Top Kenyan CEOs on what 2024 holds for the economy, incomes and jobs

Equity Group CEO James Mwangi. [Wilberforce Okwiri, Standard]

Kenya’s top business leaders have turned their eyes to the New Year with hope and cautious optimism. In their outlook, the new year promises to be a pivotal year for Kenyan firms, marked by both significant challenges and promising opportunities. 

But can Kenya’s business captains steer the ship through turbulent waters?

Our Senior Economy Reporter Brian Ngugi delved deeper into some of those concerns when he recently sat down with CEOs of some of the country’s top companies about their plans to confront challenges in the year ahead. Below are their business predictions for the year ahead.

Equity Group CEO James Mwangi: “Ensure you survive and fit under an economy that will be very different”

In 2024 we will see the unwinding of inflation. The newfound ability of the government to pay off the Eurobond is a huge boost. What was threatening to be an insolvency problem is over. There is a huge reprieve for the government.

The $12.8 billion loan from the World Bank is to be used to refinance the Chinese debt substituting high-interest loans with long-term loans that are not commercial. It might be a very transformative period. We will be under elevated monetary and fiscal policy for three years. We will continue to implement programmes from the World Bank and the IMF. The tough microeconomic policy will be sustained.

They must hold conditionalities for three years. The pain will be borne by the people. Kenyans need to get used to that. This will allow the economy to adjust. It will be painful but will save Kenya. We might become a very efficient economy.

We will be a dominant regional actor. Banks will see a lag in lending. It is because the Government has crowded out the private sector. The lending rate will be above 20 per cent. We will have a sluggish growth of the economy in 2024. Banks will focus on improving the quality of their loan books but the non-performing loans will be a challenge.

Global factors will predominantly drive the Kenyan economy. Debt, de-dollarisation, deglobalisation and the decentralisation of global manufacturing. Kenya is well-positioned to drive the agenda on climate change and fossil fuel change. Kenya can also take advantage of being the next global manufacturing hub in three years.

Kenya will also benefit from regional trade pacts. As it’s unlikely we will not have elections in the next three years the political cooling and stability will benefit the country.  The decision to abolish Visas will make Kenya an attractive business destination.

Kenya has become the biggest beneficiary in geopolitics reorganisation. If Kenya can continue to play on both it will be in quite a strong position.

Jubilee Holdings Group CEO Julius Kipng’etich: “In 2024 the government must ease consumer pain”

In 2024, the government must get in strong financial discipline and ease consumer pain. It must rein in inflation and enhance social protection programmes so that the poor do not engage in an uprising.

It must also put incentives to promote exports, seeing that remittances are tapering off. To drive exports, we must reduce the cost of doing business. Corporates must invest in technology and focus on efficiency, productivity and innovation. They must also think beyond Kenya as part of diversifying growth.

Jubilee Holdings Group CEO Julius Kipng’etich. [Wilberforce Okwiri, Standard]

I would encourage consolidation, mergers and acquisitions so that companies grow in scale to think beyond Nairobi. Companies must also invest in people. When there is a downturn don’t stop investing in people.

Chandaria Industries Group CEO Darshan Chandaria: “There are signs that the second half of 2024 could be more positive”

2023 has been a testing year of inflation on all fronts. As we look forward to the first six months of 2024, we must be ready to face similar challenges, however, one very positive sign is that global inflation is easing as we see signs of interest rate cuts from many developed markets.

The weakening of the shilling has slowed down over the last month. If this continues, it should pave the way for interest rates to be more stable at some point in 2024, meaning borrowing from banks for business growth will become viable again.

Consumer disposable income and demand were under pressure this year and this will continue into 2024, so businesses have to be ready for this. The cost of doing business will also be under pressure given the government’s new legislation. Overall, 2024 will be a challenging year for all. There are however signs that the second half could be more positive.

KCB Group CEO Paul Russo: “We are optimistic for stronger growth in the East Africa economy”

We are optimistic that we will start to see stronger growth in the East African economy in the coming year, neutralising the recession narrative. We foresee improvement in the business landscape, and we are well-positioned to support business recovery and the economy to rebound.

There has been rising consumer and business confidence and easing inflationary pressure, pointing to an optimistic future. Inflation across the region is easing as domestic food price inflation falls on the back of improved agricultural production.

We are optimistic that the various governments in the region will keep up with robust fiscal and monetary interventions to support sustained economic growth. We see currencies and interest rates beginning to stabilise in the wake of a slowdown in rate raises in the US and Europe, effectively spurring growth.

Centum Investments PLC CEO James Mworia: “There is immense opportunity for investors who take a medium-term outlook”

The Kenyan economy traditionally gathers momentum beginning the second year after every General Election, and therefore 2024 is a year of great promise in economic terms. There is immense opportunity for investors who take a medium-term outlook, given that growth traditionally peaks just before the next election cycle.

