Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
More than half of businesses in Kenya see rise in costs on high taxes, inflation
Staff arrange electrical items they sell at their shop located along Duruma Road in downtown Central Business District (CBD) Nyamakima area on September 7, 2022.
Over half of the businesses in the country expect their primary operational costs to rise this year, largely pushed by high taxes, unfavourable government policies and inflation, a new private sector survey indicates.
The 2025 Business Barometer survey done by the Kenya National Chamber of Commerce and Industry (KNCCI) reveals that 55 percent of firms now expect their costs to rise, up from 54 percent in November last year, highlighting a growing pessimism about the improvement of the business environment.
Most of these firms expect their costs to rise by less than 20 percent, and the 37 percent that anticipate a drop in their primary expenses also see a drop of between zero and 20 percent.
High taxes, levies and unfavourable government policies are the top reason for a negative outlook on business expenses, cited by 44 percent of those that expect their costs to rise.
Poor macroeconomic conditions like inflation, supply chain disruptions, and climate change or unfavourable weather, are also top concerns for businesses, cited as key reasons that could possibly drive up costs this year.
“Raw materials will be expensive because of new taxes on imported goods,” a manufacturer polled by the private sector lobby said.
On the flip side, the few companies that expect a drop in costs believe they will be helped mostly by improvements in the country’s economic situation, better weather conditions, and government incentives like subsidies.
Outside costs, the survey reveals that businesses in the country are generally gearing for a bumpy ride this year, with a vast majority anticipating meagre growth in revenues and a freeze on new hires.
60 percent do not expect their workforce to grow, largely because of a drop in sales, increased operational costs, unfavourable government policies, and high taxes stifling growth and expansion.
The same reasons, along with the high cost of living, are cited by companies that do not expect growth in their revenues this year, pointing to dwindling optimism in the Kenyan business environment.
“In 2025, private sector sentiment is generally less optimistic compared to the last two quarters of 2024, with a growing negative outlook on revenue, workforce size, and the cost of primary inputs,” noted KNCCI president Eric Rutto.
“This underscores the urgent need for revitalization measures to proactively enhance Kenya’s business environment.”
