Companies
How polls, Ukraine, inflation keep CEOs awake
Friday, August 5, 2022
Kenya Private Sector Alliance (Kepsa) CEO Carole Kariuki Karuga. PHOTO | NMG
More than half of Kenya’s CEOs and senior business leaders are not confident of growing their businesses in the next six months, a survey that captures sentiment from the August 9 post-elections has found.
The Confidence Index Report 2022 shows that most business leaders expect a stable economy after the hospitality election, with tourism sectors emerging as the most optimistic with 68 points.
“Looking into the future, the least optimistic sectors are finance and ICT, perhaps because companies in these sectors already saw growth relative to other sectors at the height of the Covid-19 pandemic and do not expect much change for those in the coming six months,” said the survey released by the Kenya Private Sector Alliance (Kepsa).
The report, developed in collaboration with TIFA Research, notes that with the current CEO’s Business Confidence Index at 61 points overall, business leaders also expressed optimism about hiring additional full-time staff in the next six months, which will translate into increased business operations.
It found that 54 percent of the 173 business leaders sampled had lower (23 percent) and the same (31 percent) outlook for business growth in the near future.
Some CEOs generally felt hopeless about better economic conditions (46 percent) in the next six months, while 15 percent expressed a lack of confidence that the new government would change the situation.
“Political stability is at the heart of driving future business optimism,” the report said in part.
A peaceful business environment after the upcoming polls is one of the main concerns of many business leaders as uncertainty looms leading up to the date.
“For those who expected lower growth for their businesses (23 percent) and their industries (29 percent), was tied to the inability to deal with the high cost of production, inflation, rising oil prices and change of government,” said Mr. Victor Ogalo. Deputy Managing Director-Competitiveness and Operations.
Some leaders revealed political instability (5 percent), the war in Ukraine (3 percent) and drought (3 percent) are some of the reasons they are less optimistic as they look into the new year.
At the industry level, company executives expressed high production costs, bad weather and a lack of government support, among other things, could hamper economic growth in the next six months.
Rising inflation and high fuel costs were also a major concern for businesses, with CEOs saying they expected prices of their inputs to rise.
While some were pessimistic, other CEOs were confident about their own companies and industry growth at 46 percent and 36 percent, respectively, on the back of stable elections.
Three in ten business leaders in the country say they were confident the economy would grow after the election, with the prospect of a peaceful campaign period and change of government central to driving future business optimism.
“Post-election political stability was the most cited reason why CEOs expected their corporate and industry business growth to be higher,” the report said.
The private sector lobby conducts these surveys ahead of elections to gauge the confidence business leaders have in their companies, industry and the economy in general.
The survey drew views from all sectors of the economy, including agriculture, tourism, finance, building and construction, services and ICT.
The survey showed that business confidence was higher than at the last two elections in 2013 and 2017.
“Overall, business leaders expressed optimism that the 2022 index had an overall score of 61 percent compared to the previous selection of 53.8 percent and 44 index points in 2013 and 2017 respectively,” said Carole Kariuki, Kepsa’s CEO.
The survey revealed that CEOs expected economic conditions to improve across all industries compared to 6 months ago, rising from an average of 47 to 66 index points for the economy and 69 index points for respective industries.
“During an election campaign period we are concerned about money laundering so there is a very targeted approach by the government to reduce cases of money laundering because in this period when the velocity of money is different from any other period,” Mr Ogalo said .
The private sector has called on citizens to exercise their right to vote with decorum to ensure the protection of what has already been built.
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