The Central Bank of Kenya’s Chief Executive Officers’ Survey has found that Kenyan CEOs are most concerned about the rising cost of raw materials and fuel. According to them, these are the two major setbacks businesses in the country will have to grapple with in the next twelve months.
The survey report, a copy of which was obtained by Business Elites Africa, explained that Kenya’s apex bank interviewed CEOs across 11 sectors of the country’s economy. The CEOs also expressed concern over the continuing negative impacts of the COVID-19 pandemic, high finance cost and heavy taxation.
“The respondents cited the business environment (high prices of raw materials and low prices of manufactured goods; rising fuel prices); Covid-19 related concerns (another wave/variants which would cause more lockdowns and dampen investor confidence); business financing (including cost of credit, liquidity constraints, delays in government disbursements); and taxation (high taxes, delays in processing refunds),” said part of the report.
Other key Takeaways from the Central Bank of Kenya’s CEOs Survey
- Respondents in the May 2021 CEOs Survey were optimistic about growth prospects in the next 12 months, for their companies, sectors, and the global economy. This optimism was mainly attributed to post COVID-19 bounce-back, businesses shifting to more digitization and anticipated increase in exports following improved relations in the East African Community (EAC) countries. The higher growth prospects were strongest in the services and manufacturing sectors where respondents reported a general upward trend in business activity.
- Growth prospects for the Kenyan economy were mixed. While there’s a gradual pick up in business activity, concerns abound mainly with regard to the continued effects of the COVID-19 pandemic.
- Business activity indicators for Q2 2021 showed a gradual pickup compared to Q1 2021, especially with the easing of lockdowns in the five counties. However, respondents were concerned about delayed government payments.
- Majority of businesses were optimistic about higher business activity for Q3 2021 compared to Q2 2021. Respondents reported expected an increase in all the analysed business activity indicators, except for the number of employees which was expected the remain at the 2021 Q2 levels for most businesses.
- Across all sectors, the business environment, COVID-19 related issues and business financing were identified as the most significant factors that could constrain expansion/growth of private sector firms over the next 12 months. The business leaders indicated that improved efficiency, skills retention and improvement of product portfolio were key internal factors that could strengthen their outlook. Externally, respondents indicated that an improved regulatory environment/tax regime, a stable economic environment and easing of the cost of doing business could strengthen the outlook of their firms over the same period.
- CEOs are most concerned about a challenging business environment, regulatory environment and economic performance. Compared to March 2021, there’s also increased concern over the COVID-19 pandemic with fears over the possibility of a fourth wave with probability of new variants which would lead to more lockdowns and dampen investor confidence.
- The business leaders indicated that they would leverage on their firms’ top strengths, which they identified as technical capability/skilled workforce, company values, and strong/trusted brands, to address their most urgent concerns. Nonetheless, they would like the government to continue improving the business environment.
- Compared to the March 2021 Survey, there is minimal change in terms of strategic direction over the next three years. Business leaders plan to expand into new markets, develop new products, and diversify and improve efficiency of their operations.
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