Market News

CEOs cite costly raw materials, fuel as top business setbacks

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Central Bank of Kenya. FILE PHOTO | NMG

Business leaders consider high raw material and fuel prices and low demand for goods as the biggest impediments to growth and expansion of firms in the next 12 months, a Central Bank of Kenya (CBK) survey has found.

The apex bank polled chief executives of firms across 11 sectors of the economy last month in the leadup to the monetary policy committee, where they reported that they are also concerned about the ongoing effects of the Covid-19 pandemic, heavy taxation and the high cost of finance.

Businesses have endured a tough period since the pandemic hit Kenya in March last year, recording reduced orders and productivity on the back of restrictions, both local and global, that are meant to control the spread of the virus.

“The respondents cited the business environment (high prices of raw materials and low prices of manufactured goods; rising fuel prices); Covid-19 related concerns (another wave/variants which would cause more lockdowns and dampen investor confidence); business financing (including cost of credit, liquidity constraints, delays in government disbursements); and taxation (high taxes, delays in processing refunds),” said CBK on the factors cited as likely to constrain growth and expansion.

CEOs in the manufacturing sector said their biggest concern lies in business financing and high input prices. For those in the services sector the biggest concern remains Covid-19, which has especially hit the hospitality sector hard.

Agriculture sector business leaders on their part cited the high input prices, falling demand and potential adverse weather conditions as their biggest concern.

On the factors that could improve their outlook for the next one year, the CEOs said they would like to see an improved regulatory environment and more effort at easing of the cost of doing business environment.

“Key issues that respondents would like addressed in the regulatory environment include a more predictable tax regime, pro-growth taxation policy and faster processing of tax refunds,” said CBK.