CEOs optimism for firms’ growth at a record high
The Central Bank of Kenya building in Nairobi.
Optimism for business growth has hit a record high among company chief executives in Kenya, buoyed by the lifting of restrictions imposed to curb spread of Covid-19 in October, a new survey says.
It found that most chief executives reported improved business activity in the current quarter of the year with the trend projected to continue in the first quarter of 2022.
“The November 2021 survey revealed the highest business optimism about the growth prospects since the inaugural survey in March 2021. Optimism was driven by higher confidence in the services sector, following the reopening of the economy, reduction of Covid-19 infections and prospects for strong global economic recovery,” said the Central Bank of Kenya report released yesterday.
President Uhuru Kenyatta on October 20 lifted a nationwide curfew that had been in place since March last year to curb the spread of the coronavirus, and also unveiled measures to boost the economy, including procurement of fertiliser for farmers by the government and cash support for the tea, coffee and sugarcane sectors.
The CBK survey indicated an improvement in business activity, in particular, production volumes, growth in sales, and the number of full-time employees being retained.
CBK said enhanced production, sales, and employment were supported by lifting of the Covid-19 restrictions, resumption of optimal production, and seasonal factors. Firms reported significant production cost increases owing to supply chain disruptions, constraints in the availability of inputs, and high freight costs.
“Increased sales and orders were reported in the agricultural sector, on account of increased export opportunities, especially in horticulture,” the report said.
Prices of goods and services are, however, expected to remain high owing to supply chain constraints and input cost pressures thereby limiting the scope for increased production volumes.
“While concerns over the Covid-19 pandemic have eased, respondents indicated that expansion or growth of private sector firms over the next one year, could be constrained by heightened political activity and the business environment,” the survey said.
To mitigate these constraining factors, companies across all sectors intend to manage costs and risks and diversify their businesses.
CEOs said an enabling business environment, a stable economic environment, and political stability could strengthen their firms’ outlook over the next year.
Kenya’s economy expanded 10.1 per cent in the second quarter of the year on the back of a rebound in economic activity compared with a similar period last year when tough Covid-19 containment measures led to a 4.7 per cent contraction.
