Kenya National Chamber of Commerce says that a majority of business owners expect a drop in the price of raw materials in the second half of the year on improved supply channels.
The chamber's Quarterly Business Barometer Report for July 2024, shows that 52 per cent of businesses expected primary input prices to drop compared to quarter two while 35 per cent were not sure.
The barometer provides a forecast of the country’s business environment.
The KNCCI report that covered sole proprietors such as Boda Boda operators to multinational enterprises, further shows that the education and agriculture sectors are most optimistic about a drop in primary input costs.
"Similar to Q2, problems that businesses expected to majorly affect performance were limited financial resources at 32 per cent, unfavourable regulations at 22 per cent, and supply chain instability at 22 per cent," reads the report in part.
In contrast, manufacturing came out as the least optimistic sector on this metric, falling among the 14 per cent not expecting a drop in prices.
Majority of the sectors expect a positive outlook for revenue growth in Q3 with mining, agriculture, education, and professional services being the most optimistic.
This was mainly attributed to an anticipated customer demand while those not expecting revenue growth cited a decline in anticipated customer demand as the major reason.
All sectors had a majorly positive outlook for staff size growth in Q3 with retail & wholesale, ICT, healthcare, and hospitality & tourism being the most pessimistic.
KNCCI says this calls for increased support to the struggling yet vital sector.
Additionally, high interest rates at 31 per cent and limited access to credit at 30 per cent topped the list of factors contributing to the challenge of limited financial resources.
Forty four per cent of respondents deemed unfavourable taxes and levies as the main cause of the unfavourable regulatory environment challenge.
Data from the Central Bank of Kenya (CBK) indicates that SMEs constitute 98 percent of all businesses in Kenya.
The Business Registration Service says that the country has an estimated 1.5 million formally registered MSMEs and over 5 million informal MSMEs; they create about 30 per cent of jobs annually.
Despite the huge role SMEs play in driving growth, it is estimated their contribution to production is minimal.
The survey engaged 1011 businesses in all sectors across the country and was conducted through an online survey spanning over 2 weeks as well as physical interviews in some regions like Nairobi.
The physical interviews using enumerators (census takers) was an addition to the data collection efforts of the 2024 Q2 Barometer Survey that only employed the use of an online survey.