Kenyan Chief Executive Officers – CEOs have indicated that they will not be hiring new staff or retaining as many employees this year as they did in 2023.
According to the January 2024 Market Perception Survey done by the Central Bank of Kenya (CBK), employers in the banking sector were the only ones who indicated the possibility of hiring and retaining employees in 2024.
The other employers in the non-banking sector who took part in the survey stated that they will probably not be hiring.
Further, the survey explained that the banking sector was expected to expand because of a projected moderate to high demand for credit in February and March 2024.
This was driven by working capital requirements by most businesses and back-to-school financing at the beginning of the school year.
“Banks expect to hire in 2024 as they expand services and strengthen capacity to support business growth,” read the survey in part.
Why Non-Banking Sector CEOs Will not be Hiring
On the other hand, employers in the non-banking sectors noted that they will not be retaining as many employees as they did in 2023.
Giving reason for the move, the respondents of the survey noted that they had experienced several challenges including the high cost of living and the decline in business because of high taxation.
Additionally, other reasons given included the weak shilling, low activity, an unfavorable business environment, poor cash flow, increased cost of doing business, increased cost of production and reduction in customers.
“Non-bank respondents, on the other hand, expressed mixed expectations on hiring, citing challenges in the economy including the high cost of living, reduction in customers, weak Shilling,
“Low activity, an unfavourable business environment, decline in business due to high taxation and high fuel prices, reduced output, poor cash flow, increased cost of doing business and increased cost of production,” added the report.
Employers Estimate Economic Growth in 2024
When asked to estimate economic growth in the country in 2024 and in five years to come, the CEOs noted that they expected relatively strong growth because of agriculture and a resilient services sector.
“About 73 per cent of respondents expected support to economic growth to come from a resilient services sector boosted by a diversified private sector and recovery in the tourism sector to pre-covid levels in addition,
“60 per cent of respondents expected support to come from enhanced agricultural production, following favourable weather conditions, which is expected to impact GDP directly, and indirectly through its impact on lowering inflation,” added the survey.
However, 80 per cent of the respondents stated that the pressure on foreign reserves from public debt repayments and imports amidst the pressure on local currency would negatively impact the economy.
At the same time, 40 percent of the key players in the private sector stated that increased taxation was a risk to economic growth with the costs of higher taxes on manufacturers being passed on to consumers,
In addition, the concentration of tax burden on a small tax base led to the contraction of household consumption demand, private sector investment and employment.