Elevated inflation, Energy Prices top concerns for Kenyan CEOs

By Phyllis MUCHOKI

Kenyan CEOs are bracing for an elevated inflation including macroeconomic volatility, cyber risk and geopolitical conflict, with these factors mentioned as some of the worries keeping them up at night.

According to the latest CEO Survey by PwC East Africa, despite these issues topping their worry list, 26 percent of the 231 CEOs who took part in the study believe growth will improve in the next 12 months, which is lower compared to the 33 per cent who took part in 2023 survey.

A host of them – 42 percent, say they are cautious about global economic growth, compared to 49 percent last year – with 35 percent of company CEOs listing financial constraint as one of the inhibiting factors to business growth this year.

The overall year on year inflation rate as measured by the Consumer Price Index (CPI) was 6.3 per cent, in February 2024. This means that in February 2024, the general price level was 6.3 per cent higher than that of February 2023.

That figure stood at 6.85 in January this year and 6.63 in December last year.

Similarly, the cost of credit in Kenya remains relatively high, particularly for small and medium-sized enterprises (SMEs) and individuals. Interest rates on loans are often double-digit, making it challenging for businesses to access affordable financing for growth.

Amid elevated inflation and a potential downturn, CEOs’ plans to grow profits in 2024 include introducing new products/services, investing in technology, increasing sales via marketing, and entering new markets.

Exchange rate concerns only draw attention for occasional transactions concerning foreign sourced goods, foreign healthcare services, foreign travel, or overseas remittances. Generally, a depreciation or appreciation of a currency is an adjustment process in response to the underlying fundamentals.

CBK says its recent MPC analysis indicate that consistently, Kenya’s exchange rate is never misaligned beyond a range of about 5 percent of its true value. It therefore is expected that the exchange rate will move to correct for any imbalances in the long-run.

Meanwhile the rank and file of Kenyans will have to contend with the pain and harassment of a steeply depreciating currency without an inkling as to where it will stabilize before they get their bearing.