The world is at a crossroads. We are staring at an economic climate that is amongst the most challenging in our lifetime, and one that, from forecasts and projections, seems poised to remain so for the near future.
An article in the Economist, ‘The World Ahead 2023’, mentions three shocks that strained the global economy in 2022 which are expected to continue in 2023.
The first is varied geopolitical risks across almost every continent, involving both developed and developing countries.
The second is energy and commodities, specifically, increasing energy demand, the pressing need for alternative sources of fossils and renewables, climatic impact, and fluctuation of commodity prices.
The third is macroeconomic stability with 2023 forecasts already revised down for 95 percent of advanced economies and nearly 70 percent of emerging markets according to the World Bank Global Economic Prospects, which also forecasts the increased likelihood of a global recession in 2023.
In Africa, businesses are navigating challenges posed by these global shocks and internal factors, such as rising rates of inflation, higher borrowing costs, a volatile forex environment and adverse weather conditions.
Kenya echoes the global and continental situation. Last year, the country witnessed decelerated economic growth owing to amongst other factors, poor harvests and high commodity prices occasioned by the ongoing drought.
Of concern for a long time, has been the country's heavy debt burden which the new administration is seeking to address by ramping up tax collection to support its budget deficit.
And with the recent proposal by the National Treasury to increase excise stamp fees for alcohol, juice, cosmetic products and even cigarettes, businesses, and Kenyans in general, are in for a bumpy ride.
This macro environment points to an economically challenging future, and an exacerbated business environment.
So, what next for businesses that are looking to survive and prosper?
From my perspective, innovation, collaboration, and reinvention will present opportunities and much-needed positivity for businesses in 2023 and beyond.
Why? Because the world needs continuous renewal. Is it achievable? Absolutely.
The post-Covid era is showing efforts to reignite growth across the globe and spur a new wave of innovation as companies and governments accelerate the embedding of sustainable business practices in their business models.
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