60% of Kenyan businesses to hold back on hiring in 2025 - Report

60% of Kenyan businesses do not expect to grow their workforce in 2025, reflecting a more pessimistic outlook for the year, raising concerns about unemployment levels, as slow job creation could further strain an already struggling labour market.

This is according to the fourth edition of the Kenya National Chamber of Commerce and Industry (KNCCI) Business Barometer Report, which gathered responses from nearly 2,000 businesses across the country. 

Key sectors such as retail, wholesale (26%), and mining (14%) likewise showed little optimism on hiring, citing a challenging business environment.

“At the end of the day businesses have to match whatever deductions are being made to the employee, this means that the cost of doing business, the expenses increase for these particular businesses, and then the ability to hire people with increased costs is not likely,” said Kiplimo Kigen, a researcher at KNCCI.

Economic experts warn that continued caution in business expansion could worsen youth unemployment and underemployment, putting additional pressure on household incomes and economic stability.

“Because of the shrinking disposable incomes that have faced the businesses and individuals over the last 1 or 2 years, that has also trickled into the numbers we are seeing. The 65% of businesses are not able to expand their workforce,” Churchill Ogutu, an Economist, said.  

“The policies that have been implemented the last couple of years have been quite prohibitive to the businesses, and also some of the statutory deductions have been quite high, which has now led to the businesses facing lower disposable incomes.”

While most sectors remain cautious about hiring, education (69%) and energy (67%) sectors are the most optimistic about workforce expansion in 2025.

Despite weak hiring projections, 65% of businesses anticipate modest revenue growth in 2025, driven by an expanding customer base and improved marketing efforts.

“Most of them are expecting to leverage technology, and most of them are seeing positivity in terms of the macroeconomics. We are seeing positive changes in interest rates, inflation, and hope that will continue through the year,” Kigen added.

However, optimism has declined compared to late 2024, with 24% of businesses expecting stagnation or revenue declines, citing high costs of living and an unfavourable regulatory environment as major obstacles.

More than 55% of businesses expect higher primary input costs due to poor macroeconomic conditions, high taxation, and unfavourable government policies.

As Kenya’s business landscape evolves in 2025, the findings from the KNCCI Business Barometer provide crucial insights for policymakers and business leaders. Economic experts reckon addressing the taxation burden, regulatory inefficiencies and capital constraints will be essential in unlocking the full potential of the private sector.