A majority of company bosses in Kenya see energy prices and global inflation as the top threats that are likely to hinder the expansion of firms this year, a new survey shows.
The Central Bank of Kenya (CBK) CEO’s survey 2023 shows 93 percent of chief executive officers in the country are troubled by global inflation while 87 percent of them have expressed concerns about high energy prices as an obstruction to their expansion plans.
“Respondents were most concerned about global inflation, high energy prices and recession fears. Agriculture sector firms were most concerned about energy prices while manufacturing and services sector firms were most concerned about global inflation and recession fears,” said CBK in the report.
Other factors raising anxiety levels among corporate leaders include geopolitical tensions, climate change, increased taxation, supply chain disruptions and macroeconomic volatility.
A fortnight ago, an Allianz Risk Barometer report denoted climate change and energy crisis as new entrants in the list of elements that have been giving business operators jitters over the years.
Last month, the country’s cost of power rose for the fifth month in a row on the back of high global oil prices and a weak shilling since President William Ruto assumed office in September last year.
A rise in fuel surcharge increases the cost of power by reducing the number of units bought.
In his new year’s address, President Ruto affirmed that he will not bow to pressure from the public and the opposition to re-introduce fuel and electricity subsidies that had been put in place by retired President Uhuru Kenyatta’s administration.
Last year, the prices of super, diesel and kerosene hit record highs mainly due to supply chain disruptions caused by Russia’s invasion of Ukraine.
The global fuel prices across Europe and the United States resulted in a rise in global inflation – which forms another key pain point for Kenyan CEOs – and a high cost of living for households in an economy that had already been battered by the Covid-19 pandemic.
By November however, the trajectory of crude oil prices – which is one of the key factors in the cost of refined fuel that Kenya imports – had started to show a downfall with a 20 percent drop to $92.45 (Sh11,529) per barrel down from $117.53 (Sh14,656) in August.
