Financial constraints, unpredictable regulatory environment and supply chain instability are the key concerns for businesses in the country, the Kenya National Chamber of Commerce now says.
These could curtail growth in the second quarter despite the private sector optimism of growth, mainly in hospitality and tourism.
In an interview, KNCCI chief executive Patrick Nyangweso said there is need for a predictable environment for businesses to invest and grow, including tax and regulatory environment.
“We need to ensure the creation of a favourable trade and investment environment that supports enterprise expansion,” Nyangweso said.
The inaugural KNCCI Quarterly Business Barometer report indicates despite 77 per cent of surveyed businesses expressing optimist of expansion in Q2, financial constraints (34%), regulations (16%), and supply chain instability (14%) loom as major obstacles.
Transport and energy sectors fear that supply chain instability and climate change might deter their performance.
The energy sector is the most confident in workforce size growth, while professional services least confident.
While a significant portion of businesses (39%) foresees a decrease in the cost of primary inputs, an equivalent proportion (39%) anticipates an increase.
“The hospitality and tourism sector is the most confident in revenue growth, while real estate and construction is at the opposite end of the spectrum,” KNCCI president Erick Rutto noted.
This is on the back of a strong rebound as the country’s tourism industry picked to post-Covid levels in 2023, with international arrivals rising to 1.9 million from 1.4 million in 2022.
The chamber’s findings come even as the Central Bank of Kenya indicates the economy is expected to remain strong for the rest of the year, supported by the services and agriculture sectors.
The CEOs Survey and Market Perceptions Survey, which were conducted ahead of this week’s MPC meeting, revealed increased optimism about business activity and economic growth prospects for the next 12 months.
"Nonetheless, respondents remained concerned about taxation, high interest rates, and geopolitical risks," governor Kamau Thugge noted.