While many Chief Executives of leading companies in Kenya expect the economy to improve in the coming months due to favorable weather conditions and a stable macroeconomic environment, several key issues continue to worry them.
According to a March 2025 survey by the Central Bank of Kenya (CBK), the top concerns for CEOs in Kenya today include reduced consumer spending due to a decline in disposable income, cuts in government spending on public projects, and the rising cost of doing business.
Firms in the agricultural sector are anticipated to benefit from increased activity due to favorable weather. However, the escalating costs of farm inputs, such as seeds, fertilizers, and chemicals, could hinder growth in this sector.
The CEO survey also reveals that Kenya’s health sector is facing severe liquidity constraints caused by pending bills and reduced donor funding, particularly from USAID. Additionally, the challenges associated with transitioning to the new Social Health Authority (SHA) health insurance program from the previous National Health Insurance Fund (NHIF) are significant.
In the manufacturing sector, CEOs have voiced concerns about cash flow challenges stemming from high lending rates, pending bills due to delayed government payments, and the risks associated with unsecured 90-day trade credit, which has become precarious due to slow business activity.
Despite these challenges, CEOs remain optimistic about future growth, supported by strategic initiatives designed to enhance performance. These initiatives include increased digitization and innovation, marketing efforts, cost-cutting measures, skills development, talent retention, and product diversification.
However, they acknowledge that high business costs, cash flow shortages, and low consumer demand could impede growth at the company level. While firms have reported no difficulties in meeting an unexpected increase in demand, many still struggle with cash flow shortages for operational financing, high business costs, the long lead times required to expand capacity, and the challenge of meeting various regulatory and compliance requirements.
On a global scale, firms are concerned about escalating geopolitical tensions, recent conflicts in the region, drastic policy changes by the new Donald Trump administration in the USA, as well as global tariff wars and their impacts on trade, supply chains, and energy prices. Furthermore, the slowing global demand and potential disruptions to labor markets caused by artificial intelligence remain significant issues.
Kenyan companies are keenly aware that ongoing regional conflicts in South Sudan and the Democratic Republic of Congo (DRC) could affect supply chains, with ripple effects reaching neighboring countries and markets.
The wholesale and retail trade sector is expected to remain sluggish, primarily due to subdued consumer demand. Many households are experiencing reduced incomes as a result of new or increased taxes, including a recent hike in contributions to the National Social Security Fund (NSSF), which will take effect in April 2025.
