Market News

Supply chain hiccups tops business leaders’ worries

port

The port of Mombasa. FILE PHOTO | NMG

The risk of interruption of doing business tops the list of concerns for Kenyan companies this year, ahead of the Covid-19 pandemic and market volatility which were the biggest concerns last year.

Business leaders told global underwriter Allianz that cyberattacks and supply chain disruptions are the most likely threats to smooth running of businesses this year, mirroring similar concerns globally that has seen supply hiccups push up prices of products such as cooking oil and motor vehicles.

Allianz said that fears of cyber incidents reflect an increase in ransomware attacks as companies continue to adopt digital systems and remote working.

Forty percent of respondents identified these disruptions as their top concern, followed by political risk and violence at 35 percent —ahead of the general elections due to be held on August 8.

Kenya will be electing its fifth president alongside governors, members of parliament and other officials.

“For most companies the biggest fear is not being able to produce their products or deliver their services. 2021 saw unprecedented levels of disruption, caused by various triggers,” said Allianz Global Corporate & Specialty chief executive Joachim Mueller.

“Crippling cyber-attacks, the supply chain impact from many climate change-related weather events, as well as pandemic-related manufacturing problems and transport bottlenecks wreaked havoc.”

Fears over the Covid-19 pandemic have however receded following the wider access to vaccines, reduced deaths and the easing of restrictions in the country from October last year.

However, the survey which polled 2,650 business leaders in 89 countries was carried out between October 20 and November 17, 2021, thus predating the emergence of the Omicron variant of Covid.

Other top concerns in Kenya include changes in legislation and regulations, loss of brand reputation, theft, fraud and corruption.

Business optimism is also ebbing lower this year, according to a separate survey done by Stanbic Bank and IHS Markit.

Their monthly Purchasing Managers Index (PMI) survey for December 2021 showed that despite much improved sales and output numbers, the businesses were lukewarm on success this year due to fears over the emergence of new strains the Covid pandemic.

“Business confidence for the upcoming year dropped in December. The level of sentiment was the weakest seen since the survey began in January 2014, with just 19 percent of respondents giving a positive outlook,” said Stanbic and HIS Markit in their survey.