Private sector firms in Kenya are cautiously optimistic about their growth prospects over the next year, despite facing multiple headwinds such as high inflation, a weaker currency, and increased taxation, according to a report released by the Central Bank of Kenya.
The CEOs Survey, conducted by the Kenya Association of Manufacturers and the Kenya Private Sector Alliance, gathered insights from over 1,000 CEOs representing various sectors between September 4 and 15.
The survey revealed that firms intend to focus on cost and risk management, diversification of their businesses, and digitization of operations to overcome the challenges and seize the opportunities.
“Business optimism for company and sectoral growth prospects was largely unchanged, but companies cited several headwinds, including a weaker Kenya Shilling, rising fuel and electricity prices, and taxes, which have contributed to reduced purchasing power and demand for their products,” the report said.
However, respondents expressed optimism that inflationary pressures would abate and improvements in the agricultural sector would provide specific opportunities to stimulate growth, the report added.
The survey also identified key drivers for firms’ growth over the next year, with expansion into new markets, customer-centric strategies, and talent management at the forefront of business strategies.
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The survey showed that firms in the agriculture sector remained remarkably optimistic, attributing their positive outlook to the development of new markets and the introduction of innovative products. Furthermore, anticipated adequate rainfall in the upcoming season is expected to drive increased production.
Financial services companies reported continued demand for their services, while those in the ICT sector capitalized on the government’s digitization initiatives.
Optimism regarding the Kenyan economy showed slight improvement, with respondents citing the potential for enhanced agricultural production, easing inflation, and reduced political turbulence as catalysts for growth.
On the global stage, optimism remained largely consistent, but concerns over factors such as the ongoing war in Ukraine and the subdued global economic outlook loomed large.
Surveyed firms reported subdued business activity in the third quarter of 2023 compared to the second quarter. This stagnation can be attributed to high input costs and reduced consumer demand.
However, as we approach the fourth quarter of 2023, surveyed firms anticipate an upturn in business activity. Seasonal factors are projected to boost tourism, financial services, wholesale and retail trade, and professional services sectors.
