Kenyan business leaders are urging the government to take practical steps to reduce the cost of doing business and create a more predictable environment for companies to operate and expand.
The call is contained in the latest Chief Executive Officers’ Survey published by the Central Bank of Kenya in August. The survey gathered views from private-sector leaders on business activity, the economic outlook and the factors expected to affect firms over the next 12 months.
Among the main concerns raised by the CEOs is the high cost of running businesses. They want the government to lower levies, licensing fees and compliance costs, as well as reduce the cost of fuel, energy and other key inputs.
The CEOs said expensive operations continue to limit the ability of businesses to expand, create jobs and invest in new opportunities. They also called for greater stability in tax and regulatory policies, saying frequent changes make it difficult for firms to plan and make long-term investment decisions.
Access to affordable credit was another major concern. Business leaders urged the government and financial sector to make financing cheaper, particularly for small and medium-sized enterprises. They said affordable credit would help businesses invest, expand their operations and create employment.
The CEOs also called for better management of public finances, including the timely payment of pending government bills. They said delays in settling bills can create cash-flow problems for businesses that depend on government contracts and payments.
The cost of doing business was identified as the leading domestic challenge expected to affect firms’ growth and expansion over the next year. Other concerns included reduced consumer purchasing power, taxation, regulatory challenges and disruptions in supply chains.
Despite these challenges, businesses remain hopeful about Kenya’s economic prospects. CEOs pointed to increased demand, market expansion, new products, improved efficiency and the use of technology as some of the factors that could support growth.
Business activity during the second quarter was mixed, with some sectors recording improvements in demand, production and sales. Cheaper credit, favourable rainfall and stronger activity in tourism, healthcare and construction contributed to better performance in some areas.
The survey also found that 71 percent of firms had adopted technology, automation or digitisation to improve efficiency and reduce costs.
However, high energy and production costs remain a concern. CEOs also pointed to geopolitical tensions and global economic uncertainty as risks to future growth.
They noted that the conflict in the Middle East could affect energy prices, freight costs and supply chains.
For the third quarter, most firms expect business activity to remain stable, while stronger demand, sales and production could provide support for growth over the next 12 months.
