and expansion into new markets at 12 per cent.

According to the report, the least consideration for the CEOs in growth was effective risk management at only 4 per cent.

The private sector honchos are now calling for certainty in taxation issues and easing the cost of doing business that they say could positively impact firms’ outlook in 2024.