Top business stories that shaped 2023

Kenyan currency notes.

The year 2023 was one of contrasting fortunes for Kenyan businesses.

From the shilling's record fall to a historic low to a surge in profit warnings in corporate Kenya, here is a round-up of Kenya's business rollercoaster in 2023:

Kenyan shilling in free fall to record low of Sh155.08 

The shilling weakened to a new low against the dollar in the year to December, signalling inflation and higher cost of imported goods and setting up the country for higher costs of electricity and debt servicing distress.

The shilling, which has lost more than 20 per cent of its value against the dollar since the start of the year, touched an all-time low of 155.0853 as of December 22.

A weakening shilling has caused pain to importers and consumers across the country for the better part of the year, hindering the government's efforts to rein in the stubborn cost of living.

Kenyans are forking out more to purchase basic commodities as the shilling continues to weaken due to external pressures.

The depreciation piled pressure on the prices of essential commodities, which stoked public anger.

The financial hardships squeezed consumers hard, posing an economic and political problem for President William Ruto's administration, which was elected on a platform to lower the cost of living, rattling its support base.

Sh10.58 trillion and counting: Kenya's public debt climbs higher yet again

Public debt rose rapidly to hit a new peak of Sh10.58 trillion, according to official estimates as both domestic and external liabilities rose rapidly.

This came as President Ruto’s revenue plan lagged in gaining momentum as tax collection in successive quarters fell short of the government's target.

This dealt a major blow to the President’s efforts to fund his costly campaign promises and repay mounting public debt at a time when his administration’s additional taxes are stoking tensions amid a high cost of living.

From Fuel to Housing: New Taxes Bit into Kenyan Wallets in 2023

Kenyans encountered record living standards after the courts paved the way for the implementation of the controversial Finance Act, 2023, bringing more pain for consumers at a time when inflation has eroded incomes and dented purchasing power.

The Ruto government has defended its new taxes, which worsened the raging cost of living crisis.

It says the high taxes are necessary for the Kenya Kwanza administration to fulfil the many pledges, chief among them, growing the economy, reducing the cost of living and addressing unemployment.

The Act introduced a monthly Affordable Housing Levy, where both employees and employers are subject to the levy at 1.5 per cent of the employee’s gross salary. The levy is to fund the State's affordable housing agenda.

The Act also doubled the Value Added Tax (VAT) rate for fuel from eight per cent to 16 per cent, adding on to the cost of energy pain affecting consumers. As a result of the doubling, petrol prices crossed past the Sh200 hitting motorists hard.

From Fuel to Food: Inflation Raged

Inflation, which is the cost of living measure, has been on an upward trend since the beginning of 2023.

It peaked in July at 8.3 per cent but has since declined to 7.5 per cent in October. The government’s economic strategies, including tax hikes to generate funds, attracted scrutiny with restless Kenyans piling pressure on the Ruto administration to address the runaway cost of living.

The Central Bank of Kenya (CBK) responded to inflation concerns by implementing a significant increase in interest rates, a move that the National Treasury acknowledged could potentially push the economy into a recession.

From Parastatals to Private Hands: State Jewels Up for Grabs 

The Ruto government revealed its longstanding plans to sell 11 more State agencies, including the Kenyatta International Convention Centre and the cash-rich National Oil and Kenya Pipeline Company.

The National Treasury also listed the Kenya Literature Bureau (KLB), Mwea Rice Mills Ltd (MRM), Western Kenya Rice Mills Ltd (WKRM), New Kenya Cooperative Creameries Limited (NKCC) and Numerical Machining Complex Limited (NMC) as potential investment opportunities for interested parties.

The Kenya Vehicle Manufacturers Ltd, Kenya Seed Company Ltd and Rivatex East Africa Ltd are also among the agencies lined up for sale by the government.

The National Treasury said the entities to be put up for sale will help it raise additional revenue.
It said the disposal would also help reduce the demand for government resources amid numerous demanding and competing needs.

Eurobond Debt: Ruto Presents Sh310b Repayment Strategy

The controversial repayment plan for Kenya’s $2 billion (Sh310 billion) Eurobond, which is scheduled for June next year, sparked controversy and is being keenly watched by global investors.

The repayment plan was developed by President William Ruto’s administration to stave off a default and has received support from major global lenders.

Its significance now lies in its potential to prevent a disastrous economic event caused by a default. Kenya is seeking to avoid a default on the Eurobond debt - an unprecedented move for a country that has never before defaulted on debt and which would have far-reaching and long-lasting implications for Kenya.  

Businesses Flash Red as Warnings Pile Up

Profit warnings from bellwether companies underlined challenges for corporate Kenya.
The dozen listed firms that said their earnings will be significantly lower than previously anticipated cited unexpected declines in sales, rising costs, increased competition, and economic downturns.
The trend heightened caution among investors as the stock market declined.

AfCFTA Unveils a $3.4 Trillion Opportunity for Businesses

Despite the economic headwinds, 2023 also presented several promising opportunities for Kenyan businesses.

The growth of the African Continental Free Trade Area (AfCFTA) opened up new market access for Kenyan goods and services. Kenya was among the seven initial pilot countries selected to test and refine the operationalisation of AfCFTA, including trade facilitation measures and dispute settlement mechanisms.

AfCFTA opens up a vast market of 1.3 billion people across Africa, creating significant opportunities for local businesses to export goods and services.