Kenyan chief executive officers (CEOs) say increased taxation, high energy costs and reduced consumer demand are a threat to economic growth.
A new survey published on Monday by the Central Bank of Kenya (CBK) shows that although the executives are confident in Kenya’s economic prospects, they are cautious of unpredictable tax regimes and increased costs of doing business.The survey covers over 1,000 CEOs from manufacturing, agriculture, tourism, hotels and restaurants, financial services, professional services, ICT and telecommunications, among others.The CEOs reported improved optimism in growth prospects for the Kenyan economy in the next 12 months on account of expectations of favourable weather conditions and macroeconomic stability.
“The cost of doing business, taxation and reduced consumer demand were reported as the key factors that could constrain firms’ growth,” said CBK.
About one in five (22 per cent) CEOs decried increased taxes, 15 per cent said low demand from consumers and eight per cent of the respondents added that political uncertainty could hinder their firm’s expansion plans.Kenya’s government has hiked import taxes, imposed new fees on mobile money transactions, and raised the value-added tax (VAT) on necessities over the last two years.
The private sector contends that these policies are undermining growth, limiting expansion, and reducing consumer purchasing power, even though they are intended to lower Kenya’s state debt.Access to reasonably priced loans is another major issue for firms. Despite the CBK’s three interest rate cuts in the last year to encourage lending, many businesses say that borrowing is still challenging because of banks’ cautious lending policies.
