Kenyan businesses are facing challenges such as increased taxes, high energy costs, and difficulties accessing affordable credit, which could impede investment and economic recovery in 2025. A recent survey conducted by the Central Bank of Kenya (CBK) revealed that over 1,000 CEOs expressed concerns about unpredictable taxation and regulatory instability, hindering long-term planning despite positive growth expectations.
While CEOs remain optimistic about Kenya’s economic outlook, they highlighted the escalating cost of doing business as unsustainable. Factors like tax hikes, import duties, and fluctuating government policies have made it challenging for companies to maintain competitiveness. Although the CBK has reduced interest rates thrice, businesses still find it hard to secure affordable credit, potentially slowing down economic expansion.
The majority of CEOs representing privately owned domestic firms emphasized that frequent and abrupt tax changes make it hard to strategize and invest for the future. This uncertainty surrounding taxation, coupled with recent tax adjustments like increased VAT and import duties, has left businesses struggling to navigate operational costs and maintain growth.
Furthermore, CEOs underscored the importance of easier access to credit for businesses to thrive. Despite the CBK’s efforts to lower interest rates, many companies face obstacles in borrowing due to stringent lending practices by banks. While some major banks have started reducing interest rates under regulatory pressure, businesses, especially SMEs, still find borrowing expensive and challenging.
In light of these challenges, business leaders are focusing on strategies like cost-cutting, diversifying operations, and exploring new markets to sustain growth. They emphasize the need for supportive policies, tax incentives, and improved credit access to stimulate economic expansion and facilitate long-term investment decisions in Kenya.