Kenyan businesses reported subdued performance in the third quarter of the year as they struggled against the high cost of living, a survey by the Central Bank of Kenya (CBK) has shown.
The CBK Chief Executive Officers (CEOs) Survey shows that after a period of impressive net growth, business confidence has started going down.
"While businesses are gradually recovering from the effects of the pandemic, recovery has been moderated by concerns over high inflation and the spillover effects of the war in Ukraine," said the survey.
Firms also reported high cost of imports and hence prices for good services would likely remain elevated due to a stronger US Dollar against most currencies.
Nonetheless, there was sustained business optimism about growth prospects for their companies and sectors, across all sectors.
"This optimism was mainly attributed to a continued post-Covid-19 recovery, increased government expenditure on infrastructure (both domestically and in the EAC region) and sector-specific growth opportunities especially in the services sector," reads the report.
The economy grew by 6.8 per cent in the first three months of the year, the highest in 22 years according to new data from the Kenya National Bureau of Statistics (KNBS).
The expansion of gross domestic product (GDP) or the total value of all goods and services, compared to the same period last year has been attributed to increased economic activities after the country rolled back the containment measures aimed at curbing the spread of the Covid-19 pandemic.
“The performance was supported by rebounds in most economic activities that had contracted significantly in the first quarter of 2021 due to measures instituted to curb the spread of Covid-19,” said KNBS in its Quarterly GDP Report for the first quarter of 2022.
The survey, which was done between July 5 and July 22, targets CEOs of over 900 private sector firms through questionnaires administered through a direct online survey.
It seeks CEOs' views or perceptions on selected indicators including business confidence and optimism, current quarter business activity, and outlook for business activity in the near term.
The survey also sought to establish the key internal and external factors that could influence the business outlook and strategic priorities over the medium term.
Generally, the service sector — transport, ICT, finance and insurance, wholesale and retail, building and construction, tourism, and real estate — posted better performance in the second quarter.
The relaxation of the Covid-19 measures saw the accommodation and food service activities sector expand by 56.2 per cent in the first quarter of 2022 from a contraction of 33 per cent in the same quarter of 2021.
The economy has since then been strained by a high cost of living, with prices of goods and services increasing by 8.3 per cent in July, the highest in five years.