How polls, Ukraine, inflation are keeping CEOs awake
Kenya Private Sector Alliance (Kepsa) CEO Carole Kariuki Karuga. PHOTO | NMG
Photo credit: Lucy Wanjiru | Nation Media Group
More than half of Kenya’s CEOs and senior business executives are not confident of growing their companies in the next six months, a survey that captures sentiments of post-August 9 elections has found.
The Confidence Index Report 2022 shows that most business executives expect a stable economy after elections with the hospitality, and tourism sectors emerging as the most optimistic at 68 points.
“Looking into the future, the least optimistic sectors are finance and ICT, perhaps since businesses in these sectors were already experiencing growth relative to other sectors at the height of the Covid-19 pandemic and do not expect much change for them in the coming six months,” said the survey released by the Kenya Private Sector Alliance (Kepsa).
The report developed in partnership with TIFA Research notes that with the current CEOs Business Confidence Index standing at 61 points overall, the business executives also expressed optimism to hire additional full-time employees in the next six months, which will translate to increased business operations.
It found that 54 percent of the 173 sampled business leaders had lower (23 percent) and the same (31 percent) company growth prospects looking into the near future.
Some of the Ceos felt general hopelessness in better economic conditions (46 percent) in the next six months while 15 percent expressed a lack of confidence in the new government to change the situation.
“Political stability is at the heart of driving future business optimism,” the report said in part.
A peaceful business environment after the upcoming polls is one of the main preoccupations of many business leaders as uncertainty looms days to the date.
“For those who expected lower growth for their companies (23 percent) and their industries (29 percent) were tied to failure to address the high cost of production, inflation, rising petroleum prices and change of government,” said Mr Victor Ogalo, the Deputy CEO-competitiveness and operations.
Some executives revealed political instability (5 percent), the war in Ukraine (3 percent) and drought (3 percent) are some of the reasons they are less optimistic looking into the new year.
At an industry level, the company executives expressed high cost of production, poor weather, and lack of government support among others could impede economic growth in the next half year.
Rising inflation and high fuel costs were also a major concern for businesses and the CEOs said they expected the prices of their inputs to increase.
While some were pessimistic, other CEOs were confident about their own firms and industry growth at 46 per cent and 36 per cent respectively on the back of stable elections.
Three in ten company executives in the country say they were confident that the economy would grow after the elections on the prospects of a peaceful electioneering period and change of government were at the heart of driving future business optimism.
“Political stability after elections was the most mentioned reason why CEOs projected that their company and industry business growth will be higher,” the report said in part.
The lobby for the private sector conducts these surveys ahead of the elections to gauge the confidence the business leaders have about their businesses, the industry and the economy in general.
The survey drew views from all sectors of the economy including agriculture, tourism, finance, building and construction, services and ICT.
The survey showed that business confidence was higher than in the last two elections held in 2013 and 2017.
“Overall the business leaders expressed optimism in the 2022 index having an overall score of 61 percent as compared to the previous elections at 53.8 per cent and 44 index points in 2013 and 2017 respectively,” said Ms Carole Kariuki the Kepsa CEO.
The survey revealed that the CEOs expected the economic conditions to improve across all industries compared to 6 months ago, rising from an average of 47 to 66 index points for the economy and 69 index points for the respective industries.
“In an electioneering period, we are concerned about money laundering so there is a much-targeted approach by the government to reduce instances of money laundering because in this period where the velocity of money is different from any other period,” said Mr Ogalo.
The private sector has called upon the citizenry to practice their voting right with decorum to ensure the protection of what has already been built.
