As the Finance Bill 2024 entered the final stage of public participation Monday, the Central Bank of Kenya (CBK) published its Market Perceptions Survey to perceptions from a wide range of institutions within the market, and all does not seem so well.
To begin with, a majority do not intend to hire new staff due to higher taxation, even as 18 percent plan to fire existing staff.
“Banks expected to hire in 2024 largely to grow business and expand, to attract new talent, and to replace existing staff.
Non-bank respondents on the other hand expressed the need to cut costs and improve efficiency as reasons for not hiring in 2024. Some, however, expressed concern about industry decline as a result of the challenging business environment,” read a report in part.
The survey targeted banks and non-bank private sector firms to gauge their outlook on various economic indicators and their preparedness to navigate the challenges posed by the current financial situation.
CEOs representing 354 private sector firms, including 28 heads of commercial banks, voiced apprehensions regarding the potential implications of the proposed fiscal measures outlined in the Finance Bill 2024.
They expressed concerns that if implemented without revision, these measures could significantly heighten the cost of conducting business and stifle economic activity.
CEOs Strategies to Remain Relevant in Business
The CEOs outlined key strategic focus areas to ensure their companies remain resilient and sustain growth amidst these uncertainties.
Also Read: How CEOs in Kenya perceive economic recovery path in 2021
Talent management, customer-centric approaches, and market expansion were highlighted as key among their strategies.
The executives said they would develop new products and embrace technological innovations as internal drivers for their firms’ growth over the next year.
In assessing the risks to economic growth, survey respondents identified high taxation, both existing and proposed within the Finance Bill 2024, as a major concern.
The potential impact of elevated levies imposed by county governments was flagged as a factor likely to compress disposable incomes, dampen household consumption demand, curb private sector investments, and exacerbate the overall cost of living and business operations.
Anticipated Rise in Borrowing Costs
Within the banking sector, CEOs raised alarms over the anticipated rise in borrowing costs, which could escalate loan repayment obligations for customers.
This, in turn, may curtail disposable incomes available for consumption and investment by households, thereby impeding growth prospects.
Approximately 40 percent of bank CEOs highlighted this as a significant challenge facing their institutions.
The survey, which engaged Chief Executives and senior officers from a diverse pool of private sector entities, including commercial banks, microfinance banks, and non-bank private firms such as hotels, was conducted through a mix of online questionnaires, email interactions, and distribution of hard copies.
