CEOs reveal the cure for Kenya's ailing economy in new survey

Kenyan chief executive officers (CEOs) have unveiled a roadmap to revive the country’s struggling economy, calling on President William Ruto’s government to address the high cost of doing business, improve access to credit, and create a stable tax regime.

Their recommendations come from the January 2025 CEOs Survey, conducted by the Central Bank of Kenya, which reveals cautious optimism about Kenya’s economic prospects over the next 12 months.

While firms anticipate growth driven by favourable weather conditions, macroeconomic stability, and declining interest rates, CEOs warn that persistent challenges such as high operational costs, taxation uncertainties, and reduced consumer demand could derail any positive progress.

The survey shows that business activity improved in the fourth quarter of 2024 compared to the third quarter, supported by seasonal factors and increased production volumes.

Firms expect further growth in the first quarter of 2025, fuelled by improved economic outcomes and easier access to credit.

However, the cost of doing business remains a significant barrier, with CEOs urging the government to streamline regulations and reduce inefficiencies.

Customer centricity, talent management, and expansion into new markets were identified as the primary drivers of growth for firms over the next year. Yet, high operational costs, abrupt tax changes, and weak consumer demand could limit this growth.

Looking ahead, firms are prioritising diversification, efficiency improvements, and cost optimization to sustain growth over the next three years. Innovations, stronger product portfolios, and enhanced marketing strategies were highlighted as key internal factors that could boost economic performance.

The survey also found that more firms are easing constraints on production capacity, thanks to idle capacity, better access to supplies, and inventory buildup.

Declining interest rates have raised hopes for improved access to credit, though challenges in securing affordable financing persist.

To address these issues, CEOs have proposed a series of measures to improve Kenya’s business environment.

They called for open skyways to allow more airlines, flights, and routes to boost tourism, alongside streamlined operations at entry ports to enhance the visitor experience.

They also urged the government to aggressively market Kenya’s strengths to attract long-term investments and implement policies that promote lending to businesses, as many firms still struggle to access credit despite lower interest rates.

Taxation certainty emerged as a critical issue, with CEOs advocating for a stable and predictable tax regime to eliminate abrupt changes in the regulatory framework.

They also called for resolving capacity limits on air freight services to support agricultural exporters and implementing policies that enhance competitiveness while protecting local manufacturers from dumping.

Finally, CEOs emphasized the need to reduce the cost of doing business by easing regulatory burdens and lowering operational costs.

The CEOs stressed the importance of collaboration between the private sector and the government to tackle these challenges. “Kenya has immense potential, but we need a conducive environment to unlock it,” said one CEO during the survey. “Stability, predictability, and targeted reforms are key to driving growth.”

The findings of the January 2025 CEOs Survey come at a critical juncture for Kenya, as the Ruto administration seeks to revive economic growth amid global uncertainties.

With CEOs expressing cautious optimism, the government’s response to these recommendations could determine the trajectory of Kenya’s economy in the coming years. For now, the message from the private sector is clear: this is the cure for the ailing economy.