In the long term, Kenya has proven to be a resilient economy underpinned by a skilful and diverse workforce, underwritten by democratic governance and peaceful transition of power.

Federation of Kenya Employers (FKE) CEO Jacqueline Mugo: “The outlook for 2024 is blurry.”

The domestic economy will continue to experience a decline in both demand and production, a very unfortunate situation. As you are aware, several tax measures in the Finance Act 2023 will become effective from January 1, 2024.

This will increase pressure on cashflows in organisations. The first half of 2024 will also see a drop in food supply. The good season we have had, as far as food supply is concerned, is coming to an end.

In the labour sector, employees are likely to see a further decrease in their disposable income as the 2.75 per cent statutory contribution to the Social Health Insurance Fund (SHIF) kicks in.

Centum Investments PLC CEO James Mworia. [Courtesy, Standard]

Businesses will continue to tread consciously in the coming year because of the unpredictable regulatory and policy environment, which is forcing them to make tough choices to survive. The outlook will only change once the government begins to lower the regressive taxes and administrative burdens that are a drag to the business operating environment.

The various employers we have engaged have indicated that they are cutting back on hiring by 40 per cent - indicating that they are considering reducing the number of staff to be able to meet the high business costs.

On the political side, we see an increased agitation for easing the cost of living. We hope that the leaders will be more accommodating and listen to the desperate cry of Kenyans for some relief to help them put bread on the table. The pain that ordinary people are going through to survive in Kenya is unbearable.

On government spending and management of resources, we urge for a more prudent approach. The resources we currently have as a country are enough to transform Kenya if managed well.

We hope that in 2024, the various government agencies tasked with the responsibility of ensuring accountability and transparency on how public resources are used will be supported, strengthened and given the space to operate independently as envisioned in our constitution.

Lastly, I hope for enhanced engagement between the government and the private sector in 2024. Employers are looking forward to enhanced social dialogue to change the state of the economy. We need a more stable, predictable and supportive regulatory and policy environment in 2024 to stem the collapse of enterprises.

Kenya Association of Manufacturers (KAM) chairman Rajan Shah: “We foresee a challenging first half and a neutral second half of 2024”

The worst of 2023 is behind us. However, there may still be some more pain to endure into the first half of 2024. The impact of the easing of global inflation and hence the slowdown in the interest rate growth and possibly the expectation of a reversal will only be felt in the later half of 2024.

Domestically, the high interest rates will continue to remain a challenge to borrow more for any growth.   We expect the global easing and the weaker shilling to generate more demand for our exports which should hopefully alleviate our foreign currency availability.

The cost of doing business will continue to remain a major concern as more and increased regulatory levies come into play.

This is where we look up to a stronger policy guideline from the government to assess the impact of all these costs on businesses and to enhance our global competitiveness. Demand growth is not expected to be seen until the second half of the year. Overall, we foresee a challenging first half and a neutral second half of 2024.

KAM chairman Rajan Shah. [Wilberforce Okwiri, Standard]

Deepak Dave of Autonomi Capital: “Government must get serious about slashing the tax burden”

The economy will continue to struggle unless the government gets serious about slashing the tax burden that’s been uncontrollably imposed; and going through the difficult decisions of restructuring the debt burden.

I predict shrinkage of about two per cent in real terms, but more importantly, the per capita income will drift down five per cent unless hard decisions are taken.

Privatisation will not go as smoothly as planned. There are still too many examples of entrenched interests winning mandates instead of opening opportunities to qualified outside firms.

Kenya Private Sector Alliance (Kepsa) CEO Carole Kariuki: “The hope is for a better year”

Businesses have been making lots of adjustments to a business environment that has been impacted by drought, then floods, increased interest rates, forex challenges, effects of Covid-19 on livelihoods and also increased taxes and levies both in number and amounts.

Kenyan business has always been resilient and very innovative. Despite these challenges, businesses are finding new ways to be productive and the desire is that matters climate will stabilise, the impact of Covid-19 will reduce and the business environment will improve - both on currency stabilisation.

They will have a more predictable tax policy that encourages the production and growth of businesses - both new ones and the expansion of existing ones as a better source of generating revenue and jobs.

As Kepsa, we look back at our partnership with government, development partners and other partners. We are confident this will continue and even deepen as the current administration settles more in government.

Tropical Brands and Oxygene Communications Chairman Linus Gitahi: “Year to boost exports”

It is the year for manufacturers to focus on exports. The depreciation of the Kenya shilling is a boon for exporters. It is an opportunity for Kenya to increase exports. It will also be a year to manage costs.