Kenyan CEOs warn of tough times as high costs, taxes squeeze businesses
Concerns over taxation also increased sharply, with the proportion of CEOs identifying it as a major challenge climbing from 15 per cent to 19 per cent.
Kenyan firms remain under pressure despite a more optimistic outlook for the business environment in the coming year, as they continue to grapple with high operational costs, rising taxes, and limited access to credit.
According to the latest Central Bank of Kenya (CBK) CEO Survey conducted in September, more business leaders are now citing the cost of doing business as a key constraint to growth, rising to 22 per cent, up from 20 per cent in July.
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Concerns over taxation also increased sharply, with the proportion of CEOs identifying it as a major challenge climbing from 15 per cent to 19 per cent. Similarly, those highlighting limited access to credit nearly doubled, from seven to 12 per cent.
Executives also remain wary of external risks such as volatile energy prices, macroeconomic instability, and ongoing geopolitical tensions disrupting global trade.
Customer-centric strategies
Even so, many firms say they are focusing on driving growth through customer-centric strategies, operational efficiency, and technological innovation.
Despite the headwinds, the CBK noted that overall optimism about Kenya’s economy has improved, buoyed by stable macroeconomic indicators, favourable weather, a growing digital economy, and easing lending rates.
“The majority of respondents reported high expectations of enhanced company performance over the next 12 months,” CBK said.
Sectoral growth prospects have also brightened, supported by opportunities specific to each industry.
In agriculture, respondents expect favourable weather to boost production, though exporters still face stiff competition from established global players.
Financial services sector
The financial services sector anticipates growth driven by product diversification, the expansion of digital offerings, and greater automation.
Tourism prospects have improved ahead of the festive season, supported by increased marketing efforts and political stability.
However, the CBK noted that activity has been affected by reduced NGO funding, lower conferencing demand, and transitional challenges linked to the government’s e-procurement policy.
The ICT sector continues to expand, powered by rising adoption of digital technology and automation, while the manufacturing sector is projected to see increased activity during the festive season.
Still, CBK cautioned that some sectors remain under strain. Manufacturing continues to face liquidity challenges from pending bills, limited access to financing, high production costs, weak consumer demand, and competition from global producers.
Meanwhile, the wholesale and retail trade sector remains subdued due to reduced consumer purchasing power.
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