Chief executives of top Kenyan companies expect to hire more workers in 2026 after months of steadily improving business conditions, which followed one of the weakest periods for formal job creation since the Covid-19 pandemic.
The renewed optimism comes after Kenya’s private sector expanded for a third consecutive month in November to a five-year high, marking a sharp turnaround from 2024 and early 2025 when hiring stalled.
Last year, the economy created the fewest jobs since Covid-19, with nearly nine in 10 new positions coming from the informal sector as companies froze pay and avoided permanent hires.
The survey covered chief executives and senior managers at 400 private sector firms, including 37 commercial banks, 14 microfinance banks and 349 non-bank firms across key sectors.
The hiring optimism is anchored on expectations that economic growth will strengthen in 2026, supported by recovering private sector credit, lower lending rates and sustained macroeconomic stability.
“Respondents reported mixed expectations about hiring prospects in 2026, with 74 percent of banks and 42 percent of non-bank private firms anticipating staff increases,” the CBK said.
Agriculture, manufacturing, trade, construction and tourism are expected to lead new hires, driven by planned business growth, diversification and expansion.
The outlook marks a shift from 2025, when firms prioritised job retention and temporary hiring amid weak demand, high taxes and political disruptions.
Companies sustained payrolls even as sales dipped mid-year, choosing to hold on to staff in anticipation of recovery rather than risk costly rehiring.
As demand recovered in the second half of the year, firms added workers cautiously, leaning heavily on short-term contracts that offered flexibility but little job security.
Executives now say easing financial conditions are changing that calculus. Lower lending rates are improving cash flows and stimulating borrowing, allowing firms to revive expansion plans shelved during tighter credit conditions.
The Stanbic Bank Kenya Purchasing Managers’ Index rose to 55.0 in November from 52.5 a month earlier.
Readings above 50.0 indicate growth in business activity, while those below that signal contraction.
November’s figure is the highest since October 2020, the survey showed, as hiring expanded for 10 months through November.
The index was above 50 for seven of the 11 months to November.
Banks are the most optimistic employers, citing stronger credit demand, selective expansion and the need to replace exiting staff.
Non-bank firms are more guarded, balancing growth plans against high operating costs, weak household purchasing power and uncertainty around taxes and government payments.
Transport sector firms remain notably pessimistic about hiring prospects.
Executives cite high logistics costs, port congestion, lengthy clearance processes, elevated freight charges and heavy penalties for delays as barriers to expansion.
“The transport sector respondents were less optimistic about new hires in 2026 due to sector-specific risks,” the CBK noted.
Across the economy, firms see recovering private sector credit as central to sustaining both output growth and employment.
Credit growth is expected to strengthen further in 2026 as borrowing costs fall, supporting working capital, asset financing and trade activity.
Cheaper credit is also expected to lift household spending and strengthen order books, reducing reliance on temporary labour.
Executives expect economic growth in 2026 to improve slightly compared with 2025, supported by resilient services, agriculture and government investment in infrastructure.
Stable inflation and a steady exchange rate are giving firms greater planning certainty, a key factor in committing to longer-term hiring.
However, executives warn that fiscal consolidation, high taxation and reduced government spending could still weigh on demand.
Pending bills by national and county governments continue to strain liquidity for suppliers and contractors.
Global uncertainties, including geopolitical tensions and commodity price volatility, also pose risks to business confidence.
